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| Maryland                                                       |   | 251811499                            |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or Other Jurisdiction of Incorporation or Organization) |   | (I.R.S. Employer Identification No.) |
|                                                           |   |                                 |
|                                                           |   |                                 |
| 44 Hersha Drive, Harrisburg, PA                                |   | 17102                                |
| (Address of Registrant’s Principal Executive Offices)    |   | (Zip Code)                           |

| Large accelerated filer  o                 | Accelerated filer                 x |
|------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|
| Non-accelerated filer     o | Small reporting company  o                                                                                     |

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Table of Contents

|                                     |      |                                                                                                                      | Page      |
|------------------------------------------|-----------|---------------------------------------------------------------------------------------------------------------------------|-----------|
|                                     |      |                                                                                                                      |      |
| PART I.  FINANCIAL INFORMATION |   1  |
| Item 1.                                  |      | Financial Statements.                                                                                                     |   1  |
|                                     |      | Consolidated Balance Sheets as of March 31, 2011 [Unaudited] and December 31, 2010                                        |   1  |
|                                     |      | Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010 [Unaudited]                      |   2  |
|                                     |      | Consolidated Statements of Equity and Comprehensive Income for the Three Months Ended March 31, 2011 and 2010 [Unaudited] |   4  |
|                                     |      | Consolidated Statements of Cash Flows for the ThreeMonths Ended March 31, 2011 and 2010 [Unaudited]                       |   5  |
|                                     |      | Notes to the Consolidated Financial Statements                                                                            |   6  |
| Item 2.                                  |      | Management’s Discussion and Analysis of Financial Condition and Results of Operations.                              |   30 |
| Item 3.                                  |      | Quantitative and Qualitative Disclosures About Market Risk.                                                               |   43 |
| Item 4.                                  |      | Controls and Procedures.                                                                                                  |   45 |
| PART II.  OTHER INFORMATION    |   46 |
| Item 1.                                  |      | Legal Proceedings.                                                                                                        |   46 |
|  Item 1A.                           |      | Risk Factors.                                                                                                             |   46 |
| Item 2.                                  |      | Unregistered Sales of Equity Securities and Use of Proceeds.                                                              |   46 |
| Item 3.                                  |      | Defaults Upon Senior Securities.                                                                                          |   46 |
| Item 4.                                  |      | [Removed and Reserved.]                                                                                                   |   46 |
| Item 5.                                  |      | Other Information.                                                                                                        |   46 |
| Item 6.                                  |      | Exhibits.                                                                                                                 |   46 |
|                                     |      |                                                                                                                      |      |
|                                     |      | SIGNATURES                                                                                                                |   47 |

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Table of Contents

ci

H

|                                                                                                                                                                                                                                            |   | March 31, 2011 |      |   | December 31, 2010 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|-------------------|--------|
| Assets:                                                                                                                                                                                                                                         |   |           |      |   |              |   |
| Investment in Hotel Properties, net of Accumulated Depreciation                                                                                                                                                                                 |   | $              | 1,277,181 |   |              | $      | 1,245,851 |   |
| Investment in Unconsolidated Joint Ventures                                                                                                                                                                                                     |   |           | 34,580    |   |              |   | 35,561 |   |
| Development Loans Receivable                                                                                                                                                                                                                    |   |           | 42,327    |   |              |   | 41,653 |   |
| Cash and Cash Equivalents                                                                                                                                                                                                                       |   |           | 19,336    |   |              |   | 65,596 |   |
| Escrow Deposits                                                                                                                                                                                                                                 |   |           | 20,594    |   |              |   | 17,384 |   |
| Hotel Accounts Receivable, net of allowance for doubtful accounts of $19 and $31                                                                                                                                                                |   |           | 10,151    |   |              |   | 9,611 |   |
| Deferred Financing Costs, net of Accumulated Amortization of $6,629 and $5,852                                                                                                                                                                  |   |           | 9,599     |   |              |   | 10,204 |   |
| Due from Related Parties                                                                                                                                                                                                                        |   |           | 6,740     |   |              |   | 5,069 |   |
| Intangible Assets, net of Accumulated Amortization of $1,156 and $1,084                                                                                                                                                                         |   |           | 7,944     |   |              |   | 7,934 |   |
| Other Assets                                                                                                                                                                                                                                    |   |           | 21,573    |   |              |   | 18,414 |   |
|                                                                                                                                                                                                                                            |   |           |      |   |              |   |   |   |
| Total Assets                                                                                                                                                                                                                                    |   | $              | 1,450,025 |   |              | $      | 1,457,277 |   |
|                                                                                                                                                                                                                                            |   |           |      |   |              |   |   |   |
| Liabilities and Equity:                                                                                                                                                                                                                         |   |           |      |   |              |   |   |   |
| Line of Credit                                                                                                                                                                                                                                  |   | $              | 63,000    |   |              | $      | 46,000 |   |
| Mortgages and Notes Payable, net of unamortized discount of $932 and $983                                                                                                                                                                       |   |           | 646,886   |   |              |   | 648,720 |   |
| Accounts Payable, Accrued Expenses and Other Liabilities                                                                                                                                                                                        |   |           | 27,553    |   |              |   | 28,601 |   |
| Dividends and Distributions Payable                                                                                                                                                                                                             |   |           | 9,827     |   |              |   | 9,805 |   |
| Due to Related Parties                                                                                                                                                                                                                          |   |           | 1,359     |   |              |   | 939 |   |
|                                                                                                                                                                                                                                            |   |           |      |   |              |   |   |   |
| Total Liabilities                                                                                                                                                                                                                               |   |           | 748,625   |   |              |   | 734,065 |   |
|                                                                                                                                                                                                                                            |   |           |      |   |              |   |   |   |
| Redeemable Noncontrolling Interests - Common Units (Note 1)                                                                                                                                                                                     |   | $              | 17,905    |   |              | $      | 19,894 |   |
|                                                                                                                                                                                                                                            |   |           |      |   |              |   |   |   |
| Equity:                                                                                                                                                                                                                                         |   |           |      |   |              |   |   |   |
| Shareholders' Equity:                                                                                                                                                                                                                           |   |           |      |   |              |   |   |   |
| Preferred Shares - 8% Series A, $.01 Par Value, 29,000,000 shares authorized, 2,400,000 Shares Issued and Outstanding (Aggregate Liquidation Preference $60,000) at March 31, 2011 and December 31, 2010                              |   |           | 24        |   |              |   | 24 |   |
| Common Shares - Class A, $.01 Par Value,  300,000,000 Shares Authorized at March 31, 2011 and December 31, 2010, 169,751,195 and 169,205,638 Shares Issued and Outstanding at March 31, 2011 and December 31, 2010, respectively |   |           | 1,697     |   |              |   | 1,692 |   |
| Common Shares - Class B, $.01 Par Value, 1,000,000 Shares Authorized, None Issued and Outstanding                                                                                                                                               |   |           | -         |   |              |   | - |   |
| Accumulated Other Comprehensive Loss                                                                                                                                                                                                            |   |           | (356      | )      |              |   | (338 | ) |
| Additional Paid-in Capital                                                                                                                                                                                                                      |   |           | 922,638   |   |              |   | 918,215 |   |
| Distributions in Excess of Net Income                                                                                                                                                                                                           |   |           | (259,237  | )      |              |   | (236,159 | ) |
| Total Shareholders' Equity                                                                                                                                                                                                                      |   |           | 664,766   |   |              |   | 683,434 |   |
|                                                                                                                                                                                                                                            |   |           |      |   |              |   |   |   |
| Noncontrolling Interests (Note 1):                                                                                                                                                                                                              |   |           |      |   |              |   |   |   |
| Noncontrolling Interests - Common Units                                                                                                                                                                                                         |   |           | 18,692    |   |              |   | 19,410 |   |
| Noncontrolling Interests - Consolidated Joint Ventures                                                                                                                                                                                          |   |           | 37        |   |              |   | 474 |   |
| Total Noncontrolling Interests                                                                                                                                                                                                                  |   |           | 18,729    |   |              |   | 19,884 |   |
|                                                                                                                                                                                                                                            |   |           |      |   |              |   |   |   |
| Total Equity                                                                                                                                                                                                                                    |   |           | 683,495   |   |              |   | 703,318 |   |
|                                                                                                                                                                                                                                            |   |           |      |   |              |   |   |   |
| Total Liabilities and Equity                                                                                                                                                                                                                    |   | $              | 1,450,025 |   |              | $      | 1,457,277 |   |

