HUMPHREY HOSPITALITY TRUST INC, 10-Q/A, 1999-12-10

HUMPHREY HOSPITALITY TRUST INC
10-Q/A, 1999-12-10
REAL ESTATE INVESTMENT TRUSTS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A

(Mark One)

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly Period Ended September 30, 1999.

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.

Commission File Number: 0-25060

HUMPHREY HOSPITALITY TRUST, INC.
(Exact name of registrant as specified in its charter)

Virginia 52-1889548
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

12301 Old Columbia Pike, Silver Spring MD 20904
(Address of principal executive offices)
Telephone number: (301) 680-4343

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to such filing
requirements for the past ninety days:

Yes [x] No [ ]

As of November 30, 1999, there were 11,173,543 shares of common stock, par value
$.01 per share, outstanding.

<PAGE>
HUMPHREY HOSPITALITY TRUST, INC.

EXPLANATORY NOTE

On October 26, 1999, Humphrey Hospitality Trust Inc. ("HHTI") and Supertel
Hospitality, Inc. ("Supertel") consummated a Merger pursuant to which Supertel
was merged (the "Merger") with and into HHTI. As a result of the Merger and in
accordance with the provision of Accounting Principles Board Opinion No. 16,
"Business Combinations," Supertel will be considered the acquiring enterprise
for financial reporting purposes. Accordingly, Part I of this amended Form 10-
Q/A for the quarter ended September 30, 1999 presents Supertel's historical
financial information for that period. HHTI has voluntarily included its
historical financial and pro forma financial information for the quarter ended
September 30, 1999 under Item 5 of Part II of this report.

INDEX

<TABLE>
<CAPTION>
Page
Number
------
Part I. FINANCIAL INFORMATION

Item 1. SUPERTEL HOSPITALITY, INC.
--------------------------
<S> <C>
Consolidated Balance Sheets as of September 30, 1999 (Unaudited) 3
and December 31, 1998

Consolidated Statements of Income
for the three and nine months ended September 30, 1999 and 4
September 30, 1998 (Unaudited)

Consolidated Statements of Cash Flows for the nine months ended
September 30, 1999 and September 30, 1998 (Unaudited) 5

Notes to Consolidated Financial Statements (Unaudited) 6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of 8
Operations

Item 3(a). Quantitative and Qualitative Disclosures about Market Risk 11

Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information - Humphrey Hospitality Trust, Inc. and Humphrey Hospitality
Management, Inc. Financial Information 13

Item 6. Exhibits and Reports on Form 8-K 38

SIGNATURES 41

</TABLE>

2
<PAGE>

Part I. FINANCIAL INFORMATION
Item 1.

SUPERTEL HOSPITALITY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>

September 30, December 31,
ASSETS 1999 1998
-------------- -------------
(Unaudited)
<S> <C> <C>

Property and equipment, at cost $114,863,505 $113,530,994
Less accumulated depreciation (24,286,858) (22,122,750)
------------ ------------
Net property and equipment 90,576,647 91,408,244

Cash and cash equivalents 2,610,007 11,520,593
Accounts receivable 1,606,104 1,428,531
Prepaid expenses and other current assets 1,465,200 388,409
Other assets (net of accumulated amortization
of $1,451,937 and $1,300,288) 1,360,604 1,493,002
------------ ------------
Total assets $ 97,618,562 $106,238,779
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable $ 2,343,637 $ 1,370,408
Current income taxes payable 850,000 207,900
Accrued expenses 3,332,671 3,738,309
Deferred income taxes 1,197,964 926,075
Long-term debt 46,599,009 61,661,585
Other long-term liabilities 390,278 415,278
------------ ------------
Total liabilities 54,713,559 68,319,555
------------ ------------

Shareholders' equity:
Preferred stock, $1.00 par value. Authorized
1,000,000 shares; none issued -- --
Common stock, $0.01 par value. Authorized
10,000,000 shares; issued and outstanding
5,032,200 and 4,843,400 shares, respectively 50,322 48,434
Additional paid-in capital 20,329,917 18,387,933
Retained earnings 22,524,764 19,482,857
------------ ------------
Total shareholders' equity 42,905,003 37,919,224
------------ ------------
Total liabilities and shareholders' equity $ 97,618,562 $106,238,779
============ ============

</TABLE>

See accompanying notes to consolidated financial statements.

3
<PAGE>

SUPERTEL HOSPITALITY, INC. AND SUBSIDIARIES

Consolidated Statements of Income
(Unaudited)

Three Month Period Ended Nine Month Period Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>

Revenue:
Room revenue $14,446,101 $14,231,204 $38,720,898 $37,903,952
Other hotel revenue 421,542 425,741 1,234,627 1,194,653
----------- ----------- ----------- -----------
Total hotel revenue 14,867,643 14,656,945 39,955,525 39,098,605
----------- ----------- ----------- -----------
Other revenue 26,190 22,936 78,269 86,925
----------- ----------- ----------- -----------
Total revenue 14,893,833 14,679,881 40,033,794 39,185,530
----------- ----------- ----------- -----------

Expenses:
Hotel operating expenses:
Payroll and payroll taxes 3,654,147 3,413,176 10,324,164 9,325,077
Royalties and advertising fund 905,158 897,296 2,447,488 2,355,088
Other hotel operating expenses 3,964,968 3,950,741 11,140,732 10,787,863
----------- ----------- ----------- -----------
Total hotel operating expense 8,524,273 8,261,213 23,912,384 22,468,028
Interest expense 851,685 977,580 2,620,585 3,128,775
Depreciation and amortization 1,167,910 1,110,089 3,475,013 3,299,683
General and administrative 791,450 992,443 2,711,566 3,151,969
Loss on properties 1,323,710 13,311 1,377,733 54,831
----------- ----------- ----------- -----------
Total expenses 12,659,028 11,354,636 34,097,281 32,103,286
----------- ----------- ----------- -----------
Income before income taxes 2,234,805 3,325,245 5,936,513 7,082,244

Income tax expense 1,413,922 1,330,103 2,894,605 2,832,898
----------- ----------- ----------- -----------
Net income $ 820,883 $ 1,995,142 $ 3,041,908 $ 4,249,346
=========== =========== =========== ===========

Net income per share -basic and diluted $0.17 $0.41 $0.63 $0.88
=========== =========== =========== ===========

Weighted average shares outstanding
- Basic and diluted 4,847,728 4,842,140 4,844,858 4,840,730
=========== =========== =========== ===========

</TABLE>
See accompanying notes to consolidated financial statements.

4
<PAGE>

SUPERTEL HOSPITALITY, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>

Nine Months Ended
September 30,
-------------
1999 1998
---- ----
<S> <C> <C>

Cash flows from operating activities:
Net income $ 3,041,908 $ 4,249,346
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,475,013 3,299,683
Loss on properties 1,377,733 54,831
Deferred income taxes 271,889 218,700
Changes in assets and liabilities:
Accounts receivable (177,573) (324,063)
Prepaid expenses and other current assets (1,076,791) (452,219)
Accounts payable 973,229 577,628
Current income taxes payable 642,100 1,265,386
Accrued expenses and other liabilities (430,638) 807,486
------------ ------------

Net cash provided by operating activities 8,096,870 9,696,778
------------ ------------

Cash flows from investing activities:
Additions to property, equipment and other assets (3,913,592) (4,154,450)
Proceeds from sale of property and equipment 24,840 24,032
------------ ------------

Net cash used in investing activities (3,888,752) (4,130,418)
------------ ------------

Cash flows from financing activities:
Repayments of long-term debt (15,062,576) (41,907,873)
Proceeds from long-term debt -- 27,053,256
Proceeds from issuance of common stock 1,943,872 41,438
------------ ------------

Net cash used in financing activities (13,118,704) (14,813,179)
------------ ------------

Net decrease in cash and cash equivalents (8,910,586) (9,246,819)

Cash and cash equivalents at beginning of period 11,520,593 9,532,430
------------ ------------
Cash and cash equivalents at end of period $ 2,610,007 $ 285,611
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.

5
<PAGE>

SUPERTEL HOSPITALITY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(1) CONSOLIDATED FINANCIAL STATEMENTS

The consolidated balance sheet as of September 30, 1999 and the
consolidated statements of income and cash flows for the three-month and
nine-month periods ended September 30, 1999 and 1998 have been prepared by
Supertel Hospitality, Inc. ("Supertel"), without audit. In the opinion of
management, all necessary adjustments (which include normal recurring
adjustments) have been made to present fairly the financial position at
September 30, 1999 and the results of operations and cash flows for all
periods presented. Balance sheet data as of December 31, 1998 has been
derived from the audited consolidated financial statements as of that date.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto included in Supertel's Form 10-K Annual Report for the year
ended December 31, 1998. The results of operations for the three-month and
nine-month periods ended September 30, 1999 are not necessarily indicative
of the operating results for the full year.

(2) BUSINESS COMBINATION

On October 26, 1999, Humphrey Hospitality Trust, Inc. (HHTI) and Supertel
consummated the Merger pursuant to which HHTI exchanged 1.30 shares of its
common stock for each outstanding share of Supertel's common stock. As a
result of the Merger and in accordance with the provision of Accounting
Principles Board Opinion No. 16, "Business Combinations," Supertel will be
considered the acquiring enterprise for financial reporting purposes.
Accordingly, Part I of this amended Form 10-Q/A for the quarter ended
September 30, 1999 presents Supertel's historical financial information for
that period. The Merger agreement provided for the shareholders of
Supertel to receive a pre-closing dividend of Supertel's earnings and
profits. The earnings and profits dividend of $5.13 per share was paid to
Supertel shareholders on October 25, 1999. The boards and shareholders of
both companies approved the Merger.

The 63 hotels (containing 4,558 rooms) and one office building acquired by
HHTI under the Merger will be leased to a subsidiary of Humphrey
Hospitality Management, Inc. (the "Lessee"). The Lessee also leases and
manages 25 hotels owned by HHTI. After the Merger, HHTI will own 88 hotels
with approximately 6,200 rooms located in 19 states. The following pro
forma information for the nine months ended September 30, 1999 is presented
for informational purposes as if the Merger with Supertel had occurred on
January 1, 1998. See Item 5 of Part II of this report for additional pro
forma information.

Humphrey Hospitality Trust, Inc.
SELECTED PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
Nine months ended Nine months ended
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
Total Revenue $25,318,000 $23,218,000
Expenses 18,042,000 16,369,000
Minority Interest 521,000 494,000
----------- -----------

Net income $ 6,755,000 $ 6,355,000
=========== ===========
Earnings per common share - Basic $ 0.60 $ 0.59
=========== ===========
Earnings per common share - Diluted $ 0.60 $ 0.60
=========== ===========
</TABLE>

6
<PAGE>

SUPERTEL HOSPITALITY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(3) IMPAIRMENT OF LONG-LIVED ASSETS

Recoverability of assets to be held and used is measured by a comparison of
the carrying amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amounts of the assets exceed the fair value of the assets. Supertel
recognized an impairment of its Bullhead City, Arizona property and reduced
its value on the balance sheet and included in the loss on properties a
write down of $1,300,000 for both the three and nine month periods ended
September 30, 1999.

(4) STOCK OPTIONS

Supertel has a stock option plan under which trustees, officers and
employees may be granted awards of stock options. The purpose of the plan
is to provide equity-based incentive compensation based on the long-term
appreciation in value of Supertel's common stock. The Merger agreement
provided for the vesting of all outstanding options prior to the Merger.
As a result, a total of 188,300 options vested and were exercised with an
option price per share ranging from $8.50 to $13.75 and an average of
$10.47 per share. The options were exercised on September 29, 1999,
increasing shareholders equity by approximately $1,944,000. The option
prices were equal to the market prices at the date of grant and
accordingly, no compensation cost has been recognized for options in the
financial statements. Supertel applies APB Opinion No. 25 in accounting for
its plan and, accordingly, no compensation cost has been recognized for its
stock options in the consolidated financial statements. Had Supertel
determined compensation cost based on the fair value at the grant date for
its stock options under SFAS No. 123, Supertel's net income would not have
been changed materially for the period.

7
<PAGE>

Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements and information
relating to Supertel and HHTI that are based on the beliefs of Supertel's and
HHTI's management as well as assumptions made by and information currently
available to Supertel's management. Such statements reflect the current views
of Supertel with respect to future events and are subject to certain risks,
uncertainties and assumptions, including the business factors described in
Supertel's 1998 Form 10-K. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described herein as believed, estimated or
expected.

Recent Developments

On October 26, 1999, HHTI and Supertel consummated the Merger pursuant to which
HHTI exchanged 1.30 shares of its common stock for each share of Supertel's
common stock. The Merger agreement provided for the stockholders of Supertel to
receive a pre-closing dividend of Supertel's earnings and profits. The earnings
and profits dividend of $5.13 per share was paid to shareholders on October 25,
1999. The boards and shareholders of both companies approved the Merger. In
order to finance the earnings and profits dividend for the Merger, Supertel has
executed and closed loan agreements on October 25, 1999, which replaced all of
the debt presented on the balance sheet as of September 30, 1999 except for the
Bertha Wetzler note referenced below. As a result of the Merger, HHTI assumed
the debt described below. The following table presents a summary of terms for
the new loans.

Approximate
Loan Balance
At Closing Interest Maturity
<S> <C>
Lender 10/25/99 Rate Year Other information
- ----------------------------------- ----------- -------- -------- --------------------
US Bank Line of Credit $ 4,955,000 7.99% 2001 LIBOR + 175-225,
Fixed at 60,90,180 days
US Bank E&P Term loan $13,000,000 8.31% 2002 15 Year Amortization
US Bank Term loan $10,000,000 8.53% 2004 15 Year Amortization
First National Bank of Omaha $15,000,000 8.40% 2009 20 Year Amortization
Mercantile Bank $ 6,700,000 8.30% 2004 20 Year Amortization
Marquette Capital Bank, N.A. $26,000,000 8.69% 2000 25 Year Amortization
Bertha Wetzler $ 820,000 9.25% 2009

</TABLE>

8
<PAGE>
Continued

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

Results of Operations

For the Third Quarter and Nine Months Ended September 30, 1999 and 1998

Total hotel revenue for the third quarter was $14,867,643, an increase of
$210,698 or 1.44%, over total revenue of $14,656,945 for the third quarter of
1998. Total hotel revenue for the first nine months was $39,955,525, an
increase of $856,920 or 2.19% over the total revenue of $39,098,605 for the
first nine months of 1998. The increase for the third quarter was primarily due
to an increase of $214,897 in revenue from lodging operations and a decrease of
$4,199 from other lodging activities (which consist of telephone, vending, movie
revenue and other purchased services). The increase for the first nine months
was primarily due to an increase of $816,946 in revenue from lodging operations
and $39,974 from other lodging activities.

The increase in revenue from lodging operations for the third quarter resulted
primarily from the addition of the Neosho, MO property in August 1998 and the
rooms added to the Creston, IA property in March 1999. Room revenues increased
from renting 302,492 rooms at increased rates in 1999 compared to 304,927 rooms
at lower rates in the third quarter of 1998. The increase in revenues from
lodging operations for the first nine months resulted primarily from the
addition of the Neosho, MO property in August 1998 and the rooms added to the
Creston, IA property in March 1999. Room revenues increased from renting
831,614 rooms at increased rates in 1999 compared to 832,542 rooms rented at
lower rates in the first nine months of 1998.

Revenue was impacted by an increase in the average daily room rate in the third
quarter of 1999. An average daily room rate of $49.15 was achieved compared to
$48.07 for the third quarter of 1998, an increase of $1.08 or 2.2%. For the
first nine months, the average daily room rate was $48.05 in 1999 compared to
$46.96 for the first nine months of 1998, an increase of $1.09 or 2.3%.

Revenue per available room for the third quarter of 1999 decreased to $35.49
from $35.54, a decrease of $0.05 or .1%. Revenue per available room for the
first nine months of 1999 increased to $32.19 from $32.09, an increase of $0.10
or .3%.

Occupancy as a percentage of rooms available for the third quarter of 1999 was
72.2% versus 73.9% for the same period in 1998. Occupancy as a percentage of
rooms available for the first nine months of 1999 was 67.0% versus 68.3% for the
same period in 1998. There was only one unseasoned property at the end of the
third quarter of 1999.

Hotel operating expenses for the third quarter of 1999 were $8,524,273 compared
to $8,261,213 for the third quarter of 1998, an increase of $263,060. Hotel
operating expenses for the first nine months of 1999 were $23,912,384 compared
to $22,468,028 for the first nine months of 1998, and increase of $1,444,356.
The increase in hotel operating expense for the first nine months of 1999 was
due in part to the increase in the payroll and payroll tax expenses. The
increase in payroll and payroll taxes expense resulted from wage rate pressure
and an increase in hours worked attributed to employee turnover.

Interest expense decreased by $125,895 or for the third quarter of 1999 from
$977,580 for the third quarter of 1998 to $851,685 in 1999. Interest expense
decreased by $508,190 for the first nine months of 1999 from $3,128,775 in 1998
to $2,620,585 in 1998. The decrease was primarily due to using cash flow from
operations to pay down debt.

<PAGE>

Continued

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

Depreciation and amortization expenses for the third quarter of 1999 were
$1,167,910 compared to $1,110,089 for the third quarter of 1998, an increase of
$57,821. Depreciation and amortization expenses for the first nine months of
1999 were $3,475,013 compared to $3,299,683 for the first nine months of 1998,
an increase of $175,330. The increase in depreciation expense for the third
quarter and nine months ended September 30, 1999 as compared to the
corresponding periods in 1998 is due to the opening of the Creston, IA addition.

General and administrative expenses for the third quarter of 1999 were $791,450
compared to $992,443 for the third quarter of 1998, a decrease of $200,993.
General and administrative expenses for the first nine months of 1999 were
$2,711,566 compared to $3,151,969 for the first nine months of 1998, a decrease
of $440,403. The decrease is due to a reduced bonus compensation accrual as a
result of not reaching certain performance goals in the third quarter and first
nine months of 1999.

Loss on properties was recorded for the three and nine months ended September
30, 1999 and September 30, 1998. For the three and nine months ended September
30, 1999 a $1,300,000 loss on properties was recognized as an impairment of fair
value of the property in Bullhead City, AZ. The balance of loss on properties
for the three and nine months ended September 30, 1999 and September 30, 1998
was a result of losses on sales of property assets.

As a result of the aforementioned operating factors and general business
conditions, net income for the third quarter of 1999 was $820,883 or $.17 per
share versus net income of $1,995,142 or $.41 per share for the corresponding
period in 1998.

Net income for the nine months of 1999 was $3,041,908 or $.63 per share versus
net income of $4,249,346 or $.88 per share, for the corresponding period in
1998.

Liquidity and Capital Resources

Supertel's growth has been financed through a combination of cash provided from
operations and long-term debt financing. Cash provided from operations was
approximately $8,097,000 for the first nine months of 1999 and $9,697,000 for
the first nine months of 1998. Supertel requires capital principally for the
construction, acquisition and improvement of lodging facilities. Capital
expenditures for such purposes were approximately $3,914,000 in the first nine
months of 1999 and approximately $4,154,000 in the first nine months of 1998.

Long-term debt was $46,599,009 at September 30, 1999 and $61,661,585 at December
31, 1998. Supertel's current installments of long-term debt were $2,133,486 at
September 30, 1999 and $2,437,936 at December 31, 1998. Supertel's loan
agreements contain certain restrictions and covenants related to, among other
things, minimum debt service, maximum debt per motel room, and maximum debt to
tangible net worth. At September 30, 1999, Supertel was in compliance with these
covenants. For a description of the new Merger financing please refer to the
recent developments section.

Supertel plans to renovate, construct, and acquire motel rooms in 1999 and after
the Merger in 2000. Supertel believes that a combination of cash flow from
operations, borrowing available under its line of credit, securing new short and
long-term facilities and the ability to leverage unencumbered properties will be
sufficient to fund scheduled development, acquisitions and debt repayment.

