SUBURBAN LODGES OF AMERICA INC, S-3/A, 1997-09-22

SUBURBAN LODGES OF AMERICA INC
S-3/A, 1997-09-22
HOTELS & MOTELS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 1997

REGISTRATION NO. 333-35871

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 1

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

---------------------

SUBURBAN LODGES OF AMERICA, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
GEORGIA 7011 58-1781184
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
1000 Parkwood Circle Mr. David E. Krischer
Suite 850 President and Chief Executive Officer
Atlanta, Georgia 30339 1000 Parkwood Circle, Suite 850
(770) 951-9511 Atlanta, Georgia 30339
(Address, including zip code, and telephone number, (770) 951-9511
including area code, of registrant's principal (Name, address, including zip code, and telephone
executive offices) number,
including area code, of agent for service)
</TABLE>

---------------------

Copies to:

<TABLE>
<C> <C>
MICHAEL H. TROTTER, ESQ. ALAN J. PRINCE, ESQ.
KILPATRICK STOCKTON LLP KING & SPALDING
1100 PEACHTREE STREET 191 PEACHTREE STREET
ATLANTA, GEORGIA 30309 ATLANTA, GEORGIA 30303
(404) 815-6500 (404) 572-4600
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
---------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED SEPTEMBER 22, 1997

3,000,000 SHARES

[SUBURBAN LODGE LOGO]

SUBURBAN LODGES OF AMERICA, INC.
COMMON STOCK

All of the 3,000,000 shares of Common Stock, par value $0.01 per share (the
"Common Stock"), offered hereby (the "Offering") are being sold by Suburban
Lodges of America, Inc. (the "Company"). The Common Stock is traded on The
Nasdaq Stock Market under the symbol "SLAM," and on September 16, 1997, the last
reported sale price was $27.13 per share. See "Price Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
==========================================================================================================
Price Underwriting Proceeds to
to Public Discount(1) Company(2)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................... $ $ $
Total(3)....................... $ $ $
==========================================================================================================
</TABLE>

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting offering expenses payable by the Company estimated at
$325,195.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 450,000 additional shares of Common Stock at the Price to Public less
the Underwriting Discount solely to cover over-allotments, if any. If the
Underwriters exercise this option in full, the Price to Public will total
$ , the Underwriting Discount will total $ and the
Proceeds to Company will total $ . See "Underwriting."

The shares of Common Stock are offered by the several Underwriters named
herein when, as and if delivered to and accepted by the Underwriters and subject
to their right to reject any order in whole or in part. It is expected that
delivery of the certificates representing the shares will be made against
payment therefor at the office of Montgomery Securities on or about
, 1997.

------------------------

MONTGOMERY SECURITIES
SMITH BARNEY INC.
J.C. BRADFORD & CO.
LEGACY SECURITIES CORP.

, 1997
<PAGE> 3

SUBURBAN LODGES OF AMERICA, INC.
SYSTEM-WIDE HOTEL LOCATIONS

[MAP SHOWING SUBURBAN LODGE HOTEL LOCATIONS AND PICTURES OF EXTERIORS OF
SUBURBAN LODGE HOTELS, A FRONT DESK AND GUEST CHECK-IN AND A DELUXE GUEST ROOM]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY, INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK OF
THE COMPANY ON THE NASDAQ STOCK MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION
M. SEE "UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements, including the notes thereto, appearing elsewhere in this Prospectus.
Unless the context suggests otherwise, (i) references in this Prospectus to the
"Company" or "Suburban" mean Suburban Lodges of America, Inc. and its
subsidiaries, and (ii) all information in this Prospectus assumes that the
Underwriters' over-allotment option is not exercised.

THE COMPANY

Suburban Lodges of America, Inc. develops, owns, manages and franchises
Suburban Lodge(R) hotels, which are economy extended stay hotels designed to
appeal to value-conscious guests seeking to "Lodge for Less."(SM) The Company
believes that the Suburban Lodge chain is one of the largest lodging chains
(based on number of guest rooms and hotels) devoted to serving the economy
extended stay market. Suburban Lodge guest rooms are fully furnished and include
a combination living room and bedroom, a bathroom and a fully equipped
kitchenette. Weekly maid and linen service, access to cable or satellite
television and coin-operated laundromats are also provided to allow guests to
stay comfortably for extended periods. Suburban Lodge hotels offer clean,
comfortable and attractive accommodations to guests at substantially lower rates
than most traditional and other extended stay hotels. Although daily rates are
available, substantially all guests pay the Company's weekly rates, which
currently range from $139 to $179 per week for single occupancy and from $159 to
$199 per week for double occupancy, for the Company's standard size room.

The extended stay segment of the lodging industry, which includes economy
extended stay hotels, is a relatively small but growing segment of the lodging
industry. Suburban believes that the extended stay market offers a number of
attractive investment characteristics compared to traditional hotels, including
higher than industry average occupancy rates and operating margins. Based upon
the high occupancy rates of the existing Suburban Lodge hotels and published
occupancy rates for other participants in the extended stay market, the Company
believes that Suburban Lodge hotels appeal to an underserved and growing segment
of guests in the extended stay market, including business travelers
(particularly those with limited or no expense accounts), individuals on
temporary work assignments, persons between domestic situations, persons
relocating or purchasing a home, tourists and other value-conscious customers
desiring low-cost, longer-term, quality accommodations with fully equipped
kitchenettes.

The Company owns and operates 24 Suburban Lodge hotels and franchises 12
additional Suburban Lodge hotels located in eight states (collectively, the
"Existing Hotels"). The Existing Hotels contain an aggregate of 4,812 guest
rooms, have an average of 134 guest rooms and average approximately 2.3 years in
age. The Company anticipates that an additional 24 Suburban Lodge hotels (16
Company-owned and eight franchised) will open during the remainder of 1997,
resulting in an aggregate of 60 Suburban Lodge hotels by year-end. The Company
intends to continue the growth of the Suburban Lodge chain in 1998 by opening
approximately 46 additional Suburban Lodge hotels (24 Company-owned and 22
franchised) which would result in a total of 106 Suburban Lodge hotels by the
end of 1998. There are currently 28 hotels under construction (17 Company-owned
and 11 franchised, the "Construction Hotels"), and sites have been acquired or
are under contract for 47 hotels (23 Company-owned and 24 franchised, the
"Development Hotels"). There can be no assurance that the Company and its
franchisees will be able to complete the development of all of these hotels. See
"-- Developments Since Initial Public Offering" and "Risk Factors -- Development
Risks."

The Company's business objective is to become a national provider of
economy extended stay hotels. Suburban's growth strategy is to develop
additional Company-owned hotels and to franchise the Suburban Lodge concept to
independent developers and operators as well as to passive investors who retain
the Company to develop and manage their Suburban Lodge hotels. The Company's
principal operating strategies are to (i) provide its guests with clean,
comfortable and attractive accommodations at weekly rates substantially lower
than those offered by most traditional and other extended stay hotels; (ii)
control operating costs at each of its hotels and maintain above industry
average operating margins and (iii) ensure guest satisfaction through a
commitment to customer service.
3
<PAGE> 5

The Company believes that the following are important features of the
Suburban Lodge system and its hotels:

- LOW WEEKLY RATES. Suburban Lodge hotels offer weekly rates substantially
lower than those offered by most traditional and other extended stay
hotels. The average weekly rate for the six months ended June 30, 1997 at
all 21 Company-owned hotels open at least one month during the period was
$153.71, compared to an equivalent average weekly rate (average daily rate
multiplied by seven) of $538.65 for extended stay hotels and $274.96 for
lower economy hotels.

- KITCHENETTES. Each Suburban Lodge guest room contains a fully equipped
kitchenette, including a refrigerator, two-burner stove-top, microwave
oven and cooking and eating utensils.

- LONG GUEST STAYS. Suburban designs, markets and prices its guest rooms to
appeal to guests staying one week or longer. The Company believes that
this strategy results in long guest stays and high occupancies. The
average guest stay at the 11 Company-owned hotels open at least one year
as of June 30, 1997 was approximately five weeks. Suburban believes that
long-term guest stays and the Company's policies of providing weekly
rather than daily housekeeping and limited office hours produce
significant operating efficiencies.

- HIGH OCCUPANCY. Average occupancy for the six months ended June 30, 1997
at the 11 Company-owned hotels open at least one year as of the end of the
period was 93.4%, which compares favorably to the average occupancy of
79.4% for extended stay hotels and 60.1% for lower economy hotels during
the same period. Average occupancy at the 21 Company-owned hotels open at
least one month as of June 30, 1997 was 87.7% during the six month period
ended June 30, 1997.

- STANDARD DESIGN AND LOW CONSTRUCTION COSTS. Suburban Lodge hotels are
designed and built to uniform plans and specifications developed and
periodically refined since 1987. The Company believes that standardization
lowers construction costs and establishes consistent quality. The average
total investment in the seven Company-owned Existing Hotels opened during
1997 was approximately $3.7 million with a range of approximately $24,600
to $29,400 per guest room, including building structures, improvements,
furniture, fixtures, equipment, land and pre-opening costs.

- ATTRACTIVE UNIT ECONOMICS. Suburban believes its hotels have achieved
attractive unit level economics. For the three most recently completed
Company-owned Existing Hotels with at least one complete quarter of
operations as of June 30, 1997, facility level earnings before interest,
taxes and depreciation constituted 16.4% (based on annualized second
quarter results) of their total development and construction costs,
including building structures, improvements, furniture, fixtures,
equipment, land and pre-opening costs. The Company believes that its
hotels' favorable unit economics are due, in part, to the fact that
Suburban Lodge hotels reach stabilization in a relatively short period
after opening. In the past, Suburban Lodge hotels have reached 90%
occupancy within, on average, 90 days of opening.

- FRANCHISING OPPORTUNITIES. Suburban believes that the combination of its
experience in franchising, its relationships with 15 existing franchise
groups and the potential attractive return on investment for Suburban
Lodge hotels will facilitate the expansion of the Suburban Lodge chain
throughout the country.

Since 1987, the Suburban Lodge system has increased to 36 hotels and has
achieved attractive growth, operating results and returns on investment. For the
years ended December 31, 1992 through 1996, for hotels open at least one year as
of the end of such year (i) average occupancy increased from 93.7% to 94.3%;
(ii) average weekly rates increased from $115.46 to $156.47, and (iii) weekly
revenue per available room ("Weekly REVPAR") increased from $108.11 to $147.45.
For the six months ended June 30, 1997, average occupancy, average weekly rates
and Weekly REVPAR at all 21 Company-owned hotels open at least one month during
the period were 87.7%, $153.71 and $135.04, respectively. Weekly REVPAR is
determined by dividing room revenue by the number of guest room days available
for the period and multiplying by seven.

The Company was incorporated in Georgia in 1987, and its executive offices
are located at 1000 Parkwood Circle, Suite 850, Atlanta, Georgia 30339, and its
telephone number is (770) 951-9511.
4
<PAGE> 6

DEVELOPMENTS SINCE INITIAL PUBLIC OFFERING

Since the Company's initial public offering in May 1996 (the "IPO"), the
Company has continued to implement its growth strategy through the following
initiatives:

UNIT EXPANSION. The number of hotels operating in the Suburban Lodge
system has increased from 14 (eight Company-owned and six franchised) to 36 (24
Company-owned and 12 franchised), and the aggregate number of guest rooms has
increased from 1,778 to 4,812. Further, the Company and its franchisees have
begun construction of an additional 28 Suburban Lodge hotels (of which 17 are
Company-owned) and development of 47 new Suburban Lodge hotels (of which 23 are
Company-owned). The Company also has expanded the number of relationships with
franchise groups from six to 15. In addition, the Company has, on appropriate
occasions, provided secondary financing to assist franchisees in the development
and construction of their Suburban Lodge hotels. In February 1997, the Company
acquired four Suburban Lodge hotels from certain of its franchisees and their
affiliates.

INTERIOR CORRIDOR PRODUCT. In connection with the Company's expansion
outside of the southern United States, Suburban has developed an interior
corridor prototype suitable for use in colder climates. The Company opened its
first interior corridor hotel in Newport News, Virginia. Eleven of the
Construction Hotels use the interior corridor design. The Company believes that
the development and construction costs of these hotels are comparable to
recently opened exterior corridor hotels.

EXPANDED CORPORATE INFRASTRUCTURE. In order to support the Company's
recent growth, the Company increased the size of its corporate staff from 17
persons as of March 31, 1996 to 63 persons as of August 31, 1997, including an
additional 23 employees in the development and construction departments. These
new employees include site selectors, an in-house architect and a civil engineer
to help assure consistent, quality development and construction throughout the
Suburban Lodge system. The Company also hired a quality assurance manager and a
training manager in order to help maintain the quality of the Company's
operations as it grows. Additionally, in order to recruit and retain quality
personnel at all levels of the Company, Suburban implemented an Employee Stock
Purchase Plan (the "Purchase Plan") in January 1997.

ADDITIONAL FINANCINGS. In order to help fund the Company's growth, the
Company completed a public offering of $53.0 million of Common Stock in November
1996 (the "November Offering"). Additionally, the Company obtained a commitment
to increase its line of credit (the "Line of Credit") with PNC Bank, Kentucky,
Inc. ("PNC") from $25.0 million to $50.0 million and received a preliminary
agreement in July 1997 from its lenders to increase the Line of Credit to $150.0
million, which is subject to obtaining other participating lenders and the
satisfaction of certain other conditions. There can be no assurance that such
lenders will be obtained or that such conditions will be satisfied.
5
<PAGE> 7

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company............. 3,000,000

Common Stock to be outstanding after the
Offering(1)................................... 15,129,227

Use of proceeds................................. To finance the development of additional Suburban
Lodge hotels and for working capital and other
general corporate purposes. See "Use of Proceeds."