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M

|                                                                                                |   | Three Months Ended |    |
|-----------------------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                                |   | March 31, 2011     |    |   | March 31, 2010 |   |
| Revenue:                                                                                            |   |               |    |   |   |   |
| Hotel Operating Revenues                                                                            |   | $                  | 57,811  |   |   | $ | 49,354 |   |
| Interest Income from Development Loans                                                              |   |               | 1,091   |   |   |   | 1,374 |   |
| Other Revenues                                                                                      |   |               | 78      |   |   |   | 88 |   |
| Total Revenues                                                                                      |   |               | 58,980  |   |   |   | 50,816 |   |
|                                                                                                |   |               |    |   |   |   |   |   |
| Operating Expenses:                                                                                 |   |               |    |   |   |   |   |   |
| Hotel Operating Expenses                                                                            |   |               | 37,837  |   |   |   | 32,129 |   |
| Hotel Ground Rent                                                                                   |   |               | 364     |   |   |   | 292 |   |
| Real Estate and Personal Property Taxes and Property Insurance                                      |   |               | 5,134   |   |   |   | 4,094 |   |
| General and Administrative                                                                          |   |               | 1,961   |   |   |   | 2,836 |   |
| Stock Based Compensation                                                                            |   |               | 1,485   |   |   |   | 657 |   |
| Acquisition and Terminated Transaction Costs                                                        |   |               | 815     |   |   |   | 3,336 |   |
| Loss from Impairment of Assets                                                                      |   |               | -       |   |   |   | 13 |   |
| Depreciation and Amortization                                                                       |   |               | 14,016  |   |   |   | 12,010 |   |
| Total Operating Expenses                                                                            |   |               | 61,612  |   |   |   | 55,367 |   |
|                                                                                                |   |               |    |   |   |   |   |   |
| Operating Loss                                                                                      |   |               | (2,632  | ) |   |   | (4,551 | ) |
|                                                                                                |   |               |    |   |   |   |   |   |
| Interest Income                                                                                     |   |               | 102     |   |   |   | 41 |   |
| Interest Expense                                                                                    |   |               | 10,623  |   |   |   | 11,741 |   |
| Other Expense                                                                                       |   |               | 284     |   |   |   | 96 |   |
| Loss on Debt Extinguishment                                                                         |   |               | -       |   |   |   | 731 |   |
| Loss before (Loss) Income from Unconsolidated Joint Venture Investments and Discontinued Operations |   |               | (13,437 | ) |   |   | (17,078 | ) |
|                                                                                                |   |               |    |   |   |   |   |   |
| Loss from Unconsolidated Joint Ventures                                                             |   |               | (981    | ) |   |   | (1,040 | ) |
| Gain from Remeasurement of   Investment in Unconsolidated Joint Venture              |   |               | -       |   |   |   | 1,818 |   |
| (Loss) Income from Unconsolidated Joint Venture Investments                                         |   |               | (981    | ) |   |   | 778 |   |
|                                                                                                |   |               |    |   |   |   |   |   |
| Loss from Continuing Operations                                                                     |   |               | (14,418 | ) |   |   | (16,300 | ) |
|                                                                                                |   |               |    |   |   |   |   |   |
| Discontinued Operations  (Note 12):                                                       |   |               |    |   |   |   |   |   |
| Loss from Discontinued Operations                                                                   |   |               | -       |   |   |   | (37 | ) |
|                                                                                                |   |               |    |   |   |   |   |   |
| Net Loss                                                                                            |   |               | (14,418 | ) |   |   | (16,337 | ) |
|                                                                                                |   |               |    |   |   |   |   |   |
| Loss Allocated to Noncontrolling Interests                                                          |   |               | 1,027   |   |   |   | 1,715 |   |
| Preferred Distributions                                                                             |   |               | (1,200  | ) |   |   | (1,200 | ) |
|                                                                                                |   |               |    |   |   |   |   |   |
| Net Loss applicable to Common Shareholders                                                     |   | $                  | (14,591 | ) |   | $ | (15,822 | ) |

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Table of Contents

|                                                                |   | Three Months Ended |        |
|---------------------------------------------------------------------|--------|--------------------|-------------|
|                                                                |   | March 31, 2011     |        |   | March 31, 2010 |   |
| Earnings Per Share:                                                 |   |               |        |   |   |   |
| BASIC                                                               |   |               |        |   |   |   |
| Loss from Continuing Operations applicable to Common Shareholders   |   | $                  | (0.09       | ) |   | $ | (0.16 | ) |
| Loss from Discontinued Operations applicable to Common Shareholders |   | $                  | 0.00        |   |   |   | (0.00 | ) |
|                                                                |   |               |        |   |   |   |   |   |
| Net Loss   applicable to Common Shareholders         |   | $                  | (0.09       | ) |   | $ | (0.16 | ) |
|                                                                |   |               |        |   |   |   |   |   |
| DILUTED                                                             |   |               |        |   |   |   |   |   |
| Loss from Continuing Operations applicable to Common Shareholders   |   | $                  | (0.09       | ) * |   | $ | (0.16 | ) * |
| Loss from Discontinued Operations applicable to Common Shareholders |   | $                  | 0.00        | * |   |   | (0.00 | ) * |
|                                                                |   |               |        |   |   |   |   |   |
| Net Loss applicable to Common Shareholders                          |   | $                  | (0.09       | ) * |   | $ | (0.16 | )* |
|                                                                |   |               |        |   |   |   |   |   |
| Weighted Average Common Shares Outstanding:                         |   |               |        |   |   |   |   |   |
| Basic                                                               |   |               | 168,334,982 |   |   |   | 99,311,523 |   |
| Diluted                                                             |   |               | 168,334,982 | * |   |   | 99,311,523 | * |

| * | Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact. Weighted average units of limited partnership interest in Hersha Hospitality Limited Partnership outstanding for the three months ended March 31, 2011 and 2010 were 7,395,023 and 9,515,228, respectively. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