<PAGE>

Continued

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

Year 2000

In 1998, Supertel began preparing its computer-based systems for Year 2000
("Y2K") computer software compliance issues. Historically, certain computer
programs were written using two digits rather than four to define the applicable
year. As a result, software may recognize a date using the two digits "00" as
1900 rather than the year 2000. Computer programs that do not recognize the
proper date could generate erroneous data or cause systems to fail. Supertel's
Y2K project covers both traditional computer systems and infrastructure ("IT
Systems") and computer based hardware and software, facilities, and equipment
("Non-IT Systems").

Supertel has completed an assessment of its IT and Non-IT Systems and has
replaced all non-compliant systems. Approximately 100% of the systems are
believed to be compliant. Supertel does not have any material suppliers or
customers and the Y2K non-compliance of any particular supplier should not
materially affect Supertel.

In response to the Year 2000 issue, HHTI modified its existing information
systems during 1998 to make them year 2000 compliant. HHTI believes it has made
all necessary modifications to its existing systems and does not expect that
additional costs associated with Year 2000 compliance, if any, will be material
to the HHTI's results of operations or financial condition.

Because of the interdependence of information systems today, Year 2000 compliant
companies may be affected by the Year 2000 readiness of their material
suppliers, customers and other third parties, including the Lessee. The Lessee
has completed an assessment of its information systems and has replaced
noncompliant systems.

HHTI does not have any material suppliers or customers, however, as part of
HHTI's evaluation of the Year 2000 readiness of the Lessee, HHTI has required
that the Lessee obtain written assurances from its material suppliers and third
party vendors that they have Year 2000 readiness programs in place as well as an
affirmation that they will be compliant when necessary. Responses to these
inquiries are currently being gathered and reviewed. To date, no such parties
have informed the Lessee that they do not expect to be Year 2000 compliant in a
timeframe that would expose the Lessee and, therefore, HHTI to material business
risks.

While HHTI believes its efforts are adequate to address its Year 2000 concerns,
HHTI could experience a material adverse effect on its results of operations and
financial condition if the Lessee encounters serious problems in its Year 2000
remediation efforts. Therefore, HHTI and the Lessee have developed plans to
address such contingencies. Such contingency plan includes, among other things,
the development of back-up procedures.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS #133). In 1999, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 137, which deferred
the effective date of SFAS #133 until fiscal years beginning after June 2000.
Management does not believe adoption of SFAS #133 will have a material impact on
Supertel's financial position, results of operations or cash flows.

Item 3 (a). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There has been no material change in Supertel's interest rate exposure
subsequent to December 31, 1998.

<PAGE>

Part II. OTHER INFORMATION

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

A special meeting of the stockholders of Supertel Hospitality Inc. was held at
the DoubleTree Hotel in Omaha, Nebraska commencing at 11:00 a.m. on September
27, 1999. The stockholders approved and adopted the Agreement and Plan of
Merger between Supertel and HHTI. Voting on the matter was as follows:

1. Approval and adoption of the Agreement and Plan of Merger between
Supertel and HHTI:

FOR ....................................... 3,713,584
AGAINST .................................... 200,045
ABSTAIN...................................... 500

The Annual Meeting of Shareholders of HHTI was held at the Omni Richmond Hotel,
100 South 12th Street, Richmond, Virginia, at 10:00 a.m. on Monday, September
27, 1999. The meeting was adjourned and then reconvened at HHTI's headquarters
in Silver Spring, Maryland at 10:00 a.m. on Tuesday, October 5, 1999. Holders
of record of 4,171,765 shares of HHTI's common stock were present in person or
by proxy at the meeting out of a total of 4,631,700 shares outstanding on August
2, 1999, the record date for meeting. Voting results were as follows:

1. The vote taken on the proposal to approve the Agreement and Plan of Merger
dated June 11, 1999 between Supertel Hospitality, Inc. and Humphrey Hospitality
Trust, Inc., and the issuance of shares of Humphrey Hospitality Common Stock in
connection with the Merger, was as follows:
<TABLE>
<CAPTION>

<S> <C>
FOR 3,344,675
AGAINST 46,130
ABSTAIN 24,700
BROKER NON-VOTE 756,260

2. The vote for election of Directors of HHTI was as follows:

FOR WITHHOLD

James I. Humphrey, Jr. 4,119,697 52,068
Margaret Allen 4,146,547 25,218
Jeffrey Zwerdling 4,147,747 24,018
George R. Whittemore 4,130,547 41,218
Dr. Leah T. Robinson 4,147,097 24,668
Andrew A. Mayer, M.D. 4,147,147 24,618

3. The vote taken of the proposal to ratify the appointment of Reznick
Fedder & Silverman as independent auditors was as follows:

FOR 4,151,946
AGAINST 12,214
ABSTAIN 7,605

</TABLE>

12
<PAGE>

Item 5. OTHER INFORMATION. - HUMPHREY HOSPITALITY TRUST, INC. HISTORICAL
AND PRO FORMA FINANCIAL INFORMATION FOR THE SEPTEMBER 30, 1999 QUARTER.

On October 26, 1999, HHTI and Supertel consummated the Merger. As a result of
the Merger and in accordance with the provision of Accounting Principles Board
Opinion No. 16, "Business Combinations," Supertel will be considered the
acquiring enterprise for financial reporting purposes. Accordingly, Part I of
this amended Form 10-Q/A for the quarter ended September 30, 1999 presents
Supertel's historical financial information for that period. As a supplement to
the financial information presented in the amended Form 10-Q/A, HHTI has
voluntarily included this historical information for the quarter ended September
30, 1999 for HHTI and Humphrey Hospitality Management, Inc. ("HHMI") and pro
forma financial information for the combined companies.

13
<PAGE>

<PAGE>

Humphrey Hospitality Trust, Inc. Financial Information
For the Quarter ended September 30, 1999.

Index
<TABLE>
<CAPTION>
Page Number
-----------
HUMPHREY HOSPITALITY TRUST, INC.
- --------------------------------

<S> <C>
Consolidated Balance Sheets as of September 30, 1999 (unaudited) and December 31, 1998 15
Consolidated Statements of Operations (unaudited)
for the three and nine months ended September 30, 1999 and September 30, 1998 16
Consolidated Statements of Cash Flows (unaudited)
for the three and nine months ended September 30, 1999 and September 30, 1998 17
Notes to Consolidated Financial Statements (unaudited) 19

HUMPHREY HOSPITALITY MANAGEMENT, INC.
- ------------------------------------

Balance Sheets as of September 30, 1999 (unaudited) and December 31, 1998 21
Summary Statements of Operations (unaudited)
for the three and nine months ended September 30, 1999 and September 30, 1998 22
Statement of Cash Flows (unaudited)
for the three and nine months ended September 30, 1999 and September 30, 1998 23
Notes to Financial Statements (unaudited) 24

Management's Discussion and Analysis of Financial Condition and Results of Operations 25

HUMPHREY HOSPITALITY TRUST, INC. SELECTED PRO FORMA DATA 29
- ----------------------------------------------------------

</TABLE>
14
<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
As of
September 30, 1999 December 31, 1998
-------------------- --------------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS

Investment in hotel properties, net of accumulated depreciation $71,158,483 $72,804,561
Cash and cash equivalents 306,318 541,864
Note receivable 268,348 --
Accounts receivable from Lessee 2,257,775 3,024,585
Deferred expenses, net of accumulated amortization 1,364,476 1,778,083
Other assets 1,337,125 695,197
----------- -----------

Total assets $76,692,525 $78,844,290
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Mortgage notes and bonds payable $43,178,072 $44,195,724
Dividends payable 412,500 412,500
Obligations under capital leases 33,131 --
Accounts payable and accrued expenses 1,021,392 914,946
Due to affiliates 436,898 405,765
----------- -----------

Total liabilities 45,081,993 45,928,935
----------- -----------

Minority interest 4,991,375 5,197,334
----------- -----------

COMMITMENTS AND CONTINGENCIES -- --

SHAREHOLDERS' EQUITY

Preferred stock, $.01 par value, 10,000,000 shares
authorized, no shares issued and outstanding -- --
Common stock. $.01 par value, 25,000,000 shares
authorized, 4,631,700 shares issued and outstanding 46,317 46,317
Additional paid-in capital 29,039,282 29,039,282
Distributions in excess of net earnings (2,466,442) (1,367,578)
----------- -----------

26,619,232 27,718,021
----------- -----------

Total liabilities and shareholders' equity $76,692,525 $78,844,290
=========== ===========
</TABLE>

See notes to consolidated financial statements.
15
<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPEMBER 30, 1999 AND SEPTEMBER 30, 1998
(Unaudited)

<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,

1999 1998 1999 1998
-------------------- ------------------ -------------------- --------------------
<S> <C> <C> <C> <C>
Revenue
Percentage lease revenue $3,176,221 $3,011,329 $9,216,454 $7,270,056
Other revenue 9,051 13,526 22,165 20,883
---------- ---------- ---------- ----------

Total revenue 3,185,272 3,024,855 9,238,619 7,290,939
---------- ---------- ---------- ----------

Expenses
Interest 935,691 839,201 3,106,596 2,050,089
Property operating expenses 267,338 243,919 786,020 589,874
General and administrative 85,743 182,419 309,187 432,108
Depreciation and amortization 882,701 685,548 2,547,006 1,736,092
---------- ---------- ---------- ----------

Total expenses 2,171,473 1,951,087 6,748,809 4,808,163
---------- ---------- ---------- ----------

Income from operations 1,013,799 1,073,768 2,489,810 2,482,776

Gain (loss) on sale of asset (3,643) (15,804) (82,130) 179,197

Income allocated to minority interest (159,477) (154,674) (380,146) (384,001)
---------- ---------- ---------- ----------

Net income $ 850,679 $ 903,290 $2,027,534 $2,277,972
========== ========== ========== ==========

Basic earnings per common share $0.18 $0.20 $0.44 $0.55
========== ========== ========== ==========

Diluted earnings per common share $0.18 $0.19 $0.44 $0.55
========== ========== ========== ==========

Weighted average shares :
Basic 4,631,700 4,631,700 4,631,700 4,143,055
Diluted 5,500,004(2) 5,448,176(1) 5,500,004(2) 4,863,789(3)
</TABLE>
__________
(1) Includes 816,476 units, which are redeemable on a one-for-one basis for
shares of common stock.
(2) Includes 868,304 units, which are redeemable on a one-for-one basis for
shares of common stock.
(3) Includes 720,734 units, which are redeemable on a one-for-one basis for
shares of common stock

See notes to consolidated financial statements.
16
<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998
(UNAUDITED)

<TABLE>
<CAPTION>
1999 1998
---------------------- ---------------------
Cash flows from operating activities
<S> <C> <C>
Net income $ 2,027,534 $ 2,277,972
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 2,547,006 1,736,092
Amortization of financing costs 485,484 114,361
Income allocated to minority interest 380,146 384,001
Loss (gain) on sale of asset 82,130 (179,197)
Changes in assets and liabilities
Decrease (increase) in accounts receivable from 766,810 (331,029)
Lessee
Increase in other assets (573,719) (136,917)
Increase in note receivable (268,348) --
Write-off of loan costs -- (8,327)
Franchise costs paid -- (249,500)
Increase in accounts payable and accrued expenses 189,473 837,066
----------- ------------
Net cash provided by operating activities 5,636,516 4,444,522
----------- ------------

Cash flows from investing activities
Investment in hotel properties (2,445,791) (23,845,039)
Proceeds from sale of hotel property 1,390,856 1,441,799
Deposits to replacement reserve (1,884,400) (914,050)
Withdrawals from replacement reserve 1,816,192 805,164
----------- ------------
Net cash used in investing activities (1,123,143) (22,512,126)
----------- ------------
Cash flows from financing activities
Proceeds from mortgages payable 6,211,151 --
Principal payments on long-term debt (89,621) (55,318)
Draw on line of credit 4,047,566 25,519,084
Paydown on line of credit (6,637,749) (15,055,862)
Repayment on line of credit (4,549,000) --
Net proceeds from issuance of stock -- 10,799,407
Distributions paid to operating partnership unit holders (586,105) (468,946)
Dividends paid (3,126,398) (2,754,572)
Principal payments on capital leases (18,763) (34,184)
----------- ------------
Net cash (used in) provided by financing activities (4,748,919) 17,949,609
----------- ------------
Net decrease in cash and cash equivalents (235,546) (117,995)
Cash and cash equivalents, beginning of period 541,864 204,065
----------- ------------
Cash and cash equivalents, end of period $ 306,318 $ 86,070
=========== ============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 2,774,044 $ 1,853,198
=========== ============
</TABLE>
17
<PAGE>

Supplemental disclosure of non-cash investing and financing activities: During
1999, the Company acquired $51,894 of equipment subject to capital leases.

During 1999, the Company received a note receivable in the amount of $250,000 in
connection with the sale of hotel assets.

See notes to consolidated financial statements.

18
<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999

Note 1. Organization and Summary of Significant Accounting Policies

Humphrey Hospitality Trust, Inc. was incorporated under the laws of the
Commonwealth of Virginia on August 23, 1994. The Company is a self-administered
real estate investment trust ("REIT") for federal income tax purposes. Humphrey
Hospitality Trust, Inc., through its wholly-owned subsidiary Humphrey
Hospitality REIT Trust (collectively, the "HHTI") owns a controlling partnership
interest in Humphrey Hospitality Limited Partnership (the "Partnership") and
through the Partnership owns interests in twenty-five existing limited-service
hotels. The Partnership owns a 99% general partnership interest and HHTI owns a
1% limited partnership interest in Solomons Beacon Inn Limited Partnership (the
"Subsidiary Partnership"). As of September 30, 1999, HHTI owns an 84.21%
interest in the Partnership. HHTI began operations on November 29, 1994.

Since inception, the Partnership has leased all of its hotel facilities to
Humphrey Hospitality Management, Inc. (the "Lessee"), a corporation majority
owned by James I. Humphrey, Jr., the President and Vice Chairman of the Board of
HHTI. The Lessee operates and leases the hotel properties pursuant to separate
percentage lease agreements (the "Percentage Leases"), which provide for both
fixed rents and percentage rents based on the revenues of the hotels.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and, accordingly, do not include
all of the disclosures normally required by generally accepted accounting
principles or those made in the HHTI Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The financial information has been prepared
in accordance with HHTI's customary accounting practices. In the opinion of
management, the information presented reflects all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation of
HHTI's financial position as of September 30, 1999, and the results of
operations for the three and nine months ended September 30, 1999 and September
30, 1998. The results of operations for the three and nine months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999. The unaudited consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and footnotes thereto included in HHTI's Annual Report on
Form 10-K for the year ended December 31, 1998.

Deferred financing costs, franchise taxes & license fees

HHTI has changed its reporting of amortization of deferred finance costs.
During the three and six month periods ended June 30, 1999 and previously, the
amortization of deferred financing costs was reported in the depreciation and
amortization expense line in the consolidated statements of operations. In the
three and nine month periods ended September 30 1999, HHTI began reporting the
amortization of deferred financing costs in the interest expense line in the
consolidated statement of operations. The comparative prior year interest and
depreciation and amortization expense amounts have been reclassified to reflect
this change.

19
<PAGE>

HHTI has changed its reporting of franchise taxes and license fees. During
the three and six month periods ended June 30, 1999 and previously, franchise
taxes and license fees expenses were reported in the general & administrative
expense line in the consolidated statements of operations. In the three and nine
month periods ended September 30 1999, HHTI began reporting franchise taxes and
license fees expenses in the property operating expense line in the consolidated
statement of operations. The comparative prior year general and administrative
and property operating expense amounts have been reclassified to reflect this
change.

Note 2. Merger Information

On October 26, 1999, HHTI announced completed the Merger with Supertel.
Supertel owned and operated limited service hotel properties under the Super 8,
Comfort Inn and Wingate Inn names located primarily in the Midwest and Texas.
Under the Merger agreement, HHTI exchanged 1.30 shares of HHTI common stock for
each share of Supertel common stock. The boards and shareholders of both
companies approved the Merger.

The Merger agreement provided for the stockholders of Supertel to receive a
pre-closing dividend of Supertel's earnings and profits, which Supertel paid
$5.13 per share on October 25, 1999 to each shareholder. Under the Merger
agreement, HHTI acquired the hotel assets of Supertel. The 63 hotels (containing
4,558 rooms) and one office building acquired by HHTI under the Merger will be
leased to a subsidiary of Humphrey Hospitality Management, Inc., Supertel
Hospitality Management, Inc. Humphrey Hospitality Management, Inc. also leases
and manages 25 hotels owned by the Company.

<PAGE>

HUMPHREY HOSPITALITY MANAGEMENT, INC.

BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- -----------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS

CURRENT ASSETS

Cash and cash equivalents $3,006,404 $3,262,524
Accounts receivable 272,945 389,536
Prepaid expenses 99,290 41,095
Due from affiliates 436,898 405,765
Other assets 64,930 71,973
---------- ----------
Total current assets $3,880,467 $4,170,893
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable $ 632,926 $ 426,685
Accrued expenses 480,135 465,666
Advance deposit 17,421 24,669
Prepaid slip rental 53,293 32,817
Due to affiliates 2,257,775 3,024,324
---------- ----------
Total current liabilities 3,441,550 3,974,161
---------- ----------

COMMITMENTS -- --

SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 1,000 shares authorized,
134 and 100 shares, issued and outstanding 1 1
Paid-in capital 50,369 --
Retained earnings 428,547 196,731
---------- ----------
478,917 196,732
Less: Note receivable - shareholder (40,000) --
---------- ----------
Total shareholders' equity 438,917 196,732
---------- ----------

Total liabilities and shareholders' equity $4,188,171 $4,170,893
========== ==========
</TABLE>

See notes to financial statements.

21
<PAGE>

HUMPHREY HOSPITALITY MANAGEMENT, INC.

STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------------------- -------------------------------------
1997 1998 1999 1998
------------ ------------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Revenue
Room revenue $7,431,594 $6,966,561 $20,590,830 $16,042,206
Telephone revenue 106,737 105,481 327,911 263,114
Slip revenue 78,095 81,771 227,269 244,017
Interest revenue 18,802 22,877 44,309 48,001
Other revenue 126,063 112,293 442,168 347,222
---------- ---------- ----------- -----------

Total revenue 7,761,291 7,288,983 21,632,487 16,944,560
---------- ---------- ----------- -----------
Expenses
Salaries and wages 1,886,095 1,595,471 5,282,192 3,968,474
Room expense 479,793 408,401 1,375,752 919,553
Telephone 99,626 91,494 322,390 242,856
Marina expense 7,768 10,739 25,841 26,435
General and administrative 447,479 355,147 1,196,683 844,934
Marketing and promotion 292,245 266,948 792,323 631,195
Utilities 360,480 332,943 992,078 798,841
Repairs and maintenance 148,332 156,141 523,462 396,247
Taxes and insurance 65,686 113,434 243,345 271,445
Franchise fees 424,799 416,949 1,083,780 878,559
Lease payments 3,291,678 3,011,329 9,562,825 7,270,055
---------- ---------- ----------- -----------
Total expenses 7,503,981 6,758,996 21,400,671 16,248,594
---------- ---------- ----------- -----------

Net income $ 257,310 $ 529,987 $ 231,816 $ 695,966
========== ========== =========== ===========
</TABLE>

See notes to financial statements.

22
<PAGE>

HUMPHREY HOSPITALITY MANAGEMENT, INC.

STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND SEPEMBER 30, 1998

<TABLE>
<CAPTION>
1999 1998
-------------------- ----------------
Cash flows from operating activities

<S> <C> <C>
Net income $ 231,816 $ 695,966
Adjustments to reconcile net income to net cash
(used in) provided by operating activities
Changes in assets and liabilities
Decrease (increase) in accounts receivable 116,591 (442,098)
Increase in prepaid expenses (58,195) (4,810)
Decrease in other assets 7,043 5,914
Increase in accounts payable 206,241 136,918
Increase in prepaid slip rentals 20,476 --
(Decrease) increase in due to affiliates (797,682) 331,032
Increase in accrued expenses 14,469 153,089
(Decrease) increase in advance deposits (7,248) 5,362
---------- ----------

Net cash (used in) provided by operating activities (266,489) 881,373
---------- ----------

Cash flows from financing activities

Issuance of common stock 10,369 --
Distributions paid -- (90,000)
Advance from shareholder 400,000(a) 200,000
Repayment of advance from shareholder (400,000)(a) (200,000)
----------- ----------

Net cash provided by (used in) financing activities 10,369 (90,000)
---------- ----------

Net (decrease) increase in cash and
cash equivalents (256,120) 791,373

Cash and cash equivalents, beginning of period 3,262,524 2,483,403
---------- ----------

Cash and cash equivalents, end of period $3,006,404 $3,274,776
========== ==========
</TABLE>
- --------------------
(a) Mr. Humphrey provided a $400,000 line of credit to the Lessee in
January 1999, at an interest rate equal to the prime rate plus 25 basis points.
The line of credit was repaid to Mr. Humphrey in April 1999.