Nasdaq Stock Market symbol...................... SLAM
</TABLE>

- ---------------

(1) Excludes (i) 750,000 shares of Common Stock reserved for issuance under the
Company's 1996 Stock Option and Incentive Award Plan (the "1996 Plan")
pursuant to which options to purchase 400,000 shares have been granted, (ii)
100,000 shares reserved for issuance under the Company's Non-Employee
Directors' Stock Option and Fee Plan (the "Directors' Plan") pursuant to
which options to purchase 9,000 shares have been granted and (iii) 500,000
shares of Common Stock reserved for issuance under the Purchase Plan
pursuant to which options to purchase 262,950 shares are outstanding.
6
<PAGE> 8

SUBURBAN LODGES OF AMERICA, INC.
AND AFFILIATED ENTITIES

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT SHARE AND CERTAIN OPERATING DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenue:
Room revenue................................. $ 2,184 $ 2,893 $ 3,904 $ 4,431 $ 7,754 $ 3,026 $ 8,436
Other hotel revenue.......................... 173 223 290 296 596 214 681
Franchise and other revenue.................. 194 247 151 460 916 513 451
------- ------- ------- ------- --------- --------- ----------
Total revenue.......................... 2,551 3,363 4,345 5,187 9,266 3,753 9,568
------- ------- ------- ------- --------- --------- ----------
Expenses:
Hotel operating expenses..................... 1,058 1,364 1,768 2,072 3,910 1,432 4,330
Corporate operating expenses................. 378 429 737 883 1,527 597 856
Related party consulting fees................ -- -- -- 17 10 10 --
Depreciation and amortization................ 323 372 416 460 788 247 1,103
------- ------- ------- ------- --------- --------- ----------
Total costs and expenses................... 1,759 2,165 2,921 3,432 6,235 2,286 6,289
------- ------- ------- ------- --------- --------- ----------
Operating income............................... 792 1,198 1,424 1,755 3,031 1,467 3,279
Interest income................................ -- -- -- -- 957 139 1,321
Interest expense............................... (614) (725) (936) (1,098) (556) (554) (12)
------- ------- ------- ------- --------- --------- ----------
Income before income taxes (expense) and
extraordinary income....................... 178 473 488 657 3,432 1,052 4,588
Income tax (expense) benefit(1)................ -- -- 14 20 (1,047) (153) (1,557)
Extraordinary income from early extinguishment
of debt...................................... -- -- 130 -- -- -- --
------- ------- ------- ------- --------- --------- ----------
Net income (loss)...................... $ 178 $ 473 $ 632 $ 677 $ 2,385 $ 899 $ 3,031
======= ======= ======= ======= ========= ========= ==========
Earnings per common share(2)................... $ 0.25
Pro forma earnings per share(2)................ $ 0.31 $ 0.14
Weighted average shares outstanding(2)......... 6,923,956 4,603,957 11,930,781
CASH FLOW DATA:
EBITDA(3)...................................... $ 1,115 $ 1,570 $ 1,840 $ 2,215 $ 3,819 $ 1,714 $ 4,382
Cash flows provided by (used in):
Operating activities......................... 399 879 929 1,305 3,369 1,384 3,370
Investing activities......................... (15) (2,349) (651) (4,791) (36,357) (18,282) (31,405)
Financing activities......................... (273) 1,561 (238) 3,707 110,641 43,391 (12,500)
OPERATING DATA:
Number of hotels open at end of period:
Company-owned................................ 3 5 5 6 14 9 22
Franchised................................... 3 3 4 6 10 8 9
------- ------- ------- ------- --------- --------- ----------
System-wide............................ 6 8 9 12 24 17 31
======= ======= ======= ======= ========= ========= ==========
Company-owned hotels(4):
Occupancy.................................... 92.9% 95.5% 97.7% 95.8% 89.2% 96.0% 87.7%
Average weekly rate.......................... $116.59 $121.96 $128.69 $136.77 $155.35 $148.13 $153.71
Weekly REVPAR(5)............................. $108.27 $116.47 $125.74 $130.93 $136.81 $141.94 $135.04
Franchised hotels(4):
Occupancy.................................... 85.9% 96.8% 98.9% 93.2% 86.8% 92.5% 84.4%
Average weekly rate.......................... $119.15 $123.21 $131.03 $146.34 $167.77 $160.61 $166.86
Weekly REVPAR(5)............................. $101.57 $119.23 $129.59 $135.44 $144.32 $146.75 $139.76
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------
ACTUAL AS ADJUSTED(6)
-------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................................................................... $ 37,805 $114,800
Total assets.................................................................................. 142,973 219,968
Long-term debt................................................................................ 15,000 15,000
Shareholders' equity.......................................................................... 125,724 202,719
</TABLE>

(Notes on following page)
7
<PAGE> 9

- ---------------

(1) Historical financial data for the four years ended December 31, 1995 and the
period from January 1, 1996 to the date of the IPO does not include a
provision for income taxes for the limited liability companies and
partnerships which owned the hotels (the "Affiliated Entities") prior to the
IPO because these entities were not subject to income taxes. Income taxes or
income tax benefits have been provided for Suburban Lodges of America, Inc.
and its subsidiaries where appropriate under Statement of Financial
Accounting Standards ("SFAS" 109, "Accounting for Income Taxes") for all
periods subsequent to the date of the IPO.

(2) Earnings per common share for the six month period ended June 30, 1997 was
computed by dividing net income by the weighted average shares outstanding
for the period.

Prior to May 28, 1996, the assets of the Company were owned and operated by
Suburban Lodges of America, Inc. and its affiliates and the Affiliated
Entities. The outstanding shares or other equity interests of those entities
differed substantially from the shares of common stock of the Company
outstanding after the IPO. Accordingly, the Company believes that the
presentation of historical per share information for the periods prior to
the six months ended June 30, 1997 is not meaningful.

The pro forma earnings per share of $0.14 per share for the six month period
ended June 30, 1996 and $0.31 per share for the year ended December 31, 1996
have been calculated by dividing income before income taxes by the weighted
average number of shares of Common Stock deemed to be outstanding during the
period. Income before tax has been adjusted to provide for income taxes
(approximately $395,000 and $1,287,000 for the six month period ended June
30, 1996 and the year ended December 31, 1996, respectively) assuming a
37.5% effective tax rate. Prior to May 29, 1996, the Company was not fully
subject to income taxes because its predecessors included partnerships and
limited liability companies; however, if they had been subject to income
taxes, pro forma net income after taxes would have been approximately
$657,000 and $2,145,000 for the six month period ended June 30, 1996 and the
year ended December 31, 1996, respectively, assuming a 37.5% effective tax
rate.

(3) EBITDA represents income before interest expense, income taxes (if
applicable) and depreciation and amortization. EBITDA is a commonly used
financial analysis tool for measuring and comparing lodging companies and
other companies with significant amortization and depreciation expense and
for analyzing operating performance, leverage and liquidity of such
companies. Such data are not a measure of financial performance under
generally accepted accounting principles and should not be considered as an
alternative to net income as an indicator of the Company's operating
performance or as an alternative to cash flow as a measure of liquidity.

(4) Information for the 12 months ended December 31, 1996 and for the six month
periods ended June 30, 1996 and 1997 is provided from the beginning of the
first calendar month following the date of opening or acquisition of each
hotel, and all other information is presented from the date of opening or
acquisition.

(5) Weekly REVPAR is determined by dividing room revenue by the number of guest
room days available for the period and multiplying by seven.

(6) The as adjusted balance sheet data is presented as if the sale of 3,000,000
shares offered hereby by the Company (at an assumed public offering price of
$27.13 per share) and the application of the net proceeds therefrom had
occurred on June 30, 1997. See "Use of Proceeds."
8
<PAGE> 10

RISK FACTORS

Certain statements in this Prospectus, including projections with respect
to the number of hotels and statements included under the captions "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things,
uncertainty as to the Company's future profitability; the ability to meet
construction and development schedules and budgets; the ability to develop and
implement operational and financial systems to manage rapidly growing
operations; the uncertainty as to the consumer demand for economy extended stay
lodging; increasing competition in the extended stay lodging market; the ability
to obtain financing on acceptable terms to finance the Company's growth
strategy; the ability of the Company to operate within the limitations imposed
by financing arrangements; and other factors referenced in this Prospectus.

In evaluating the Company's business, prospective investors should
carefully consider the following factors in addition to the other information
contained in this Prospectus.

DEVELOPMENT RISKS

The Company intends to grow primarily by developing and franchising
additional Suburban Lodge hotels. Development involves substantial risks,
including the risk that development costs will exceed budgeted or contracted
amounts, the risk of delays in construction, the risk of failing to obtain all
necessary zoning and construction permits, the risk that financing might not be
available on favorable terms, the risk that developed properties will not
achieve desired revenue or profitability levels once opened, the risk of
competition for suitable development sites from competitors which have greater
financial resources than the Company, the risk of incurring substantial costs in
the event a development project must be abandoned prior to completion, changes
in governmental rules, regulations and interpretations and general economic and
business conditions. For example, as the Company has expanded, it has begun to
rely on union contractors and subcontractors in certain markets for the
construction of hotels, which may result in increased construction costs and
delays for such hotels. Although the Company intends to manage development to
reduce such risks, there can be no assurance that present or future developments
will perform in accordance with the Company's expectations. The Company
currently intends to complete construction of 16 Company-owned hotels during the
remainder of 1997, to complete construction of approximately 24 Company-owned
hotels in 1998 and to continue an active development program thereafter. There
can be no assurance that the Company will be able to complete all of these
hotels or do so on a timely basis or within budget. As of the date of this
Prospectus, the hotels currently expected to open in 1998 are in various stages
of construction, development or planning, and the Company has acquired or has an
option to acquire the sites for 24 of these hotels.

In general, the Company takes approximately 12 months to develop a Suburban
Lodge hotel, including seven to eight months devoted to construction. The
Company anticipates that the total cost of each of the 17 Company-owned hotels
under construction, including building structures, improvements, furniture,
fixtures, equipment, land and pre-opening costs, will be approximately $3.9
million (or approximately $29,000 per guest room). The Company anticipates the
total aggregate cost to complete construction of all of the Company-owned
Construction Hotels will be approximately $66.0 million, of which approximately
$15.9 million had already been spent as of June 30, 1997. The Company
anticipates that it will cost an additional $95.7 million to open the 24
Company-owned hotels expected to open during 1998. In the past, Suburban Lodge
hotels have, on average, reached 90% occupancy within 90 days of opening;
however, there can be no assurance that each new hotel will obtain such
occupancy level within such time period.

MANAGEMENT OF GROWTH

Suburban has experienced rapid growth in its revenues, the number of its
employees and the scope of its operations. This growth has resulted in, and is
expected to continue to create, new and increased responsibili-

9
<PAGE> 11

ties for management personnel, as well as added demands on the Company's
operating and financial systems. In addition, as the Company continues to pursue
an accelerated expansion strategy through the development and franchising of new
Suburban Lodge hotels, new Company-owned and franchised hotels will be opened in
geographic markets in which the Company has limited or no previous operating or
franchise experience. The Company's growth will depend on the efforts of key
management personnel and the Company's ability to attract or develop new
management personnel and to integrate these new employees into its overall
operations. If the Company is unable to manage growth effectively, the Company's
business and results of operations could be materially and adversely affected.
See "Business -- Business Strategy."

RISKS OF INDEPENDENT FINANCING

The Company expects that it will require additional financing over time,
the amount of which will depend on a number of factors, including the number of
hotels the Company constructs and the cash flow generated by its hotels. The
Company has obtained a commitment from PNC to increase the Line of Credit to
$50.0 million and received a preliminary agreement in July 1997 from its lenders
to increase the Line of Credit to $150.0 million, which is subject to obtaining
other participating lenders and the satisfaction of certain other conditions.
There can be no assurance that such commitments will be obtained or such
conditions will be satisfied. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." The terms of any additional financing the Company may be able to
procure are unknown at this time. Any future debt financing or issuances of
preferred stock by the Company will be senior to the rights of the holders of
Common Stock, and any future issuances of Common Stock will result in the
dilution of the then-existing shareholders' proportionate equity interests in
the Company.

DEPENDENCE ON SENIOR MANAGEMENT

Suburban's continued success will depend to a significant extent upon the
efforts and abilities of its senior management and key employees, including
David E. Krischer, the founder, Chairman of the Board, Chief Executive Officer
and President of the Company. The loss of Mr. Krischer's services could have a
material adverse effect upon the Company; however, the Company carries a $3.0
million key man life insurance policy on Mr. Krischer's life. See
"Management -- Directors and Executive Officers."

CONTROL OF THE COMPANY BY MANAGEMENT

It is expected that after consummation of the Offering, Mr. Krischer will
beneficially own 18.7% of the outstanding shares of Common Stock of the Company
and, together with the other executive officers and directors of the Company as
a group, will own 24.4% of the outstanding shares of Common Stock. By reason of
such holdings, these shareholders acting as a group will be able to exercise
significant influence over the affairs and policies of the Company, including
the election of the Company's Board of Directors. Subject to the limitations
contained in the Line of Credit, the Board of Directors will control the
declaration and determination of the size of dividends. See "Dividend Policy."

RISKS ASSOCIATED WITH THE LODGING INDUSTRY

The economy extended stay segment of the lodging industry, in which the
Company operates, may be adversely affected by changes in national or local
economic conditions and other local market conditions, such as an oversupply of
lodging or a reduction in demand for lodging in a geographic area, changes in
travel patterns, extreme weather conditions, changes in governmental regulations
which influence or determine wages, prices, construction costs or methods of
operation, changes in interest rates, the availability of financing for
operating or capital needs and changes in real estate tax rates and other
operating expenses. In addition, due in part to the strong correlation between
the lodging industry's performance and economic conditions, the lodging industry
is subject to cyclical changes in revenues and profits. These risks may be
exacerbated by the relatively illiquid nature of real estate holdings. Downturns
or prolonged adverse conditions in real estate or capital markets or in national
or local economies or the inability of the Company to dispose of an investment
when it finds disposition to be advantageous or necessary could have a material
adverse effect on the Company.

10
<PAGE> 12

COMPETITION IN THE LODGING INDUSTRY

The lodging industry is highly competitive. Competitive factors within the
industry include room rates, quality of accommodations, name recognition, supply
and availability of alternative lodging (including short-term lease apartments),
service levels, reputation, reservation systems and convenience of location.
Each of the Existing Hotels and the Construction Hotels is located, and each of
the Development Hotels will be located, in a developed area that includes
competing hotels. The number of competitive hotels in a particular area could
have a material adverse effect on occupancy, average weekly rates and Weekly
REVPAR of the Existing Hotels and the Construction Hotels or hotels developed or
acquired in the future. See "Business -- Competition."

The Company anticipates that competition within the extended stay lodging
market will increase substantially in the foreseeable future. A number of other
lodging chains and developers are developing extended stay hotels which compete
with the Company's hotels. In particular, some of these entities have targeted
the economy segment of the extended stay market in which the Company competes.
The Company competes for guests and for new development sites with certain of
these established entities which have greater financial resources than the
Company and better relationships with lenders and real estate sellers. These
entities may be able to accept more risk than the Company can prudently manage.
Further, there can be no assurance that new or existing competitors will not
significantly reduce their rates or offer greater convenience, services or
amenities or significantly expand or improve hotels in markets in which the
Company competes, thereby materially adversely affecting the Company's business
and results of operations.

REAL ESTATE INVESTMENT RISKS

General Risks

The Company's investment in its hotels will be subject to varying degrees
of risk generally incident to the ownership and operation of real property. The
underlying value of the Company's real estate investments is significantly
dependent upon its ability to maintain or increase cash provided by operations.
The value of the Company's hotels and the income from the hotels may be
materially adversely affected by changes in national economic conditions,
changes in general or local economic conditions and neighborhood
characteristics, competition from other lodging hotels, changes in real property
tax rates and in the availability, cost and terms of financing, the impact of
present or future environmental legislation and compliance with environmental
laws, the ongoing need for capital improvements, changes in operating expenses,
changes in governmental rules and fiscal policies, civil unrest, acts of God,
including earthquakes and other natural disasters (which may result in uninsured
losses), acts of war, changes in zoning laws and other factors which are beyond
the control of the Company.

Illiquidity of Real Estate

Real estate investments are relatively illiquid. The ability of the Company
to vary its portfolio in response to changes in economic and other conditions
will be limited. There can be no assurance that the Company will be able to
dispose of an investment when it finds disposition advantageous or necessary or
that the sale price of any disposition will recoup or exceed the amount of the
Company's investment.

Uninsured and Underinsured Losses Could Result in Loss of Value of Hotels

Suburban maintains comprehensive insurance on each of its hotels, including
liability, fire and extended coverage. The Company believes this coverage is of
the type and amount customarily obtained for or by an owner of similar real
property assets. However, there are certain types of losses, generally of a
catastrophic nature, such as earthquakes and floods, that may be uninsurable or
not economically insurable. The Company uses its discretion in determining
amounts, coverage limits and deductibility provisions of insurance, with a view
to obtaining appropriate insurance on the Company's hotels at a reasonable cost
and on suitable terms. This may result in insurance coverage that, in the event
of a loss, would be insufficient to pay the full current market value or current
replacement cost of the Company's lost investment. Inflation, changes in
building codes and ordinances, environmental considerations and other factors
also might make it infeasible to use

11
<PAGE> 13

insurance proceeds to replace a hotel after it has been damaged or destroyed.
Under such circumstances, the insurance proceeds received by the Company might
not be adequate to restore its economic position with respect to such hotel.

COMPETITION FOR AND DEPENDENCE ON FRANCHISEES

One of the Company's sources of revenue is franchise agreements with hotel
owners. The Company competes with national and regional brand franchisors, most
of which have greater name recognition and financial resources than the Company.
Competition for franchisees is intense among national brand franchisors in the
lodging industry. Suburban believes that its ability to attract a franchisee is
based principally upon both the perceived value and quality of its brand name
and services and the potential economic advantages to the hotel owner of
retaining the Company's brand name. The Company believes that the perceived
value of a brand name to a hotel owner is in part a function of the success of
the hotels currently under management. No assurance can be given that the
Company will be successful in retaining current or competing for additional
franchisees. While the Company does not anticipate that the loss or termination
of any single franchise agreement would have a material adverse effect on its
operations, the loss of a multi-hotel franchisee could have a material adverse
effect on the Company's results of operations. Further, the Company is highly
dependent upon the efforts of its franchisees with respect to revenues from
franchising operations, particularly with franchisees who manage their own
hotels. See "Business -- Business Strategy -- Growth Strategy" and
"Business -- Franchise, Development and Management Agreements."