R

|                                    |   | Shareholders' Equity     |   |   | Noncontrolling Interests |   |   |                 |   |   | Redeemable Noncontrolling Interests |   |
|-----------------------------------------|--------|--------------------------|--------|--------|--------------------------|--------|--------|----------------------|--------|--------|-------------------------------------|--------|
|                                    |   | Series APreferred Shares |   |   | Class ACommon Shares     |   |   | Class BCommon Shares |   |   | AdditionalPaid-InCapital            |   |   | OtherComprehensiveIncome |   |   | Distributionsin Excessof NetEarnings |   |   | Total Shareholders' Equity |   |   | Common Units |   |   | Consolidated Joint Ventures |   |   | Total Noncontrolling Interests |   |   | TotalEquity |   |   | Common Units |   |
| Balance at December 31, 2010            |   | $                        | 24     |   |                     | $      | 1,692  |                 |   | $      | -                                   |   |   | $ | 918,215 |   |   | $ | (338 | ) |   | $ | (236,159 | ) |   | $ | 683,434 |   |   | $ | 19,410 |   |   | $ | 474 |   |   | $ | 19,884 |   |   | $ | 703,318 |   |   | $ | 19,894 |   |
|                                    |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance Costs                          |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | (78 | ) |   |   | - |   |   |   | - |   |   |   | (78 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (78 | ) |   |   | - |   |
| Unit Conversion                         |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | 168 |   |   |   | - |   |   |   | - |   |   |   | 168 |   |   |   | (168 | ) |   |   | - |   |   |   | (168 | ) |   |   | - |   |   |   | - |   |
| Reallocation of Noncontrolling Interest |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | 1,584 |   |   |   | - |   |   |   | - |   |   |   | 1,584 |   |   |   | 13 |   |   |   | - |   |   |   | 13 |   |   |   | 1,597 |   |   |   | (1,597 | ) |
| Dividends and Distributions declared:   |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock ($0.05 per share)          |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | - |   |   |   | - |   |   |   | (8,486 | ) |   |   | (8,486 | ) |   |   | (215 | ) |   |   | - |   |   |   | (215 | ) |   |   | (8,701 | ) |   |   | (151 | ) |
| Preferred Stock ($0.50 per share)       |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | - |   |   |   | - |   |   |   | (1,200 | ) |   |   | (1,200 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,200 | ) |   |   | - |   |
| Dividend Reinvestment Plan              |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3 |   |   |   | - |   |
| Stock Based Compensation                |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Grants                                  |   |                     | -      |   |                     |   | 5      |                 |   |   | -                                   |   |   |   | 1,339 |   |   |   | - |   |   |   | - |   |   |   | 1,344 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,344 |   |   |   | - |   |
| Amortization                            |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | 1,407 |   |   |   | - |   |   |   | - |   |   |   | 1,407 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,407 |   |   |   | - |   |
| Comprehensive Income (Loss):            |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehenive Loss                 |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | - |   |   |   | (18 | ) |   |   | - |   |   |   | (18 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (18 | ) |   |   | - |   |
| Net Loss                                |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | - |   |   |   | - |   |   |   | (13,392 | ) |   |   | (13,392 | ) |   |   | (348 | ) |   |   | (437 | ) |   |   | (785 | ) |   |   | (14,177 | ) |   |   | (241 | ) |
| Total Comprehensive Loss                |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (13,410 | ) |   |   | (348 | ) |   |   | (437 | ) |   |   | (785 | ) |   |   | (14,195 | ) |   |   | (241 | ) |
|                                    |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at March 31, 2011               |   | $                        | 24     |   |                     | $      | 1,697  |                 |   | $      | -                                   |   |   | $ | 922,638 |   |   | $ | (356 | ) |   | $ | (259,237 | ) |   | $ | 664,766 |   |   | $ | 18,692 |   |   | $ | 37 |   |   | $ | 18,729 |   |   | $ | 683,495 |   |   | $ | 17,905 |   |
|                                    |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009            |   | $                        | 24     |   |                     | $      | 577    |                 |   | $      | -                                   |   |   | $ | 487,481 |   |   | $ | (160 | ) |   | $ | (185,725 | ) |   | $ | 302,197 |   |   | $ | 27,126 |   |   | $ | 267 |   |   | $ | 27,393 |   |   | $ | 329,590 |   |   | $ | 14,733 |   |
|                                    |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock Issuance                   |   |                     | -      |   |                     |   | 794    |                 |   |   | -                                   |   |   |   | 260,233 |   |   |   | - |   |   |   | - |   |   |   | 261,027 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 261,027 |   |   |   | - |   |
| Unit Conversion                         |   |                     | -      |   |                     |   | 1      |                 |   |   | -                                   |   |   |   | 601 |   |   |   | - |   |   |   | - |   |   |   | 602 |   |   |   | (602 | ) |   |   | - |   |   |   | (602 | ) |   |   | - |   |   |   | - |   |
| Units Issued for Acquisitions           |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,299 |   |   |   | - |   |   |   | 5,299 |   |   |   | 5,299 |   |   |   | - |   |
| Reallocation of Noncontrolling Interest |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | (1,745 | ) |   |   | - |   |   |   | - |   |   |   | (1,745 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,745 | ) |   |   | 1,745 |   |
| Dividends and Distributions declared:   |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common Stock ($0.05 per share)          |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | - |   |   |   | - |   |   |   | (6,862 | ) |   |   | (6,862 | ) |   |   | (350 | ) |   |   | - |   |   |   | (350 | ) |   |   | (7,212 | ) |   |   | (152 | ) |
| Preferred Stock ($0.50 per share)       |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | - |   |   |   | - |   |   |   | (1,200 | ) |   |   | (1,200 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,200 | ) |   |   | - |   |
| Dividend Reinvestment Plan              |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3 |   |   |   | - |   |
| Stock Based Compensation                |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization                            |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | 656 |   |   |   | - |   |   |   | - |   |   |   | 656 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 656 |   |   |   | - |   |
| Comprehensive Income (Loss):            |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Loss                |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | - |   |   |   | (5 | ) |   |   | - |   |   |   | (5 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5 | ) |   |   | - |   |
| Net Loss                                |   |                     | -      |   |                     |   | -      |                 |   |   | -                                   |   |   |   | - |   |   |   | - |   |   |   | (14,622 | ) |   |   | (14,622 | ) |   |   | (949 | ) |   |   | (314 | ) |   |   | (1,263 | ) |   |   | (15,885 | ) |   |   | (452 | ) |
| Total Comprehensive Loss                |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (14,627 | ) |   |   | (949 | ) |   |   | (314 | ) |   |   | (1,263 | ) |   |   | (15,890 | ) |   |   | (452 | ) |
|                                    |   |                     |   |   |                     |   |   |                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at March 31, 2010               |   | $                        | 24     |   |                     | $      | 1,372  |                 |   | $      | -                                   |   |   | $ | 747,229 |   |   | $ | (165 | ) |   | $ | (208,409 | ) |   | $ | 540,051 |   |   | $ | 30,524 |   |   | $ | (47 | ) |   | $ | 30,477 |   |   | $ | 570,528 |   |   | $ | 15,874 |   |

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T

|                                                                            |   | For the Three Months Ended |    |
|---------------------------------------------------------------------------------|--------|----------------------------|---------|
|                                                                            |   | March 31, 2011             |    |   | March 31, 2010 |   |
| Operating activities:                                                           |   |                       |    |   |   |   |
| Net loss                                                                        |   | $                          | (14,418 | ) |   | $ | (16,337 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: |   |                       |    |   |   |   |   |   |
| Depreciation                                                                    |   |                       | 13,946  |   |   |   | 11,973 |   |
| Amortization                                                                    |   |                       | 924     |   |   |   | 678 |   |
| Debt extinguishment                                                             |   |                       | -       |   |   |   | 580 |   |
| Development loan interest added to principal                                    |   |                       | (674    | ) |   |   | (606 | ) |
| Equity in loss (income) of unconsolidated joint ventures                        |   |                       | 981     |   |   |   | (778 | ) |
| Loss recognized on change in fair value of derivative instrument                |   |                       | 7       |   |   |   | 2 |   |
| Stock based compensation expense                                                |   |                       | 1,485   |   |   |   | 657 |   |
| Change in assets and liabilities:                                               |   |                       |    |   |   |   |   |   |
| (Increase) decrease in:                                                         |   |                       |    |   |   |   |   |   |
| Hotel accounts receivable                                                       |   |                       | (498    | ) |   |   | (1,530 | ) |
| Escrows                                                                         |   |                       | (1,548  | ) |   |   | (674 | ) |
| Other assets                                                                    |   |                       | 351     |   |   |   | 178 |   |
| Due from related parties                                                        |   |                       | (671    | ) |   |   | (2,059 | ) |
| Increase (decrease) in:                                                         |   |                       |    |   |   |   |   |   |
| Due to related parties                                                          |   |                       | 420     |   |   |   | (488 | ) |
| Accounts Payable, Accrued Expenses and Other Liabilities                        |   |                       | 3,897   |   |   |   | 4,955 |   |
| Net cash provided by (used in) operating activities                             |   |                       | 4,202   |   |   |   | (3,449 | ) |
|                                                                            |   |                       |    |   |   |   |   |   |
| Investing activities:                                                           |   |                       |    |   |   |   |   |   |
| Purchase of hotel property assets                                               |   |                       | (38,516 | ) |   |   | (160,768 | ) |
| Deposits on hotel acquisitions                                                  |   |                       | (3,500  | ) |   |   | - |   |
| Capital expenditures                                                            |   |                       | (10,507 | ) |   |   | (1,373 | ) |
| Cash paid for hotel development project                                         |   |                       | (124    | ) |   |   | - |   |
| Advances to capital expenditure escrows                                         |   |                       | (1,982  | ) |   |   | (1,521 | ) |
| Investment in notes receivable from unconsolidated joint venture                |   |                       | (1,000  | ) |   |   | - |   |
| Cash paid for franchise fee intangible                                          |   |                       | (40     | ) |   |   | - |   |
| Net cash used in investing activities                                           |   |                       | (55,669 | ) |   |   | (163,662 | ) |
|                                                                            |   |                       |    |   |   |   |   |   |
| Financing activities:                                                           |   |                       |    |   |   |   |   |   |
| Proceeds (repayments of) from borrowings under line of credit, net              |   |                       | 17,000  |   |   |   | (79,200 | ) |
| Principal repayment of mortgages and notes payable                              |   |                       | (1,590  | ) |   |   | (31,127 | ) |
| Proceeds from mortgages and notes payable                                       |   |                       | -       |   |   |   | 31,535 |   |
| Cash paid for deferred financing costs                                          |   |                       | (173    | ) |   |   | (8 | ) |
| Proceeds from issuance of common stock, net                                     |   |                       | -       |   |   |   | 261,027 |   |
| Dividends paid on common shares                                                 |   |                       | (8,457  | ) |   |   | (2,881 | ) |
| Dividends paid on preferred shares                                              |   |                       | (1,200  | ) |   |   | (1,200 | ) |
| Distributions paid on common partnership units                                  |   |                       | (373    | ) |   |   | (435 | ) |
| Net cash  provided by financing activities                            |   |                       | 5,207   |   |   |   | 177,711 |   |
|                                                                            |   |                       |    |   |   |   |   |   |
| Net (decrease) increase in cash and cash equivalents                            |   |                       | (46,260 | ) |   |   | 10,600 |   |
| Cash and cash equivalents - beginning of period                                 |   |                       | 65,596  |   |   |   | 11,404 |   |
|                                                                            |   |                       |    |   |   |   |   |   |
| Cash and cash equivalents - end of period                                       |   | $                          | 19,336  |   |   | $ | 22,004 |   |