See notes to financial statements.

23
<PAGE>

HUMPHREY HOSPITALITY MANAGEMENT, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 1999

Note 1. Organization and Summary of Significant Accounting Policies

Humphrey Hospitality Management, Inc. (the "Lessee") was incorporated under
the laws of the State of Maryland on August 18, 1994 to lease and operate hotel
properties from Humphrey Hospitality Limited Partnership. As of December 31,
1998, James I. Humphrey, Jr. was the sole shareholder of the Lessee. On June 1,
1999, the Lessee sold shares of stock to certain of its officers, constituting a
25% interest in the company, in exchange for $10,369 in cash and a $40,000 note
receivable.

Basis of Presentation

The accompanying financial statements have been prepared in accordance with
the instructions to Form 10-Q and accordingly, do not include all of the
disclosures normally required by generally accepted accounting principles. The
financial information has been prepared in accordance with the Lessee's
customary accounting practices. In the opinion of management, the information
presented reflects all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the Lessee's financial position
as of September 30, 1999, and the results of operations for the three and nine
months ended September 30, 1999 and September 30, 1998. The results of
operations for the three and nine months ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999. The unaudited financial statements should be read in
conjunction with the audited financial statements and footnotes thereto included
in Humphrey Hospitality Trust, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1998.

Accounts Receivable

The Lessee typically considers accounts receivable to be fully collectible
although an allowance for doubtful accounts is sometimes required. If amounts
become uncollectible, they will be charged to operations when that determination
is made.

Income Taxes

The Lessee has elected to be treated as an S Corporation for federal and
state income tax purposes. Therefore, no provision or benefit for income taxes
has been included in these financial statements since taxable income or loss
passes through to, and is reportable by, the shareholders individually.

Lease Expense

Lease expense is recognized when accrued under the lease agreements from
the date of acquisition of each hotel property. Contingent lease expense is
accrued based on the probability of the future revenue target being achieved, in
accordance with Emerging Issues Task Force ("EITF") 98-9.

24
<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.

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

This report on Form 10-Q may include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are identified by phrases such
as HHTI "expects" or "anticipates" and words of similar import. HHTI's actual
results may differ materially from those projected. Factors that could cause
such differences include difficulties in integrating and operating acquired
properties; termination of franchise agreements; default of the Lessee under
operating leases; and general risks associated with investments in real estate,
including the effect of changes in economic, competitive and other market
conditions in the markets where the Company's properties are concentrated, the
inability of properties to generate adequate cash flow to fund debt service and
operating expenses, financing and refinancing risks related to HHTI's floating
rate debt and new debt necessary to support growth. HHTI cautions readers not to
place undue reliance on any such forward-looking statements, which statements
are made pursuant to the Private Securities Litigation Reform Act of 1995.

HHTI is a Virginia corporation that operates as a real estate investment
trust (a "REIT") under the Internal Revenue Code of 1986, as amended (the
"Code"). HHTI through Humphrey Hospitality REIT Trust, HHTI's wholly-owned
subsidiary, is the sole general partner of Humphrey Hospitality Limited
Partnership (the "Partnership") and owns an 84.21% interest in the Partnership
at September 30, 1999. As of September 30, 1999, the Partnership owned directly
or indirectly twenty-five hotel properties (the "Hotels").

In order for HHTI to qualify as a REIT under the Code, neither HHTI nor the
Partnership can operate hotels. Therefore, the Partnership leases the Hotels
pursuant to Percentage Leases (the "Leases") to Humphrey Hospitality Management,
Inc. (the "Lessee"), which is substantially owned by James I. Humphrey, a
limited partner in the Partnership and Chairman of the Board of Directors and
President of the Company. The Partnership's, and therefore HHTI's principal
source of revenue is lease payments by the Lessee under the Percentage Leases.
The Lessee's ability to make payments to the Partnership under the Leases is
dependent on its ability to generate cash flow from the operation of the Hotels.

RESULTS OF OPERATIONS

Three months ended September 30, 1999 compared to the three months ended
September 30, 1998

HHTI's total revenues for the three month period ended September 30, 1999,
substantially consisted of Lease revenue recognized pursuant to the Leases. The
Company's revenue during the three month period ended September 30, 1999 was
$3,185,272 an increase of $160,417, or 5%, as compared to revenue of $3,024,855
for the same period during 1998. The improvement in revenues is primarily
attributable to additional Lease revenue derived from the increase, through
acquisitions, in the total number of Hotels. Net income declined by $52,611, or
6% to $850,679, for the three months ended September 30, 1999, as compared to
net income of $903,290 for the same period during 1998. The decline is a result
of additional interest and depreciation and amortization expense, associated
with the financing and acquisition of new Hotels. Depreciation expense also
increased due to over $1 million of capital improvements during 1999.

25
<PAGE>

The Lessee's room revenue from the Hotels increased by $465,033, or 7%, to
$7,431,594 for the three months ended September 30, 1999, as compared to
$6,966,561 of room revenue for the same period of 1998. The improvement in
revenues is primarily attributable to the increase in the total number of Hotels
leased. The average daily rate of the Hotels increased to $62.42 for the three
months ended September 30, 1999, as compared to the pro forma average daily rate
of $60.28 for the same period of 1998. Revenue per available room ("Revpar") was
$47.87 for the three months ended September 30, 1999 as compared to pro forma
Revpar of $46.56 for the same period of 1998, an increase of 3%. Lessee
operating expenses increased by $744,985, or 11% primarily as the result of the
increased number of Hotels under management, to $7,503,981 for the three months
ended September 30, 1999, as compared to $6,758,996 for the same period of 1998.
The net income for the three months ended September 30, 1999 was $257,310 as
compared to a net income of $529,987 for the same period in 1998. The reduction
in net income is primarily the result of the increase in the number of hotels
and partly because of the Lessee accrued $115,454 in contingent leases for the
three months ended September 30, 1999.

Nine months ended September 30, 1999 compared to the nine months ended September
30, 1998

HHTI's total revenue for the nine month period ended September 30, 1999,
substantially consisted of Lease revenue recognized pursuant to the Leases.
HHTI's revenue during the nine month period ended September 30, 1999 was
$9,238,619 an increase of $1,947,680, or 27%, as compared to revenue of
$7,290,939 for the same period during 1998. The improvement in revenues is
attributed to the additional Lease revenue derived from the increase, through
acquisitions, in the number of Hotels. Net income decreased by $250,438 to
$2,027,534 or 11% for the nine months ended September 30, 1999 as compared to
net income of $2,277,972 for the same period of 1998. The decline in net income
is primarily attributable to adjustments to amortization expense of $83,409 due
to the reduction in the BankBoston line of credit from $35 million to $20
million and $97,225 from the early retirement of bonds secured by the Comfort
Inn- Morgantown, WV and the recognition of a $82,130 loss on the sale of the
Rodeway Inn-Wytheville, VA. The decline is also the result of additional
interest, depreciation and amortization expense associated with the financing
and acquisition of new hotels. Depreciation expense also increased due to over
$1 million of capital improvements during 1999. September 30, 1998 net income
was aided by the $179,197 gain on the sale of the Comfort Inn-Elizabethton, TN.

The Lessee's room revenue from the Hotels increased by $4,548,624 or 28%,
to $20,590,830 for the nine months ended September 30, 1999, as compared to
$16,042,206 of room revenue for the same period of 1998. The improvement in
revenues is primarily attributable to the increase in the number of Hotels
leased. The average daily rate of the Hotels increased to $60.52 for the nine
months ended September 30, 1999, as compared to pro forma average daily rate of
$61.10 for the same period of 1998. REVPAR was $43.06 for the nine months ended
September 30, 1999 as compared to pro forma REVPAR of $42.07 for the same period
during 1998. Lessee operating expenses increased by $5,152,077 to $21,400,671
for the nine months ended September 30, 1999, as compared to $16,248,594 or 32%
for the same period during 1998. The Lessee experienced the decrease in net
income for the nine months ended September 30, 1999 primarily due to the accrual
of $340,368 in contingent lease payments.

The following table shows certain other pro forma information as if the
hotels acquired by the Partnership during 1998 had occurred on January 1, 1998.
Historical information is presented for the three and nine months ended
September 30, 1999.

26
<PAGE>

<TABLE>
<CAPTION>
Three Months ended Nine Months ended
September 30, September 30,
1999 1998 1999 1998
---------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Occupancy rate 77% 77% 71% 69%
ADR $ 62.42 $ 60.28 $ 60.52 $ 61.10
REVPAR $ 47.87 $ 46.56 $ 43.06 $ 42.07
Room Revenues $7,433,601 $7,659,297 $20,589,945 $20,535,043
Room nights available 155,296 164,496 478,224 488,124
Room nights occupied 119,083 127,070 340,184 336,081

Operating Hotels (at period end) 25 26 25 26
Rooms available (at period end) 1,687 1,470 1,687 1,470

</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

HHTI's principal source of cash to meet its cash requirements, including
distributions to shareholders, is its share of the Partnership's cash flow. The
Partnership's principal source of revenue is rent payments under the Leases. The
Lessee's obligations under the Leases are unsecured. The Lessee's ability to
make rent payments, and HHTI's liquidity, including its ability to make
distributions to common shareholders, is dependent on the Lessee's ability to
generate sufficient cash flow from the operation of the Hotels.

For the three and nine months ended September 30, 1999, HHTI expended
approximately $1.3 and 1.8 million respectively, for capital improvements to the
Hotels. During the quarter, the Company's Hotels located in Jackson, TN;
Allentown, PA; Cleveland, TN; Brandon, FL; Shelby, NC; and Gettysburg, PA,
underwent substantial capital improvements.

The hotel business is seasonal, with hotel revenue generally greater in the
second and third quarters than in the first and fourth quarters, with the
exception of the HHTI's Hotels in Florida. These Hotels are busiest in the first
and fourth quarters of the year. To the extent that cash flow from operating
activities is insufficient to provide all of the estimated monthly distributions
(particularly in the first quarter), HHTI anticipates that it will be able to
fund any such deficit from future working capital.

HHTI's Funds From Operations (net income plus minority interest and
depreciation and amortization) ("FFO") was $1,896,500 for the three months ended
September 30, 1999, which is an increase of $137,184, or 8% over FFO in the
comparable period in 1998, which was $1,759,316. For the nine months ended
September 30, 1999, the Company's FFO was $5,036,816 which is an increase of
$817,948, or 19.4% over FFO in the comparable period in 1998, which was
$4,218,868. The improvements in FFO can be attributed to the addition of seven
Hotels purchased during 1998. Management considers FFO to be a market accepted
measure of an equity REIT's operating performance, which management believes
reflects on the value of real estate companies such as the Company in connection
with the evaluation of other measures of operating performances. All REITs do
not calculate FFO in the same manner, therefore, the Company's calculation may
not be the same as the calculation of FFO for similar REITs. FFO as defined
under the National Association of Real Estate Investment Trusts standards,
consists of net income computed in accordance with generally accepted accounting
principles, excluding gains or losses on operating properties, plus depreciation
and amortization of real estate assets after adjustments for unconsolidated
partnerships and joint ventures. FFO is considered a key measurement of the
performance of a real estate investment trust. HHTI has reported FFO for the
period using the most recent definition, which now does not exclude non-
recurring items and therefore certain amounts for 1998 have been reclassified to
conform to the 1999 presentation.

27
<PAGE>

The computation of historical FFO is as follows:

<TABLE>
<CAPTION>
Historical Three Historical Three
Months Period Ended Months Period Ended
September 30, 1999 Per Share September 30, 1998 Per Share
----------------------- ------------- ----------------------- --------------
<S> <C> <C> <C> <C>
Net income applicable to
common shares $ 850,679 $ 903,290

Add :
Minority interest 159,477 154,674
Depreciation and amortization 882,701 685,548
Less:
Loss on sale of assets 3,643 15,804
---------- ----------

Funds From Operations $1,896,500 $.34 $1,759,316 $.32
========== ============= ========== =========
</TABLE>

<TABLE>
<CAPTION>
Historical Nine Historical Nine
Months Period Ended Months Period Ended
September 30, 1999 Per Share September 30, 1998 Per Share
----------------------- ------------- ------------------------ --------------
Net income applicable to
<S> <C> <C> <C> <C>
common shares $2,027,534 $2,277,972

Add :
Minority interest 380,146 384,001
Depreciation 2,547,006 1,736,092
Less:
Loss (gain) on sale of asset 82,130 (179,197)
---------- ----------

Funds From Operations $5,036,816 $.92 $4,218,868 $.87
========== ========== ========== ===========
</TABLE>

Long-term debt as of September 30, 1999, of approximately $43.2 million,
consisted of:

Approximately $2.3 million, secured by a first deed of trust on the Comfort
Inn Hotel located in Dublin, VA. The outstanding balance bears interest at a
rate equal to 7.75% per annum with additional underwriters' fees increasing
the interest rate to approximately 8%.

Approximately $2.9 million, secured by a first deed of trust on the Hampton
Inn Hotel located in Brandon, FL. The outstanding balance bears interest at a
rate of 8% per annum.

Approximately $5 million, secured by a mortgage on the Comfort Inn and
Holiday Inn Express Hotels located in Gettysburg, PA. The outstanding balance
bears interest at a rate of 7.75%.

Approximately $11.2 million, under the BankBoston Credit Facility, which is
secured and cross-collateralized by the Company's Hotels located in Jackson,
TN; Ellenton, FL (2 hotels): Shelby, NC; Key Largo, FL; Cleveland, TN;

28
<PAGE>

Dahlgren, VA; Princeton, WV and Dover, DE. The interest rate on the
BankBoston Credit Facility is LIBOR plus between 165 and 215 basis points.
The Company entered into an interest rate swap agreement that fixes the
interest on approximately $11.2 at a ceiling of 7.79%. The rate at September
30, 1999 was 7.41%.

Approximately $21.8 million, under the Mercantile Credit Facility which is
secured and cross-collateralized by, and cross-defaulted on the Company's
Hotels located in Solomons, MD; Farmville, VA (2 hotels); Culpeper, VA; New
Castle, PA; Harlan, KY; Danville, KY; Murphy, NC; Chambersburg, PA;
Allentown, PA, Morgantown, WV, and Rocky Mount, VA . The interest rate on the
Mercantile Credit Facility is variable at 25 basis points above the prime
rate. The rate was 8.5% at September 30, 1999.

HHTI expects to meet its short-term liquidity requirements generally
through net cash provided by operations and existing cash balances. HHTI
believes that its net cash provided by operations will be adequate to fund both
operating requirements and payment of dividends by HHTI in accordance with REIT
requirements.

HHTI expects to meet its long-term liquidity requirements, such as
scheduled debt maturities and property acquisitions, through long-term secured
and unsecured borrowings, the issuance of additional equity securities of HHTI,
or, in connection with acquisitions of hotel properties, issuance of units of
limited partnership interest in the Partnership.

Seasonality of Hotel Business and the Hotels

The hotel industry is seasonal in nature. Generally, hotel revenues for
hotels operating in the geographic areas in which the Hotels operate are greater
in the second and third quarters than in the first and fourth quarters, with the
exception of the HHTI's Florida Hotels. HHTI's Florida Hotels are busiest in the
first and fourth quarters of the year. The Hotels' operations historically
reflect this trend. Although the hotel business is seasonal in nature, HHTI
believes that it generally will be able to make its expected distributions by
using undistributed cash flow from the second and third quarters to fund any
shortfall in cash flow from operating activities from the Hotels in the first
and fourth quarters.

SELECTED PRO FORMA FINANCIAL DATA

The data below reflects selected financial information for the HHTI
resulting from the Merger of Supertel and HHTI, which is referred to as "pro
forma" information. The selected unaudited pro forma financial data set forth
below assumes that the Merger was accounted for as a reverse acquisition using
the purchase method of accounting, that the companies had been combined for
accounting and financial reporting purposes as of January 1, 1998, and that the
Lessee leased the Supertel hotels from HHTI beginning January 1, 1998. The pro
forma lease revenue for HHTI for the Supertel hotels were derived by applying
the rent provisions of the leases for the Supertel hotels to the historical
revenues for those hotels. HHTI and Supertel expect that certain restructuring
expenses will be incurred as a result of combining the companies; however, the
unaudited pro forma financial data does not reflect any anticipated
reorganization expense. The companies also anticipate that the Merger will
provide the combined company with certain financial benefits that include
improved operating efficiencies and opportunities to earn more revenue. However,
these anticipated cost savings or benefits are not reflected in the pro forma

29
<PAGE>

information. Therefore, the pro forma information, while helpful in illustrating
the financial characteristics of the combined company under one set of
assumptions, does not attempt to predict or suggest future results. The pro
forma information also does not attempt to show how the combined company would
actually have performed had the Merger been completed as of the dates or for the
periods presented. Additionally, no adjustments have been made to conform any
differences in accounting policies between HHTI and Supertel for the periods
presented. The information in the following tables is qualified in its entirety
by, and should be read in conjunction with the historical financial statements
of HHTI, the Lessee and Supertel included elsewhere in this document or
incorporated by reference.

HUMPHREY HOSPITALITY TRUST, INC.

Selected Pro Forma Financial Data
---------------------------------
(Unaudited, in thousands, except for share data)

<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99
-------- -------- -------- --------- -------- -------- --------
OPERATING DATA:
Revenue:
Percentage lease revenue.....................$ 6,645 $ 7,791 $ 8,639 $ 8,260 $ 7,724 $ 8,626 $ 8,851
Other revenue................................ 47 34 62 26 30 19 68
-------- -------- -------- --------- -------- -------- --------
Total revenue........................ 6,692 7,825 8,701 8,286 7,754 8,645 8,919
-------- -------- -------- --------- -------- -------- --------
Expenses:
Interest..................................... 2,490 2,258 2,546 2,693 2,797 2,740 2,561
Real estate operating expenses............... 774 769 854 728 855 928 878
General and administrative................... 347 511 432 157 289 411 207
Depreciation and amortization................ 1,750 1,724 1,914 2,078 2,090 2,117 2,169
-------- -------- -------- --------- -------- -------- --------
Total expenses....................... 5,361 5,262 5,746 5,656 6,031 6,196 5,815
-------- -------- -------- --------- -------- -------- --------
Income from operations......................... 1,331 2,563 2,955 2,630 1,723 2,449 3,104
Income allocated to minority interest.......... (96) (185) (213) (191) (124) (173) (224)
-------- -------- -------- --------- -------- -------- --------
Net income.....................................$ 1,235 $ 2,378 $ 2,742 $ 2,439 $ 1,599 $ 2,276 $ 2,880
======== ======== ======== ========= ======== ======== ========
$0.12 $0.22 $0.25 $0.22 $0.14 $0.20 $0.26
Basic earnings per common share................======== ======== ======== ========= ======== ======== ========

Diluted earnings per common share.............. $0.12 $0.22 $0.25 $0.22 $0.14 $0.20 $0.26
======== ======== ======== ========= ======== ======== ========
Weighted average shares:
Basic........................................ 10,024 10,845 11,174 11,174 11,174 11,174 11,174
Diluted...................................... 10,681 11,532 11,990 12,042 12,042 12,042 12,042

OTHER DATA:
Funds From Operations reconciliation:
Net income applicable to common shareholders $ 1,235 $ 2,378 $ 2,742 $ 2,439 $ 1,599 $ 2,226 $ 2,880
Add: Minority interest 96 185 213 191 124 173 224
Depreciation and amortization 1,750 1,724 1,914 2,078 2,090 2,117 2,169
-------- -------- -------- --------- -------- -------- --------
Funds From Operations (FFO) -Diluted $ 3,081 $ 4,287 $ 4,869 $ 4,708 $ 3,813 $ 4,516 $ 5,273
======== ======== ======== ========= ======== ======== ========

FFO Per Share - Diluted $0.29 $0.37 $0.41 $0.39 $0.32 $0.38 $0.44
======== ======== ======== ========= ======== ======== ========
</TABLE>

HUMPHREY HOSPITALITY TRUST, INC. AND SUBSIDIARIES

<PAGE>

HUMPHREY HOSPITALITY TRUST, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

HUMPHREY HOSPITALITY TRUST, INC.