MARKET CONCENTRATION

Nineteen of the 36 Existing Hotels are located in the State of Georgia, and
17 of such hotels are located in metropolitan Atlanta. See "Business -- The
Hotels." Therefore, adverse events or conditions which affect those areas
particularly (such as natural disasters or adverse changes in local economic
conditions) could have a pronounced negative impact on the operations of the
Company. The Line of Credit contains limitations on the Company's ability to
expand in the Atlanta, Georgia and Charlotte, North Carolina areas. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

IMPACT OF ENVIRONMENTAL REGULATIONS

Suburban's operating costs may be affected by the obligation to pay for the
cost of complying with existing environmental laws, ordinances and regulations.
In addition, in the event any future legislation is adopted, the Company may
from time to time be required to make significant capital and operating
expenditures in response to such legislation. Suburban attempts to minimize its
exposure to potential environmental liability through its site selection
procedures. The Company typically secures an option to purchase land subject to
certain contingencies. Prior to exercising such option and purchasing the
property, the Company conducts a Phase I environmental assessment (which
generally involves a physical inspection and database search, but not soil or
groundwater analyses). Under various federal, state and local environmental
laws, ordinances and regulations, a current or previous owner or operator of
real property may be liable for the costs of removal or remediation of hazardous
or toxic substances on, under or in such property. Such laws often impose
liability whether the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In addition, the presence of
contamination from hazardous or toxic substances, or the failure to remediate
properly such contaminated property, may materially adversely affect the owner's
ability to use or sell such real property or to borrow using such real property
as collateral. Persons who arrange for the disposal or treatment of hazardous or
toxic substances may also be liable for the costs of removal or remediation of
such substances at the disposal or treatment facility, whether such facility is
or ever was owned or operated by such person. Certain environmental laws and
common-law principles could be used to impose liability for releases of
hazardous materials, including asbestos-containing materials ("ACMs"), into the
environment, and third parties may seek recovery from owners or operators of
real properties for personal injury associated with exposure to released ACMs or
other hazardous materials. Environmental laws may also impose restrictions on
the manner in which property may be used or transferred or in which businesses
may be

12
<PAGE> 14

operated, and these restrictions may require expenditures. In connection with
the ownership and operation of its hotels, the Company may be liable for any
such costs. Any potential environmental liability the Company may have solely as
a franchisor is less clear; however, the Company's business and results of
operations could be materially adversely affected if a franchisee incurred
environmental liability. Although the Company has not received any notice of
potential liability for environmental cleanups or violations from a federal,
state or local government agency and is not currently aware of any material
environmental claims pending or threatened against it or any of its franchised
hotels, no assurance can be given that such notice will not be served or that a
material environmental claim will not be asserted against the Company and its
franchised hotels. The cost of defending against claims of liability or
remediating contaminated property and the cost of complying with environmental
laws could materially adversely affect the Company's results of operations and
financial condition.

The initial Phase I groundwater sampling at the Construction Hotel in
Columbia (Broad River), South Carolina discloses evidence of a dry-cleaning
solvent in the groundwater. The likely source of the solvent is a dry-cleaning
facility located upgradient of the site. Based upon a Phase II Survey obtained
with respect to this site, the Company does not believe that it will have any
material liability in connection with the dry-cleaning solvent; however, there
can be no guarantee that the Company will not incur future environmental
liabilities arising out of the presence of the solvent or that any such
liability would not have a material adverse effect on the future financial
condition or results of operations of the Company.

GOVERNMENT REGULATION AND COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT

The lodging industry is subject to numerous federal, state and local
government regulations including those relating to building and zoning
requirements. For example, certain communities in the Atlanta metropolitan area
have recently enacted new zoning ordinances restricting the development of new
extended stay hotels. To date, such ordinances have not had an adverse effect on
the Company's business; however, the enactment of new ordinances in other
jurisdictions in which the Company intends to develop hotels may have an adverse
effect on the Company's expansion plans. Additionally, the Company is subject to
laws governing its relationship with employees, including minimum wage
requirements, overtime, working conditions and work permit requirements. The
Company is also subject to federal regulations and certain state laws that
govern the offer and sale of franchises. Many state laws impose substantive
requirements on franchise agreements, including limitations on non-competition
provisions and termination or nonrenewal of a franchise. Some states require
that certain materials be approved before franchises can be offered or sold in
that state. The failure to obtain approvals to sell franchises or an increase in
the minimum wage rate, employee benefit costs or other costs associated with
employees could materially adversely affect the Company.

Under the Americans with Disabilities Act of 1990 (the "ADA"), all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. While the Company believes that the Existing
Hotels and the Construction Hotels are substantially in compliance with these
requirements, a determination that the Company or one of its franchisees is not
in compliance with the ADA could result in the imposition of fines or an award
of damages to private litigants. In addition, changes in governmental rules and
regulations or enforcement policies affecting the use and operation of the
hotels, including changes to building codes and fire and life-safety codes, may
occur. If the Company were required to make substantial modifications at its
hotels to comply with the ADA or other changes in governmental rules and
regulations, the Company's financial condition and ability to develop new hotels
could be materially adversely affected.

ANTI-TAKEOVER CONSIDERATIONS

Staggered Board

The Company's Board of Directors is divided into three classes serving
staggered three-year terms. The terms of the current directors will expire in
1998, 1999 and 2000. The staggered terms of directors may limit the ability of
the holders of Common Stock to change control of the Company even if a change of
control were

13
<PAGE> 15

in such shareholders' best interests. The foregoing may discourage offers or
other bids for the Common Stock at a premium over the market price thereof.

Articles and Bylaws

The ownership positions of Mr. Krischer and the other executive officers
and directors of the Company as a group, together with the anti-takeover effects
of certain provisions in the Company's Articles of Incorporation and Bylaws, may
have the effect of delaying, deferring or preventing a change of control of the
Company, even if a change of control were in the shareholders' best interests.
For example, the Articles of Incorporation require that all shareholder actions
must be effected at a duly-called annual or special meeting of shareholders, and
the Bylaws require that shareholders follow an advance notification procedure
for certain shareholder nominations of candidates for the Board of Directors and
for certain other business to be conducted at any meeting of shareholders. In
addition, the Company's Articles of Incorporation authorize "blank check"
preferred stock, so that the Company's Board of Directors may, without
shareholder approval, issue preferred shares through a shareholders' rights plan
or otherwise, which could inhibit a change of control.

Georgia Anti-Takeover Statutes

The Company has adopted both the fair price and business combinations with
interested stockholders provisions of the Georgia Business Corporation Code,
which, in general, impose restrictions upon acquirors of 10% or more of the
Common Stock. These statutes may delay, defer or prevent a change of control of
the Company, even if a change of control were in the shareholders' best
interests.

Rights Agreement

The Company's Board of Directors has adopted a Rights Agreement (the
"Rights Agreement"). Pursuant to the terms of the Rights Agreement, one right (a
"Right") has been issued in respect of each outstanding share of Common Stock,
and one Right will be issued in respect of each share of Common Stock issued in
the Offering. Rights will also attach to shares of Common Stock issued after the
Offering but prior to the date on which the Rights are distributed pursuant to
the terms of the Rights Agreement. Each Right will entitle the holder thereof to
purchase a fraction of a share of the Company's Series A Participating
Cumulative Preferred Stock or, in certain instances, Common Stock or stock of
the Acquiring Person (as defined below) if, in most instances (i) a third party
or group (an "Acquiring Person") acquires beneficial ownership of 15% or more of
the Common Stock or (ii) a tender or exchange offer that would result in a
person or group becoming an Acquiring Person is commenced. The Rights Plan will
be in effect through May 2006 and could have the effect of discouraging offers
or other bids for the Common Stock at a premium over the market price thereof.

LIMITED PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

The Common Stock has traded on The Nasdaq Stock Market since May 1996 and
has a limited public market history. There can be no assurance that future
market prices for the shares will equal or exceed the price to public set forth
on the cover page of this Prospectus. The price at which the Common Stock trades
depends upon a number of factors, including, but not limited to, the performance
of the Company, the Company's historical and anticipated operating results, the
trading volume in the Common Stock and general market and economic conditions,
some of which factors are beyond the Company's control. Factors, such as
quarterly fluctuations in the Company's or its competitors' financial and
operating results and developments affecting the Company, its customers or the
industry generally, could also cause the market price of the Common Stock to
fluctuate substantially. In addition, the stock market has from time to time
experienced extreme price and volume fluctuations which have affected the market
price of many companies and which have often been unrelated to the operating
performance of these companies. These broad market fluctuations may adversely
affect the market price of the Common Stock. See "Price Range of Common Stock"
and "Underwriting."

14
<PAGE> 16

USE OF PROCEEDS

The net proceeds to the Company from the Offering are estimated to be
approximately $77.0 million ($88.6 million if the Underwriters' over-allotment
option is exercised in full), based upon an estimated public offering price of
$27.13 per share, the last reported sale price of the Common Stock on The Nasdaq
Stock Market on September 16, 1997. The Company intends to use such net proceeds
to develop additional Suburban Lodge hotels and for working capital and other
general corporate purposes. Pending use of the net proceeds as set forth above,
the net proceeds will be invested in interest-bearing, short-term, investment
grade securities or money market accounts. Such investments may include, for
example, government and government agency securities, prime rated commercial
paper, certificates of deposit and interest-bearing bank deposits.

DIVIDEND POLICY

The Company has not paid dividends on its Common Stock. The Board of
Directors intends to continue a policy of retaining earnings to finance the
Company's growth and, therefore, does not anticipate paying any such dividends
in the foreseeable future. In addition, the Line of Credit does, and future
financing arrangements may, impose minimum net worth covenants and other
limitations that could restrict the Company's right to pay dividends. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

15
<PAGE> 17

PRICE RANGE OF COMMON STOCK

The Common Stock is quoted on The Nasdaq Stock Market under the symbol
"SLAM." The Common Stock began trading on May 23, 1996. The last reported sale
price of the Common Stock on The Nasdaq Stock Market on September 16, 1997 was
$27.13. The following table sets forth for the periods indicated the high and
low closing sale prices of the Common Stock, as reported on The Nasdaq Stock
Market. As of September 16, 1997, there were approximately 73 holders of record
and 1,970 beneficial owners of the Common Stock.

<TABLE>
<CAPTION>
PRICE RANGE
----------------
HIGH LOW
------- ------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Second Quarter (since May 23, 1996)....................... $26.75 $19.63
Third Quarter............................................. 24.63 17.50
Fourth Quarter............................................ 24.50 15.25
YEAR ENDING DECEMBER 31, 1997
First Quarter............................................. 21.63 15.63
Second Quarter............................................ 22.50 15.50
Third Quarter (through September 16, 1997)................ 27.13 18.25
</TABLE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1997, and as adjusted to reflect the sale by the Company of 3,000,000 shares
of Common Stock at an assumed public offering price of $27.13 per share and the
application of the net proceeds therefrom as described under "Use of Proceeds."
This table should be read in conjunction with the selected financial data, the
historical and combined financial statements of the Company and the related
notes thereto, which are incorporated herein by reference. See "Incorporation of
Certain Documents by Reference."

<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt.............................................. $15,000 $ 15,000
Shareholders' equity:
Preferred Stock, par value $1.00 per share, 5,000,000
shares authorized; no shares issued and outstanding.... -- --
Common Stock, par value $0.01 per share, 100,000,000
shares authorized; 12,129,227 shares issued and
outstanding; 15,129,227 shares issued and outstanding,
as adjusted(1)......................................... 121 151
Additional paid-in capital.................................. 120,558 197,523
Retained earnings........................................... 5,045 5,045
-------- --------
Total shareholders' equity............................. 125,724 202,719
-------- --------
Total capitalization.............................. $140,724 $217,719
======== ========
</TABLE>

- ---------------

(1) Excludes (i) 750,000 shares of Common Stock reserved for issuance under the
1996 Plan pursuant to which options to purchase 400,000 shares are
outstanding, (ii) 100,000 shares reserved for issuance under the Directors'
Plan pursuant to which options to purchase 9,000 shares are outstanding and
(iii) 500,000 shares of Common Stock reserved for issuance under the
Purchase Plan pursuant to which options to purchase 262,950 shares are
outstanding.

16
<PAGE> 18

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

SUBURBAN LODGES OF AMERICA, INC.
AND AFFILIATED ENTITIES
(IN THOUSANDS, EXCEPT SHARE AND OPERATING DATA)

The selected consolidated financial data set forth below has been derived
from the historical consolidated financial statements of Suburban Lodges of
America, Inc. and Affiliated Entities. The historical consolidated financial
statements of Suburban Lodges of America, Inc. and Affiliated Entities for the
four years ended December 31, 1996 have been audited by Deloitte & Touche LLP,
independent accountants, whose reports thereon are incorporated by reference.
The selected data for 1992 and the six month periods ended June 30, 1996 and
1997 have been derived from the unaudited consolidated financial statements of
Suburban Lodges of America, Inc. In the opinion of management, the unaudited
financial statements include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the information set forth
therein. The consolidated historical results for the six months ended June 30,
1996 and 1997 are not necessarily indicative of the results for a full year.
These selected consolidated financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical consolidated financial statements and related
notes thereto of Suburban Lodges of America, Inc. and Affiliated Entities
incorporated herein by reference.

CASH FLOW DATA:
EBITDA(3)...................................... $ 1,115 $ 1,570 $ 1,840 $ 2,215 $ 3,819 $ 1,714 $ 4,382
Cash flows provided by (used in):
Operating activities......................... 399 879 929 1,305 3,369 1,384 3,370
Investing activities......................... (15) (2,349) (651) (4,791) (36,357) (18,282) (31,405)
Financing activities......................... (273) 1,561 (238) 3,707 110,641 43,391 (12,500)
</TABLE>

(Notes on following page)

17
<PAGE> 19

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Number of hotels open at end of period:
Company-owned................................ 3 5 5 6 14 9 22
Franchised................................... 3 3 4 6 10 8 9
--------- --------- --------- --------- --------- --------- ---------
System-wide............................ 6 8 9 12 24 17 31
========= ========= ========= ========= ========= ========= =========
Company-owned hotels(4):
Occupancy.................................... 92.9% 95.5% 97.7% 95.8% 89.2% 96.0% 87.7%
Average weekly rate.......................... $ 116.59 $ 121.96 $ 128.69 $ 136.77 $155.35 $ 148.13 $ 153.71
Weekly REVPAR(5)............................. $ 108.27 $ 116.47 $ 125.74 $ 130.93 $136.81 $ 141.94 $ 135.04
Franchised hotels(4):
Occupancy.................................... 85.9% 96.8% 98.9% 93.2% 86.8% 92.5% 84.4%
Average weekly rate.......................... $ 119.15 $ 123.21 $ 131.03 $ 146.34 $167.77 $ 160.61 $ 166.86
Weekly REVPAR(5)............................. $ 101.57 $ 119.23 $ 129.59 $ 135.44 $144.32 $ 146.75 $ 139.76
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................... $ 337 $ 428 $ 467 $ 687 $ 78,340 $ 27,181 $ 37,805
Total assets................................... 5,872 9,097 9,640 15,004 131,000 60,432 142,973
Long-term debt................................. 6,258 9,357 10,072 13,818 15,000 -- 15,000
Shareholders' equity........................... (623) (512) (692) 100 112,194 57,961 125,724
</TABLE>

- ---------------

(1) Historical financial data for the four years ended December 31, 1995 and the
period from January 1, 1996 to the date of the IPO does not include a
provision for income taxes for the Affiliated Entities because these
entities were not subject to income taxes. Income taxes or income tax
benefits have been provided for Suburban Lodges of America, Inc. and its
subsidiaries where appropriate under Statement of Financial Accounting
Standards ("SFAS" 109, "Accounting for Income Taxes") for all periods
subsequent to the date of the IPO.