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|                                 |   | March 31, 2011 |          |   | December 31, 2010 |   |
|--------------------------------------|--------|----------------|---------------|--------|-------------------|--------|
|                                 |   |           |          |   |              |   |
| Land                                 |   | $              |  241,381 |   |              | $      | 233,869 |   |
| Buildings and Improvements           |   |           | 1,089,140     |   |              |   | 1,057,344 |   |
| Furniture, Fixtures and Equipment    |   |           | 154,804       |   |              |   | 150,723 |   |
| Construction in Progress             |   |           | 15,425        |   |              |   | 15,301 |   |
|                                 |   |           | 1,500,750     |   |              |   | 1,457,237 |   |
|                                 |   |           |          |   |              |   |   |   |
| Less Accumulated Depreciation        |   |           | (223,569      | )      |              |   | (211,386 | ) |
|                                 |   |           |          |   |              |   |   |   |
| Total Investment in Hotel Properties |   | $              | 1,277,181     |   |              | $      | 1,245,851 |   |

| Hotel                                                                        |   | Acquisition Date |   | Land |   |   | Buildings and Improvements |   | Furniture Fixtures and Equipment |   | Franchise Fees, Loan Costs, and Leasehold Intangible |   | Total Purchase Price |   |
|------------------------------------------------------------------------------|--------|------------------|--------|------|--------|--------|----------------------------|--------|----------------------------------|--------|------------------------------------------------------|--------|----------------------|--------|
| Holiday Inn Express,     Water Street, New York, NY |   | 3/25/2011        |   | $    | 7,341  |   |                       | $      | 28,591                           |   |                                                 | $      | 2,704                |   |   | $ | 28 |   |   | $ | 38,664 |   |

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|                                                                   |   | For the Three Months Ended March 31, |        |
|------------------------------------------------------------------------|--------|--------------------------------------|-------------|
|                                                                   |   | 2011                                 |        |   | 2010 |   |
| Pro Forma Total Revenues                                               |   | $                                    | 59,383      |   |   | $ | 56,472 |   |
|                                                                   |   |                                 |        |   |   |   |   |   |
| Pro Forma Loss from Continuing Operations                              |   | $                                    | (14,490     | ) |   | $ | (14,915 | ) |
| Loss from Discontinued Operations                                      |   |                                 | -           |   |   |   | (37 | ) |
| Pro Forma Net Loss                                                     |   |                                 | (14,490     | ) |   |   | (14,952 | ) |
| Loss allocated to Noncontrolling Interest                              |   |                                 | 1,030       |   |   |   | 1,594 |   |
| Preferred Distributions                                                |   |                                 | (1,200      | ) |   |   | (1,200 | ) |
| Pro Forma Net Loss applicable to Common Shareholders                   |   | $                                    | (14,660     | ) |   | $ | (14,558 | ) |
|                                                                   |   |                                 |        |   |   |   |   |   |
| Pro Forma Loss applicable to Common Shareholders per Common Share |   |                                 |        |   |   |
| Basic                                                                  |   | $                                    | (0.09       | ) |   | $ | (0.15 | ) |
| Diluted                                                                |   | $                                    | (0.09       | ) |   | $ | (0.15 | ) |
|                                                                   |   |                                 |        |   |   |   |   |   |
| Weighted Average Common Shares Outstanding                             |   |                                 |        |   |   |   |   |   |
| Basic                                                                  |   |                                 | 168,334,982 |   |   |   | 99,311,523 |   |
| Diluted                                                                |   |                                 | 168,334,982 |   |   |   | 99,311,523 |   |

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| Joint Venture                                     |   | Hotel Properties                                           |   | PercentOwned |      |   | PreferredReturn |               |   | March 31,2011 |   |   | December 31,2010 |   |
|---------------------------------------------------|--------|------------------------------------------------------------|--------|--------------|-----------|--------|-----------------|--------------------|--------|---------------|--------|--------|------------------|--------|
|                                              |   |                                                       |   |         |      |   |            |               |   |          |   |   |             |   |
| Inn American Hospitality  at Ewing, LLC |   |   Courtyard by Marriott,  Ewing, NJ         |   |         | 50.0      | %      |            | 11.0% cumulative   |   |          | $      | -      |             |   | $ | 28 |   |
| SB Partners, LLC                                  |   | Holiday Inn Express, Boston, MA                       |   |         | 50.0      | %      |            |               | N/A    |          |   |   | 1,628            |   |   |   | 1,852 |   |
| Mystic Partners, LLC                              |   | Hilton and Marriott branded  hotels in CT and RI |   |         | 8.8%-66.7 | %      |            | 8.5%non-cumulative |   |          | 25,509 |   |             |   | 25,935 |   |
| Metro 29th Street Associates, LLC            |   |   Holiday Inn Express,  New York, NY        |   |         | 50.0      | %      |            |               | N/A    |          |   |   | 7,443            |   |   |   | 7,746 |   |
|                                              |   |                                                       |   |         |      |   |            |               |   |          |   | $      | 34,580           |   |   | $ | 35,561 |   |

|                                                                  |   | March 31, 2011 |   |   | March 31, 2010 |   |
|-----------------------------------------------------------------------|--------|----------------|--------|--------|----------------|--------|
| Inn American Hospitality at Ewing, LLC                                |   |           | (27    | )      |           |   | (97 | ) |
| SB Partners, LLC                                                      |   |           | (224   | )      |           |   | (144 | ) |
| Mystic Partners, LLC                                                  |   |           | (427   | )      |           |   | (415 | ) |
| Metro 29th Street Associates, LLC                                     |   |           | (303   | )      |           |   | (384 | ) |
|                                                                  |   |           | (981   | )      |           |   | (1,040 | ) |
| Gain from Remeasurement of Investment in Unconsolidated Joint Venture |   |           | -      |   |           |   | 1,818 |   |
|                                                                  |   |           |   |   |           |   |   |   |
| (Loss) Income from Unconsolidated Joint Venture Investments           |   | $              | (981   | )      |           | $      | 778 |   |

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| Balance Sheets                      |   |          |    |   |             |   |
|-------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                |   | March 31,2011 |    |   | December 31,2010 |   |
| Assets                              |   |          |    |   |             |   |
| Investment in hotel properties, net |   | $             | 145,133 |   |             | $      | 144,675 |   |
| Other Assets                        |   |          | 27,323  |   |             |   | 27,970 |   |
| Total Assets                        |   | $             | 172,456 |   |             | $      | 172,645 |   |
|                                |   |          |    |   |             |   |   |   |
| Liabilities and Equity              |   |          |    |   |             |   |   |   |
| Mortgages and notes payable         |   | $             | 157,768 |   |             | $      | 156,976 |   |
| Other liabilities                   |   |          | 39,782  |   |             |   | 37,797 |   |
| Equity:                             |   |          |    |   |             |   |   |   |
| Hersha Hospitality Trust            |   |          | 37,778  |   |             |   | 38,394 |   |
| Joint Venture Partner(s)            |   |          | (62,872 | )      |             |   | (60,522 | ) |
| Total Equity                        |   |          | (25,094 | )      |             |   | (22,128 | ) |
|                                |   |          |    |   |             |   |   |   |
| Total Liabilities and Equity        |   | $             | 172,456 |   |             | $      | 172,645 |   |

| Statements of Operations                   |   |               |    |   |           |   |
|--------------------------------------------|--------|--------------------|---------|--------|----------------|--------|
|                                       |   | Three Months Ended |    |
|                                       |   | March 31, 2011     |    |   | March 31, 2010 |   |
| Room Revenue                               |   | $                  | 15,970  |   |           | $      | 15,584 |   |
| Other Revenue                              |   |               | 4,637   |   |           |   | 4,718 |   |
| Operating Expenses                         |   |               | (14,777 | )      |           |   | (14,921 | ) |
| Interest Expense                           |   |               | (2,412  | )      |           |   | (3,391 | ) |
| Lease Expense                              |   |               | (1,305  | )      |           |   | (1,373 | ) |
| Property Taxes and Insurance               |   |               | (1,441  | )      |           |   | (1,547 | ) |
| General and Administrative                 |   |               | (1,660  | )      |           |   | (1,798 | ) |
| Loss Allocated to Noncontrolling Interests |   |               | 22      |   |           |   | 229 |   |
| Depreciation and Amortization              |   |               | (1,978  | )      |           |   | (3,121 | ) |
|                                       |   |               |    |   |           |   |   |   |
| Net loss                                   |   | $                  | (2,944  | )      |           | $      | (5,620 | ) |