Pro Forma Condensed Consolidated Statement of Income
Three Months Ended September 30, 1999
(Unaudited, in thousands, except for share data)

Transfer to
Supertel
Supertel Hospitality
Hospitality, Inc. Management,
Historical Inc.(a) Adjustments Sub-Total
------------------ -------------- --------------- ---------
<S> <C> <C> <C> <C>
Revenue
Room revenue....................... $14,446 $(14,446) $ -- $ --
Other lodging revenue.............. 422 (422) -- --
Percentage lease
revenue.......................... -- 5,675(b) -- 5,675
Other revenue...................... 26 -- 8(c) 34
------- -------- ----------- ------
Total revenue................ 14,894 (9,193) 8 5,709
------- -------- ----------- ------
Expenses
Hotel operating expenses........... 8,524 (8,524) -- --
Interest........................... 868 -- 758(d)(e) 1,626
Real estate operating expenses -- 611 -- 611
General and administrative......... 791 (580) (140)(c) 71
Impairment loss.................... 1,300 -- (1,300)(i) --
Depreciation and
Amortization..................... 1,152 -- -- 1,152
------- -------- ------ ---------
Total expenses............... 12,635 (8,493) (682) 3,460
------- -------- ------ ------
Income from operations............... 2,259 (700) 690 2,249
Gain (loss) on sale of assets........ (24) -- 24 --
Income allocated to
minority interest.................. -- -- -- --
------- -------- ------ ------
Income before income
Taxes.............................. 2,235 (700) 714 2,249
Income tax expense................... 1,414 -- (1,414)(f) --
------- -------- ----------- ------
Net Income................... $ 821 $ (700) $2,128 $2,249
======= ======== ====== ======
Basic earnings per common
Share.............................. $0.17
Diluted earnings per common
Share.............................. $0.17
Weighted average shares
Basic.............................. 4,848
Diluted............................ 4,848
</TABLE>

MERGER
----------------------------
Humphrey
Hospitality
Trust, Inc.
Historical Adjustments Pro Forma
------------ -------------- ----------
<S> <C> <C> <C>
Revenue
Room revenue....................... $ -- $ -- $ --
Other lodging revenue.............. -- -- --
Percentage lease
revenue.......................... 3,176 -- 8,851
Other revenue...................... 9 25(g) 68
------ ----------- -------
Total revenue................ 3,185 25 8,919
------ ----------- -------
Expenses
Hotel operating expenses........... -- -- --
Interest........................... 935 -- 2,561
Real estate operating expenses 267 -- 878
General and administrative......... 86 50(h) 207
Impairment loss.................... -- -- --
Depreciation and
Amortization..................... 883 134(e) 2,169
----------- ----------- ---------
Total expenses............... 2,171 184 5,815
------ ----------- ---------
Income from operations............... 1,014 (159) 3,104
Gain (loss) on sale of assets........ (4) 4(i) --
Income allocated to
minority interest.................. (159) (65)(j) (224)
------ ----------- ---------
Income before income
Taxes.............................. 851 (220) 2,880
Income tax expense................... -- -- --
------ ----------- -------
Net Income................... $ 851 $(220) $ 2,880
====== =========== =======
Basic earnings per common
Share.............................. $0.18 $0.26
Diluted earnings per common
Share.............................. $0.18 $0.26
Weighted average shares
Basic.............................. 4,632 11,174
Diluted............................ 5,500 12,042
</TABLE>

See accompanying notes to pro forma condensed consolidated statement of income.

31
<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.

Pro Forma Condensed Consolidated Statement of Income
Three Months Ended June 30, 1999
(Unaudited, in thousands, except for share data)

Transfer to
Supertel
Supertel Hospitality
Hospitality, Inc. Management,
Historical Inc.(a) Adjustments Sub-Total
----------------- -------------- --------------- ----------
<S> <C> <C> <C> <C>
Revenue
Room revenue....................... $13,378 $(13,378) $ -- $ --
Other lodging revenue.............. 395 (395) -- --
Percentage lease
revenue.......................... -- 5,434(b) -- 5,434
Other revenue...................... 40 -- (50)(c) (10)
------- -------- ----------- ------
Total revenue................ 13,813 (8,339) (50) 5,424
------- -------- ----------- ------
Expenses
Hotel operating
expenses......................... 8,048 (8,048) -- --
Interest........................... 895 -- 770(d)(e) 1,665
Real estate operating
expenses......................... -- 661 -- 661
General and
administrative................... 1,049 (572) (235)(c) 242
Depreciation and
amortization..................... 1,156 -- -- 1,156
------- -------- ----------- ------
Total expenses............... 11,148 (7,959) 535 3,724
------- -------- ----------- ------
Income from operations............... 2,665 (380) (585) 1,700
Gain (loss) on sale of
assets............................. -- -- -- --
Income allocated to
minority interest.................. -- -- -- --
------- -------- ----------- ------
Income before income
taxes.............................. 2,665 (380) (585) 1,700
Income tax expense................... 1,066 -- (1,066)(f) --
------- -------- ----------- ------
Net Income................... $ 1,599 $ (380) $ 481 $1,700
======= ======== =========== ======
Basic earnings per common
share.............................. $0.33
Diluted earnings per common
share.............................. $0.33
Weighted average shares
Basic.............................. 4,843
Diluted............................ 4,843
</TABLE>

MERGER
----------------------------
Humphrey
ospitality
rust, Inc.
Historical Adjustments Pro Forma
----------- -------------- ----------
<S> C> <C> <C>
Revenue
Room revenue....................... -- $ -- $ --
Other lodging revenue.............. -- -- --
Percentage lease
revenue.......................... 3,192 -- 8,626
Other revenue...................... 4 25(g) 19
------ ----------- -------
Total revenue................ 3,196 25 8,645
------ ----------- -------
Expenses
Hotel operating
expenses......................... -- -- --
Interest........................... 1,075 -- 2,740
Real estate operating
expenses......................... 267 -- 928
General and
administrative................... 119 50(h) 411
Depreciation and
amortization..................... 827 134(e) 2,117
------ ----------- -------
Total expenses............... 2,288 184 6,196
------ ----------- -------
Income from operations............... 908 (159) 2,449
Gain (loss) on sale of
assets............................. (78) 78(i) --
Income allocated to
minority interest.................. (131) (42)(j) (173)
------ ----------- -------
Income before income
taxes.............................. 699 (123) 2,276
Income tax expense................... -- -- --
------ ----------- -------
Net Income................... $ 699 $(123) $ 2,276
====== =========== =======
Basic earnings per common
share.............................. $0.15 $0.20
Diluted earnings per common
share.............................. $0.15 0.20
Weighted average shares
Basic.............................. 4,632 11,174
Diluted............................ 5,500 12,042
</TABLE>

See accompanying notes to pro forma condensed consolidated statement of income.

<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.

Pro Forma Condensed Consolidated Statement of Income
Three Months Ended March 31, 1999
(Unaudited, in thousands, except for share data)

Transfer to
Supertel
Supertel Hospitality
Hospitality, Inc. Management,
Historical Inc.(a) Adjustments Sub-Total
----------------- -------------- --------------- ----------
<S> <C> <C> <C> <C>
Revenue
Room revenue....................... $10,896 $(10,896) $ -- $ --
Other lodging revenue.............. 368 (368) -- --
Percentage lease
revenue.......................... -- 4,876(b) -- 4,876
Other revenue...................... 8 -- (12)(c) (4)
------- -------- ----------- ------
Total revenue................ 11,272 (6,388) (12) 4,872
------- -------- ----------- ------
Expenses
Hotel operating
expenses......................... 7,339 (7,339) -- --
Interest........................... 906 -- 795(d)(e) 1,701
Real estate operating
expenses......................... -- 603 -- 603
General and
administrative................... 871 (572) (164)(c) 135
Depreciation and
amortization..................... 1,119 -- -- 1,119
------- -------- ----------- ------
Total expenses............... 10,235 (7,308) 631 3,558
------- -------- ----------- ------
Income from operations............... 1,037 920 (643) 1,314
Gain (loss) on sale of
assets............................. -- -- -- --
Income allocated to
minority interest.................. -- -- -- --
------- -------- ----------- ------
Income before income
taxes.............................. 1,037 920 (643) 1,314
Income tax expense................... 415 -- (415)(f) --
------- -------- ----------- ------
Net Income................... $ 622 $ 920 $(228) $1,314
======= ======== =========== ======
Basic earnings per common
share.............................. $0.13
Diluted earnings per common
share.............................. $0.13
Weighted average shares
Basic.............................. 4,843
Diluted............................ 4,843
</TABLE>

MERGER
-----------------------------
Humphrey
Hospitality
Trust, Inc.
Historical Adjustments Pro Forma
------------ --------------- ----------
<S> <C> <C> <C>
Revenue
Room revenue....................... $ -- $ -- $ --
Other lodging revenue.............. -- -- --
Percentage lease
revenue.......................... 2,848 -- 7,724
Other revenue...................... 9 25(g) 30
------ ----------- -------
Total revenue................ 2,857 25 7,754
------ ----------- -------
Expenses
Hotel operating
expenses......................... -- -- --
Interest........................... 1,096 -- 2,797
Real estate operating
expenses......................... 252 -- 855
General and
administrative................... 104 50(h) 289
Depreciation and
amortization..................... 837 134(e) 2,090
------ ----------- -------
Total expenses............... 2,289 184 6,031
------ ----------- -------
Income from operations............... 568 (159) 1,723
Gain (loss) on sale of
assets............................. -- -- --
Income allocated to
minority interest.................. (90) (34)(j) (124)
------ ----------- -------
Income before income
taxes.............................. 478 (193) 1,599
Income tax expense................... -- -- --
------ ----------- -------
Net Income................... $ 478 $(193) $ 1,599
====== =========== =======
Basic earnings per common
share.............................. $0.10 $0.14
Diluted earnings per common
share.............................. $0.10 $0.14
Weighted average shares
Basic.............................. 4,632 11,174
Diluted............................ 5,500 12,042
</TABLE>

See accompanying notes to pro forma condensed consolidated statement of income.

33
<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.

Pro Forma Condensed Consolidated Statement of Income
Three Months Ended December 31, 1998
(Unaudited, in thousands, except for share data)

Transfer to
Supertel
Supertel Hospitality
Hospitality, Inc. Management,
Historical Inc.(a) Adjustments Sub-Total
------------------ -------------- --------------- ----------
<S> <C> <C> <C> <C>
Revenue
Room revenue....................... $11,829 $(11,829) $ -- $ --
Other lodging revenue.............. 412 (412) -- --
Percentage lease
revenue.......................... -- 5,089(b) -- 5,089
Other revenue...................... 31 (1) (37)(c) (7)
------- -------- ----------- ------
Total revenue................ 12,272 (7,153) (37) 5,082
------- -------- ----- ------
Expenses
Hotel operating
expenses......................... 7,368 (7,368) -- --
Interest........................... 944 -- 763(d)(e) 1,707
Real estate operating
expenses......................... -- 488 -- 488
General and
administrative................... 1,506 (591) (885)(c) 30
Depreciation and
amortization..................... 1,136 -- -- 1,136
------- -------- ----- ------
Total expenses............... 10,954 (7,471) (122) 3,361
------- -------- ----- ------
Income from operations............... 1,318 318 85 1,721
Gain (loss) on sale of
assets............................. (38) -- 38 --
Income allocated to
minority interest.................. -- -- -- --
------- -------- ----- ------
Income before income
taxes.............................. 1,280 318 123 1,721
Income tax expense................... 512 -- (512)(f) --
------- -------- ----------- ------
Net Income................... $ 768 $ 318 $ 635 $1,721
======= ======== ===== ======
Basic earnings per common
share.............................. $0.16
Diluted earnings per common
share.............................. $0.16
Weighted average shares
Basic.............................. 4,843
Diluted............................ 4,843
</TABLE>
<TABLE>
<CAPTION>

MERGER
----------------------------
Humphrey
Hospitality
Trust, Inc.
Historical Adjustments Pro Forma
------------ --------------- ----------
<S> <C> <C> <C>
Revenue
Room revenue....................... $ -- $ -- $ --
Other lodging revenue.............. -- -- --
Percentage lease
revenue.......................... 3,171 -- 8,260
Other revenue...................... 8 25(g) 26
------ ----------- -------
Total revenue................ 3,179 25 8,286
------ ----------- -------
Expenses
Hotel operating
expenses......................... -- -- --
Interest........................... 986 -- 2,693
Real estate operating
expenses......................... 240 -- 728
General and
administrative................... 77 50(h) 157
Depreciation and
amortization..................... 808 134(e) 2,078
------ ----------- -------
Total expenses............... 2,111 184 5,656
------ ----------- -------
Income from operations............... 1,068 (159) 2,630
Gain (loss) on sale of
assets............................. (622) 622(i) --
Income allocated to
minority interest.................. (71) (120)(j) (191)
------ ----------- -------
Income before income
taxes.............................. 375 343 2,439
Income tax expense................... -- -- --
------ ----------- -------
Net Income................... $ 375 $ 343 $ 2,439
====== =========== =======
Basic earnings per common
share.............................. $0.08 $0.22
Diluted earnings per common
share.............................. $0.08 $0.22
Weighted average shares
Basic.............................. 4,632 11,174
Diluted............................ 5,500 12,042
</TABLE>

See accompanying notes to pro forma condensed consolidated statement of income.

<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.

Pro Forma Condensed Consolidated Statement of Income
Three Months Ended September 30, 1998
(Unaudited, in thousands, except for share data)

<TABLE>
<CAPTION>
MERGER
Transfer to ----------------------------
Supertel Humphrey
Supertel Hospitality Hospitality
Hospitality, Inc. Management, Trust, Inc.
Historical Inc.(a) Adjustments Sub-Total Historical Adjustments Pro Forma
------------------ -------------- --------------- --------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
Room revenue............. $14,231 $(14,231) $ -- $ -- $ -- $ -- $ --
Other lodging revenue.... 426 (426) -- -- -- -- --
Percentage lease
revenue................ -- 5,628(b) -- 5,628 3,011 -- 8,639
Other revenue............ 23 -- -- 23 14 25(g) 62
------- -------- ------- ------ ------ ------- -------
Total revenue...... 14,680 (9,029) -- 5,651 3,025 25 8,701
------- -------- ------- ------ ------ ------- -------
Expenses
Hotel operating
expenses............... 8,261 (8,261) -- -- -- -- --
Interest................. 994 -- 713(d)(e) 1,707 839 -- 2,546
Real estate operating
expenses............... -- 610 -- 610 244 -- 854
General and
administrative......... 992 (591) (201)(c) 200 182 50(h) 432
Depreciation and
amortization........... 1,094 -- -- 1,094 686 134(e) 1,914
------- -------- ------- ------ ------ ------- -------
Total expenses..... 11,341 (8,242) 512 3,611 1,951 184 5,746
------- -------- ------- ------ ------ ------- -------
Income from operations..... 3,339 (787) (512) 2,040 1,074 (159) 2,955
Gain (loss) on sale of
assets................... (14) -- 14 -- (16) 16(i) --
Income allocated to
minority interest........ -- -- -- -- (155) (58)(j) (213)
------- -------- ------- ------ ------ ------- -------
Income before income
taxes.................... 3,325 (787) (498) 2,040 903 (201) 2,742
Income tax expense......... 1,330 -- (1,330)(f) -- -- -- --
------- -------- ------- ------ ------ ------- -------
Net Income......... $ 1,995 $ (787) $ 832 $2,040 $ 903 $(201) $ 2,742
======= ======== ======= ====== ====== ======= =======
Basic earnings per common
share.................... $0.41 $0.19 $0.25
Diluted earnings per common
share.................... $0.41 $0.19 $0.25
Weighted average shares
Basic.................... 4,842 4,632 11,174
Diluted.................. 4,842 5,448 11,990
</TABLE>

See accompanying notes to pro forma condensed consolidated statement of income.

35
<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.

Pro Forma Condensed Consolidated Statement of Income
Three Months Ended June 30, 1998
(Unaudited, in thousands, except for share data)

MERGER
Transfer to ----------------------------
Supertel Humphrey
Supertel Hospitality Hospitality
Hospitality, Inc. Management, Trust, Inc.
Historical Inc.(a) Adjustments Sub-Total Historical Adjustments Pro Forma
----------------- -------------- --------------- --------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
Room revenue............. $13,139 $(13,139) $ -- $ -- $ -- $ -- $ --

Other lodging revenue.... 398 (398) -- -- -- -- --
Percentage lease
revenue................ -- 5,437(b) -- 5,437 2,354 -- 7,791
Other revenue............ 5 -- -- 5 4 25(g) 34
------- -------- ----------- ------ ------ ----------- -------
Total revenue...... 13,542 (8,100) -- 5,442 2,358 25 7,825
------- -------- ----------- ------ ------ ----------- -------
Expenses
Hotel operating
expenses............... 7,468 (7,468) -- -- -- -- --
Interest................. 1,067 -- 672(d)(e) 1,739 519 -- 2,258
Real estate operating
expenses............... -- 600 -- 600 169 -- 769
General and
administrative......... 1,160 (591) (255)(c) 314 147 50(h) 511
Depreciation and
amortization........... 1,059 -- -- 1,059 531 134(e) 1,724
------- -------- ----------- ------ ------ ----------- -------
Total expenses..... 10,754 (7,459) 417 3,712 1,366 184 5,262
------- -------- ----------- ------ ------ ----------- -------
Income from operations..... 2,788 (641) (417) 1,730 992 (159) 2,563
Gain (loss) on sale of
Assets................... -- -- -- -- 195 (195)(i) --
Income allocated to
minority interest........ -- -- -- -- (163) (22)(j) (185)
------- -------- ----------- ------ ------ ----------- -------
Income before income
Taxes.................... 2,788 (641) (417) 1,730 1,024 (376) 2,378
Income tax expense......... 1,115 -- (1,115)(f) -- -- -- --
------- -------- ----------- ------ ------ ----------- -------
Net Income......... $ 1,673 $ (641) $ 698 $1,730 $1,024 $(376) $ 2,378
======= ======== =========== ====== ====== =========== =======
Basic earnings per common
Share.................... $0.35 $0.24 $0.22
Diluted earnings per common
Share.................... $0.35 $0.24 $0.22
Weighted average shares
Basic.................... 4,840 4,303 10,845
Diluted.................. 4,840 4,990 11,532
</TABLE>

See accompanying notes to pro forma condensed consolidated statement of income.
36
<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.