(2) Earnings per common share for the six month period ended June 30, 1997 was
computed by dividing net income by the weighted average shares outstanding
for the period.

(5) Weekly REVPAR is determined by dividing room revenue by the number of guest
room days available for the period and multiplying by seven.

18
<PAGE> 20

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Formed in 1987, the Company presently owns and operates 24 Suburban Lodge
hotels and franchises 12 additional Suburban Lodge hotels located in eight
states. These Existing Hotels contain an aggregate of 4,812 guest rooms, have an
average of 134 guest rooms and average approximately 2.3 years in age. The
Company anticipates that an additional 24 Suburban Lodge hotels (16
Company-owned and eight franchised) will open during the remainder of 1997,
resulting in an aggregate of 60 Suburban Lodge hotels by year-end. The Company
intends to continue the growth of the Suburban Lodge chain in 1998 by opening
approximately 46 additional Suburban Lodge hotels (24 Company-owned and 22
franchised), which would result in a total of 106 Suburban Lodge hotels by the
end of 1998. There are currently 28 hotels under construction (17 Company-owned
and 11 franchised), and sites have been acquired or are under contract for 47
additional hotels (23 Company-owned and 24 franchised). There can be no
assurance that the Company and its franchisees will be able to complete the
development of all of these hotels. See "Prospectus Summary -- Developments
Since Initial Public Offering" and "Risk Factors -- Development Risks."

The Company's growth strategy is to develop additional Company-owned hotels
and to franchise the Suburban Lodge concept to independent developers and
operators, as well as to passive investors who retain the Company to develop and
manage their Suburban Lodge hotels. The Company has obtained a Line of Credit to
fund future development projects and for working capital. Suburban's principal
operating strategies are to (i) provide its guests with clean, comfortable and
attractive accommodations at weekly rates substantially lower than those offered
by most traditional and other extended stay hotels; (ii) control operating costs
at each of its hotels and maintain above industry average operating margins and
(iii) ensure guest satisfaction through a commitment to customer service. Given
the Company's focus on maintaining competitive prices and the historically high
occupancies at the Existing Hotels, the Company's growth is expected to be
generated principally by the development of new Company-owned and franchised
Suburban Lodge hotels.

RESULTS OF OPERATIONS

The following table sets forth certain consolidated historical operating
information for Suburban Lodges of America, Inc. and Affiliated Entities, as a
percentage of total revenue, for the periods indicated.

<TABLE>
<CAPTION>
SUBURBAN LODGES OF AMERICA, INC.
AND AFFILIATED ENTITIES(1)
---------------------------------------
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
--------------------- --------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Room revenue........................................... 89.9% 85.4% 83.7% 80.7% 88.2%
Other hotel revenue.................................... 6.7 5.7 6.4 5.7 7.1
Franchise and other revenue............................ 3.4 8.9 9.9 13.6 4.7
----- ----- ----- ----- -----
Total revenue................................ 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Hotel operating expenses............................... 40.7 40.0 42.2 38.1 45.3
Corporate operating expenses and related party
consulting fees...................................... 17.0 17.3 16.6 16.2 8.9
Depreciation and amortization.......................... 9.6 8.9 8.5 6.6 11.5
----- ----- ----- ----- -----
Total expenses............................... 67.3 66.2 67.3 60.9 65.7
----- ----- ----- ----- -----
Operating income....................................... 32.7% 33.8% 32.7% 39.1% 34.3%
===== ===== ===== ===== =====
</TABLE>

(Note on following page)

19
<PAGE> 21

The following table sets forth certain information with respect to hotel
level operating performance for the periods indicated, which the Company
believes to be important in assessing its operating performance.

- ---------------

(1) Information for the Forest Park hotel is included in the data for the six
months ended June 30, 1996, from the date of its acquisition by the Company.

Comparison of the six months ended June 30, 1997 to the six months ended June
30, 1996

Total revenue for the six months ended June 30, 1997 was approximately
$9,568,000, which was an increase of $5,815,000, or 154.9%, over the six month
period ended June 30, 1996. Room revenue for the period increased by
approximately $5,410,000, of which approximately $5,531,000 was attributable to
the opening and year to date results for the 11 hotels which opened and the one
hotel acquired during or after the quarter ended June 30, 1996, and the partial
year to date room revenue for the four hotels acquired in February 1997. In
addition, hotels open throughout both periods experienced a decrease in room
revenue of $121,000, reflecting a 3.2% decrease in occupancy and a 1.3% decrease
in average weekly rate ("AWR"). The decrease in revenue relates primarily to the
temporary impact of opening additional Company-owned hotels in cities in which
the Company had existing hotels. The increase in total room revenue reflects a
3.8% increase in AWR for all Company hotels from $148.13 to $153.71, which
resulted from rate increases at some existing hotels as well as the overall
impact of additional deluxe rooms available at all of the hotels opened after
June 30, 1996.

Franchise and other revenue from corporate operations for the six month
period ended June 30, 1997, which includes management, franchise and development
revenue, was approximately $451,000, compared to $513,000 for the six month
period ended June 30, 1996. Franchise revenue for the period increased $104,000,
or 65.0%, from $160,000 in 1996 to $264,000 in 1997. The additional franchise
revenue reflects initial franchise fees on four new Suburban Lodge hotels opened
in 1997, and increased royalties on open hotels, which was partially offset by a
decrease in franchise revenue due to the acquisition of four franchised hotels.
Development and construction revenue decreased approximately $119,000 due to the
Company's focus on development of Company-owned hotels since June 30, 1996.

Hotel operating expenses increased $2,898,000, or approximately 202.4%, to
$4,330,000 for the six month period ended June 30, 1997, from $1,432,000 for the
six month period ended June 30, 1996. The majority of this increase, or
$2,741,000, reflects the opening and full year to date expenses for 11 hotels
opened and the one hotel acquired after the quarter ended March 31, 1996, and
the partial year to date expenses for the four hotels acquired in February 1997.
In addition, hotels opened throughout both periods experienced an increase in
operating expenses of $157,000. Hotel operating margins decreased from 55.8% to
52.5% from June 30, 1996 to June 30, 1997, due primarily to lower revenues and
fixed operating costs associated with new hotels which opened after June 30,
1996.

Depreciation and amortization increased from $247,000 to $1,104,000,
principally as a result of the 14 hotels opened or acquired after June 30, 1996.

Corporate operating expenses increased $259,000, or approximately 43.4%, to
$856,000, due to additional staffing in the financial, management and
development segments of the business, legal and professional fees associated
with being a public company and executive compensation and benefit plans.

20
<PAGE> 22

Interest income during the six month period ended June 30, 1997 increased
to $1,322,000 from $139,000 during the six month period ended June 30, 1996. The
increase is attributable primarily to the interest earned on available proceeds
from both the IPO and the November Offering.

Interest expense during the six month period ended June 30, 1997 decreased
to $13,000 from $554,000 during the six month period ended June 30, 1996. The
decrease is primarily attributable to the use of a portion of the net proceeds
from the IPO to retire all of the then existing debt.

Income tax expense increased by $1,494,000 as compared to 1996, because the
Company became a taxable entity on May 29, 1996.

Comparison of the year ended December 31, 1996 to the year ended December 31,
1995

Total revenue for the year ended December 31, 1996 was approximately
$9,266,000 which was an increase of $4,079,000, or 78.6%, over the year ended
December 31, 1995. Room revenue for the period increased by approximately
$3,322,000 of which approximately $3,124,000 was attributable to the opening and
full year to date results of the Matthews hotel which opened in August 1995, and
the partial year room revenue for hotels which opened in 1996, as well as the
acquisition of the Forest Park hotel in May 1996. In addition, approximately
$198,000 of the increase in revenue was attributable to hotels open throughout
both periods, reflecting a 4.9% increase for the year. The increase in total
room revenue resulted from a 13.6% increase in AWR from $136.77 to $155.35,
which reflects additional revenue at two hotels as a result of the 1996 Olympic
Games and an increase in the availability of deluxe rooms at the hotels which
opened in 1996. Overall occupancy declined by 8% to 89% because of the ramp-up
period associated with the seven new hotels opened in 1996.

Franchise and other revenue from corporate operations for the year ended
December 31, 1996 which includes management, franchise and development revenue,
was approximately $917,000, an increase of $456,000, or approximately 98.9%,
over the year ended December 31, 1995. Franchise revenue for the year increased
$224,000, or approximately 106.6%, from $210,000 in 1995 to $434,000 in 1996.
The additional franchise revenue reflects initial franchise fees on nine new
Suburban Lodge hotels opened in 1996 (including four of the 16 hotels acquired
concurrently with the IPO (the "Corporate Organization")) and increased
royalties on open hotels. Development and construction revenue increased
approximately $232,000 due to the accelerated development of additional hotels
during 1996, including fees related to four properties to be developed on behalf
of third party investors.

Hotel operating expenses increased $1,837,000, or approximately 88.7%, to
$3,910,000 for the year ended December 31, 1996 from $2,072,000 for the year
ended December 31, 1995. The majority of this increase, or approximately
$1,560,000, reflects the opening and full year expenses for the Matthews hotel
and the partial year expenses for the hotels which opened in 1996, and the
expenses for the Forest Park hotel. The balance of the increase in hotel
operating expenses of $277,000 is related to increases in expenses at hotels
open during the entire period for both years. Depreciation and amortization
increased $328,000, or approximately 71.4%, principally as a result of the
hotels opened in 1996 and the acquisition of the Forest Park hotel. In addition,
the Company incurred loan amortization costs associated with the Line of Credit.
Facility operating margins decreased from 56.2% to 53.2% from December 31, 1995
to December 31, 1996, due primarily to fixed operating costs associated with new
hotels opened in 1996.

Corporate operating expenses increased $645,000, or approximately 73.1%, to
$1,527,000 due to additional staffing in the financial, management and
development segments of the business, legal and professional fees associated
with being a public company and executive compensation and benefit plans.
Interest expense for the year ended December 31, 1996 decreased to $556,000 from
$1,098,000 for the year ended December 31, 1995. The decrease is primarily
attributable to the use of a portion of the net proceeds from the IPO to retire
all the then existing debt.

Interest income for the year was approximately $956,000 which was primarily
earned on available proceeds from both the IPO and the November Offering.

21
<PAGE> 23

Income tax expense increased by $1,067,000 as compared to 1995, because the
Company became a taxable entity in 1996.

Comparison of the year ended December 31, 1995 to the year ended December 31,
1994

Total revenue for the year ended December 31, 1995 was approximately
$5,187,000, which was an increase of $843,000, or 19.4%, over the year ended
December 31, 1994. Room revenue for the period increased by approximately
$528,000, of which approximately $354,000 was attributable to the opening of the
Matthews hotel in August 1995 and $174,000 was attributable to hotels open
throughout both periods. The increase in room revenue for hotels open throughout
both periods resulted from a 4.1% increase in Weekly REVPAR from $125.74 to
$130.93. The increase resulted from a 6.3% increase in AWR from $128.69 to
$136.19, which was partially offset by a slight decrease in occupancy.

Franchise and other revenue from corporate operations for the year ended
December 31, 1995, which includes management, construction and development
revenue, was approximately $460,000, an increase of $309,000, or approximately
205.0%, over the year ended December 31, 1994. Franchise revenue for the period
increased $96,000, or approximately 98.0%, from $98,000 in 1994 to $194,000 in
1995. The additional franchise revenue reflects two initial franchise fees for
hotels which opened in 1995, and increased royalties on open hotels as a result
of increases in revenue at these hotels. The franchise component of the
Company's business produces a high return as a result of its relatively small
incremental overhead. Development and construction revenue from the development
of five additional sites acquired or placed under construction during the year
for third party franchisees were approximately $44,000 and $116,000,
respectively, in 1995, representing an aggregate increase of approximately
$154,000 from 1994. Management fees in 1995, for third party management
activities, increased to approximately $107,000 from $47,000 in 1994.

Hotel operating expenses increased $304,000, or approximately 17.2%, to
$2,072,000 for the year ended December 31, 1995 from $1,768,000 for the year
ended December 31, 1994. More than half the increase, or $166,000, resulted from
preparation for the opening and operation of the Matthews hotel. The balance of
the increase in hotel operating expenses of $138,000 is related to increases in
expenses at hotels open during the entire year. Management's focus on recruiting
property managers, expanding compensation and benefit programs, implementing
proactive quality assurance programs to ensure all rooms are maintained at
quality standards and general increases in utilities and guest supplies were the
primary causes for the $138,000 increase in costs. Depreciation and amortization
increased $44,000, or approximately 10.6%, principally as a result of the
opening of the Matthews hotel.

Corporate operating expenses and related party consulting fees increased
$163,000, or approximately 22.1%, to $900,000. This increase was due to the
addition of senior management, including hiring a Chief Financial Officer and
Treasurer, a Vice President of Development and a land acquisition specialist, to
help prepare for accelerated development and expansion, as well as upgrades in
computer systems, corporate advertising and marketing programs and executive
compensation and benefit plans.

Interest expense during 1995 increased $162,000, or approximately 17.3%, to
$1,098,000, primarily from an increase in indebtedness associated with the
opening of the Matthews hotel. As of December 31, 1995, the Company had
outstanding indebtedness on six hotels of $10,668,000. The Company's policy is
to capitalize interest expense incurred in connection with the construction and
development of Suburban Lodge hotels prior to their opening dates.

Liquidity and Capital Resources

The Company applied a portion of the net proceeds from the IPO to the
repayment of approximately $21.0 million in debt, plus accrued interest, and
paid approximately $7.6 million in connection with the acquisition of certain
hotels as part of the Corporate Organization, leaving approximately $30.0
million available for development of additional Suburban Lodge hotels and
general corporate purposes.

On November 25, 1996, the Company received approximately $53.0 million in
net proceeds in connection with the November Offering. Since the IPO, the
Company has used the remaining net proceeds from the IPO,

22
<PAGE> 24

the November Offering, and cash flow from operations to fund development and
construction of additional hotels and for working capital. As of September 15,
1997, the Company had outstanding indebtedness of $30.0 million from PNC. On
February 28, 1997, the Company acquired four Suburban Lodge hotels from certain
of its franchisees and their affiliates and utilized approximately $12.5 million
in cash to pay off the existing debt related to such hotels. As of June 30,
1997, the Company had approximately $38.0 million in cash and cash equivalents.
These funds are targeted for future acquisitions and construction and
development of additional hotels.

The Company anticipates that the total cost to complete construction of the
Company-owned Construction Hotels will be approximately $66.0 million, of which
approximately $15.9 million had already been spent as of June 30, 1997. The
Company intends to fund the development and construction of these hotels with
existing cash balances, proceeds from the Offering, cash flow from operations
and borrowings under the Line of Credit. While the Company anticipates that
there may be some markets where, due to a number of factors (such as the
increased cost of using union subcontractors), its development costs will be
higher, overall the Company anticipates that in the immediate future a typical
136-guest room Suburban Lodge hotel will cost approximately $3.9 million
(approximately $29,000 per guest room).

The Company has obtained a commitment from PNC to increase the Line of
Credit to $50.0 million and a preliminary agreement from its lenders to increase
the Line of Credit to $150.0 million, which is subject to obtaining other
participating lenders and the satisfaction of other conditions. As of September
15, 1997, the Company had outstanding indebtedness of $30.0 million from PNC.
The Line of Credit matures March 31, 1999, and bears interest, at the Company's
option, at (i) the higher of PNC's prime rate, plus three-quarters of one
percent or the federal funds rate, plus one and one quarter percent or (ii) the
Euro-Rate, plus two and one quarter percent. The Line of Credit is secured by
substantially all the assets of the Company. The Line of Credit restricts, among
other items, the incurrence of indebtedness, the sale of assets, the incurrence
of liens, the concentration of hotel locations and the payment of cash
dividends. In addition, the Company is required to satisfy, among other items,
certain financial performance criteria, including minimum net worth levels and
minimum levels of earnings before interest, taxes, depreciation and
amortization. As of June 30, 1997, the Company had $35.0 million available under
the Line of Credit.