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|                                                                                                                                                             |   | March 31,2011 |   |   | December 31,2010 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|------------------|--------|
| Company's share of equity recorded on the joint ventures' financial statements                                                                                   |   | $             | 37,778 |   |             | $      | 38,394 |   |
| Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsoldiated joint ventures(1) |   |          | (3,198 | )      |             |   | (2,833 | ) |
| Investment in Unconsolidated Joint Ventures                                                                                                                      |   | $             | 34,580 |   |             | $      | 35,561 |   |

|   | (1) | Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures consists of the following: |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | cumulative impairment of our investment in joint ventures not reflected on the joint ventures' financial statements; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | our basis in the investment in joint ventures not recorded on the joint ventures' financial statements; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | accumulated amortization of our equity in joint ventures that reflect our portion of the excess of the fair value of joint ventures' assets on the date of our investment over the carrying value of the assets recorded on the joint ventures’ financial statements.  This excess investment is amortized over the life of the properties, and the amortization is included in Income (Loss) from Unconsolidated Joint Venture Investments on our consolidated statement of operations. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Hotel Property                           |   | Borrower                               |   | Principal Outstanding March 31, 2011 |   |   | Principal Outstanding December 31, 2010 |   |   | Interest Rate |   | Maturity Date (1) |
|------------------------------------------|--------|----------------------------------------|--------|--------------------------------------|--------|--------|-----------------------------------------|--------|--------|---------------|--------|-------------------|
| Operational Hotels                       |   |                                   |   |                                 |   |   |                                    |   |   |          |   |              |
| Renaissance by Marriott - Woodbridge, NJ |   | Hersha Woodbridge Associates, LLC      |   |                                 | 5,000  |   |                                    |   | 5,000  |          |   |              | 11 | % | April 1, 2012 * |
| Element Hotel - Ewing, NJ                |   | American Properties @ Scotch Road, LLC |   |                                 | 2,000  |   |                                    |   | 2,000  |          |   |              | 11 | % | August 6, 2011 * |
| Hilton Garden Inn - Dover, DE            |   | 44 Aasha Hospitality Associates, LLC   |   |                                 | 1,000  |   |                                    |   | 1,000  |          |   |              | 10 | % | November 1, 2011 * |
|                                     |   |                                   |   |                                 |   |   |                                    |   |   |          |   |              |   |   |   |
| Construction Hotels                      |   |                                   |   |                                 |   |   |                                    |   |   |          |   |              |   |   |   |
| Hyatt 48Lex - New York, NY               |   | 44 Lexington Holding, LLC              |   |                                 | 13,295 | (2)    |                                    |   | 12,939 |          |   |              | 11 | % | December 31, 2011 * |
| Hyatt Union Square - New York, NY        |   | Risingsam Union Square, LLC            |   |                                 | 13,032 | (2)    |                                    |   | 12,714 |          |   |              | 10 | % | December 31, 2011 |
| Hampton Inn - New York, NY (3)           |   | SC Waterview, LLC                      |   |                                 | 8,000  |   |                                    |   | 8,000  |          |   |              | 10 | % | December 31, 2011 |
|                                     |   |                                   |   |                                 |   |   |                                    |   |   |          |   |              |   |   |   |
| Total Development Loans Receivable       |   |                                   |   | $                                    | 42,327 |   |                                    | $      | 41,653 |          |   |              |   |   |   |

| * | Indicates borrower is a related party. |
|---|----------------------------------------|

| (1) | Represents current maturity date in effect. Agreements for our development loans receivable typically allow for two one-year extensions which can be exercised by the borrower if the loan is not in default.  As these loans typically finance hotel development projects, it is common for the borrower to exercise their options to extend the loans, in whole or in part, until the project has been completed and the project provides cash flow to the developer or is refinanced by the developer. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | We have amended the following development loans to allow the borrower to elect, quarterly, to pay accrued interest in-kind by adding the accrued interest to the principal balance of the loan: |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |   | Interest IncomeThree Months Ended March 31, |   |   |   |   |
|-----------------------------|--------|---------------------------------------------|--------|--------|--------|--------|
| Borrower                    |   | 2011                                        |   |   | 2010   |   |   | Cumulative Interest IncomePaid In Kind |   |
| Risingsam Union Square, LLC |   | $                                           | 318    |   |   | $      | 287 |   |   | $ | 3,032 |   |
| 44 Lexington Holding, LLC   |   |                                        | 356    |   |   |   | 319 |   |   |   | 3,295 |   |
|                        |   |                                        |   |   |   |   |   |   |   |   |   |   |
| Total                       |   | $                                           | 674    |   |   | $      | 606 |   |   | $ | 6,327 |   |

| (3) | Subsequent to March 31, 2011, we entered into a purchase and sale agreement to acquire a vacant property located in New York, NY from SC Waterview, LLC.  Consideration to be given in exchange for the property will include conversion of the $8,000 principal balance and $300 of the accrued interest receivable on the development loan receivable with the seller into equity.  See Note 13 – Subsequent Events for additional discussion of this purchase and sale agreement. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                              |   | March 31, 2011 |   |   | December 31, 2010 |   |
|-------------------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                                              |   |           |   |   |              |   |
| Transaction Costs                                                 |   | $              | 737    |   |              | $      | 340 |   |
| Investment in Statutory Trusts                                    |   |           | 1,548  |   |              |   | 1,548 |   |
| Deposits on Hotel Acquisitions                                    |   |           | 9,000  |   |              |   | 5,500 |   |
| Prepaid Expenses                                                  |   |           | 6,097  |   |              |   | 6,986 |   |
| Interest Receivable from Development Loans to Non-Related Parties |   |           | 1,922  |   |              |   | 1,767 |   |
| Hotel Purchase Option                                             |   |           | 933    |   |              |   | 933 |   |
| Other                                                             |   |           | 1,336  |   |              |   | 1,340 |   |
|                                                              |   | $              | 21,573 |   |              | $      | 18,414 |   |

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| - Hampton Inn, Danville, PA         | - Residence Inn, Langhorne, PA              |
|-------------------------------------|---------------------------------------------|
| - Hampton Inn, Philadelphia, PA     | - Residence Inn, Norwood, MA                |
| - Hampton Inn, Carlisle, PA         | - Sheraton Hotel, JFK Airport, New York, NY |
| - Hampton Inn, Selinsgrove, PA      | - Holiday Inn Express, Times Square, NY     |
| - Holiday Inn, Norwich, CT          | - Hampton Inn, Washington, DC               |
| - Towneplace Suites, Harrisburg, PA | - Hyatt Place, King of Prussia, PA          |
| - Comfort Inn, Harrisburg, PA       |                                        |

| - | a fixed charge coverage ratio of not less than 1.25 to 1.00 which will increase to 1.35 to 1.00 as of September 30, 2011, and 1.45 to 1.00 as of September 30, 2012; and |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - | a total funded liabilities to gross asset value ratio of not more than 0.65 to 1.00 |
|---|-------------------------------------------------------------------------------------|