Pro Forma Condensed Consolidated Statement of Income
Three Months Ended March 31, 1998
(Unaudited, in thousands, except for share data)

MERGER
Transfer to -----------------------------
Supertel Humphrey
Supertel Hospitality Hospitality
Hospitality, Inc. Management, Trust, Inc.
Historical Inc.(a) Adjustments Sub-Total Historical Adjustments Pro Forma
----------------- -------------- --------------- --------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
Room revenue.............. $10,534 $(10,534) $ -- $ -- $ -- $ -- $
-- --
Other lodging revenue..... 371 (371) -- -- -- -- --
Percentage lease
revenue................. -- 4,741(b) -- 4,741 1,904 -- 6,645
Other revenue............. 18 -- -- 18 4 25(g) 47
------- -------- ----------- ------ ------ ----------- -------
Total revenue....... 10,923 (6,164) -- 4,759 1,908 25 6,692
------- -------- ----------- ------ ------ ----------- -------
Expenses
Hotel operating
expenses................ 6,740 (6,740) -- -- -- -- --
Interest.................. 1,118 -- 680(d)(e) 1,798 692 -- 2,490
Real estate operating
expenses................ -- 597 -- 597 177 -- 774
General and
administrative.......... 1,000 (591) (214)(c) 195 102 50(h) 347
Depreciation and
amortization............ 1,096 -- -- 1,096 520 134(e) 1,750
------- -------- ----------- ------ ------ ----------- -------
Total expenses...... 9,954 (6,734) 466 3,686 1,491 184 5,361
------- -------- ----------- ------ ------ ----------- -------
Income from operations...... 969 570 (466) 1,073 417 (159) 1,331
Gain (loss) on sale of
assets.................... -- -- -- -- -- -- --
Income allocated to
minority interest......... -- -- -- -- (66) (30)(j) (96)
------- -------- ----------- ------ ------ ----------- -------
Income before income
taxes..................... 969 570 (466) 1,073 351 (189) 1,235
Income tax expense.......... 388 -- (388)(f) -- -- -- --
------- -------- ----------- ------ ------ ----------- -------
Net Income.......... $ 581 $ 570 $ (78) $1,073 $ 351 $(189) $ 1,235
======= ======== =========== ====== ====== =========== =======
Basic earnings per common
share..................... $0.12 $0.10 $0.12
Diluted earnings per common
share..................... $0.12 $0.10 $0.12
Weighted average shares
Basic..................... 4,840 3,482 10,024
Diluted................... 4,840 4,139 10,681
</TABLE>

See accompanying notes to pro forma condensed consolidated statement of income.

37
<PAGE>

HUMPHREY HOSPITALITY TRUST, INC.

NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Three Months Ended September 30, 1999, June 30, 1999, March 31, 1999, December
31, 1998, September 30, 1998, June 30, 1998 and the March 31, 1998
(Unaudited, in thousands, except for share data)

(a) Represents the transfer of Supertel Hospitality's hotel management
operations to Supertel Hospitality Management in connection with the
Merger and the conversion to a real estate investment trust.

(b) Adjustment to reflect percentage lease revenue calculated based on
the terms of the proposed leases for and the historical revenue of
the Supertel hotels.

(c) Reflects the elimination of non-recurring revenue and general and
administrative expenses pertaining to the development division of
Supertel which will not continue after the Merger and the
elimination of payroll expenses related to certain Supertel
executives who will resign in connection with the Merger.

(d) Adjustment to reflect interest expense computed on approximately $74
million of restructured debt outstanding after the Merger at an
estimated weighted average interest rate of approximately 8.4% per
annum.

(e) Represents amortization related to additional deferred financing
costs, net of the amortization on the financing fees written off in
connection with the restructuring of Supertel's debt, and additional
depreciation expense related to the adjustment to record Humphrey
Hospitality's net assets acquired at fair market value in connection
with the Merger.

(f) Represents the elimination of Supertel's income taxes as a result of
its conversion to a real estate investment trust.

(g) Represents rental revenue from the Supertel office building leased
to Humphrey Hospitality Management for an annual rent of $100.

(h) Represents an increase in the annual fee paid to Humphrey
Hospitality Management under the services agreement to $300
annually.

(i) Represents the elimination of impairment loss on assets or
gain(loss) on the sales of assets.

(j) Represents an adjustment to the income allocated to minority
interest based on a pro forma percentage of 7.21%.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits -

2.1 Agreement and Plan of Merger dated June 11, 1999 between HHTI and
Supertel Hospitality, Inc. (incorporated by reference to Exhibit 99.2 to
HHTI's Current Report on Form 8-K filed on June 14, 1999).

3.1 Second Amended and Restated Articles of Incorporation of the
Registrant.
38
<PAGE>

3.2 Third Amended and Restated Bylaws of the Registrant.

10.1 Declaration of Trust of Humphrey Hospitality REIT Trust
(incorporated by reference to Exhibit 10.1 to HHTI's Registration
Statement on Form S-11 (Registration No. 333-48583)).

10.2 Bylaws of Humphrey Hospitality REIT Trust (incorporated by
reference to Exhibit 10.2 to HHTI's Registration Statement on Form S-11
(Registration No. 333-48583)).

10.3 Second Amended and Restated Agreement of Limited Partnership of
Humphrey Hospitality Limited Partnership (incorporated by reference to
Exhibit 10.7 to HHTI's Registration Statement on Form S-11 (Registration
No. 333-48583)).

10.4 Second Amended and Restated Agreement of Limited Partnership of
Solomons Beacon Inn Limited Partnership (incorporated by reference to
Exhibit 10.2 to HHTI's Registration Statement on Form S-11 (Registration
No. 33-93346)).

10.5 Agreement of Purchase and Sale dated March 26, 1997, between 344
Associates Limited Partnership and Humphrey Hospitality Limited
Partnership for the Comfort Inn-Gettysburg, Pennsylvania (incorporated
by reference to Exhibit 10.17 to HHTI's Registration Statement on Form
S-11 (Registration No. 333-48583)).

10.6 Agreement of Purchase and Sale dated March 26, 1997, between 144
Associated Limited Partnership and Humphrey Hospitality Limited
Partnership for the Holiday Inn Express-Gettysburg, Pennsylvania
(incorporated by reference to Exhibit 10.18 to HHTI's Registration
Statement on Form S-11 (Registration No. 333-48583)).

10.7 Purchase Agreement dated March 26, 1997, between 644 Associates
Limited Partnership and Humphrey Hospitality Limited Partnership for the
Holiday Inn Express - Allentown, Pennsylvania (incorporated by reference
to Exhibit 10.19 to HHTI's Registration Statement on Form S-11
(Registration No. 333-48583)).

10.8 Purchase Agreement dated March 26, 1997, between 544 Associates
Limited Partnership and Humphrey Hospitality Limited Partnership for the
Comfort Inn- Chambersburg, Pennsylvania Hotel (incorporated by reference
to Exhibit 10.20 to HHTI's Registration Statement on Form S-11
(Registration No. 333-48583)).

10.9 Option Agreement (incorporated by reference to Exhibit 10.6 to
HHTI's Registration Statement on Form S-11 (Registration No. 33-83658)).

10.10 Non-Competition Agreement (incorporated by reference to Exhibit
10.7 to HHTI's Registration Statement on Form S-11 (Registration No.
33-83658)).

10.11 Services Agreement dated as of January 1, 1996 between HHTI and
Humphrey Hospitality Management, Inc. (incorporated by reference to
Exhibit 10.22 to HHTI's Registration Statement on Form S-11
(Registration No. 333-15897)).
39

<PAGE>

10.12 First Amendment to Services Agreement, dated as of October 1,
1996, between HHTI and Humphrey Hospitality Management, Inc.
(incorporated by reference to Exhibit 10.23 to HHTI's Registration
Statement on Form S-11 (Registration No. 333-15897)).

10.13 Development Services Agreement, dated as of April 4, 1996, between
Humphrey Hospitality Limited Partnership and Humphrey Development
(incorporated by reference to Exhibit 10.25 to HHTI's Registration
Statement on Form S-11 (Registration No. 333-15897)).

10.14 First Amendment to Development Services Agreement dated November
6, 1996 between the Partnership and Humphrey Development (incorporated
by reference to Exhibit 10.26 to HHTI's Registration Statement on Form
S-11 (Registration No. 333-15897)).

10.15 Agreement of Purchase and Sale dated May 31, 1998 between Allen
Investments, Inc. and Humphrey Hospitality Limited Partnership for the
Best Western - Ellenton, FL, the Shoney's Inn, Ellenton, FL and the
Hampton Inn, Brandon, FL (incorporated by reference to Exhibit 2.1 to
Form 8-K/A filed August 6, 1998).

10.16 Revolving Credit and Guaranty Agreement dated August 18,1998 among
HHTI, Humphrey Hospitality Limited Partnership, Humphrey Hospitality
REIT Trust and Solomons Beacon Limited Partnership and BankBoston, N.A.
and other banks that may become parties to the agreement (incorporated
by reference to Exhibit 10.8 to Form 10-K405 filed on March 31, 1999).

10.17 First Amendment to BankBoston Revolving Credit and Guaranty
Agreement dated November 30, 1998 (incorporated by reference to Exhibit
10.9 to Form 10- K405 filed on March 31, 1999).

10.18 Shareholders' Agreement dated June 11, 1999, between Supertel
Hospitality, Inc., Jeffrey Zwerdling, George R. Whittemore, Leah T.
Robinson and Andrew A. Mayer (incorporated by reference to Form 10-Q
filed on August 5, 1999).

10.19 Shareholders' Agreement dated June 11, 1999, between HHTI,
Supertel Hospitality, Inc., Paul J. Schulte and Steve H. Borgmann
(incorporated by reference to Form 10-Q filed on August 5, 1999).

10.20 Agreement dated June 11, 1999 between HHTI, Humphrey Hospitality
Limited Partnership, Supertel Hospitality, Inc. and James I. Humphrey,
Jr. (incorporated by reference to Form 10-Q filed on August 5, 1999).

10.21 Right of First Opportunity Agreement dated June 10, 1999, between
HHTI, Humphrey Hospitality Limited Partnership and Humphrey Hospitality
Management, Inc. (incorporated by reference to Form 10-Q filed on August
5, 1999).

27.1 Financial Data Schedule

B. Reports on Form 8-K.

None
40

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

HUMPHREY HOSPITALITY TRUST, INC.

By: /s/ Paul J. Schulte
-------------------
Paul J. Schulte
Chairman of THE BOARD,
Chief executive officer

DATED this 10th day of December 1999.

EXHIBIT 3.1

SECOND
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
HUMPHREY HOSPITALITY TRUST, INC.

(A Stock Corporation)

The name of the corporation (which is hereinafter called the
"Corporation") is Humphrey Hospitality Trust, Inc.

II.

The purpose for which this Corporation is formed is to transact any and
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.

III.

The total number of shares of stock that the Corporation has authority
to issue is 25 million (25,000,000) shares of Common Stock, $.01 par value per
share, and ten million (10,000,000) shares of Preferred Stock, $.01 par value
per share.

No holder of shares of capital stock of the Corporation shall have any
preemptive or preferential right to subscribe to or purchase (i) any shares of
any class of the Corporation, whether now or hereafter authorized; (ii) any
warrants, rights, or options to purchase any such shares; or (iii) any
securities or obligations convertible into any such shares or into warrants,
rights, or options to purchase any such shares.
<PAGE>

The Preferred Stock may be issued from time to time by the Board of
Directors of the Corporation, in such series and with such preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or other provisions as may be fixed by the Board of
Directors.

IV.

The address of the Corporation's initial registered office is
Riverfront Plaza, East Tower, 951 E. Byrd Street, which is in the City of
Richmond. The name and address of the initial Registered Agent is Thurston R.
Moore, who is a resident of Virginia and a member of the Virginia State Bar, and
whose business address is Riverfront Plaza, East Tower, 951 East Byrd Street,
Richmond, Virginia 23219-4074, which is in the City of Richmond.

A. The Corporation shall have a Board of Directors consisting of not
less than three (3) nor more than nine (9) members unless otherwise determined
from time to time by resolution adopted by the affirmative vote of a majority of
the shareholders. A director need not be a shareholder. At the annual meeting of
shareholders, the shareholders shall elect directors to serve a one-year term
and until their successors are duly elected and qualified.

B. Notwithstanding anything herein to the contrary, at all times
(except during a period not to exceed sixty (60) days following the death,
resignation, incapacity or removal from office of a director prior to expiration
of the director's term of office), a majority of the Board of Directors shall be
comprised of persons who are "Independent Directors." Independent Directors are
persons who are not officers or employees of the Corporation or "Affiliates" of
(i) any advisor to the Corporation under an advisory agreement, (ii) any lessee

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<PAGE>

of any property of the Corporation, (iii) any subsidiary of the Corporation or
(iv) any partnership which is an Affiliate of the Corporation.

C. For purposes of the foregoing subsection, "Affiliate" of a person
shall mean (i) any person that, directly or indirectly, controls or is
controlled by or is under common control with such person, (ii) any other person
that owns, beneficially, directly or indirectly, five percent (5%) or more of
the outstanding capital stock, shares or equity interests of such person, or
(iii) any officer, director, employee, partner or trustee of such person or any
person controlling, controlled by or under common control with such person
(excluding directors and persons serving in similar capacities who are not
otherwise an Affiliate of such person). The term "person" means and includes
individuals, corporations, general and limited partnerships, stock companies or
associations, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof. For the purposes of this
definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests or other
equity interests.

D. Notwithstanding any other provisions of these Articles of
Incorporation or the bylaws of the Corporation (and notwithstanding that some
lesser percentage may be specified by law, these Articles of Incorporation or
the bylaws of the Corporation), the provisions of this Article V shall not be
amended, altered, changed or repealed without the approval of a majority of the
members of the Board of Directors or the affirmative vote of the holders of not

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<PAGE>

less than a majority of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, voting
separately as a class.

VI.

Except as expressly otherwise required by these Articles of
Incorporation, (i) an amendment to or restatement of these Articles of
Incorporation for which the Virginia Stock Corporation Act requires shareholder
approval, (ii) the approval of a plan of merger or share exchange for which the
Virginia Stock Corporation Act requires shareholder approval, (iii) the approval
of a sale of all, or substantially all of the Corporation's property, other than
in the usual and regular course of business or (iv) the approval of the
dissolution of the Corporation shall be approved by a majority of the votes
entitled to be cast by each voting group that is entitled to vote on the matter,
unless in submitting any such matter to the shareholders the Board of Directors
shall require a greater vote.

VII.

A. In this Article:
"Applicant" means the Person seeking indemnification pursuant
to this Article.
"Expenses" includes counsel fees.
"Liability" means the obligation to pay a judgment,
settlement, penalty, fine, including any excise tax assessed with respect to an
employee benefit plan, or reasonable expenses incurred with respect to a
proceeding.
"Party" includes an individual who was, is, or is threatened
to be made a named defendant or respondent in a proceeding.

-4-
<PAGE>

"Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal.

B. In any proceeding brought by or in the right of the Corporation or
brought by or on behalf of shareholders of the Corporation, no director or
officer of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages with respect to any transaction, occurrence or
course of conduct, whether prior or subsequent to the effective date of this
Article, except for liability resulting from such Person's having engaged in
willful misconduct or a knowing violation of the criminal law or any federal or
state securities law.

C. The Corporation shall indemnify (i) any Person who was or is a party
to any proceeding, including a proceeding brought by a shareholder in the right
of the Corporation or brought by or on behalf of shareholders of the
Corporation, by reason of the fact that he is or was a director or officer of
the Corporation, or (ii) any director or officer who is or was serving at the
request of the Corporation as a director, trustee, partner, member or officer of
another corporation, partnership, joint venture, limited liability company,
trust, employee benefit plan or other enterprise, against any liability incurred
by him in connection with such proceeding, unless he engaged in gross
negligence, willful misconduct or a knowing violation of the criminal law. A
Person is considered to be serving an employee benefit plan at the Corporation's
request if his duties to the Corporation also impose duties on, or otherwise
involve services by, him to the plan or to participants in or beneficiaries of
the plan. The Board of Directors is hereby empowered, by a majority vote of a
quorum of disinterested directors, to enter into a contract to indemnify any

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<PAGE>

director or officer in respect of any proceedings arising from any act or
omission, whether occurring before or after the execution of such contract.

D. The provisions of this Article shall be applicable to all
proceedings commenced after the adoption hereof by the Corporation, arising from
any act or omission, whether occurring before or after such adoption. No
amendment or repeal of this Article shall have any effect on the rights provided
under this Article with respect to any act or omission occurring prior to such
amendment or repeal. The Corporation shall promptly take all such actions, and
make all such determinations, as shall be necessary or appropriate to comply
with its obligation to make any indemnity under this Article and shall promptly
pay or reimburse all reasonable expenses, including attorneys' fees, incurred by
any such indemnified Person in connection with such actions and determinations
or proceedings of any kind arising therefrom.

E. The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself create a presumption that the applicant did not meet the standard of
conduct described in Section B or C of this Article.

F. Any indemnification under Section C of this Article (unless ordered
by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the applicant is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section C.

The determination shall be made:

1. By the Board of Directors by a majority vote of a quorum
consisting of directors not at the time parties to the proceeding;

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<PAGE>

2. If a quorum cannot be obtained under subsection 1 of this
Section, by majority vote of a committee duly designated by the Board of
Directors (in which designation directors who are parties may participate),
consisting solely of two or more directors not at the time parties to the
proceeding;

3. By special legal counsel:

a. Selected by the Board of Directors or its
committee in the manner prescribed in subsection 1 or 2 of this Section; or

b. If a quorum of the Board of Directors cannot be
obtained under subsection 1 of this Section and a committee cannot be designated
under subsection 2 of this Section, selected by majority vote of the full Board
of Directors, in which selection directors who are parties may participate; or

4. By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination.

Any evaluation as to reasonableness of expenses shall be made in the
same manner as the determination that indemnification is appropriate, except
that if the determination is made by special legal counsel, such evaluation as
to reasonableness of expenses shall be made by those entitled under subsection 3
of this Section F to select counsel.

Notwithstanding the foregoing, in the event there has been a change in
the composition of a majority of the Board of Directors after the date of the
alleged act or omission with respect to which indemnification is claimed, any
determination as to indemnification and advancement of expenses with respect to
any claim for indemnification made pursuant to this Article shall be made by
special legal counsel agreed upon by the Board of Directors and the applicant.

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<PAGE>

If the Board of Directors and the applicant are unable to agree upon such
special legal counsel the Board of Directors and the applicant each shall select
a nominee, and the nominees shall select such special legal counsel.

G. 1. The Corporation shall pay for or reimburse the reasonable
expenses incurred by any applicant who is a party to a proceeding in advance of
final disposition of the proceeding or the making of any determination under
Section F if the applicant furnishes the Corporation:

a. a written statement of his good faith belief that
he has met the standard of conduct described in Section C; and

b. a written undertaking, executed personally or on
his behalf, to repay the advance if it is ultimately determined that he did not
meet such standard of conduct.

2. The undertaking required by paragraph (b) of subsection 1
of this Section shall be an unlimited general obligation of the applicant but
need not be secured and may be accepted without reference to financial ability
to make repayment.

3. Authorizations of payments under this Section shall be made
by the Persons specified in Section F.

H. The Board of Directors is hereby empowered, by majority vote of a
quorum consisting of disinterested directors, to cause the Corporation to
indemnify or contract to indemnify any Person not specified in Section B or C of
this Article who was, is or may become a party to any proceeding, by reason of
the fact that he is or was an employee or agent of the Corporation, or is or was
serving at the request of the Corporation as director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, to the same extent as if such Person were
specified as one to whom indemnification is granted in Section C. The provisions

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<PAGE>

of Sections D through G of this Article shall be applicable to any
indemnification provided hereafter pursuant to this Section H.

I. The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any Person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability asserted against or incurred by him in any
such capacity or arising from his status as such, whether or not the Corporation
would have power to indemnify him against such liability under the provisions of
this Article.

J. Every reference herein to directors, officers, employees or agents
shall include former directors, officers, employees and agents and their
respective heirs, executors and administrators. The indemnification hereby
provided and provided hereafter pursuant to the power hereby conferred by this
Article on the Board of Directors shall not be exclusive of any other rights to
which any Person may be entitled, including any right under policies of
insurance that may be purchased and maintained by the Corporation or others,
with respect to claims, issues or matters in relation to which the Corporation
would not have the power to indemnify such Person under the provisions of this
Article. Such rights shall not prevent or restrict the power of the Corporation
to make or provide for any further indemnity, or provisions for determining
entitlement to indemnity, pursuant to one or more indemnification agreements,
bylaws, or other arrangements (including, without limitation, creation of trust
funds or security interests funded by letters of credit or other means) approved

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<PAGE>

by the Board of Directors (whether or not any of the directors of the
Corporation shall be a party to or beneficiary of any such agreements, bylaws or
arrangements); provided, however, that any provision of such agreements, bylaws
or other arrangements shall not be effective if and to the extent that it is
determined to be contrary to this Article or applicable laws of the Commonwealth
of Virginia.

K. Each provision of this Article shall be severable, and an adverse
determination as to any such provision shall in no way affect the validity of
any other provision.

VIII.