In the future, the Company may seek to increase the amount of its credit
facilities, negotiate additional credit facilities or issue corporate debt or
equity securities. Any debt incurred or issued by the Company may be secured or
unsecured, fixed or variable rate interest and may be subject to such terms as
the Board of Directors of the Company deems prudent.

The Company believes that existing cash balances, cash generated from
operations, the net proceeds from the Offering and borrowings under the Line of
Credit will be sufficient to complete the construction of the 24 Company-owned
hotels expected to open during 1998. However, additional capital will be
necessary for the Company to execute its long-term development plans.

SEASONALITY

Management believes that extended stay hotels are not as seasonal in nature
as the overall lodging industry due to long-term guest stays. Based upon its
past experience, management expects that occupancy and revenues may be lower
than normal during the months of November, December and January due to the
holiday season. Because many of Suburban's expenses do not fluctuate with
occupancy, such declines in occupancy may cause decreases in the Company's
quarterly earnings.

INFLATION

The rate of inflation as measured by changes in the average consumer price
index has not had a material effect on the revenue or operating results of the
Company. However, inflation in the future could affect the Company's operating
or construction costs. See "Risk Factors -- Development Risks."

23
<PAGE> 25

BUSINESS

OVERVIEW

The Company develops, owns, manages and franchises Suburban Lodge(R)
hotels, which are economy extended stay hotels designed to appeal to
value-conscious guests seeking to "Lodge for Less."(SM) The Company believes
that the Suburban Lodge chain is one of the largest lodging chains (based on
number of guest rooms and hotels) devoted to serving the economy extended stay
market. Suburban Lodge guest rooms are fully furnished and include a combination
living room and bedroom, a bathroom and a fully equipped kitchenette. Weekly
maid and linen service, access to cable or satellite television and
coin-operated laundromats are also provided to allow guests to stay comfortably
for extended periods. Suburban Lodge hotels offer clean, comfortable and
attractive accommodations to guests at substantially lower rates than most
traditional and other extended stay hotels. Although daily rates are available,
substantially all guests pay the Company's weekly rates, which currently range
from $139 to $179 per week for single occupancy and from $159 to $199 per week
for double occupancy, for the Company's standard size rooms.

The extended stay segment of the lodging industry, which includes economy
extended stay hotels, is a relatively small but growing segment of the lodging
industry. Based upon the high occupancy rates of the Existing Hotels, published
occupancy rates for other participants in the extended stay market and industry
sources, the Company believes that demand for extended stay hotels compares
favorably to the existing supply of hotels in this segment of the market. The
Company believes that Suburban Lodge hotels appeal to an underserved and growing
segment of guests in the extended stay market. These guests include business
travelers (particularly those with limited or no expense accounts), individuals
on temporary work assignments, persons between domestic situations, persons
relocating or purchasing a home, tourists and other value-conscious customers
desiring low-cost, longer-term, quality accommodations with fully equipped
kitchenettes, with individuals on temporary work assignments and persons
relocating or purchasing a home constituting the two largest groups of guests.
Suburban believes that the extended stay market offers a number of attractive
investment characteristics compared to traditional hotels, including higher than
industry average occupancy rates and operating margins.

The Company believes that the following are important features of the
Suburban Lodge system and its hotels:

- KITCHENETTES. Each Suburban Lodge guest room contains a fully equipped
kitchenette, including a refrigerator, two-burner stove-top, microwave
oven and cooking and eating utensils.

- OPERATING EFFICIENCIES. The Company seeks to minimize costs throughout
its operations. Suburban believes that long-term guest stays, weekly
rather than daily housekeeping and limited office hours

24
<PAGE> 26

produce significant operating efficiencies. Each Suburban Lodge hotel has
a staff of approximately six to eight on-site employees, including a
general manager, which is substantially smaller than the staffs at most
traditional lodging hotels.

BUSINESS STRATEGY

Suburban's business objective is to become a national provider of economy
extended stay hotels. The Company intends to achieve its objective through the
execution of its growth and operating strategies.

Growth Strategy

Company-owned Development. The Company presently owns and operates 24
Suburban Lodge hotels and franchises 12 additional Suburban Lodge hotels located
in eight states. The Existing Hotels contain an aggregate of 4,812 guest rooms,
have an average of 134 guest rooms and average approximately 2.3 years in age.
The Company anticipates that an additional 16 Company-owned Suburban Lodge
hotels will open during the remainder of 1997, resulting in an aggregate of 40
Company-owned Suburban Lodge hotels by year-end. The Company intends to continue
the growth of the Suburban Lodge chain in 1998 by opening approximately 24
Company-owned Suburban Lodge hotels, which would result in a total of 64
Company-owned hotels by the end of 1998. There are currently 17 Company-owned
hotels under construction, and sites have been acquired or are under contract
for 23 Company-owned hotels. In order to increase the pace of development, the
Company has been exploring the use of third parties to develop hotels in new
markets for the Company. There can be no assurance that the Company will be able
to complete the development of all of these hotels. See "Risk
Factors -- Development Risks."

The Company believes that the depth and experience of its senior management
team will be an important factor in executing its growth strategy. David E.
Krischer, the Company's founder, Chairman of the Board, Chief Executive Officer
and President, developed the Suburban Lodge concept and has overseen the
development or acquisition of each of the Company-owned Existing Hotels. In
addition, both the Company's Vice President of Operations and its Vice President
of Construction have been employed by the Company since its inception. The
Company's in-house development team has significant experience in developing
Suburban Lodge hotels and supervises all phases of development to ensure on-time
construction within budget that meets the Company's standards. This team
developed 19 of the Existing Hotels and currently is developing 20 of the
Construction Hotels and 26 of the Development Hotels, including three for
franchisees who will retain the Company to manage their hotels.

25
<PAGE> 27

Suburban has begun, and expects to continue, to develop and operate
Company-owned hotels on a nationwide basis. In selecting particular cities, the
Company identifies markets that have high levels of employment and metropolitan
statistical areas with populations of 150,000 or more. In considering specific
development sites, the Company reviews demographic and traffic studies, the
availability and pricing of suitable sites, the costs and risks of developing
and any other factors deemed relevant, including site selection criteria based
on the experience of the Existing Hotels. In particular, the Company looks for
sites that are exposed to heavily-traveled thoroughfares with nearby retail and
restaurant developments and that are located in areas with a substantial number
of employers. In order to obtain desirable sites without delay, the Company may
purchase larger sites and sell the excess real estate.

Suburban has developed uniform plans and specifications for the design of
Suburban Lodge hotels. Depending upon site configuration, land costs and climate
conditions, each hotel will be constructed using Suburban's two-story or
three-story exterior or interior corridor design and is expected to contain
between 120 and 150 guest rooms. Once the Company has selected and acquired a
site and obtained regulatory permits and approvals, the construction phase of
development generally requires approximately seven to eight months, with the
entire development process lasting approximately 12 months. Suburban has
relationships with several architectural and engineering firms as well as
independent general contractors, whose work is supervised by the Company's
in-house development team. The Company believes that these relationships
facilitate the construction of its hotels.

Franchising and Third Party Development and Management Activities. In
addition to operating Company-owned Suburban Lodge hotels, the Company
franchises Suburban Lodge hotels. In particular, the Company franchises the
Suburban Lodge system on a nationwide basis to independent developers and
operators and to passive investors who retain the Company to develop and manage
their Suburban Lodge hotels. Suburban considers its franchisees to be an
integral component of its continued growth and believes its relationship with
all of its franchisees is excellent. As of September 1, 1997, 15 franchisee
groups were operating or developing franchised Suburban Lodge hotels in Alabama,
Arizona, Colorado, Florida, Georgia, Kentucky, North Carolina, Ohio, Tennessee
and Texas. In addition to the 12 existing franchised hotels, the Company plans
to work with its franchisees to open eight franchised Suburban Lodge hotels
during the remainder of 1997 and 22 in 1998, although there can be no assurance
that all of these hotels will be opened. In addition, the Company has, on
appropriate occasions, provided secondary financing to assist franchisees in the
development and construction of their Suburban Lodge hotels. See "Risk
Factors -- Development Risks" and "Risk Factors -- Competition for and
Dependence on Franchisees."

Through franchising, the Company intends to accelerate the growth of the
Suburban Lodge chain, thereby increasing its market presence and brand awareness
in both new and existing markets, while generating incremental revenues at an
attractive margin. Further, the Company anticipates that the development of a
large network of hotels will result in economies of scale in management,
marketing and purchasing. Suburban offers franchising opportunities on a
national level and believes that its existing infrastructure and experience in
franchising the Suburban Lodge concept will be an important factor in executing
its franchising strategy.

Suburban believes that several aspects of the Suburban Lodge concept should
be attractive to franchise prospects, including the depth of the Company's
management team and its experience in the economy extended stay market, the
competitive pricing and low per guest room development costs of each Suburban
Lodge hotel and the potential for a franchisee to receive an attractive return
on investment. Management is currently unaware of any lodging competitor that
targets franchise opportunities primarily for newly constructed extended stay
hotels at a similar price point. The Company also offers development and
management services to franchisees who are passive investors for additional
fees. See "-- Franchise, Development and Management Agreements -- Fees." The
Company's current franchisees have been obtained primarily through referrals. In
addition, the Company advertises franchising opportunities at industry trade
shows and in industry publications.

26
<PAGE> 28

Operating Strategies

Suburban's principal operating strategies are to (i) provide its guests
with clean, comfortable and attractive accommodations at weekly rates
substantially lower than those offered by most traditional and other extended
stay hotels; (ii) control the operating costs at each of its hotels and maintain
above industry average operating margins; and (iii) ensure guest satisfaction
through a commitment to customer service. Suburban's principal operating
strategy is to offer its guests weekly rates substantially lower than those
offered by most traditional and other extended stay hotels. The Company believes
that its high occupancy is primarily a result of a combination of its low weekly
rates, which appeal to a broad base of potential guests, and its guest room
amenities. In addition, Suburban seeks to minimize costs throughout its
operations. The Company is able to control its operating costs because it
operates each hotel with a staff of approximately six to eight full-time
employees, which is smaller than the staffs at most traditional hotels,
maintains limited office hours and provides weekly rather than daily
housekeeping. In addition, because the average guest stay is approximately five
weeks, the Company has been able to minimize its marketing and advertising
efforts while maintaining high occupancies. Longer guest stays also reduce guest
check-in traffic and the administrative costs of the hotels.

THE HOTELS

The Existing Hotels are located in eight states, contain an aggregate of
4,812 guest rooms, have an average of 134 guest rooms and average approximately
2.3 years in age. The Construction Hotels and Development Hotels are located in
18 states. A newly developed Suburban Lodge hotel is built using either a
two-story or three-story exterior or interior corridor design. The designs have
similar architectural styles and guest room floor plans. The majority of
Suburban Lodge guest rooms are uniform in size, and weekly rates for single
occupancy currently range from $139 to $179, and for double occupancy range from
$159 to $199, for standard size rooms. All hotels developed after June 30, 1996,
however, include some larger guest rooms for which a range for single occupancy
of $169 to $209 is charged, and for which a range for double occupancy of $189
to $229 is charged. Each hotel includes guest rooms, a general manager's
apartment, an office and a guest laundry room and offers convenience items for
sale to its guests in the front office. Each guest room includes a combination
living room and bedroom, a fully equipped kitchenette (including a refrigerator,
two-burner stove-top, microwave oven and cooking and eating utensils), a
telephone and access to satellite or cable television. Each Suburban Lodge hotel
also offers weekly maid and linen service.

27
<PAGE> 29

The following tables set forth certain information with respect to the
Existing Hotels, Construction Hotels and Development Hotels.

<TABLE>
<CAPTION>
AVERAGE OCCUPANCY(2)
--------------------------------
SIX AVERAGE WEEKLY RATE(2)
MONTHS ---------------------------
YEAR ENDED ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31,
DATE NUMBER OF ------------------ ----------- ---------------------------
EXISTING HOTELS OPENED ROOMS(1) 1994 1995 1996 1996 1997 1994 1995 1996
--------------- ------- --------- ---- ---- ---- ---- ---- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMPANY-OWNED:
Atlanta (Forest Park),
GA(3)....................... Mar-88 126 99.1% 98.8% 96.9% 99.0% 94.7% $123.70 $131.47 $147.86
Atlanta (Fulton Industrial),
GA.......................... Dec-88 108 99.6 99.2 97.2 99.4 94.0 124.62 129.18 143.69
Atlanta (Norcross), GA(4)..... Jun-89 129 99.8 97.9 95.7 98.0 94.3 131.15 140.20 152.75
Birmingham (Oxmoor), AL....... Jun-90 151 94.3 92.5 92.1 91.8 95.2 128.73 138.04 145.46
Atlanta (Mableton), GA........ Jun-93 79 97.6 97.1 97.5 98.1 96.5 128.93 130.59 133.63
Greenville (Mauldin Road),
SC.......................... Sep-93 130 98.1 97.8 93.3 94.9 84.1 129.44 138.14 149.02
Charlotte (Matthews), NC...... Aug-95 139 86.6 98.6 99.7 93.7 146.02 168.95
Atlanta (Lilburn), GA(5)(6)... Nov-95 132 72.1 92.3 96.7 93.8 179.71 181.40
Atlanta (Conyers), GA(5)...... Apr-96 138 72.2 78.3 91.0 182.51
Atlanta (Douglasville),
GA(5)....................... Jun-96 132 57.8 89.3 201.70
Atlanta (Roswell), GA(5)(6)... Jun-96 134 70.0 98.4 206.43
Louisville (Preston Highway),
KY.......................... Aug-96 150 66.8 88.0 162.37
Atlanta (Tara Blvd.), GA...... Sep-96 138 80.4 90.7 162.19
Greenville (Wade Hampton
Blvd.), SC.................. Oct-96 126 48.9 73.9 136.32
Atlanta (Indian Trail),
GA(6)....................... Nov-96 149 99.4 93.2 164.74
Knoxville (Kingston Pike),
TN.......................... Dec-96 132 56.6
Atlanta (Northside Drive),
GA.......................... Jan-97 150 87.3
Chesapeake (Old Greenbrier),
VA.......................... Feb-97 132 60.2
Atlanta (Gwinnett Place),
GA(6)....................... Feb-97 138 68.2
Charlotte (Pressley Rd.),
NC.......................... Mar-97 132 94.4
Charlotte (University Area),
NC.......................... Apr-97 138 68.7
Memphis (Hickory Ridge Mall),
TN.......................... Jun-97 144
Newport News (Jefferson Ave.),
VA.......................... Jul-97 134
Charleston (North), SC........ Aug-97 138
-----
SUBTOTAL/WEIGHTED AVERAGE..... 3,199 98.0% 96.3% 89.0% 96.1% 87.7% $127.82 $135.91 $155.84
FRANCHISED(7):
Birmingham (Riverchase), AL... Jun-92 122
Atlanta (Stone Mountain),
GA.......................... Nov-92 132
Atlanta (Marietta), GA........ Aug-94 132
Birmingham (Inverness), AL.... Sep-95 130
Savannah (Abercorn), GA....... Mar-96 130
Atlanta (Lawrenceville), GA... Jun-96 132
Atlanta (Decatur), GA......... Oct-96 133
Louisville (Jeffersontown),
KY.......................... Feb-97 144
Jacksonville (Bay Meadows),
FL.......................... Apr-97 138
Atlanta (Woodstock), GA....... Jul-97 138
Cincinnati (Florence), KY..... Aug-97 144
Valdosta (Mall), GA........... Aug-97 138
-----
SUBTOTAL/WEIGHTED AVERAGE...... 1,613 98.9% 91.6% 86.4% 90.4% 84.4% $134.03 $150.54 $167.06
-----
SYSTEM-WIDE TOTAL/WEIGHTED
AVERAGE....................... 4,812 98.2% 94.6% 87.8% 94.1% 86.6% $129.67 $141.24 $160.85
=====