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|                |   |        |                                             |   |   |          |             |           | Estimated Fair Value |   |
|---------------------|--------|-------------|--------------------------------------------------|--------|--------|---------------|------------------|----------------|----------------------|--------|
| Date of Transaction |   | Hedged Debt |                                             | Type   |   | Maturity Date |             | March 31, 2011 |                 |   | December 31, 2010 |   |
| May 9, 2010         |   |        | Variable Rate Mortgage - Hotel 373, New York, NY |   | Cap    |          | May 9, 2011      |           | $                    | -      |   |   | $ | - |   |
| January 9, 2009     |   |        | Variable Rate Mortgage - Nu Hotel, Brooklyn, NY  |   | Swap   |          | January 10, 2011 |           |                 | -      |   |   |   | (4 | ) |
| April 19, 2010      |   |        | Subordinated Notes Payable                       |   | Cap    |          | July 30, 2012    |           |                 | 21     |   |   |   | 50 |   |
|                |   |        |                                             |   |   |          |             |           | $                    | 21     |   |   | $ | 46 |   |

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| ·   | 2011 Annual Long-Term Incentive Program (“2011 Annual LTIP")- On March 16, 2011, the Compensation Committee adopted the 2011 Annual LTIP for the executive officers, pursuant to which the executive officers are eligible to earn equity awards in the form of common shares.  Shares are earned under the 2011 Annual LTIP based on achieving a threshold, target or maximum level of performance in certain defined areas of performance.  The Company accounts for these grants as performance awards for which the Company assesses the probable achievement of the performance conditions at the end of each period.  No stock based compensation expense was recorded for the three months ended March 31, 2011 under the 2011 Annual LTIP.  Any common shares issued in settlement of equity awards under the 2011 Annual LTIP will be made pursuant to the 2008 Plan or any other equity incentive plan approved by the Company’s shareholders. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 2010 Annual Long-Term Incentive Program (“2010 Annual LTIP”) - On March 30, 2011, 440,669 shares were issued pursuant to the 2010 Annual LTIP of which 25% vested immediately and the remaining will vest 25% on December 31, 2011, 25% on December 31, 2012, and 25% on December 31, 2013.  The grant date fair value of the shares awarded was $5.98 per share.  Stock based compensation expense related to the 2010 Annual LTIP program of $99 was recorded for the three months ended March 31, 2011.  As of December 31, 2010, the Company determined that it was probable the performance conditions for the 2010 Annual LTIP would be satisfied and a liability of $1,321 was included in accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheet for unissued shares under this program. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                         |   |          |      |   |                         |   |           |   |                    |   | Shares Vested  |   | Unearned Compensation |    |
|------------------------------|--------|---------------|-----------|--------|------------------------------|--------|----------------|--------|-------------------------|--------|----------------|--------|-----------------------|---------|
|  Original Issuance Date |   | Shares Issued |      |   | Share Price on date of grant |   | Vesting Period |   |   Vesting Schedule |   | March 31, 2011 |   | December 31, 2010     |    | March 31, 2011 |   |   | December 31, 2010 |   |
| June 1, 2006                 |   |          | 89,500    |   |                         | $      | 9.40           |   |  4 years           |   | 25%/year       |   |                  | 89,500  |   |   | 89,500 |   | $ | - |   |   | $ | - |   |
| June 1, 2007                 |   |          | 214,582   |   |                         | $      | 12.32          |   |  4 years           |   | 25%/year       |   |                  | 160,933 |   |   | 160,933 |   |   | 110 |   |   |   | 275 |   |
| June 2, 2008                 |   |          | 278,059   |   |                         | $      | 8.97           |   |  4 years           |   | 25%/year       |   |                  | 139,028 |   |   | 139,028 |   |   | 727 |   |   |   | 883 |   |
| September 30, 2008           |   |          | 3,616     |   |                         | $      | 7.44           |   |  1-4 years         |   | 25-100%/year   |   |                  | 2,308   |   |   | 2,308 |   |   | 7 |   |   |   | 9 |   |
| June 1, 2009                 |   |          | 744,128   |   |                         | $      | 2.80           |   |  4 years           |   | 25%/year       |   |                  | 186,241 |   |   | 186,241 |   |   | 1,128 |   |   |   | 1,258 |   |
| June 1, 2010                 |   |          | 182,308   |   |                         | $      | 4.63           |   |  2-3 years         |   | 25-50%/year    |   |                  | 42,784  |   |   | 42,784 |   |   | 459 |   |   |   | 515 |   |
| Total                        |   |          | 1,512,193 |   |                         |   |           |   |                    |   |           |   |                  | 620,794 |   |   | 620,794 |   | $ | 2,431 |   |   | $ | 2,940 |   |

| Original Issuance Date |   | Shares Issued |   | Share Price on date of grant |   | Vesting Period |   | Vesting Schedule |   | Unearned CompensationMarch 31, 2010 |   |
|------------------------|--------|---------------|--------|------------------------------|--------|----------------|--------|------------------|--------|-------------------------------------|--------|
| March 30, 2011         |   |          | 24,384 |                         |   | $              | 5.98   |             |   |  1 year                        |   |   | 100 | % |   | $ | 109 |   |

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|                   |   |          |   |   |                         |   |           |   |             |   | Shares Vested  |   |   | Unearned Compensation |   |
|------------------------|--------|---------------|--------|--------|------------------------------|--------|----------------|--------|------------------|--------|----------------|--------|--------|-----------------------|--------|
| Original Issuance Date |   | Shares Issued |   |   | Share Price on date of grant |   | Vesting Period |   | Vesting Schedule |   | March 31, 2011 |   |   | December 31, 2010     |   |   | March 31, 2011 |   |   | December 31, 2010 |   |
| January 6, 2011        |   |          | 17,410 |   |                         | $      | 6.66           |   |  1.5 years  |   | 50%/year       |   |   | -                     |   |   |   | - |   |   |   | 77 |   |   |   | - |   |
| March 25, 2010         |   |          | 6,000  |   |                         | $      | 5.02           |   |  2 years    |   | 50%/year       |   |   | -                     |   |   |   | - |   |   |   | 19 |   |   |   | 20 |   |
| June 1, 2010           |   |          | 3,331  |   |                         | $      | 4.63           |   |  2 years    |   | 50%/year       |   |   | 3,331                 |   |   |   | 3,331 |   |   |   | - |   |   |   | - |   |
| September 25, 2009     |   |          | 10,000 |   |                         | $      | 3.06           |   |  1 year     |   | 100%/year      |   |   | 10,000                |   |   |   | 10,000 |   |   |   | - |   |   |   | - |   |
| Total                  |   |          | 36,741 |   |                         |   |           |   |             |   |           |   |   | 13,331                |   |   |   | 13,331 |   |   | $ | 96 |   |   | $ | 20 |   |

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|                                                                    |   | Three Months Ended |    |
|-------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                    |   | March 31, 2011     |    |   | March 31, 2010 |   |
| Numerator:                                                              |   |               |    |   |   |   |
| BASIC AND DILUTED*                                                      |   |               |    |   |   |   |
| Loss from Continuing Operations                                         |   | $                  | (14,418 | ) |   | $ | (16,300 | ) |
| Loss from Continuing Operations allocated to Noncontrolling Interests   |   |               | 1,027   |   |   |   | 1,712 |   |
| Distributions to 8.0% Series A Preferred Shareholders                   |   |               | (1,200  | ) |   |   | (1,200 | ) |
| Dividends Paid on Unvested Restricted Shares                            |   |               | (64     | ) |   |   | (55 | ) |
| Loss from Continuing Operations applicable to Common Shareholders       |   |               | (14,655 | ) |   |   | (15,843 | ) |
|                                                                    |   |               |    |   |   |   |   |   |
| Discontinued Operations                                                 |   |               |    |   |   |   |   |   |
| Loss from Discontinued Operations                                       |   |               | -       |   |   |   | (37 | ) |
| Loss from Discontinued Operations allocated to Noncontrolling Interests |   |               | -       |   |   |   | 3 |   |
| Loss from Discontinued Operations applicable to Common Shareholders     |   |               | -       |   |   |   | (34 | ) |
|                                                                    |   |               |    |   |   |   |   |   |
| Net Loss applicable to Common Shareholders                              |   | $                  | (14,655 | ) |   | $ | (15,877 | ) |

| * | Income (Loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact. Weighted average units of limited partnership interest in Hersha Hospitality Limited Partnership outstanding for the three months ended March 31, 2011 and 2010 were 7,395,023 and 9,515,228, respectively. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                    |   | Three Months Ended |        |
|---------------------------------------------------------|--------|--------------------|-------------|
|                                                    |   | March 31, 2011     |        |   |   | March 31, 2010 |   |   |
| Denominator:                                            |   |               |        |   |   |   |   |   |
| Weighted average number of common shares - basic        |   |               | 168,334,982 |   |   |   |   | 99,311,523 |   |   |
| Effect of dilutive securities:                          |   |               |        |   |   |   |   |   |   |   |
| Restricted Stock Awards                                 |   |               | -           |   | ** |   |   | - |   | ** |
| Contingently Issued Shares                              |   |               | -           |   | ** |   |   | - |   |   |
| Option to acquire common shares                         |   |               | -           |   | ** |   |   | - |   | ** |
| Partnership Units                                       |   |               | -           |   | * |   |   | - |   | * |
| Weighted average number of common shares - diluted |   |               | 168,334,982 |   |   |   |   | 99,311,523 |   |   |