The Corporation shall seek to elect and maintain status as a REIT under
the Code. It shall be the duty of the Board of Directors to ensure that the
Corporation satisfies the requirements for qualification as a REIT under the
Code, including, but not limited to, the ownership of its outstanding stock, the
nature of its assets, the sources of its income, and the amount and timing of
its distributions to its shareholders. The Board of Directors shall take no
action to disqualify the Corporation as a REIT or to otherwise revoke the
Corporation's election to be taxed as a REIT without the affirmative vote of
two-thirds (2/3) of the number of shares of Common Stock entitled to vote on
such matter at a special meeting of the shareholders.

IX.

A. Restrictions on Transfer.

1. Definitions. The following terms shall have the
following meanings:

"Beneficial Ownership" shall mean ownership of shares of
Equity Stock by a Person who would be treated as an owner of such shares of
Equity Stock either directly or indirectly through the application of Section
544 of the Code, as modified by Section

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<PAGE>

856(h)(1)(B) of the Code. The terms "Beneficial Owner," "Beneficially Owns," and
"Beneficially Owned" shall have correlative meanings.

"Beneficiary" shall mean, with respect to any Trust, one or
more organizations described in each of Section 170(b)(1)(A) (other than clauses
(vii) or (viii) thereof) and Section 170(c)(2) of the Code that are named by the
Corporation as the beneficiary or beneficiaries of such Trust, in accordance
with the provisions of Section (B)(1) of Article VIII hereof.

"Board of Directors" shall mean the Board of Directors of the
Corporation.

"Constructive Ownership" shall mean ownership of shares of
Equity Stock by a Person who would be treated as an owner of such shares of
Equity Stock either directly or indirectly through the application of Section
318 of the Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns," and "Constructively Owned" shall
have correlative meanings.

"Equity Stock" shall mean Preferred Stock and Common Stock of
the Corporation. The term "Equity Stock" shall include all shares of Preferred
Stock and Common Stock of the Corporation that are held as Shares-in-Trust in
accordance with the provisions of Section (B) of Article VIII hereof.

"Humphrey Partnership Agreement" shall mean the agreement of
limited partnership establishing Humphrey Hospitality Limited Partnership, a
Virginia limited partnership, as amended and restated from time to time.

"Market Price" on any date shall mean the average of the
Closing Price for the five consecutive Trading Days ending on such date. The
"Closing Price" on any date shall mean the last sale price, regular way, or, in

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<PAGE>

case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of Equity
Stock are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
shares of Equity Stock are listed or admitted to trading or, if the shares of
Equity Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price, or if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System or,
if such system is no longer in use, the principal other automated quotations
system that may then be in use or, if the shares of Equity Stock are not quoted
by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the shares of Equity
Stock selected by the Board of Directors.

"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Equity Stock are listed or admitted
to trading is open for the transaction of business or, if the shares of Equity
Stock are not listed or admitted to trading on any national securities exchange,
shall mean any day other than a Saturday, a Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.

"Non-Transfer Event" shall mean an event other than a
purported Transfer that would cause any Person to Beneficially Own or
Constructively Own shares of Equity Stock in excess of the Ownership Limit,

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<PAGE>

including, but not limited to, the granting of any option or entering into any
agreement for the sale, transfer or other disposition of shares of Equity Stock
or the sale, transfer, assignment or other disposition of any securities or
rights convertible into or exchangeable for shares of Equity Stock.

"Ownership Limit" shall mean, with respect to the Common
Stock, 9.9% of the number of outstanding shares of Common Stock and, with
respect to any class or series of Preferred Stock, 9.9% of the number of
outstanding shares of such class or series of Preferred Stock.

"Permitted Transferee" shall mean any Person designated as a
Permitted Transferee in accordance with the provisions of Section (B)(5) of
Article VIII hereof.

"Person" shall mean an individual, corporation, partnership,
estate, trust, a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a "group" as that
term is used for purposes of Section 12(d)(3) of the Securities Exchange Act of
1934, as amended.

"Prohibited Owner" shall mean, with respect to any purported
Transfer or Non-Transfer Event, any Person who, but for the provisions of
Section (A)(3) of Article VIII hereof, would own record title to shares of
Equity Stock.

"Redemption Rights" shall mean the rights granted under the
Humphrey Partnership Agreement to the limited partners to redeem, under certain
circumstances, their limited partnership interests for shares of Common Stock
(or cash at the option of the Corporation).

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<PAGE>

"Restriction Termination Date" shall mean the first day after
which (i) the Board of Directors determines that it is no longer in the best
interests of the Corporation to attempt to, or continue to, qualify as a REIT
and (ii) there is an affirmative vote of two-thirds of the number of shares of
Common Stock entitled to vote on such matter at a special meeting of the
shareholders of the Corporation.

"Shares-in-Trust" shall mean any shares of Equity Stock
designated Shares-in-Trust pursuant to Section (A)(3) of Article VIII hereof.

"Transfer" (as a noun) shall mean any sale, transfer, gift,
assignment, devise or other disposition of shares of Equity Stock, whether
voluntary or involuntary, whether of record, constructively or beneficially and
whether by operation of law or otherwise. "Transfer" (as a verb) shall not have
the correlative meaning.

"Trust" shall mean any separate trust created pursuant to
Section (A)(3) of Article VIII hereof and administered in accordance with the
terms of Section (B) of Article VIII hereof, for the exclusive benefit of any
Beneficiary.

"Trustee" shall mean any Person or entity unaffiliated with
both the Corporation and any Prohibited Owner, such Trustee to be designated by
the Corporation to act as trustee of any Trust, or any successor trustee
thereof.

2. Restriction on Transfers.

a. Except as provided in Section (A)(7) of
Article VIII hereof, prior to the Restriction Termination Date, (i) no Person
shall Beneficially Own or Constructively Own outstanding shares of Equity Stock
in excess of the Ownership Limit and (ii) any Transfer that, if effective, would
result in any Person Beneficially Owning or Constructively Owning shares of
Equity Stock in excess of

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<PAGE>

the Ownership Limit shall be void ab initio as to the Transfer of that number of
shares of Equity Stock which would be otherwise Beneficially Owned or
Constructively Owned by such Person in excess of the Ownership Limit, and the
intended transferee shall acquire no rights in such excess shares of Equity
Stock.

b. Except as provided in Section (A)(7) of
Article VIII hereof, prior to the Restriction Termination Date, any Transfer
that, if effective, would result in shares of Equity Stock being beneficially
owned by fewer than 100 Persons (determined without reference to any rules of
attribution) shall be void ab initio as to the Transfer of that number of shares
which would be otherwise beneficially owned (determined without reference to any
rules of attribution) by the transferee, and the intended transferee shall
acquire no rights in such shares of Equity Stock.

c. Prior to the Restriction Termination Date,
any Transfer of shares of Equity Stock that, if effective, would result in the
Corporation being "closely held" within the meaning of Section 856(h) of the
Code shall be void ab initio as to the Transfer of that number of shares of
Equity Stock which would cause the Corporation to be "closely held" within the
meaning of Section 856(h) of the Code, and the intended transferee shall acquire
no rights in such shares of Equity Stock.

d. Prior to the Restriction Termination Date,
any Transfer of shares of Equity Stock that, if effective, would cause the
Corporation to Constructively Own 10% or more of the ownership interests in a
tenant of the Corporation's real property, within the meaning of Section
856(d)(2)(B) of the Code, shall be void ab initio as to the Transfer of that
number of shares of Equity Stock which would cause the Corporation to
Constructively Own 10% or more of the ownership interests in a tenant of the

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<PAGE>

Corporation's real property, within the meaning of Section 856(d)(2)(B) of the
Code, and the intended transferee shall acquire no rights in such excess shares
of Equity Stock.

3. Transfer to Trust.

a. If, notwithstanding the other provisions
contained in this Section (A) of Article VIII, at any time prior to the
Restriction Termination Date, there is a purported Transfer or Non-Transfer
Event such that any Person would either Beneficially Own or Constructively Own
shares of Equity Stock in excess of the Ownership Limit, then, (i) except as
otherwise provided in Section (A)(7) of Article VIII hereof, the purported
transferee shall acquire no right or interest (or, in the case of a Non-Transfer
Event, the Person holding record title to the shares of Equity Stock
Beneficially Owned or Constructively Owned by such Beneficial Owner or
Constructive Owner, shall cease to own any right or interest) in such number of
shares of Equity Stock which would cause such Beneficial Owner or Constructive
Owner to Beneficially Own or Constructively Own shares of Equity Stock in excess
of the Ownership Limit, (ii) such number of shares of Equity Stock in excess of
the Ownership Limit (rounded up to the nearest whole share) shall be designated
Shares-in-Trust and, in accordance with the provisions of Section (B) of Article
VIII hereof, transferred automatically and by operation of law to the Trust to
be held in accordance with that Section (B) of Article VIII, and (iii) the
Prohibited Owner shall submit such number of shares of Equity Stock to the
Corporation for registration in the name of the Trustee. Such transfer to a
Trust and the designation of shares as Shares-in-Trust shall be effective as of
the close of business on the business day prior to the date of the Transfer or
Non-Transfer Event, as the case may be.

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<PAGE>

b. If, notwithstanding the other provisions
contained in this Section (A) of Article VIII, at any time prior to the
Restriction Termination Date, there is a purported Transfer or Non-Transfer
Event that, if effective, would (i) result in the shares of Equity Stock being
beneficially owned by fewer than 100 Persons (determined without reference to
any rules of attribution), (ii) result in the Corporation being "closely held"
within the meaning of Section 856(h) of the Code, or (iii) cause the Corporation
to Constructively Own 10% or more of the ownership interests in a tenant of the
Corporation's real property, within the meaning of Section 856(d)(2)(B) of the
Code, then (x) the purported transferee shall not acquire any right or interest
(or, in the case of a Non-Transfer Event, the Person holding record title of the
shares of Equity Stock with respect to which such Non-Transfer Event occurred,
shall cease to own any right or interest) in such number of shares of Equity
Stock, the ownership of which by such purported transferee or record holder
would (A) result in the shares of Equity Stock being beneficially owned by fewer
than 100 Persons (determined without reference to any rules of attribution), (B)
result in the Corporation being "closely held" within the meaning of Section
856(h) of the Code, or (C) cause the Corporation to Constructively Own 10% or
more of the ownership interests in a tenant of the Corporation's real property,
within the meaning of Section 856(d)(2)(B) of the Code, (y) such number of
shares of Equity Stock (rounded up to the nearest whole share) shall be
designated Shares-in-Trust and, in accordance with the provisions of Section (B)
of Article VIII hereof, transferred automatically and by operation of law to the
Trust to be held in accordance with that Section (B) of Article VIII, and (z)
the Prohibited Owner shall submit such number of shares of Equity Stock to the
Corporation for registration in the name of the Trustee. Such transfer to a

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<PAGE>

Trust and the designation of shares as Shares-in-Trust shall be effective as of
the close of business on the business day prior to the date of the Transfer or
Non-Transfer Event, as the case may be.

4. Remedies For Breach. If the Corporation, or its designees,
shall at any time determine in good faith that a Transfer has taken place in
violation of Section (A)(2) of Article VIII hereof or that a Person intends to
acquire or has attempted to acquire Beneficial Ownership or Constructive
Ownership of any shares of Equity Stock in violation of Section (A)(2) of
Article VIII hereof, the Corporation shall take such action as it deems
advisable to refuse to give effect to or to prevent such Transfer or
acquisition, including, but not limited to, refusing to give effect to such
Transfer on the books of the Corporation or instituting proceedings to enjoin
such Transfer or acquisition.

5. Notice of Restricted Transfer. Any Person who acquires or
attempts to acquire shares of Equity Stock in violation of Section (A)(2) of
Article VIII hereof, or any Person who owned shares of Equity Stock that were
transferred to the Trust pursuant to the provisions of Section (A)(3) of Article
VIII hereof, shall immediately give written notice to the Corporation of such
event and shall provide to the Corporation such other information as the
Corporation may request in order to determine the effect, if any, of such
Transfer or Non-Transfer Event, as the case may be, on the Corporation's status
as a REIT.

6. Owners Required To Provide Information. Prior to the
Restriction Termination Date:
a. Every Beneficial Owner or Constructive Owner
of more than 5%, or such lower percentages as required pursuant to regulations
under the Code, of the outstanding shares of all classes of capital stock of the
Corporation shall, within 30 days after January 1 of each year, provide to the
Corporation a

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<PAGE>

written statement or affidavit stating the name and address of such Beneficial
Owner or Constructive Owner, the number of shares of Equity Stock Beneficially
Owned or Constructively Owned, and a description of how such shares are held.
Each such Beneficial Owner or Constructive Owner shall provide to the
Corporation such additional information as the Corporation may request in order
to determine the effect, if any, of such Beneficial Ownership or Constructive
Ownership on the Corporation's status as a REIT and to ensure compliance with
the Ownership Limit.

b. Each Person who is a Beneficial Owner or
Constructive Owner of shares of Equity Stock and each Person (including the
stockholder of record) who is holding shares of Equity Stock for a Beneficial
Owner or Constructive Owner shall provide to the Corporation a written statement
or affidavit stating such information as the Corporation may request in order to
determine the Corporation's status as a REIT and to ensure compliance with the
Ownership Limit.

7. Exception. The Ownership Limit shall not apply to the
acquisition of shares of Equity Stock by an underwriter that participates in a
public offering of such shares for a period of 90 days following the purchase by
such underwriter of such shares provided that the restrictions contained in
Section (A)(2) of Article VIII hereof will not be violated following the
distribution by such underwriter of such shares. In addition, the Board of
Directors, upon receipt of a ruling from the Internal Revenue Service or an
opinion of counsel in each case to the effect that the restrictions contained in
Section (A)(2)(B), Section (A)(2)(C), and/or Section (A)(2)(D) of Article VIII
hereof will not be violated, may exempt a Person from the Ownership Limit
provided that (i) the Board of Directors obtains such representations and
undertakings from such Person as are reasonably necessary to ascertain that no

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<PAGE>

individual's Beneficial Ownership or Constructive Ownership of shares of Equity
Stock will violate the Ownership Limit and (ii) such Person agrees in writing
that any violation or attempted violation will result in such transfer to the
Trust of shares of Equity Stock pursuant to Section (A)(3) of Article VIII
hereof.

B. Shares-in-Trust.

1. Trust. Any shares of Equity Stock transferred to a Trust
and designated Shares-in-Trust pursuant to Section (A)(3) of Article VIII hereof
shall be held for the exclusive benefit of the Beneficiary. The Corporation
shall name a Beneficiary for each Trust within five days after discovery of the
existence thereof. Any transfer to a Trust, and subsequent designation of shares
of Equity Stock as Shares-in-Trust, pursuant to Section (A)(3) of Article VIII
hereof shall be effective as of the close of business on the business day prior
to the date of the Transfer or Non-Transfer Event that results in the transfer
to the Trust. Shares-in-Trust shall remain issued and outstanding shares of
Equity Stock of the Corporation and shall be entitled to the same rights and
privileges on identical terms and conditions as are all other issued and
outstanding shares of Equity Stock of the same class and series. When
transferred to a Permitted Transferee in accordance with the provisions of
Section (B)(5) of Article VIII hereof, such Shares-in-Trust shall cease to be
designated as Shares-in-Trust.

2. Dividend Rights. The Trust, as record holder of
Shares-in-Trust, shall be entitled to receive all dividends and distributions as
may be declared by the Board of Directors on such shares of Equity Stock and
shall hold such dividends or distributions in trust for the benefit of the
Beneficiary. The Prohibited Owner with respect to Shares-in-Trust shall repay to

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<PAGE>

the Trust the amount of any dividends or distributions received by it that (i)
are attributable to any shares of Equity Stock designated Shares-in-Trust and
(ii) the record date of which was on or after the date that such shares became
Shares-in-Trust. The Corporation shall take all measures that it determines
reasonably necessary to recover the amount of any such dividend or distribution
paid to a Prohibited Owner, including, if necessary, withholding any portion of
future dividends or distributions payable on shares of Equity Stock Beneficially
Owned or Constructively Owned by the Person who, but for the provisions of
Section (A)(3) of Article VIII hereof, would Constructively Own or Beneficially
Own the Shares-in-Trust; and, as soon as reasonably practicable following the
Corporation's receipt or withholding thereof, shall pay over to the Trust for
the benefit of the Beneficiary the dividends so received or withheld, as the
case may be.

3. Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of Shares-in-Trust shall be entitled
to receive, ratably with each other holder of shares of Equity Stock of the same
class or series, that portion of the assets of the Corporation which is
available for distribution to the holders of such class and series of shares of
Equity Stock. The Trust shall distribute to the Prohibited Owner the amounts
received upon such liquidation, dissolution, or winding up, or distribution;
provided, however, that the Prohibited Owner shall not be entitled to receive
amounts pursuant to this Section (B)(3) of Article VIII in excess of, in the
case of a purported Transfer in which the Prohibited Owner gave value for shares
of Equity Stock and which Transfer resulted in the transfer of the shares to the
Trust, the price per share, if any, such Prohibited Owner paid for the shares of
Equity Stock and, in the case of a Non-Transfer Event or Transfer in which the
Prohibited Owner did not give value for such shares (e.g., if the shares were
received through a gift or devise) and which Non-Transfer Event or Transfer, as
the case may be, resulted in the transfer of shares to the Trust, the price per

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<PAGE>

share equal to the Market Price on the date of such Non-Transfer Event or
Transfer. Any remaining amount in such Trust shall be distributed to the
Beneficiary.

4. Voting Rights. The Trustee shall be entitled to vote all
Shares-in-Trust. Any vote by a Prohibited Owner as a holder of shares of Equity
Stock prior to the discovery by the Corporation that the shares of Equity Stock
are Shares-in-Trust shall, subject to applicable law, be rescinded and shall be
void ab initio with respect to such Shares-in-Trust and the Prohibited Owner
shall be deemed to have given, as of the close of business on the business day
prior to the date of the purported Transfer or Non-Transfer Event that results
in the transfer to the Trust of shares of Equity Stock under Section (A)(3) of
Article VIII hereof, an irrevocable proxy to the Trustee to vote the
Shares-in-Trust in the manner in which the Trustee, in its sole and absolute
discretion, desires.

5. Designation of Permitted Transferee. The Trustee shall have
the exclusive and absolute right to designate a Permitted Transferee of any and
all Shares-in-Trust. In an orderly fashion so as not to materially adversely
affect the Market Price of the Shares-in-Trust, the Trustee shall designate any
Person as Permitted Transferee, provided, however, that (i) the Permitted
Transferee so designated purchases for valuable consideration (whether in a
public or private sale) the Shares-in-Trust and (ii) the Permitted Transferee so
designated may acquire such Shares-in-Trust without such acquisition resulting
in a transfer to a Trust and the redesignation of such shares of Equity Stock so
acquired as Shares-in-Trust under Section (A)(3) of Article VIII hereof. Upon
the designation by the Trustee of a Permitted Transferee in accordance with the
provisions of this Section (B)(5) of Article VIII, the Trustee shall (i) cause
to be transferred to the Permitted Transferee that number of Shares-in-Trust

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<PAGE>

acquired by the Permitted Transferee, (ii) cause to be recorded on the books of
the Corporation that the Permitted Transferee is the holder of record of such
number of shares of Equity Stock, (iii) cause the Shares-in-Trust to be
canceled, and (iv) distribute to the Beneficiary any and all amounts held with
respect to the Shares-in-Trust after making that payment to the Prohibited Owner
pursuant to Section (B)(6) of Article VIII hereof.