AVERAGE WEEKLY RATE(2) WEEKLY REVPAR(2)
----------------- -----------------------------------------------
SIX MONTHS YEAR ENDED SIX MONTHS
ENDED JUNE 30, DECEMBER 31, ENDED JUNE 30,
----------------- --------------------------- -----------------
EXISTING HOTELS 1996 1997 1994 1995 1996 1996 1997
--------------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPANY-OWNED:
Atlanta (Forest Park),
GA(3)....................... $146.74 $151.16 $122.59 $129.89 $143.38 $145.25 $143.12
Atlanta (Fulton Industrial),
GA.......................... 142.20 144.23 124.12 128.15 139.73 141.37 135.51
Atlanta (Norcross), GA(4)..... 149.48 148.01 130.88 137.23 146.13 146.51 139.58
Birmingham (Oxmoor), AL....... 143.46 145.86 121.39 127.68 134.07 131.65 138.73
Atlanta (Mableton), GA........ 134.81 139.03 125.83 126.80 130.30 132.16 134.11
Greenville (Mauldin Road),
SC.......................... 146.72 144.71 126.98 135.10 139.13 139.16 121.89
Charlotte (Matthews), NC...... 164.65 173.12 126.45 166.58 164.07 162.17
Atlanta (Lilburn), GA(5)(6)... 174.89 164.46 113.06 166.99 169.70 154.49
Atlanta (Conyers), GA(5)...... 164.69 145.44 131.99 128.87 132.44
Atlanta (Douglasville),
GA(5)....................... 144.51 112.62 128.66
Atlanta (Roswell), GA(5)(6)... 188.63 140.77 181.05
Louisville (Preston Highway),
KY.......................... 155.33 107.31 136.75
Atlanta (Tara Blvd.), GA...... 159.42 130.40 144.50
Greenville (Wade Hampton
Blvd.), SC.................. 147.10 66.66 108.57
Atlanta (Indian Trail),
GA(6)....................... 175.55 163.75 162.22
Knoxville (Kingston Pike),
TN.......................... 146.68 81.61
Atlanta (Northside Drive),
GA.......................... 154.37 136.54
Chesapeake (Old Greenbrier),
VA.......................... 149.58 104.05
Atlanta (Gwinnett Place),
GA(6)....................... 191.73 142.41
Charlotte (Pressley Rd.),
NC.......................... 156.42 147.66
Charlotte (University Area),
NC.......................... 171.78 118.01
Memphis (Hickory Ridge Mall),
TN..........................
Newport News (Jefferson Ave.),
VA..........................
Charleston (North), SC........
SUBTOTAL/WEIGHTED AVERAGE..... $149.13 $153.71 $125.19 $130.76 $137.17 $142.24 $135.04
FRANCHISED(7):
Birmingham (Riverchase), AL...
Atlanta (Stone Mountain),
GA..........................
Atlanta (Marietta), GA........
Birmingham (Inverness), AL....
Savannah (Abercorn), GA.......
Atlanta (Lawrenceville), GA...
Atlanta (Decatur), GA.........
Louisville (Jeffersontown),
KY..........................
Jacksonville (Bay Meadows),
FL..........................
Atlanta (Woodstock), GA.......
Cincinnati (Florence), KY.....
Valdosta (Mall), GA...........
SUBTOTAL/WEIGHTED AVERAGE...... $162.53 $166.86 $132.56 $137.89 $144.30 $147.07 $139.76
SYSTEM-WIDE TOTAL/WEIGHTED
AVERAGE....................... $154.10 $158.09 $127.36 $133.04 $140.31 $144.31 $136.61
</TABLE>

(Notes on following page)

28
<PAGE> 30

<TABLE>
<CAPTION>
NUMBER OF ESTIMATED
CONSTRUCTION HOTELS(8) LOCATION ROOMS OPENING
---------------------- ------------------- --------- --------------------
<S> <C> <C> <C>
COMPANY-OWNED:
Virginia Beach............................................ Virginia Beach, VA 144 Third Quarter 1997
Dayton South.............................................. Dayton, OH 129 Third Quarter 1997
Fairfield................................................. Cincinnati, OH 131 Fourth Quarter 1997
Eastland.................................................. Columbus, OH 139 Fourth Quarter 1997
Indianapolis Northwest.................................... Indianapolis, IN 132 Fourth Quarter 1997
Chattanooga............................................... Chattanooga, TN 132 Fourth Quarter 1997
Hazelwood................................................. St. Louis, MO 136 Fourth Quarter 1997
Mobile.................................................... Mobile, AL 132 Fourth Quarter 1997
St. Charles............................................... St. Louis, MO 133 Fourth Quarter 1997
San Antonio North......................................... San Antonio, TX 137 Fourth Quarter 1997
Northwest Franklin........................................ Columbus, OH 129 Fourth Quarter 1997
Jackson................................................... Jackson, MS 132 Fourth Quarter 1997
Broad River............................................... Columbia, SC 132 Fourth Quarter 1997
Dallas North Central...................................... Dallas, TX 144 Fourth Quarter 1997
Northland................................................. Columbus, OH 132 Fourth Quarter 1997
Indianapolis East......................................... Indianapolis, IN 135 Fourth Quarter 1997
Downers Grove............................................. Chicago, IL 132 First Quarter 1998
-----
SUBTOTAL............................................ 2,281
-----
FRANCHISED:
Harding Place............................................. Nashville, TN 126 Third Quarter 1997
Montgomery Mall........................................... Montgomery, AL 144 Third Quarter 1997
Bragg Blvd................................................ Fayetteville, NC 144 Fourth Quarter 1997
Pineville................................................. Charlotte, NC 137 Fourth Quarter 1997
Albany Mall............................................... Albany, GA 138 Fourth Quarter 1997
Arlington South........................................... Dallas, TX 132 Fourth Quarter 1997
Savannah Airport.......................................... Savannah, GA 138 Fourth Quarter 1997
Arlington North........................................... Dallas, TX 137 Fourth Quarter 1997
Augusta West.............................................. Augusta, GA 138 First Quarter 1998
Eagle..................................................... Eagle, CO 118 First Quarter 1998
Garner.................................................... Garner, NC 144 First Quarter 1998
-----
SUBTOTAL............................................ 1,496
-----
Total............................................. 3,777
=====
</TABLE>

<TABLE>
<CAPTION>
DEVELOPMENT HOTELS:
- -------------------
LOCATION COMPANY FRANCHISED
- --------- ------- ----------
<S> <C> <C>
Athens, GA.................................................. 0 1
Atlanta, GA................................................. 0 5
Austin, TX.................................................. 1 0
Birmingham, AL.............................................. 0 1
Chicago, IL................................................. 2 0
Cincinnati, OH.............................................. 2 0
Dallas, TX.................................................. 2 0
Denver, CO.................................................. 4 1
Dothan, AL.................................................. 0 1
El Paso, TX................................................. 1 0
Greensboro, NC.............................................. 0 1
Houston, TX................................................. 3 1
Jacksonville, FL............................................ 0 2
Louisville, KY.............................................. 0 1
Macon, GA................................................... 0 1
Melbourne, FL............................................... 0 1
Memphis, TN................................................. 0 2
Minneapolis, MN............................................. 2 0
Nashville, TN............................................... 0 1
Orlando, FL................................................. 0 2
Phoenix, AZ................................................. 0 1
Richmond, VA................................................ 1 1
Salt Lake City, UT.......................................... 2 0
San Antonio, TX............................................. 2 0
Stuart, FL.................................................. 0 1
Winston-Salem, NC........................................... 1 0
-- --
TOTAL............................................... 23 24
== ==
</TABLE>

(Notes on following page)

29
<PAGE> 31

- ---------------

(1) The number of guest rooms does not include the general manager's apartment.
(2) Information for the year ended December 31, 1996 and for the six months
ended June 30, 1996 and 1997 is provided from the beginning of the first
calendar month following the date of opening or acquisition of each hotel,
and all other information is presented from the date of opening or
acquisition.
(3) The Forest Park hotel was acquired by the Company from an unrelated third
party for $3.8 million in cash as part of the Corporate Organization.
However, this hotel has been managed by the Company since its opening in
March 1988 and is therefore treated as a Company-owned hotel in this table.
(4) In the third quarter of 1997, the Company incurred approximately $157,000 of
capital expenditures in connection with the renovation of this property. The
Company has not incurred similar expenses at the other Company-owned
Existing Hotels.
(5) Information for these hotels reflects the impact of the 1996 Olympic Games
on the occupancy and room revenue for these hotels.

(6) These hotels were acquired from certain franchisees and their affiliates on
February 28, 1997. For purposes of presentation, the results for all periods
prior to February 28, 1997 are included in the subtotal weighted average for
franchised hotels and the results for the remainder of the six month period
ended June 30, 1997 are included under Company-owned Existing Hotels.

(7) Individual hotel information has not been provided for the franchised hotels
due to non-disclosure agreements between the Company and its franchisees.

(8) The Company believes that each of the Construction Hotels will open during
the calendar quarter indicated. However, the Company and its franchisees may
not be able to complete the development of all of these hotels on schedule.
See "Risk Factors -- Development Risks."

OPERATING PRACTICES

The Company has managed Suburban Lodge hotels since 1988, when the first
hotel was opened, and is currently managing the 24 Company-owned Existing
Hotels. Each Suburban Lodge hotel has a general manager, who resides on-site and
is responsible for the overall operation of the hotel, and an assistant manager.
Managers are trained in all aspects of hotel operations, with particular
emphasis placed on customer service, and are given broad authority to make
day-to-day operating decisions. Managers are supervised through the Company's
management information systems and on-site audits by area managers. Area
managers are assigned to zones that typically include four to six hotels and
visit and inspect each hotel in their respective zone on a regular basis to
ensure that consistency and quality standards are being satisfied. Incentive
programs allow managers to earn bonuses based on achievement of monthly budgets
set for each hotel and upon performance and occupancy rates. In addition, the
employees of each hotel compete against the Company's other hotels for awards
based upon occupancy and their overall performance. To the extent possible, the
Company intends to promote managers from within its organization. As part of its
ongoing training program, the Company requires that each manager attend training
sessions to discuss improvement of property performance and safety and current
industry developments.

Each hotel utilizes the Company's proprietary software package that
processes all on-site transactions and maintains financial records. The software
provides on-site management with updated information on items such as available
guest rooms, guest rooms needing cleaning or repairs, room charges due and guest
payment history. Each hotel is connected by modem to Suburban's corporate office
in Atlanta, and operating results are compiled and reviewed on a regular basis.
The corporate office purchases supplies, pays virtually all property expenses
and prepares monthly financial statements for all properties managed by the
Company.

Suburban collects data about each of its guests, including their
occupation, permanent residence, length of stay and how they learned about the
hotel. The Company uses this information as part of its market research and in
the preparation of advertising and sales materials for each hotel. In order to
sustain and improve upon the high level of demand historically experienced at
the hotels, Suburban employs various marketing techniques, which include
billboard, print (including yellow pages and newspapers) and radio advertising,
as well as direct marketing by area and general managers to local employers, and
its 24-hour 1-800 guest information line (1-800-951-STAY).

The Company is committed to keeping each of its hotels well maintained and
in good condition. Due to the historically high occupancy levels at the
Company-owned Existing Hotels, the Company has adopted a policy of refurbishing
guest rooms on an "as-needed" basis. During the three-year period ended December
31, 1996, maintenance and repair expenses for the Company-owned Existing Hotels
(exclusive of the Forest Park hotel) represented 3.8% to 5.0% of room revenues
per year for the Company-owned hotels open for the entire 12 months during each
year. During the six months ended June 30, 1997, maintenance and repair expenses
for the 12 Company-owned Existing Hotels open for the entire six month period
represented 4.2% of room revenues for such period.

30
<PAGE> 32

FRANCHISE, DEVELOPMENT AND MANAGEMENT AGREEMENTS

Franchise Agreements

General. The Company enters into single unit franchise agreements with its
franchisees for the construction of a Suburban Lodge hotel over a defined period
of time at a specific site. The Company's current franchise agreement provides
for an initial term of ten years and three months, with a ten-year renewal
option subject to several conditions, including the requirement that the
franchisee modernize or contract to modernize its hotel and that it pay the
Company an administrative fee equal to 10% of the initial franchise fee
specified in the then-current franchise agreement. Each franchise agreement
provides the franchisee with a protected territory, in which Suburban agrees not
to construct, operate or grant others the right to construct or operate a
business using Suburban's trade names, trademarks, servicemarks or other indicia
of origin.

Fees. Under the current Suburban Lodge franchise agreement, the franchisee
is required to pay an initial franchise fee for a single hotel equal to the
greater of $30,000 or $225 per guest room. Beginning three months after
operations commence, the franchisee is required to pay the Company a monthly
royalty fee of four percent of gross revenues. Upon notice from Suburban, all
franchisees are also required to pay an advertising and marketing fee of one
percent of gross revenues and a reservations/referral fee of one percent of
gross revenues, to cover the franchisee's share of the costs incurred by
Suburban in providing these services. The Company may increase these fees under
certain conditions.

Services. The Company has prepared comprehensive materials and provides
services to assist each franchisee in developing and operating a Suburban Lodge
hotel. These materials and services include development and operating manuals,
pre-opening and ongoing training for the franchisee and its general manager,
proprietary operating software designed specifically for the operation of a
Suburban Lodge hotel, prototype architectural plans and specifications (which
offer a choice between Suburban's two-story and three-story structure), a
24-hour 1-800 guest information line (with "fax on demand" capability which
allows a potential guest to receive locator maps and brochures), semi-annual
inspections by Suburban's corporate staff to ensure quality control and
advertising materials and layouts.

Franchisee Training and Support. An important element of Suburban's
franchise program is the training it provides to each franchisee. The Company
must approve each franchisee's selection of a general manager, who is required
to complete satisfactorily the Company's training program. In addition, the
Company provides between six to ten days of training to a franchisee with
respect to its first hotel, between three to five days of training for each
additional hotel and ongoing supervision thereafter. The Company maintains
regular communication with its franchisees to relay operating and marketing
information.

Quality Control. To maintain quality and consistency within the Suburban
Lodge system, the current franchise agreement specifies certain management,
operational, maintenance, record-keeping, accounting, reporting and marketing
standards and procedures with which each franchisee must comply. Each franchisee
is also obligated to comply with Suburban's standards with respect to the
training of operational personnel, safety, maintaining specified insurance, the
type of ancillary services and products which may be provided, the display of
signs and the type, quality and age of furniture, fixtures and equipment to be
included in the guest rooms and throughout the hotel. To ensure compliance with
Suburban's quality control standards, the Company's corporate staff conducts
periodic inspections of its franchised hotels.

Reporting. Each franchised hotel's operating system is connected via modem
to the Company's central system, which allows Suburban to download sales and
other operating information on a regular basis.

Termination. Suburban has the right to terminate a franchise agreement for
a variety of reasons, including a franchisee's failure to make payments when due
or comply with its other covenants under the franchise agreement, its failure to
adhere to the Company's policies and standards or its failure to comply with any
applicable laws in its operation of the hotel. Upon termination resulting from a
breach of the franchise agreement by a franchisee, the Company may purchase the
hotel at fair market value less liquidated damages and other amounts which the
franchisee may owe the Company. The franchisee may terminate the agreement only
if the Company materially breaches the franchise agreement (and fails to cure
such breach), and only by providing the Company with a six-month notice of
termination. Many state franchise laws limit the ability of a

31
<PAGE> 33

franchisor to terminate or refuse to renew a franchise. Suburban does not
anticipate that the termination of any single franchise agreement would have a
material adverse effect on its financial condition or results of operations.