|                                                                     |   | Three Months Ended |   |
|--------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                     |   | March 31, 2011     |   |   | March 31, 2010 |   |
| Earnings Per Share:                                                      |   |               |   |   |   |   |
| BASIC                                                                    |   |               |   |   |   |   |
| Loss from Continuing Operations applicable to Common Shareholders   |   | $                  | (0.09  | ) |   | $ | (0.16 | ) |
| Loss from Discontinued Operations applicable to Common Shareholders |   |               | 0.00   |   |   |   | (0.00 | ) |
| Net Loss applicable to Common Shareholders                          |   | $                  | (0.09  | ) |   | $ | (0.16 | ) |
|                                                                     |   |               |   |   |   |   |   |   |
| DILUTED*                                                                 |   |               |   |   |   |   |   |   |
| Loss from Continuing Operations applicable to Common Shareholders   |   | $                  | (0.09  | ) |   | $ | (0.16 | ) |
| Loss from Discontinued Operations applicable to Common Shareholders |   |               | 0.00   |   |   |   | (0.00 | ) |
| Net Loss applicable to Common Shareholders                          |   | $                  | (0.09  | ) |   | $ | (0.16 | ) |

| * | Income (Loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact. Weighted average units of limited partnership interest in Hersha Hospitality Limited Partnership outstanding for the three months ended March 31, 2011 and 2010 were 7,395,023 and 9,515,228, respectively. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ** | Unvested stock awards, contingently issuable share awards and options to acquire our common shares have been omitted from the denominator for the purpose of computing diluted earnings per share for the three months ended March 31, 2011 and 2010, since the effect of including these awards in the denominator would be anti-dilutive to loss from continuing operations applicable to common shareholders.  For the three months ended March 31, 2011, there were 310,728 anti-dilutive unvested stock awards outstanding, 1,690,980 anti-dilutive contingently issuable share awards outstanding, and 3,040,591 anti-dilutive options to acquire our common shares outstanding.  For the three months ended March 31, 2010, there were 122,492 anti-dilutive unvested stock awards outstanding and 1,539,416 anti-dilutive options to acquire our common shares outstanding. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                   |   | Three Months Ended, |   |
|------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|
|                                                                                                                   |   | March 31, 2011      |   |   | March 31, 2010 |   |
| Common Shares issued as part of the Dividend Reinvestment Plan                                                         |   | $                   | 3      |   |   | $ | 3 |   |
| Acquisitions of hotel properties                                                                                       |   |                |   |   |   |   |   |   |
| Issuance of Common Units                                                                                               |   |                | -      |   |   |   | 5,299 |   |
| Debt assumed, net of discount                                                                                          |   |                | -      |   |   |   | 11,937 |   |
| Settlement of notes receivable and accrued interest receivable                                                         |   |                | -      |   |   |   | 1,408 |   |
| Interests in unconsolidated joint ventures used as consideration                                                       |   |                | -      |   |   |   | 4,133 |   |
| Development loan accrued interest revenue receivable paid in-kind by adding balance to development loan principal |   |                | 674    |   |   |   | 606 |   |
| Conversion of Common Units to Common Shares                                                                            |   |                | 168    |   |   |   | 602 |   |
| Reallocation of noncontrolling interest                                                                                |   |                | 1,597  |   |   |   | 1,745 |   |

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|                                                           |   | Three Months EndedMarch 31, 2010 |   |
|----------------------------------------------------------------|--------|----------------------------------|--------|
| Revenue:                                                       |   |                             |   |
| Hotel Operating Revenues                                       |   | $                                | 234    |   |
| Total Revenues                                                 |   |                             | 234    |   |
| Expenses:                                                      |   |                             |   |   |
| Hotel Operating Expenses                                       |   |                             | 216    |   |
| Real Estate and Personal Property Taxes and Property Insurance |   |                             | 13     |   |
| Depreciation and Amortization                                  |   |                             | 45     |   |
| General and Administrative                                     |   |                             | 1      |   |
| Other Expense                                                  |   |                             | (4     | ) |
| Total Expenses                                                 |   |                             | 271    |   |
|                                                           |   |                             |   |   |
| (Loss) from Discontinued Operations                            |   | $                                | (37    | ) |

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tio

| · | our business or investment strategy; |
|--------|--------------------------------------|

| · | our projected operating results; |
|--------|----------------------------------|

| · | our distribution policy; |
|--------|--------------------------|

| · | our liquidity; |
|--------|----------------|

| · | completion of any pending transactions; |
|--------|-----------------------------------------|

| · | our ability to obtain future financing arrangements; |
|--------|------------------------------------------------------|

| · | our understanding of our competition; |
|--------|---------------------------------------|

| · | market trends; and |
|--------|--------------------|

| · | projected capital expenditures. |
|--------|---------------------------------|

| · | general volatility of the capital markets and the market price of our common shares; |
|--------|--------------------------------------------------------------------------------------|

| · | changes in our business or investment strategy; |
|--------|-------------------------------------------------|

| · | availability, terms and deployment of capital; |
|--------|------------------------------------------------|

| · | availability of qualified personnel; |
|--------|--------------------------------------|

| · | changes in our industry and the market in which we operate, interest rates, or the general economy; |
|--------|-----------------------------------------------------------------------------------------------------|

| · | the degree and nature of our competition; |
|--------|-------------------------------------------|

| · | financing risks, including the risk of leverage and the corresponding risk of default on our mortgage loans and other debt and potential inability to refinance or extend the maturity of existing indebtedness; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | the depth and duration of the current economic downturn; |
|--------|----------------------------------------------------------|

| · | levels of spending in the business, travel and leisure industries, as well as consumer confidence; |
|--------|----------------------------------------------------------------------------------------------------|

| · | declines in occupancy, average daily rate and RevPAR and other hotel operating metrics; |
|--------|-----------------------------------------------------------------------------------------|

| · | hostilities, including future terrorist attacks, or fear of hostilities that affect travel; |
|--------|---------------------------------------------------------------------------------------------|

| · | financial condition of, and our relationships with, our joint venture partners, third-party property managers, franchisors and hospitality joint venture partners; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | the degree and nature of our competition; |
|--------|-------------------------------------------|

| · | increased interest rates and operating costs; |
|--------|-----------------------------------------------|

| · | risks associated with potential acquisitions, including the ability to ramp up and stabilize newly acquired hotels with limited or no operating history, and dispositions of hotel properties; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | risks associated with our development loan portfolio, including the ability of borrowers to repay outstanding principal and accrued interest at maturity; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | availability of and our ability to retain qualified personnel; |
|--------|----------------------------------------------------------------|

| · | our failure to maintain our qualification as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

| · | environmental uncertainties and risks related to natural disasters; |
|--------|---------------------------------------------------------------------|

| · | changes in real estate and zoning laws and increases in real property tax rates; and |
|--------|--------------------------------------------------------------------------------------|

| · | the factors discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2010 under the heading “Risk Factors” and in other reports we file with the SEC from time to time. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| CONSOLIDATED HOTELS:                |   |                |       |   |           |   |       |       |   |
|-------------------------------------|--------|---------------------|------------|--------|----------------|--------|------------|------------|--------|
|                                |   | Three Months Ended, |       |   |           |   |
|                                |   | March 31, 2011      |       |   | March 31, 2010 |   |       | % Variance |   |
|                                |   |                |       |   |           |   |       |       |   |
| Rooms Available                     |   |                | 707,571    |   |           |   | 641,772    |       |   |   | 10.3 | % |
| Rooms Occupied                      |   |                | 430,017    |   |           |   | 392,870    |       |   |   | 9.5 | % |
| Occupancy                           |   |                | 60.77      | %      |           |   | 61.22      | %          |   |   | -0.4 | % |
| Average Daily Rate (ADR)            |   | $                   | 126.93     |   |           | $      | 118.92     |       |   |   | 6.7 | % |
| Revenue Per Available Room (RevPAR) |   | $                   | 77.14      |   |           | $      | 72.80      |       |   |   | 6.0 | % |
|                                |   |                |       |   |           |   |       |       |   |   |   |   |
| Room Revenues                       |   | $                   | 54,579,944 |   |           | $      | 46,718,890 |       |   |   | 16.8 | % |
| Total Revenues                      |   | $                   | 57,810,592 |   |           | $      | 49,353,531 |       |   |   | 17.1 | % |