6. Compensation to Record Holder of Shares of Equity Stock
that Become Shares-in-Trust. Any Prohibited Owner shall be entitled (following
discovery of the Shares-in-Trust and subsequent designation of the Permitted
Transferee in accordance with Section (B)(5) of Article VIII hereof or following
the acceptance of the offer to purchase such shares in accordance with Section
(B)(7) of Article VIII hereof) to receive from the Trustee following the sale or
other disposition of such Shares-in-Trust the lesser of (i) in the case of (a) a
purported Transfer in which the Prohibited Owner gave value for shares of Equity
Stock and which Transfer resulted in the transfer of the shares to the Trust,
the price per share, if any, such Prohibited Owner paid for the shares of Equity
Stock, or (b) a Non-Transfer Event or Transfer in which the Prohibited Owner did
not give value for such shares (e.g., if the shares were received through a gift
or devise) and which Non-Transfer Event or Transfer, as the case may be,
resulted in the transfer of shares to the Trust, the price per share equal to
the Market Price on the date of such Non-Transfer Event or Transfer, and (ii)
the price per share received by the Trustee from the sale or other disposition
of such Shares-in-Trust in accordance with Section (B)(5) of Article VIII
hereof. Any amounts received by the Trustee in respect of such Shares-in-Trust
and in excess of such amounts to be paid the Prohibited Owner pursuant to this
Section (B)(6) shall be distributed to the Beneficiary in accordance with the

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<PAGE>

provisions of Section (B)(5) of Article VIII hereof. Each Beneficiary and
Prohibited Owner waive any and all claims that they may have against the Trustee
and the Trust arising out of the disposition of Shares-in-Trust, except for
claims arising out of the gross negligence or willful misconduct of, or any
failure to make payments in accordance with this Section (B), by such Trustee or
the Corporation.

7. Purchase Right in Shares-in-Trust. Shares-in-Trust shall be
deemed to have been offered for sale to the Corporation, or its designee, at a
price per share equal to the lesser of (i) the price per share in the
transaction that created such Shares-in-Trust (or, in the case of devise, gift
or Non-Transfer Event, the Market Price at the time of such devise, gift or
Non-Transfer Event) and (ii) the Market Price on the date the Corporation, or
its designee, accepts such offer. The Corporation shall have the right to accept
such offer for a period of ninety days after the later of (i) the date of the
Non-Transfer Event or purported Transfer which resulted in such Shares-in-Trust
and (ii) the date the Corporation determines in good faith that a Transfer or
Non-Transfer Event resulting in Shares-in-Trust has occurred, if the Corporation
does not receive a notice of such Transfer or Non-Transfer Event pursuant to
Section (A)(5) of Article VIII hereof.

C. Remedies Not Limited. Nothing contained in this Article VIII shall
limit the authority of the Corporation to take such other action as it deems
necessary or advisable to protect the Corporation and the interests of its
shareholders by preservation of the Corporation's status as a REIT and to ensure
compliance with the Ownership Limit.

D. Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this Article VIII, including any definition contained in

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<PAGE>

Section (A)(1) of Article VIII hereof, the Board of Directors shall have the
power to determine the application of the provisions of this Article VIII with
respect to any situation based on the facts known to it.

E. Legend. Each certificate for shares of Equity Stock shall bear the
following legend:

"The shares of [Common or Preferred] Stock represented by this
certificate are subject to restrictions on transfer for the purpose of the
Corporation's maintenance of its status as a real estate investment trust under
the Internal Revenue Code of 1986, as amended (the "Code"). No Person may (i)
Beneficially Own or Constructively Own shares of Common Stock in excess of 9.9%
of the number of outstanding shares of Common Stock, (ii) Beneficially Own or
Constructively Own shares of any class or series of Preferred Stock in excess of
9.9% of the number of outstanding shares of such class or series of Preferred
Stock, (iii) beneficially own shares of Equity Stock that would result in the
shares of Equity Stock being beneficially owned by fewer than 100 Persons
(determined without reference to any rules of attribution), (iv) Beneficially
Own shares of Equity Stock that would result in the Corporation being "closely
held" under Section 856(h) of the Code, or (v) Constructively Own shares of
Equity Stock that would cause the Corporation to Constructively Own 10% or more
of the ownership interests in a tenant of the Corporation's real property,
within the meaning of Section 856(d)(2)(B) of the Code. Any Person who attempts
to Beneficially Own or Constructively Own shares of Equity Stock in excess of
the above limitations must immediately notify the Corporation in writing. If the
restrictions above are violated, the shares of Equity Stock represented hereby
will be transferred automatically and by operation of law to a Trust and shall
be designated Shares-in-Trust. All capitalized terms in this legend have the
meanings defined in the Corporation's

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<PAGE>

Amended and Restated Articles of Incorporation, as the same may be further
amended from time to time, a copy of which, including the restrictions on
transfer, will be sent without charge to each shareholder who so requests."

F. Severability. If any provision of this Article VIII or any
application of any such provision is determined to be invalid by any federal or
state court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected and other applications of such provision shall
be affected only to the extent necessary to comply with the determination of
such court.

Dated: October 26, 1999

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EXHIBIT 3.2

THIRD AMENDED AND RESTATED

BYLAWS

HUMPHREY HOSPITALITY TRUST, INC.
<PAGE>

TABLE OF CONTENTS
Page

ARTICLE I................................................................... 1

Section 1. Principal Office....................................... 1
Section 2. Additional Offices..................................... 1
Section 3. Fiscal and Taxable Years............................... 1

ARTICLE II.................................................................. 2
Section 1. Place.................................................. 2
Section 2. Annual Meeting......................................... 2
Section 3. Special Meetings....................................... 3
Section 4. Notice................................................. 3
Section 5. Scope of Notice........................................ 4
Section 6. Organization........................................... 4
Section 7. Quorum................................................. 4
Section 8. Voting................................................. 5
Section 9. Proxies................................................ 5
Section 10. Voting of Shares by Certain Holders................... 5
Section 11. Inspectors............................................. 7
Section 12. Fixing Record Date..................................... 7
Section 13. Action Without a Meeting............................... 8
Section 14. Voting by Ballot....................................... 8
Section 15. Voting List............................................ 8
Section 16. Shareholder Proposals.................................. 9

ARTICLE III................................................................. 10
Section 1. General Powers......................................... 10
Section 2. Number, Tenure and Qualifications...................... 10
Section 3. Changes in Number; Vacancies........................... 10
Section 4. Resignations........................................... 11
Section 5. Removal of Directors................................... 12
Section 6. Annual and Regular Meetings............................ 12
Section 7. Special Meetings....................................... 12
Section 8. Notice................................................. 12
Section 9. Quorum................................................. 13
Section 10. Voting................................................ 13
Section 11. Telephone Meetings.................................... 13
Section 12. Action Without a Meeting.............................. 14
Section 13. Compensation.......................................... 14
Section 14. Policies and Resolutions.............................. 14
Section 15. Nominations........................................... 15
<PAGE>

ARTICLE IV.................................................................. 16
Section 1. Committees of the Board................................ 16
Section 2. Telephone Meetings..................................... 18
Section 3. Action By Committees Without a Meeting................. 18

ARTICLE V................................................................... 18
Section 1. General Provisions..................................... 18
Section 2. Subordinate Officers, Committees and Agents............ 19
Section 3. Removal and Resignation................................ 20
Section 4. Vacancies.............................................. 20
Section 5. General Powers......................................... 20
Section 6. Duties of the Chairman of the Board.....................20
Section 7. Duties of the Chief Executive Officer.................. 20
Section 8. Duties of the President................................ 21
Section 9. Duties of the Vice President............................21
Section 10. Duties of the Treasurer............................... 22
Section 11. Duties of the Secretary............................... 22
Section 12. Other Duties of Officers.............................. 23
Section 13. Salaries.............................................. 23

ARTICLE VI.................................................................. 23
Section 1. Contracts.............................................. 23
Section 2. Checks and Drafts...................................... 23
Section 3. Deposits............................................... 23

ARTICLE VII................................................................. 24
Section 1. Certificates of Stock.................................. 24
Section 2. Lost Certificate....................................... 24
Section 3. Transfer Agents and Registrars......................... 25
Section 4. Transfer of Stock...................................... 25
Section 5. Stock Ledger........................................... 26

ARTICLE VIII................................................................ 26
Section 1. Declaration............................................ 26
Section 2. Contingencies.......................................... 26

ARTICLE IX.................................................................. 27
Section 1. Seal................................................... 27
Section 2. Affixing Seal.......................................... 27

ARTICLE X................................................................... 27
Waiver of Notice................................................... 27

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ARTICLE XI.................................................................. 28
Section 1. By Directors........................................... 28
Section 2. By Shareholders........................................ 28

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THIRD AMENDED AND RESTATED

BYLAWS

HUMPHREY HOSPITALITY TRUST, INC.

The Board of Directors of Humphrey Hospitality Trust, Inc. (the
"Corporation") hereby sets out the Bylaws of the Corporation in their entirety,
as follows:

ARTICLE I

Offices
-------

Section 1. Principal Office. The principal office of the Corporation shall
be located at 12301 Old Columbia Pike, Silver Spring, Maryland 20904, or at any
other place or places as the Board of Directors may designate.

Section 2. Additional Offices. The Corporation may have additional offices
at such places as the Board of Directors may from time to time determine or the
business of the Corporation may require.

Section 3. Fiscal and Taxable Years. The fiscal and taxable years of the
Corporation shall begin on January 1 and end on December 31.

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ARTICLE II

Meetings of Shareholders
------------------------

Section 1. Place. All meetings of shareholders shall be held at 12301 Old
Columbia Pike, Silver Spring, Maryland 20904, or at such other place within the
United States as shall be stated in the notice of the meeting.

Section 2. Annual Meeting. The CEO or the Board of Directors may fix the
time of the annual meeting of the shareholders for the election of Directors and
the transaction of any business as may be properly brought before the meeting,
but if no such date and time is fixed by the CEO or the Board of Directors, the
meeting for any calendar year shall be held on the fourth Thursday in May, if
that day is not a legal holiday. If that day is a legal holiday, the annual
meeting shall be held on the next succeeding business day that is not a legal
holiday.

Section 3. Special Meetings. The CEO, a majority of the Board of Directors
or a majority of the Independent Directors may call special meetings of the
shareholders. Special meetings of shareholders also shall be called by the
Secretary upon the written request of the holders of shares entitled to cast not
less than ten percent (10%) of all the votes entitled to be cast at such
meeting. Such request shall state the purpose of such meeting and the matters
proposed to be acted on at such meeting. The Secretary shall inform such
shareholders of the reasonably estimated cost of preparing and mailing notice of
the meeting and, upon payment to the Corporation of such costs, the Secretary
shall give notice to each shareholder entitled to notice of the meeting. Unless
requested by shareholders entitled to cast a majority of all the votes entitled

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to be cast at such meeting, a special meeting need not be called to consider any
matter which is substantially the same as a matter voted on at any annual or
special meeting of the shareholders held during the preceding twelve months.

Section 4. Notice. Not less than 10 nor more than 60 days before each
meeting of shareholders, the Secretary shall give to each shareholder entitled
to vote at such meeting and to each shareholder not entitled to vote who is
entitled to notice of the meeting, written or printed notice stating the time
and place of the meeting and, in the case of a special meeting or as otherwise
may be required by statute, the purpose for which the meeting is called, either
by mail or by presenting it to such shareholder personally or by leaving it at
his residence or usual place of business. If mailed, such notice shall be deemed
to be given when deposited in the United States mail addressed to the
shareholder at his post office address as it appears on the records of the
Corporation, with postage thereon prepaid.

Notice of a meeting of shareholders to act on (i) an amendment of the
Articles of Incorporation of the Corporation (the "Articles of Incorporation"),
(ii) plan of merger or share exchange, (iii) the sale, lease, exchange or other
disposition of all, or substantially all, the property of the Corporation
otherwise than in the usual and regular course of its business, or (iv) the
dissolution of the Corporation, shall be given in the manner provided above, to
each shareholder, whether or not entitled to vote, not less than twenty-five nor
more than sixty days before the date of the meeting. Any such notice shall state
that one of the purposes of the meeting is to consider the particular
extraordinary corporate act and, when applicable, shall be accompanied by a copy
of the (i) proposed amendment, (ii) plan of merger or share exchange, or (iii)
agreement pursuant to which the disposition of all or substantially all of the
Corporation's property will be effected.

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Section 5. Scope of Notice. No business shall be transacted at a special
meeting of shareholders except that specifically designated in the notice of the
meeting. Subject to the provisions of Section 16 of this Article II, any
business of the Corporation may be transacted at the annual meeting without
being specifically designated in the notice, except such business as is required
by statute to be stated in such notice.

Section 6. Organization. At every meeting of the shareholders, the CEO, if
there be one, shall conduct the meeting or, in the case of vacancy in office or
absence of the CEO, one of the following officers present shall conduct the
meeting and act as Chairman in the order stated: the Chairman of the Board, Vice
Chairman of the Board, if there be one, the President, the Vice Presidents in
their order of rank and seniority, or a Chairman chosen by the shareholders
entitled to cast a majority of the votes which all shareholders present in
person or by proxy are entitled to cast. The Secretary, or, in his absence, an
assistant secretary, or in the absence of both the Secretary and assistant
secretaries, a person appointed by the Chairman shall act as Secretary.

Section 7. Quorum. At any meeting of shareholders, the presence in person
or by proxy of shareholders entitled to cast a majority of all the votes
entitled to be cast at such meeting shall constitute a quorum; but this Section
7 shall not affect any requirement under any statute, the Articles of
Incorporation or these Bylaws for the vote necessary for the adoption of any
measure. If such quorum shall not be present at any meeting of the shareholders,
the shareholders representing a majority of the shares entitled to vote at such
meeting, present in person or by proxy, may vote to adjourn the meeting from
time to time to a date not more than 120 days after the original record date
without notice other than announcement at the meeting until such quorum shall be
present. At such adjourned meeting at which a quorum shall be present, any

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business may be transacted which might have been transacted at the meeting as
originally notified. Any meeting at which Directors are to be elected shall be
adjourned only from day to day, as may be directed by shareholders representing
a majority of the shares who are present in person or by proxy and who are
entitled to vote on the election of Directors.

Section 8. Voting. A plurality of all the votes cast at a meeting of
shareholders duly called and at which a quorum is present shall be sufficient to
elect a director. There shall be no cumulative voting. Each share of stock may
be voted for as many individuals as there are Directors to be elected and for
whose election the share is entitled to be voted. A majority of the votes cast
at a meeting of shareholders duly called and at which a quorum is present shall
be sufficient to approve any other matter which may properly come before the
meeting, unless more than a majority of the votes cast is required by statute,
by the Articles of Incorporation or by these Bylaws. Each shareholder of record
shall have the right, at every meeting of shareholders, to one vote for each
share held.

Section 9. Proxies. A shareholder may vote the shares of stock owned of
record by him, either in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney in fact. Such proxy shall be
filed with the Secretary of the Corporation before or at the time of the
meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.

Section 10. Voting of Shares by Certain Holders. Shares registered in the
name of another corporation, if entitled to be voted, may be voted by the
president, a vice president or a proxy appointed by the president or a vice

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president of such other corporation, unless some other person who has been
appointed to vote such shares pursuant to a bylaw or a resolution of the board
of directors of such other corporation presents a certified copy of such bylaw
or resolution, in which case such person may vote such shares. Any fiduciary may
vote shares registered in his name as such fiduciary, either in person or by
proxy.

Shares of its own stock indirectly owned by this Corporation shall not
be voted at any meeting and shall not be counted in determining the total number
of outstanding shares entitled to be voted at any given time, unless they are
held by it in a fiduciary capacity, in which case they may be voted and shall be
counted in determining the total number of outstanding shares at any given time.

The Board of Directors may adopt by resolution a procedure by which a
shareholder may certify in writing to the Corporation that any shares of stock
registered in the name of the shareholder are held for the account of a
specified person other than the shareholder. The resolution shall set forth the
class of shareholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the shareholder of record of
the specified stock in place of the shareholder who makes the certification.

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Section 11. Inspectors. At any meeting of shareholders, the Chairman of the
meeting may, or upon the request of any shareholder shall, appoint one or more
persons as inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares represented at the meeting based upon their
determination of the validity and effect of proxies, count all votes, report the
results and perform such other acts as are proper to conduct the election and
voting with impartiality and fairness to all the shareholders.

Each report of an inspector shall be in writing and signed by him or by
a majority of them if there is more than one inspector acting at such meeting.
If there is more than one inspector, the report of a majority shall be the
report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be PRIMA FACIE evidence thereof.

Section 12. Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of the shareholders or any
adjournment thereof, or entitled to receive payment for any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of

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shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section such
determination shall apply to any adjournment thereof.

Section 13. Action Without a Meeting. Any action required or permitted to
be taken at a meeting of shareholders may be taken without a meeting if a
consent in writing, setting forth such action, is signed by each shareholder
entitled to vote on the matter and any other shareholder entitled to notice of a
meeting of shareholders (but not to vote thereat) has waived in writing any
right to dissent from such action, and such consent and waiver are filed with
the minutes of proceedings of the shareholders.

Section 14. Voting by Ballot. Voting on any question or in any election
may be VIVA VOCE unless the presiding officer shall order or any shareholder
shall demand that voting be by ballot.

Section 15. Voting List. The officer or agent having charge of the stock
transfer books for shares of the Corporation shall make, at least ten (10) days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, with the address of
and the number of shares held by each. Such list, for a period of ten (10) days
prior to such meeting, shall be kept on file at the registered office of the
Corporation or at its principal place of business or at the office of its
transfer agent or registrar and shall be subject to inspection by any
shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the

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shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders. If the requirements of this section have not been
substantially complied with, the meeting shall, on the demand of any shareholder
in person or by proxy, be adjourned until the requirements are complied with.

Section 16. Shareholder Proposals. To be properly brought before an annual
meeting of shareholders, business must be (i) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the Board of
Directors, (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (iii) otherwise properly brought before
the meeting by a shareholder. In addition to any other applicable requirements,
for business to be properly brought before an annual meeting by a shareholder,
the shareholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a shareholder's notice must be
given, either by personal delivery or by United States mail, postage prepaid, to
the Secretary of the Corporation not later than ninety (90) days in advance of
the annual meeting. A shareholder's notice to the Secretary shall set forth as
to each matter the shareholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting (including the specific proposal to be presented) and the reasons for
conducting such business at the annual meeting, (ii) the name and record address
of the shareholder proposing such business, (iii) the class and number of shares
of the Corporation that are beneficially owned by the shareholder, and (iv) any
material interest of the shareholder in such business.

In the event that a shareholder attempts to bring business before an
annual meeting without complying with the provisions of this Section 16, the

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Chairman of the meeting shall declare to the meeting that the business was not
properly brought before the meeting in accordance with the foregoing procedures,
and such business shall not be transacted.

No business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Section 16, provided, however,
that nothing in this Section 16 shall be deemed to preclude discussion by any
shareholder of any business properly brought before the annual meeting.

ARTICLE III

Directors
---------

Section 1. General Powers. The Board of Directors shall have full power to
conduct, manage, and direct the business and affairs of the Corporation, and all
powers of the Corporation, except those specifically reserved or granted to the
shareholders by statute or by the Articles of Incorporation or these Bylaws,
shall be exercised by, or under the authority of, the Board of Directors.

Section 2. Number, Tenure and Qualifications. The number of Directors of
the Corporation shall be not less than three (3) nor more than nine (9).
Directors need not be shareholders in the Corporation.

At all times (except during a period not to exceed sixty (60) days
following the death, resignation, incapacity or removal from office of a
Director prior to expiration of the Director's term of office), a majority of
the Board of Directors shall be comprised of Independent Directors.

Section 3. Changes in Number; Vacancies. Any vacancy occurring on the Board
of Directors may, subject to the provisions of Section 5 of this Article III, be

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filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum; provided, however, that a majority
of Independent Directors shall nominate replacements for vacancies among the
Independent Directors, which replacements must be elected by a majority of the
Directors, including a majority of the Independent Directors. Any vacancy
occurring by reason of an increase in the number of Directors may be filled by
action of a majority of the entire Board of Directors including a majority of
Independent Directors. Notwithstanding the foregoing, in the event of a vacancy
occurring prior to the 2006 annual meeting of shareholders among the STH
Directors or the HHTI Directors (each as defined in that certain Agreement and
Plan of Merger, dated as of June 11, 1999, by and between the Company and
Supertel Hospitality, Inc.), a majority of the remaining STH Directors and HHTI
Directors, respectively, shall nominate replacements for any vacancy among the
STH Directors and the HHTI Directors, as the case may be. If the shareholders of
any class or series are entitled separately to elect one or more Directors, a
majority of the remaining Directors elected by that class or series or the sole
remaining Director elected by that class or series may fill any vacancy among
the number of Directors elected by that class or series. A Director elected by
the Board of Directors to fill a vacancy shall be elected to hold office for the
balance of the term of the Director he is replacing or until his successor is
elected and qualified. The Board of Directors may declare vacant the office of a
Director who has been declared of unsound mind by an order of court, who has
pled guilty or nolo contendere to, or been convicted of, a felony involving
moral turpitude, or who has willfully violated the Company's Articles of
Incorporation or these Bylaws.