Covenants. During the term of the agreement, each franchisee agrees not to
engage as an owner, operator or in any managerial capacity in any other economy
extended stay lodging business. Each franchisee also agrees not to divulge any
Company trade secrets or any information received from the Company's
confidential operating manual.

Right of First Refusal. If a franchisee desires to sell an interest in the
agreement or the hotel, the franchisee must first notify Suburban in writing of
such intention and offer to sell such interest to the Company upon terms and
conditions at least as favorable as those offered by a third party. If the
Company and the franchisee cannot agree within 30 days of such notice on the
terms and conditions of such sale, or if the Company chooses not to acquire such
interest, the franchisee may then sell the interest to a third party on such
terms and conditions, provided that the sale is made within 180 days after the
expiration of any offer to the Company and that the hotel continues to be
operated pursuant to the Suburban Lodge system.

Development Agreements

The Company, in accordance with the terms of its current Development and
Design/Build Agreement, may perform development and design services for its
franchisees who are passive investors, including the recommendation of possible
sites, the negotiation for the purchase of sites, securing the services of
engineers, architects and other professionals, the preparation of preliminary
design documents and design/build budgets, the negotiation with contractors and
the overall monitoring of the development and construction of the Suburban Lodge
hotel. The franchisee pays for the cost of all services and expenditures
associated with the construction of the hotel, including development fees to the
Company. The agreement terminates upon the completion of the services described,
or upon termination of the franchise agreement, whichever occurs first. In
addition, in the event either party fails to perform substantially under the
agreement, the party not at fault may terminate the agreement upon seven days'
written notice. The Company is developing five Suburban Lodge hotels for passive
investors pursuant to the terms of its standard Development and Design/Build
Agreement.

Management Agreements

The Company, upon request, will manage franchised Suburban Lodge hotels for
its franchisees pursuant to a management agreement between the Company and the
franchisee. The Company's current Management Agreement has a five-year term,
which is automatically renewed for successive terms unless terminated upon 120
days' written notice. Under the agreement, the Company, in addition to providing
certain pre-opening services, operates and manages the hotel and, among other
duties, is responsible for all personnel decisions, the negotiation of operating
leases and contracts, the preparation of advertising campaigns, the payment of
taxes and the general maintenance of the hotel. Suburban also maintains the
right to determine all operating policies affecting the appearance of the hotel,
the maintenance of the hotel and its standards of operation, the quality of
services and other matters affecting customer satisfaction. The agreement is
terminable if either party fails to perform any material term or condition under
the agreement and fails to cure after notice from the non-defaulting party, if
either party files for bankruptcy or upon the destruction or condemnation of the
hotel. In addition to a fixed fee for pre-opening services, Suburban will charge
a management fee equal to five percent of the hotel's monthly gross revenues. As
of the date of this Prospectus, the Company has five Management Agreements in
effect.

The hotel owner is obligated to indemnify the Company against certain
liabilities arising out of the financing of the hotel, unless such liabilities
result from the negligence, fault, misrepresentation, omission or misconduct of
the Company, its agents or employees. In addition, to the extent not covered by
insurance, the hotel owner is obligated to indemnify the Company against certain
liabilities occasioned by the negligence, fault, omission or other tortious
conduct of the hotel owner, its agents, employees and contractors. Similarly, to
the extent not covered by insurance, the Company is obligated to indemnify the
hotel owner against certain

32
<PAGE> 34

liabilities occasioned by the negligence, fault, omission or other tortious
conduct of the Company, its employees, agents, business invitees (except guests)
or contractors.

COMPETITION

The lodging industry is highly competitive. Competitive factors within the
industry include room rates, quality of accommodations, name recognition, supply
and availability of alternative lodging, including short-term lease apartments,
service levels, reputation, reservation systems and convenience of location.
Each of the Existing Hotels and Construction Hotels is located, and each of the
Development Hotels will be located, in a developed area that includes competing
hotels, including both traditional hotels and other extended stay hotels. The
number of competitive hotels in a particular area could have a material adverse
effect on occupancy, AWR and Weekly REVPAR of the Existing Hotels and the
Construction Hotels or properties developed or acquired in the future. See
"-- The Hotels."

The Company anticipates that competition within the extended stay lodging
market will increase substantially in the foreseeable future. A number of other
lodging chains and developers are already developing extended stay hotels which
may compete with the Company's hotels. In particular, some of these entities
have targeted the economy segment of the extended stay market in which the
Company competes. The Company may compete for guests and for development sites
with certain of these established entities which have greater financial
resources than the Company and better relationships with lenders and real estate
sellers. These entities may be able to accept more risk than the Company can
prudently manage. Further, new or existing competitors might reduce their rates
or offer greater convenience, services or amenities or expand or improve hotels
in markets in which the Company competes, thereby adversely affecting the
Company's business and results of operations. See "Risk Factors -- Competition
in the Lodging Industry."

EMPLOYEES

As of August 31, 1997, Suburban employed 256 persons. Suburban expects that
it will increase the number of its employees as it expands its business. The
Company's employees are not subject to any collective bargaining agreements, and
management believes that its relationship with its employees is good.

LEGAL PROCEEDINGS

Suburban is not a party to any litigation or claim, and, to date, no claims
have had a material adverse effect on the Company.

33
<PAGE> 35

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Certain information regarding the directors and executive officers of the
Company is set forth in the table below.

<TABLE>
<CAPTION>
TERM
NAME AGE POSITION CLASS EXPIRES
- ---- --- -------- ----- -------
<S> <C> <C> <C> <C>
David E. Krischer............... 48 Chairman of the Board, Chief Executive III 1999
Officer and President
Dan J. Berman................... 33 Vice President -- Franchising and Director III 1999
Seth H. Christian............... 32 Vice President -- Operations
Terry J. Feldman................ 54 Vice President, Chief Financial Officer -- --
and Treasurer
G. Hunter Hilliard.............. 55 Vice President -- Construction -- --
Kevin R. Pfannes................ 43 Vice President -- Development and -- --
Secretary
James R. Kuse................... 67 Director II 1998
Michael McGovern................ 54 Director II 1998
John W. Spiegel................. 56 Director I 2000
</TABLE>

DAVID E. KRISCHER. Mr. Krischer formed the Company in 1987 to develop a
national chain of economy extended stay hotels and has served as its President
and Chairman since inception. Mr. Krischer has over 15 years of experience in
real estate development, has been involved in the hospitality industry for
nearly 11 years and currently is the Chairman of the Extended Stay Lodging
Council, a division of the American Hotel & Motel Association. From 1974 to
1986, he was a partner with two Atlanta law firms, Arrington, Rubin, Winter,
Krischer & Goger and Costanzo & Krischer, where his practice focused on general
business and real estate law and real estate syndication.

DAN J. BERMAN. Mr. Berman joined the Company in September 1993 as its Vice
President -- Franchising and was elected as a Director in March 1996. Prior to
joining the Company in 1993, Mr. Berman practiced commercial law in New York
City with the firm Young and Young from September 1990 to May 1993. Mr. Berman
received the degrees of Juris Doctor and Master of Business Administration from
Emory University Law and Business Schools in 1990.

SETH H. CHRISTIAN. Mr. Christian joined the Company in November 1987 and
was elected Vice President -- Operations in January 1989. From 1983 through
1987, he served as General Manager of Hotel/Restaurant Management, Inc., an
Atlanta-based hospitality company. Mr. Christian is a member of the Board of
Directors of the Arthritis Foundation, Georgia Chapter. Mr. Christian received a
Bachelor of Arts in economics from Georgia State University in 1988.

TERRY J. FELDMAN. Mr. Feldman joined the Company in January 1995 as its
Treasurer and Chief Financial Officer and was elected Vice President in March
1996. He has over 30 years of experience in real estate accounting and finance.
Prior to joining the Company, Mr. Feldman served as the Vice President and Chief
Financial Officer of Unity Mortgage, Inc., a home mortgage lender, from July
1992 to July 1994. Mr. Feldman served as the Vice President and Chief Financial
Officer of Anderson Properties, Inc., a commercial real estate company in
Atlanta, from 1984 to 1992. From 1977 to 1984, he served in treasury and
financial planning capacities at Days Inns of America, Inc. Mr. Feldman is a
Certified Public Accountant.

G. HUNTER HILLIARD. Mr. Hilliard joined the Company in April 1987 as its
Vice President -- Construction. In addition, since 1980, Mr. Hilliard has been
the sole shareholder and Secretary of Acreage Investment Corporation, a real
estate and construction consulting firm. He has over 25 years of experience in
the development and construction of single and multi-family housing, retail
centers and office space.

KEVIN R. PFANNES. Mr. Pfannes joined the Company in January 1996 and was
elected Vice President -- Development in February 1996. He has 18 years of legal
and business experience in the development, acquisition, leasing and financing
of a broad range of commercial real estate transactions. From July 1992

34
<PAGE> 36

through January 1995, Mr. Pfannes served as real estate counsel and Director of
Operations of General Innkeeping Acceptance Corporation, a wholly-owned
subsidiary of Holiday Inns, Inc., which provided financing for Holiday Inn
hotels. From January 1986 to July 1992, Mr. Pfannes was a self-employed
attorney, and his practice focused on commercial real estate matters. From 1979
to 1984, Mr. Pfannes worked for the Chicago law firm of Rooks, Pitts and Poust,
where his practice focused on real estate and lending matters.

JAMES R. KUSE. Mr. Kuse was elected as a Director of the Company in May
1996. Mr. Kuse has been the Chairman of the Board of Directors of Georgia Gulf
Corporation since January 1985. From February 1989 through February 1991, Mr.
Kuse also served as the Chief Executive Officer of Georgia Gulf Corporation. Mr.
Kuse also serves as a Director of Rhodes, Inc. and Green Capital Investors.

MICHAEL MCGOVERN. Mr. McGovern was elected as a Director of the Company in
May 1996. Since 1975, Mr. McGovern has been the President and a Director of
McGovern Enterprises, Inc., a company which provides corporate, financial and
real estate advisory services throughout the United States.

JOHN W. SPIEGEL. Mr. Spiegel was elected as a Director of the Company in
May 1996. Since 1985, Mr. Spiegel has served as Executive Vice President and
Chief Financial Officer of SunTrust Banks, Inc. He has also served as Treasurer
of Trust Company of Georgia since 1978 and is an officer and director of various
subsidiaries of SunTrust Banks, Inc. Mr. Spiegel is also a member of the Board
of Directors of Rock-Tenn Company and ContiFinancial Corporation.

COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee. The Audit Committee consists of Messrs. Kuse, Spiegel and
Krischer. The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public accountants
the plans and the results of the audit engagement, approves professional
services provided by the independent public accountants, reviews the
independence of the independent public accountants, considers the range of audit
and non-audit fees and reviews the adequacy of the Company's internal accounting
controls.

Compensation Committee. The Compensation Committee consists of Messrs.
Kuse and McGovern. The Compensation Committee determines compensation for the
Company's executive officers and administers the Company's 1996 Plan.

The Company may from time to time form other committees as circumstances
warrant. Such committees will have authority and responsibility as delegated by
the Board of Directors.

35
<PAGE> 37

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock by (i) each director of the Company; (ii) each
executive officer of the Company; (iii) all directors and executive officers of
the Company as a group and (iv) each person known to the Company to beneficially
own more than 5.0% of the outstanding Common Stock. Unless otherwise indicated,
all shares are owned directly and the indicated person has sole voting and
investment power. The number of shares represents the number of shares of Common
Stock the person holds as of September 15, 1997.

<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
OUTSTANDING OUTSTANDING
NAME AND ADDRESS OF NUMBER OF SHARES COMMON STOCK COMMON STOCK
BENEFICIAL OWNER(1) BENEFICIALLY OWNED PRIOR TO OFFERING AFTER OFFERING
------------------- ------------------ ----------------- --------------
<S> <C> <C> <C>
David E. Krischer(2)................................ 2,837,937 23.3% 18.7%
Dan J. Berman(3)(4)................................. 153,131 1.3 1.0
Seth H. Christian(3)................................ 153,094 1.3 1.0
Terry J. Feldman(3)(5).............................. 20,205 * *
G. Hunter Hilliard(3)(6)............................ 93,532 * *
Kevin R. Pfannes(3)(7).............................. 15,627 * *
James R. Kuse(8).................................... 19,043 * *
Michael McGovern(8)................................. 414,591 3.4 2.7
John W. Spiegel(8).................................. 10,075 * *
The Equitable Companies Incorporated(9)............. 1,777,100 14.5 11.7
Provident Investment Counsel, Inc.(10).............. 646,202 5.3 4.2
All directors and executive officers as a group
(nine persons).................................... 3,717,235 30.4% 24.4%
</TABLE>

- ---------------

* Represents less than one percent of the outstanding Common Stock.
(1) Unless otherwise indicated, the address of the persons named above is care
of Suburban Lodges of America. Inc., 1000 Parkwood Circle, Suite 850,
Atlanta, Georgia 30339.
(2) Includes options to purchase 37,500 shares, which are currently
exercisable, 117 shares held in an individual retirement account for the
benefit of Mr. Krischer's spouse and 117 shares held in an individual
retirement account for the benefit of Mr. Krischer's daughter.
(3) Includes options to purchase 12,500 shares, which are currently
exercisable.
(4) Includes 100 shares held with Mr. Berman's spouse as joint tenants with the
right of survivorship.
(5) Includes 6,000 shares held by Mr. Feldman's spouse.
(6) Includes 1,400 shares held by Mr. Hilliard's spouse.
(7) Includes 117 shares held in an individual retirement account for Mr.
Pfannes' benefit.
(8) Includes 575 shares of restricted Common Stock and options to purchase
1,500 shares of Common Stock granted pursuant to the Directors' Plan.
(9) The Equitable Companies Incorporated's address is 787 Seventh Avenue, New
York, New York 10019. Share information is based on Schedule 13G dated
February 12, 1997.
(10) Provident Investment Counsel, Inc.'s address is 300 North Lake Avenue,
Pasadena, California 91101. Share information is based on Schedule 13G
dated June 10, 1997.

36
<PAGE> 38

UNDERWRITING

Montgomery Securities, Smith Barney Inc., J.C. Bradford & Co. and Legacy
Securities Corp. (the "Underwriters"), have severally agreed, subject to the
terms and conditions contained in the Underwriting Agreement, to purchase from
the Company the number of shares of Common Stock indicated below opposite their
respective names, at the public offering price less the underwriting discount
set forth on the cover page of this Prospectus. The Underwriting Agreement
provides that the obligations of the Underwriters are subject to certain
conditions precedent and that the Underwriters are committed to purchase all of
the shares of Common Stock if they purchase any.

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITERS TO BE PURCHASED
- ------------ ----------------
<S> <C>
Montgomery Securities.......................................
Smith Barney Inc............................................
J.C. Bradford & Co..........................................
Legacy Securities Corp......................................
Total............................................. 3,000,000
=========
</TABLE>

The Underwriters have advised the Company that they propose initially to
offer the Common Stock to the public on the terms set forth on the cover page of
this Prospectus. The Underwriters may allow selected dealers a concession of not
more than $ per share, and the Underwriters may allow, and such dealers
may reallow, a concession of not more than $ per share to certain other
dealers. After the Offering, the offering price and other selling terms may be
changed by the Underwriters. The Common Stock is offered subject to receipt and
acceptance by the Underwriters and to certain other conditions, including the
right to reject orders in whole or in part.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 450,000 additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the initial 3,000,000 shares to be purchased by
the Underwriters. To the extent that the Underwriters exercise this option, each
of the Underwriters will be committed, subject to certain conditions, to
purchase such additional shares in approximately the same proportion as set
forth in the above table. The Underwriters may purchase such shares only to
cover over-allotments made in connection with the Offering.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including civil liabilities under the
Securities Act of 1933, as amended (the "Securities Act"), or will contribute to
payments the Underwriters may be required to make in respect thereof.

Each director and officer of the Company has agreed (except for shares
purchased in the public market), for a period of 90 days from the date of this
Prospectus, that they will not, directly or indirectly, offer to sell, sell,
contract to sell or otherwise sell or dispose of any shares of their Common
Stock or options or warrants to acquire shares of Common Stock without the
consent of Montgomery Securities. The Company has agreed not to sell any shares
of Common Stock for a period of 90 days from the date of this Prospectus without
the prior written consent of Montgomery Securities, except that the Company may,
without consent, issue shares of Common Stock upon exercise of outstanding stock
options and warrants.

The Underwriters have informed the Company that they do not intend to
confirm sales to accounts over which they exercise discretionary authority in
excess of five percent of the number of shares of Common Stock offered hereby.

In January 1996, Legacy Securities Corp. ("Legacy") agreed to provide
investment banking consulting services to the Company in connection with the IPO
and received a fee for such services in the amount of $100,000 upon the closing
of the IPO. In addition, affiliates of Legacy are developing several Suburban
Lodge hotels and have entered into a number of preliminary franchise agreements
and development agreements with the Company. As part of the Corporate
Organization, the Company acquired a Suburban Lodge hotel from the owners of
Legacy Lodging LLC for an aggregate of approximately 29,400 shares of Common
Stock. All of these shares were held in escrow until the Company obtained final
zoning approval on the site for such hotel. As of the date of this Prospectus,
Suburban and affiliates of Legacy are parties to three preliminary franchise

37
<PAGE> 39

agreements, one development agreement, and one franchise agreement with respect
to one of these properties. All of these agreements are in substantially the
same form as the other agreements described in this Prospectus. In addition, in
April 1997 Suburban and an affiliate of Legacy terminated one preliminary
franchise agreement and a related development agreement, without further
liability or obligation of either party to the other. See
"Business -- Franchise, Development and Management Agreements -- Development
Agreements."

Certain persons participating in the Offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market. Such transactions may include stabilizing bids, effecting syndicate
covering transactions or imposing penalty bids. A stabilizing bid means the
placing of any bid or effecting any purchase for the purpose of pegging, fixing
or maintaining the price of the Common Stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the Offering. A penalty bid means an arrangement that permits the Underwriters
to reclaim a selling concession from a syndicate member in connection with the
Offering when shares of Common Stock sold by the syndicate member are purchased
in syndicate covering transactions. Such transactions may be effected on The
Nasdaq Stock Market, in the over-the-counter market, or otherwise.

In connection with the Offering, the Underwriters may engage in passive
market making transactions in the Common Stock on The Nasdaq Stock Market
immediately prior to the commencement of sales in the Offering, in accordance
with Rule 103 of Regulation M under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Passive market making consists of displaying bids
on The Nasdaq Stock Market limited by the bid prices of independent market
makers and purchases limited by such prices and effected in response to order
flow. Net purchases by a passive market maker on each day are limited to a
specified percentage of the passive market maker's average daily trading volume
in the Common Stock during a specified prior period and must be discontinued
when such limit is reached. Passive market making may stabilize the market price
of the Common Stock at a level above that which might otherwise prevail and, if
commenced, may be discontinued at any time.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Kilpatrick Stockton LLP, Atlanta, Georgia. The validity
of the shares of Common Stock offered hereby will be passed upon for the
Underwriters by King & Spalding, Atlanta, Georgia.

EXPERTS

The Company's financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, the combined financial statement schedule of real estate
owned and accumulated depreciation incorporated by reference in this Prospectus
from the Company's Rule 424(b) prospectus dated November 20, 1996, and the
financial statements of Gulf Coast Associates, Ltd. for the year ended December
31, 1995, incorporated by reference in this Prospectus from the Company's Rule
424(b) prospectus dated November 20, 1996, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports incorporated herein
by reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. As used herein, the term "Registration Statement" means the initial

38
<PAGE> 40

Registration Statement and any and all amendments thereto. This Prospectus omits
certain information contained in said Registration Statement as permitted by the
rules and regulations of the Commission. For further information with respect to
the Company and the Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits thereto. Statements herein
concerning the contents of any contract or other document are not necessarily
complete and in each instance reference is made to such contract or other
document filed with the Commission as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Copies of such reports, proxy statements and
other information filed by the Company with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and
at the following regional offices of the Commission: 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, New York, New
York 10048. Copies of such materials can be obtained at prescribed rates from
the Public Reference Section of the Commission, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, or at the Commission web site at
http://www.sec.gov.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed by the Company with the Commission
pursuant to the Exchange Act are incorporated in this Prospectus by reference:

(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;

(b) The Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1997 (as amended) and June 30, 1997;

(d) The combined schedule of real estate owned and accumulated
depreciation and the financial statements of Gulf Coast Associates, Ltd.
contained in the Prospectus dated November 20, 1996, filed with the
Commission pursuant to Rule 424(b) under the Securities Act; and

(e) The description of the Company's Common Stock contained in the
Company's registration statement on Form 8-A filed under Section 12 of the
Exchange Act, dated March 28, 1996, including any amendment or report
updating such description.

In addition, all documents filed by the Company pursuant to sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the Offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents (such documents, and the documents enumerated above, being
hereinafter referred to as "Incorporated Documents"). Any statement contained
herein or in an Incorporated Document shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed Incorporated Document
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, including any beneficial owner, on the
written or oral request of any such person, a copy of any or all of the
Incorporated Documents, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference therein. Requests shall be
directed to Suburban Lodges of America, Inc., 1000 Parkwood Circle, Suite 850,
Atlanta, Georgia 30339, Attention: Mr. Terry Feldman (telephone number (770)
951-9511). The information relating to the Company contained in this Prospectus
does not purport to be comprehensive and should be read together with the
information contained in the Incorporated Documents.

39
<PAGE> 41
INSIDE BACK COVER

This page includes photos of the interior of a deluxe guest room and a
standard size guest room.
<PAGE> 42

======================================================

No dealer, salesperson or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus in connection with the offer made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or any Underwriter. This Prospectus does not constitute an offer
to sell or the solicitation of any offer to buy any security other than the
securities to which it relates or an offer to sell or the solicitation of an
offer to buy any securities offered hereby by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to any person to whom it
is unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, in any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof or that the information contained herein is correct as of any
date subsequent to the date hereof.

----------------------------

TABLE OF CONTENTS

----------------------------

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 9
Use of Proceeds....................... 15
Dividend Policy....................... 15
Price Range of Common Stock........... 16
Capitalization........................ 16
Selected Consolidated Historical
Financial Data...................... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 19
Business.............................. 24
Management............................ 34
Principal Shareholders................ 36
Underwriting.......................... 37
Legal Matters......................... 38
Experts............................... 38
Available Information................. 38
Incorporation of Certain Documents By
Reference........................... 39
</TABLE>

======================================================
======================================================
3,000,000 SHARES

[SUBURBAN LODGE LOGO]

SUBURBAN LODGES OF
AMERICA, INC.
COMMON STOCK
------------------------

PROSPECTUS

------------------------

MONTGOMERY SECURITIES

SMITH BARNEY INC.

J.C. BRADFORD & CO.

LEGACY SECURITIES CORP.
, 1997
======================================================
<PAGE> 43

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below is an estimate of the approximate amount of the fees and
expenses (other than underwriting commissions and discounts) payable by the
Registrant in connection with the issuance and distribution of the shares of
Common Stock.

<TABLE>
<S> <C>
Securities and Exchange Commission, Registration Fee........ $ 27,966
NASD Filing Fee............................................. 9,729
Printing and Mailing........................................ 100,000
Accounting Fees and Expenses................................ 75,000
Blue Sky Fees and Expenses.................................. 2,500
Counsel Fees and Expenses................................... 75,000
Miscellaneous............................................... 35,000
--------
Total............................................. $325,195
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The underwriting agreement provides for indemnification by the Underwriters
of the Company, and by the Company of the Underwriters, for certain liabilities,
including liabilities arising under the Securities Act of 1933 (the "Securities
Act"), and affords certain rights of contribution with respect thereto.

As provided under Georgia law, the Company's Amended and Restated Articles
of Incorporation provide that a director shall not be personally liable to the
Company or its shareholders for monetary damages for breach of duty of care or
any other duty owed to the Company as a director, except that such provisions
shall not limit the liability of a director (a) for any appropriation, in
violation of his duties, of any business opportunity of the Company; (b) for
acts or omissions which involve intentional misconduct or a knowing violation of
law; (c) for unlawful corporate distributions or (d) for any transactions from
which the director receives an improper benefit.

Under Article V of the Company's Bylaws, the Company is required to
indemnify its directors and officers to the fullest extent permitted by Georgia
law. The Georgia Business Corporation Code provides that a corporation may
indemnify its directors, officers and agents against judgments, fines,
penalties, amounts paid in settlement and expenses, including attorneys' fees,
resulting from various types of legal actions or proceedings if the actions of
the party being indemnified meet the standards of conduct specified therein.
Determinations concerning whether the applicable standard of conduct has been
met can be made by (a) a majority of the disinterested directors; (b) a majority
of a committee of disinterested directors; (c) independent legal counsel or (d)
an affirmative vote of a majority of shares held by the disinterested
shareholders. No indemnification may be made to or on behalf of a corporate
director, officer, employee or agent (i) in connection with a proceeding by or
in right of the Company in which such person was adjudged liable to the Company
or (ii) in connection with any other proceeding in which said person was
adjudged liable on the basis that personal benefit was improperly received by
him.

The Company has entered into Indemnity Agreements with certain of its
directors and officers (the "Indemnified Parties"). Under the terms of the
Indemnity Agreements, the Company is required to indemnify the Indemnified
Parties against certain liabilities arising out of their service for the
Company. The Indemnity Agreements require the Company (i) to indemnify each
Indemnified Party to the fullest extent permitted by law; (ii) to provide
coverage for each Indemnified Party under the Company's directors and officers
liability insurance policy and (iii) to advance certain expenses incurred by an
Indemnified Party. The Indemnity Agreements provide limitations on the
Indemnified Party's rights to indemnification in certain circumstances.

II-1
<PAGE> 44

The Company's directors and officers are insured against losses arising
from any claim against them as such for wrongful acts or omissions, subject to
certain limitations.

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---------- ----------------------
<C> <C> <S>
*****1.1 -- Form of Underwriting Agreement
*3.1 -- Amended and Restated Articles of Incorporation of the
Registrant
*3.2 -- Amended and Restated Bylaws of the Registrant
*4.1 -- Form of Common Stock Certificate of the Registrant
***5.1 -- Opinion of Kilpatrick Stockton LLP
*10.1 -- Form of Acquisition Agreement and Plan of Merger (with
accompanying schedule)
*10.2 -- Purchase and Sale Agreement by and among Suburban Holdings,
LP and Gulf Coast Associates, Ltd.
*10.3 -- Purchase and Sale Agreement by and between Suburban
Holdings, LP and Omnicorp Resources, Inc.
*10.4 -- Form of Agreement and Consent of Partners of each of the
Affiliated Entities and Third Party Sellers
*10.5 -- Suburban Lodges of America, Inc. Stock Option and Incentive
Award Plan
*10.6 -- Suburban Lodges of America, Inc. Non-Employee Directors'
Stock Option and Fee Plan
*10.7 -- Form of Indemnification Agreement between Suburban Lodges of
America, Inc. and its directors and officers
*10.8 -- Registration Rights Agreement among Suburban Lodges of
America, Inc. and Certain Shareholders
*10.9 -- Form of Franchise Agreement
*10.10 -- Form of Development and Design/Build Agreement
*10.11 -- Form of Management Agreement
*10.12 -- Management Agreement between Suburban Management, Inc. and
Gulf Coast Associates, Ltd.
*10.13 -- Consulting Agreement with Legacy Securities Corp.
*10.14 -- Acknowledgment and Agreement between Suburban Lodges of
America, Inc. and Young Consulting, Inc. re. Company's
proprietary computer software
*10.15 -- Suburban Lodge 401(k) Savings Plan
*10.16 -- Credit Agreement by and among Suburban Lodges of America,
Inc., the Guarantors identified therein, the Banks
identified therein and PNC Bank, Kentucky, Inc.
*10.17 -- Sublease between Suburban Lodges of America, Inc. and Omni
Insurance Company
**10.18 -- Purchase and Sale Agreement among the Registrant, Burson and
Simpson Lodge Development, Inc. and the parties named
therein.
**10.19 -- Registration Rights Agreement among the Registrant and
Certain Shareholders
*****10.20 -- Office Lease between the Registrant and Massachusetts Mutual
Life Insurance Company
*21.1 -- Subsidiaries of the Registrant
***23.1 -- Consent of Kilpatrick Stockton LLP (see Exhibit 5.1)
****23.2 -- Consent of Deloitte & Touche, L.L.P.
***24.1 -- Powers of Attorney (see Signature Page)
</TABLE>

- ---------------

* Incorporated herein by reference to the Registrant's Registration
Statement on Form S-1 (Registration No. 333-2876) under the Securities
Act, filed on May 23, 1996.
** Incorporated by reference to the Registrant's Current Report on Form 8-K,
filed on March 14, 1997, as amended.
*** Previously filed.
**** Filed herewith.
***** To be filed by amendment.

II-2
<PAGE> 45

ITEM 17. UNDERTAKINGS

The undersigned Company hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Company's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit, or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question as to whether such indemnification by it is against
public policy as expressed in the Securities Act, and will be governed by the
final adjudication of such issue.

The undersigned Company hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 46

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of
Atlanta, State of Georgia, on the 20th day of September, 1997.

SUBURBAN LODGES OF AMERICA, INC.

By: /s/ DAVID E. KRISCHER
------------------------------------
David E. Krischer
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons on
the 20th day of September, 1997, in the capacities indicated.

<TABLE>
<CAPTION>
SIGNATURE POSITION
--------- --------
<C> <S>

/s/ DAVID E. KRISCHER Chairman of the Board, Chief Executive
- ----------------------------------------------------- Officer, President and Director (Principal
David E. Krischer Executive Officer)

* Vice President -- Franchising and Director
- -----------------------------------------------------
Dan J. Berman

/s/ TERRY J. FELDMAN Vice President and Chief Financial Officer
- ----------------------------------------------------- (Principal Financial and Accounting Officer)
Terry J. Feldman

* Director
- -----------------------------------------------------
James R. Kuse

* Director
- -----------------------------------------------------
Michael McGovern

* Director
- -----------------------------------------------------
John W. Spiegel

*By: /s/ DAVID E. KRISCHER
- -----------------------------------------------------
as attorney-in-fact
</TABLE>

II-4

<PAGE> 1

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Amendment No. 1 to this
Registration Statement of Suburban Lodges of America, Inc. on Form S-3 of our
report dated February 21, 1997 (February 28, 1997 as to Note 13), appearing in
the Annual Report on Form 10-K of Suburban Lodges of America, Inc. for the year
ended December 31, 1996 and our report on the combined financial statement
schedule of real estate owned and accumulated depreciation of Suburban Lodges
of America, Inc. dated March 17, 1996 (May 29, 1996 as to Notes 1 and 11)
appearing in the Suburban Lodges of America, Inc. Rule 424(b) Prospectus dated
November 20, 1996, and to the reference to us under the headings "Selected
Financial Data" and "Experts" in the Prospectus, which is part of this
Registration Statement.

/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP

Atlanta, Georgia
September 22, 1997

<PAGE> 2

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration Statement of
Suburban Lodges of America, Inc. on Form S-3 of our report on the financial
statements of Gulf Coast Associates Ltd. d/b/a Suburban Lodge of Forest Park
dated March 26, 1996 (May 29, 1996 as to Note 8) appearing in the Suburban
Lodges of America, Inc. Rule 424(b) Prospectus dated November 20, 1996, and to
the reference to us under the heading "Experts" in the Prospectus, and the Rule
424(b) Prospectus dated November 20, 1996, which is part of this Registration
Statement.

/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP

Atlanta, Georgia
September 22, 1997