Section 4. Resignations. Any Director or member of a committee may resign
at any time. Such resignation shall be made in writing and shall take effect at

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the time specified therein, or if no time be specified, at the time of the
receipt by the Chairman of the Board, the CEO, the President or the Secretary.

Section 5. Removal of Directors. The shareholders may, at any time, remove
any Director, with or without cause, by the affirmative vote of the holders of
not less than a majority of all the shares entitled to vote on the election of
Directors and may elect a successor to fill any resulting vacancy for the
balance of the term of the removed Director.

Section 6. Annual and Regular Meetings. An annual meeting of the Board of
Directors shall be held immediately after and at the same place as the annual
meeting of shareholders, no notice other than this bylaw being necessary. The
Board of Directors may provide, by resolution, the time and place, either within
or without the Commonwealth of Virginia, for the holding of regular meetings of
the Board of Directors without other notice than such resolution.

Section 7. Special Meetings. Special meetings of the Board of Directors may
be called by or at the request of the Chairman of the Board, the CEO, the
President, a majority of the Board of Directors or a majority of the Independent
Directors then in office. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or without
the Commonwealth of Virginia, as the place for holding any special meeting of
the Board of Directors called by them.

Section 8. Notice. Notice of any special meeting of the Board of Directors
shall be given by written notice delivered personally, telegraphed, telecopied
or mailed to each Director at his business or resident address. Personally

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delivered, telegraphed or telecopied notices shall be given at least two days
prior to the meeting. Notice by mail shall be given at least five days prior to
the meeting. If mailed, such notice shall be deemed to be given when deposited
in the United States mail properly addressed, with postage thereon prepaid. If
given by telegram, such notice shall be deemed to be given when the telegram is
delivered to the telegraph company. Neither the business to be transacted at,
nor the purpose of, any annual, regular or special meeting of the Board of
Directors need be stated in the notice, unless specifically required by statute
or these Bylaws.

Section 9. Quorum. Subject to the provisions of Section 10 of this Article
III, a majority of the entire Board of Directors shall constitute a quorum for
transaction of business at any meeting of the Board of Directors, provided that,
if less than a quorum is present at said meeting, a majority of the Directors
present may adjourn the meeting from time to time without further notice.

Subject to the provisions of Section 10 of this Article III, the
Directors present at a meeting which has been duly called and convened may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough Directors to leave less than a quorum.

Section 10. Voting. The action of the majority of the Directors present at
a meeting at which a quorum is present shall be the action of the Board of
Directors, unless the concurrence of a greater proportion is required for such
action by the Articles of Incorporation, these Bylaws, or applicable statute.

Section 11. Telephone Meetings. Members of the Board of Directors may
participate in a meeting by means of a conference telephone or similar

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communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.

Section 12. Action Without a Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors may be taken without a
meeting, if a consent in writing to such action is signed by each Director and
such written consent is filed with the minutes of proceedings of the Board of
Directors.

Section 13. Compensation. Directors shall receive such reasonable
compensation for their services as Directors as the Board of Directors may fix
or determine from time to time; such compensation may include a fixed sum,
shares of capital stock of the Corporation and reimbursement of reasonable
expenses incurred in traveling to and from or attending regular or special
meetings of the Board of Directors or of any committee thereof.

Section 14. Policies and Resolutions. It shall be the duty of the Board of
Directors to insure that the purchase, sale, retention and disposal of the
Corporation's assets, the investment policies and the borrowing policies of the
Corporation and the limitations thereon or amendment thereof are at all times:

(a) consistent with such policies, limitations and
restrictions as are contained in these Bylaws, or in the Corporation's Articles
of Incorporation, or as described in the Corporation's ongoing periodic reports
filed with the SEC, subject to revision from time to time at the discretion of
the Board of Directors without shareholder approval unless otherwise required by
law; and

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(b) in compliance with the restrictions applicable to
real estate investment trusts pursuant to the Internal Revenue Code of 1986, as
amended.

Section 15. Nominations. Subject to the rights of holders of any class
or series of stock having a preference over the common stock as to dividends or
upon liquidation, nominations for the election of Directors shall be made by the
Company's notice of the meeting of shareholders for such election, the Board of
Directors, or by any shareholder entitled to vote in the election of Directors
generally. At the 2000 through 2005 annual meetings of shareholders, the STH
Directors and the HHTI Directors, or, in the event any one or more of them shall
decline or be unable to serve as a director, such individual designated by the
remaining STH Directors or HHTI Directors, as the case may be, shall be
nominated for election to the Board of Directors and the Board of Directors
shall use its best efforts to cause each such individual to be so elected at
each such annual meeting of shareholders.

Any shareholder entitled to vote in the election of Directors generally
may nominate one or more persons for election as Directors at a meeting only if
written notice of such shareholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid, to the Secretary of the Corporation not later than (i)
with respect to an election to be held at an annual meeting of shareholders,
ninety (90) days in advance of such meeting, and (ii) with respect to an
election to be held at a special meeting of shareholders for the election of
Directors, the close of business on the seventh (7th) day following the date on
which notice of such meeting is first given to shareholders. Each notice shall
set forth: (a) the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the shareholder is a holder of record of stock of the Corporation entitled

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to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the Board of Directors;
and (e) the consent of each nominee to serve as a Director of the Corporation if
so elected. The Chairman of the meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedure.

ARTICLE IV

Committees
----------

Section 1. Committees of the Board. The Board of Directors may appoint from
among its members an executive committee and other committees comprised of two
or more Directors. A majority of the members of any committee so appointed shall
be Independent Directors. The Board of Directors shall appoint (i) an
acquisition committee which is comprised of not less than two members, a
majority of whom are Independent Directors and (ii) an audit committee of which
is comprised entirely of Independent Directors. The Board of Directors may
delegate to any committee any of the powers of the Board of Directors except the
power to elect Directors, declare dividends or distributions on stock, recommend
to the shareholders any action which requires shareholder approval, amend or
repeal these Bylaws, approve any merger or share exchange which does not require
shareholder approval, or issue stock. However, if the Board of Directors has
given general authorization for the issuance of stock, a committee of the Board

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of Directors, in accordance with a general formula or method specified by the
Board of Directors by resolution or by adoption of a stock option plan, may fix
the terms of stock, subject to classification or reclassification, and the terms
on which any stock may be issued.

Notice of committee meetings shall be given in the same manner as
notice for special meetings of the Board of Directors.

One-third, but not less than two, of the members of any committee shall
be present in person at any meeting of such committee in order to constitute a
quorum for the transaction of business at such meeting, and the act of a
majority present shall be the act of such committee. The Board of Directors may
designate a chairman of any committee, and such chairman or any two members of
any committee may fix the time and place of its meetings unless the Board shall
otherwise provide. In the absence or disqualification of any member of any such
committee, the members thereof present at any meeting and not disqualified from
voting, whether or not they constitute a quorum, may unanimously appoint another
Director to act at the meeting in the place of such absent or disqualified
members; provided, however, that in the event of the absence or disqualification
of an Independent Director, such appointee shall be an Independent Director.

Each committee shall keep minutes of its proceedings and shall report
the same to the Board of Directors at the meeting next succeeding, and any
action by the committees shall be subject to revision and alteration by the
Board of Directors, provided that no rights of third persons shall be affected
by any such revision or alteration.

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Subject to the provisions hereof, the Board of Directors shall have the
power at any time to change the membership of any committee, to fill all
vacancies, to designate alternative members to replace any absent or
disqualified member, or to dissolve any such committee.

Section 2. Telephone Meetings. Members of a committee of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
shall constitute presence in person at the meeting.

Section 3. Action By Committees Without a Meeting. Any action required or
permitted to be taken at any meeting of a committee of the Board of Directors
may be taken without a meeting, if a consent in writing to such action is signed
by each member of the committee and such written consent is filed with the
minutes of proceedings of such committee.

ARTICLE V

Officers
--------

Section 1. General Provisions. The officers of the Corporation may consist
of a Chairman of the Board, a Vice Chairman of the Board, a CEO, a President,
one or more Vice Presidents, a Treasurer, one or more assistant treasurers, a
Secretary, and one or more assistant secretaries and such other officers as may
be elected in accordance with the provisions of Section 2 of this Article VI.
The officers of the Corporation shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as may be convenient.
Each officer shall hold office until his successor is elected and qualifies or
until his death, resignation or removal in the manner hereinafter provided. Any

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two or more offices may be held by the same person. In its discretion, the Board
of Directors may leave unfilled any office except that of President and
Secretary. Election or appointment of an officer or agent shall not of itself
create contract rights between the Corporation and such officer or agent.

Section 2. Subordinate Officers, Committees and Agents. The Board of
Directors may from time to time elect such other officers and appoint such
committees, employees, other agents as the business of the Corporation may
require, including one or more assistant secretaries, and one or more assistant
treasurers, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these Bylaws, or as the Board of
Directors may from time to time determine. The Directors may delegate to any
officer or committee the power to elect subordinate officers and to retain or
appoint employees or other agents.

Section 3. Removal and Resignation. Any officer or agent of the Corporation
may be removed by the Board of Directors if in its judgment the best interests
of the Corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Any officer
of the Corporation may resign at any time by giving written notice of his
resignation to the Board of Directors, the Chairman of the Board, the CEO, the
President or the Secretary. Any resignation shall take effect at the time
specified therein or, if the time when it shall become effective is not
specified therein, immediately upon its receipt. The acceptance of a resignation
shall not be necessary to make it effective unless otherwise stated in the
resignation.

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Section 4. Vacancies. A vacancy in any office may be filled by the Board of
Directors for the balance of the term.

Section 5. General Powers. All officers of the Corporation as between
themselves and the Corporation shall, respectively, have such authority and
perform such duties in the management of the property and affairs of the
Corporation as may be determined by resolution of the Board of Directors, or in
the absence of controlling provisions in a resolution of the Board of Directors,
as may be provided in these Bylaws.

Section 6. Duties of the Chairman of the Board. The Chairman of the Board
of Directors shall preside at all meetings of stockholders and the Board of
Directors, and shall have such other duties as may be assigned by resolution of
the Board of Directors. The Vice Chairman of the Board of Directors, if any, may
preside at meetings of the Board of Directors in the absence of the chairman of
the Board of Directors and the CEO, and shall have such others as may be
assigned by resolution of the Board of Directors.

Section 7. Duties of the Chief Executive Officer. Subject to the authority
of the Board of Directors, the Chief Executive Officer ("CEO") of the
Corporation shall be the highest ranking management officer of the Corporation
and shall be primarily responsible for the execution of policies of the Board of
Directors. He shall have authority over the general management and direction of
the business of the Corporation and its divisions, if any, subject only to the
ultimate authority of the Board of Directors. The CEO shall preside at all
meetings of the stockholders and Board of Directors in the absence of the
Chairman of the Board. He may sign and execute in the name of the Corporation
share certificates, deeds, mortgages, bonds, contracts or other instruments
except in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these Bylaws to some other officer or
agent of the Corporation or shall be required by law otherwise to be signed or
executed. In addition, he shall perform all duties incident to the office of the
CEO and such other duties as from time to time may be assigned to him by the

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<PAGE>

Board of Directors. The CEO shall assign or delegate job duties,
responsibilities, and authorities to other officers of the Company, or designate
others to do so.

Section 8. Duties of the President. In the absence of a CEO, the President
shall be the chief executive officer of the Corporation with the duties and
authority described in Section 7 above. Otherwise, the President shall be the
chief operating officer of the Corporation primarily responsible for and shall
have authority over the general management of day-to-day operations of the
Corporation and its business and divisions, if any, subject only to the ultimate
authority of the Board of Directors and the CEO. In addition, he shall perform
all duties incident to the office of the President and such other duties as from
time to time may be assigned to him by the Board of Directors.

Section 9. Duties of the Vice-Presidents. Each Vice-President, if any,
shall have such powers and duties as may from time to time be assigned to him by
the President or the Board of Directors. Any Vice-President may sign and execute
in the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation or
shall be required by law or otherwise to be signed or executed.

-21-
<PAGE>

Section 10. Duties of the Treasurer. The Treasurer shall have such powers
and duties as may be assigned to him by the President of the Board of Directors.
The Treasurer may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments, except in
cases where the signing and the execution thereof shall be expressly delegated
by the Board of Directors or by these Bylaws to some other officer or agent of
the Corporation or shall be required by law or otherwise to be signed or
executed.

Section 11. Duties of the Secretary. The Secretary shall act as secretary
of all meetings of the Board of Directors, the Executive Committee and all other
Committees of the Board and shareholders of the Corporation. He shall keep and
preserve the minutes of all such meetings in the proper book or books provided
for that purpose. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these Bylaws; shall have custody of all
deeds, leases, contracts and other important corporate documents; shall have
charge of the books, records and papers of the Corporation relating to its
organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are properly
filed; and shall, in general perform, all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board of Directors, the CEO or the President.

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<PAGE>

Section 12. Other Duties of Officers. Any officer of the Corporation shall
have, in addition to the duties prescribed herein or by law, such other duties
as from time to time shall be prescribed by the Board of Directors, the CEO or
the President.

Section 13. Salaries. The salaries of the officers shall be fixed from time
to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.

ARTICLE VI

Contracts, Notes, Checks and Deposits
-------------------------------------

Section 1. Contracts. The Board of Directors may authorize any officer or
agent to enter into any contract or to execute and deliver any instrument in the
name of and on behalf of the Corporation and such authority may be general or
confined to specific instances.

Section 2. Checks and Drafts. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or officers, agent or agents of
the Corporation and in such manner as shall from time to time be determined by
the Board of Directors.

Section 3. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors may
designate.

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<PAGE>

ARTICLE VII

Shares of Stock
---------------

Section 1. Certificates of Stock. Each shareholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
shares of each kind and class of shares held by him in the Corporation. Each
certificate shall be signed by the CEO or the President or a Vice President and
countersigned by the Secretary or an assistant secretary or the Treasurer or an
assistant treasurer and may be sealed with the corporate seal.

The signatures may be either manual or facsimile. Certificates shall be
consecutively numbered; and if the Corporation shall, from time to time, issue
several classes of stock, each class may have its own number series. A
certificate is valid and may be issued whether or not an officer who signed it
is still an officer when it is issued. Each certificate representing stock which
is restricted as to its transferability or voting powers, which is preferred or
limited as to its dividends or as to its share of the assets upon liquidation or
which is redeemable at the option of the Corporation, shall have a statement of
such restriction, limitation, preference or redemption provision, or a summary
thereof, plainly stated on the certificate. In lieu of such statement or
summary, the Corporation may set forth upon the face or back of the certificate
a statement that the Corporation will furnish to any shareholder, upon request
and without charge, a full statement of such information.

Section 2. Lost Certificate. The Board of Directors may direct a new
certificate to be issued in place of any certificate previously issued by the
Corporation alleged to have been lost, stolen or destroyed upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing the issuance of a new certificate,

-24-
<PAGE>

the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or his legal representative to advertise the same in such manner as
it shall require and/or to give bond, with sufficient surety, to the Corporation
to indemnify it against any loss or claim which may arise as a result of the
issuance of a new certificate.

Section 3. Transfer Agents and Registrars. At all such times that the
Corporation's securities are listed on a national securities exchange or
qualified for trading in the over-the-counter market, the Board of Directors
shall appoint one or more banks or trust companies in such city or cities as the
Board of Directors may deem advisable, from time to time, to act as transfer
agents and/or registrars of the shares of stock of the Corporation; and, upon
such appointments being made, no certificate representing shares shall be valid
until countersigned by one of such transfer agents and registered by one of such
registrars.

Section 4. Transfer of Stock. No transfers of shares of stock of the
Corporation shall be made if (i) void ab initio pursuant to any provision of the
Corporation's Articles of Incorporation or (ii) the Board of Directors, pursuant
to any provision of the Corporation's Articles of Incorporation, shall have
refused to permit the transfer of such shares. Permitted transfers of shares of
stock of the Corporation shall be made on the stock records of the Corporation
only upon the instruction of the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary or with a transfer agent or transfer clerk, and upon surrender of the
certificate or certificates, if issued, for such shares properly endorsed or
accompanied by a duly executed stock transfer power and the payment of all taxes

-25-
<PAGE>

thereon. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, as to any transfers
not prohibited by any provision of the Corporation's Articles of Incorporation
or by action of the Board of Directors thereunder, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.

Section 5. Stock Ledger. The Corporation shall maintain at its principal
office or at the office of its counsel, accountants or transfer agent, an
original or duplicate stock ledger containing the name and address of each
shareholder and the number of shares of stock of each class held by such
shareholder.

ARTICLE VIII

Dividends
---------

Section 1. Declaration. Dividends upon the shares of stock of the
Corporation may be declared by the Board of Directors, subject to applicable
provisions of law and the Articles of Incorporation. Dividends may be
paid in cash, property or shares of the Corporation, subject to applicable
provisions of law and the Articles of Incorporation.

Section 2. Contingencies. Before payment of any dividends, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors may from time to time, in its absolute
discretion, think proper as a reserve fund for contingencies, for equalizing
dividends, for repairing or maintaining the property of the Corporation, its
subsidiaries or any partnership for which it serves as general partner, or for

-26-
<PAGE>

such other purpose as the Board of Directors shall determine to be in the best
interest of the Corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.

ARTICLE IX

Seal
----

Section 1. Seal. The Corporation may have a corporate seal, which may be
altered at will by the Board of Directors. The Board of Directors may authorize
one or more duplicate or facsimile seals and provide for the custody thereof.

Section 2. Affixing Seal. Whenever the Corporation is required to place its
corporate seal to a document, it shall be sufficient to meet the requirements of
any law, rule or regulation relating to a corporate seal to place the word
"(SEAL)" adjacent to the signature of the person authorized to execute the
document on behalf of the Corporation.

ARTICLE X

Waiver of Notice
----------------

Whenever any notice is required to be given pursuant to the Articles of
Incorporation or these Bylaws of the Corporation or pursuant to applicable law,
a waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted
at nor the purpose of any meeting need be set forth in the waiver of notice,
unless specifically required by statute. The attendance of any person at any

-27-
<PAGE>

meeting shall constitute a waiver of notice of such meeting, except where such
person attends a meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting is not lawfully called or
convened.

ARTICLE XI

Amendment of Bylaws
-------------------

Section 1. By Directors. The Board of Directors shall have the power to
adopt, alter or repeal any Bylaws of the Corporation and to make new Bylaws,
except that the Board of Directors shall not alter or repeal this Article XI or
any Bylaws made by the shareholders.

Section 2. By Shareholders. The shareholders shall have the power to adopt,
alter or repeal any Bylaws of the Corporation and to make new Bylaws.

The foregoing are certified as the Bylaws of the Corporation adopted by
the Board of Directors and the Shareholders of the Corporation effective October
26, 1999.

/s/ James I. Humphrey, Jr.
------------------------------
Secretary
-28-

<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 2,610,007
<SECURITIES> 0
<RECEIVABLES> 1,606,104
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 116,044,088
<DEPRECIATION> 24,286,858
<TOTAL-ASSETS> 97,618,562
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 46,599,009
0
0
<COMMON> 50,322
<OTHER-SE> 42,854,681
<TOTAL-LIABILITY-AND-EQUITY> 97,618,562
<SALES> 38,720,898
<TOTAL-REVENUES> 40,033,794
<CGS> 0
<TOTAL-COSTS> 34,097,281
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,620,585
<INCOME-PRETAX> 5,936,513
<INCOME-TAX> 2,894,605
<INCOME-CONTINUING> 3,041,908
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,041,908
<EPS-BASIC> .63
<EPS-DILUTED> .63
<FN>
<F1>Humphrey Hospitality Trust, Inc. is in the specialized real estate industry for
which the current/noncurrent distinction is deemed in practice to have little
or no relevance. Therefore, it prepares unclassified balance sheets which do
not report current assets or current liabilities.
</FN>

</TABLE>