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| UNCONSOLIDATED JOINT VENTURES:      |   |                |       |   |           |   |       |       |   |
|-------------------------------------|--------|---------------------|------------|--------|----------------|--------|------------|------------|--------|
|                                |   | Three Months Ended, |       |   |           |   |
|                                |   | March 31, 2011      |       |   | March 31, 2010 |   |       | % Variance |   |
|                                |   |                |       |   |           |   |       |       |   |
| Rooms Available                     |   |                | 196,560    |   |           |   | 196,560    |       |   |   | 0.0 | % |
| Rooms Occupied                      |   |                | 122,958    |   |           |   | 114,823    |       |   |   | 7.1 | % |
| Occupancy                           |   |                | 62.55      | %      |           |   | 58.42      | %          |   |   | 4.1 | % |
| Average Daily Rate (ADR)            |   | $                   | 129.88     |   |           | $      | 126.63     |       |   |   | 2.6 | % |
| Revenue Per Available Room (RevPAR) |   | $                   | 81.25      |   |           | $      | 73.97      |       |   |   | 9.8 | % |
|                                |   |                |       |   |           |   |       |       |   |   |   |   |
| Room Revenues                       |   | $                   | 15,970,246 |   |           | $      | 14,540,323 |       |   |   | 9.8 | % |
| Total Revenues                      |   | $                   | 20,641,853 |   |           | $      | 19,192,694 |       |   |   | 7.6 | % |

| Brand               |   | Location         |   | Acquisition Date  |   | Rooms  |   |   | Hotel Operating Revenues |   |
|---------------------|--------|------------------|--------|-------------------|--------|--------|--------|--------|--------------------------|--------|
|                |   |             |   |              |   |   |   |   |                     |   |
| Holiday Inn         |   | Wall Street, NY  |   | May 7, 2010       |   |   | 113    |   |                     |   | 1,003 |   |
| Hampton Inn         |   | Washington, DC   |   | September 1, 2010 |   |   | 228    |   |                     |   | 3,025 |   |
| Holiday Inn Express |   | Water Street, NY |   | March 25, 2011    |   |   | 112    |   |                     |   | 82 |   |
|                |   |             |   |              |   |   | 453    |   |                     | $      | 4,110 |   |

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|                |   |             |   |             |   |   |   |   | Hotel Operating RevenuesThree Months Ended |   |
|---------------------|--------|------------------|--------|------------------|--------|--------|--------|--------|--------------------------------------------|--------|
| Brand               |   | Location         |   | Acquisition Date |   | Rooms  |   |   | March 31, 2011                             |   |   | March 31, 2010 |   |
|                |   |             |   |             |   |   |   |   |                                       |   |   |   |   |
| Hampton Inn         |   | Times Square, NY |   | February 9, 2010 |   |   | 184    |   |                                       |   | 2,073 |   |   |   | 1,136 |   |
| Candlewood Suites   |   | Times Square, NY |   | February 9, 2010 |   |   | 188    |   |                                       |   | 1,656 |   |   |   | 852 |   |
| Holiday Inn Express |   | Times Square, NY |   | February 9, 2010 |   |   | 210    |   |                                       |   | 2,064 |   |   |   | 1,115 |   |
|                |   |             |   |             |   |   | 582    |   |                                       | $      | 5,793 |   |   | $ | 3,143 |   |

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|                                                                                                  |   | Three Months Ended |        |
|-------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|
|                                                                                                  |   | March 31, 2011     |        |   | March 31, 2010 |   |
|                                                                                                  |   |               |        |   |   |   |
| Net loss applicable to common shares                                                                  |   | $                  | (14,591     | ) |   | $ | (15,822 | ) |
| Loss allocated to noncontrolling interest                                                             |   |               | (1,027      | ) |   |   | (1,715 | ) |
| Loss (income) from unconsolidated joint ventures                                                      |   |               | 981         |   |   |   | (778 | ) |
| Depreciation and amortization                                                                         |   |               | 14,016      |   |   |   | 12,010 |   |
| Depreciation and amortization from discontinued operations                                            |   |               |        |   |   |   | 45 |   |
| FFO related to the noncontrolling interest in consolidated joint ventures (1)                         |   |               | 340         |   |   |   | 124 |   |
| Funds from consolidated hotel operations applicable to common shares and Partnership units            |   |               | (281        | ) |   |   | (6,136 | ) |
|                                                                                                  |   |               |        |   |   |   |   |   |
| (Loss) income from unconsolidated joint ventures                                                      |   |               | (981        | ) |   |   | 778 |   |
| Less:                                                                                                 |   |               |        |   |   |   |   |   |
| Gain from remeasurement of investment in unconsolidated joint ventures                                |   |               | -           |   |   |   | (1,818 | ) |
| Add:                                                                                                  |   |               |        |   |   |   |   |   |
| Depreciation and amortization of purchase price   in excess of historical cost (2)     |   |               | 525         |   |   |   | 508 |   |
| Interest in depreciation and amortization of unconsolidated joint venture (3)                         |   |               | 202         |   |   |   | 229 |   |
| Funds from unconsolidated joint ventures operations applicable to common shares and Partnership units |   |               | (254        | ) |   |   | (303 | ) |
|                                                                                                  |   |               |        |   |   |   |   |   |
| Funds from Operations applicable to common shares and Partnership units                               |   | $                  | (535        | ) |   | $ | (6,439 | ) |
|                                                                                                  |   |               |        |   |   |   |   |   |
| Weighted Average Common Shares and Units Outstanding                                                  |   |               |        |   |   |   |   |   |
| Basic                                                                                                 |   |               | 168,334,982 |   |   |   | 99,311,523 |   |
| Diluted                                                                                               |   |               | 180,772,304 |   |   |   | 110,488,659 |   |

| (1) | Adjustment made to deduct FFO related to the noncontrolling interest in our consolidated joint ventures. Represents the portion of net income and depreciation allocated to our joint venture partners. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Adjustment made to add depreciation of purchase price in excess of historical cost of the assets in the unconsolidated joint venture at the time of our investment. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Adjustment made to add our interest in real estate related depreciation and amortization of our unconsolidated joint ventures. Allocation of depreciation and amortization is consistent with allocation of income and loss. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | a significant decrease in the market price of a long-lived asset; |
|--------|--------|-------------------------------------------------------------------|

|   | · | a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | a significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset, including an adverse action or assessment by a regulator; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a current expectation that, it is more likely than not that, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Identifying loans for individual review. In general, these consist of development loans that are not performing in accordance with the contractual terms of the loan. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Assessing whether the loans identified for review are impaired. That is, whether it is probable that all amounts will not be collected according to the contractual terms of the loan agreement.  We determine the amount of impairment by calculating the estimated fair value, discounted cash flows or the value of the underlying collateral. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                           |   |   | 2011   |   |   | 2012   |   |   | 2013   |   |   | 2014   |   |   | 2015   |   |   | Thereafter |   |   | Total  |   |
|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|
| Mortgages & Notes Payable  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   |   |
| Fixed Rate Debt                |   |   | $      | 6,004  |   |   | $      | 15,698 |   |   | $      | 32,450 |   |   | $      | 42,556 |   |       | $      | 88,664 |   |   | $ | 353,037 |   |   | $ | 538,409 |   |
| Weighted Average Interest Rate |   |   |   | 6.14   | %      |   |   | 6.14   | %      |   |   | 6.13   | %      |   |   | 6.10   | %      |       |   | 6.01   | %      |   |   | 6.01 | % |   |   | 6.09 | % |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Floating Rate Debt             |   |   |   | 17,861 |   |   |   | 40,000 |   |   |   | -      |   |   |   | -      |   |       |   | -      |   |   |   | 51,548 |   |   |   | 109,409 |   |
| Weighted Average Interest Rate |   |   |   | 2.78   | %      |   |   | 3.22   | %      |   |   | 3.22   | %      |   |   | 3.22   | %      |       |   | 3.22   | %      |   |   | 3.22 | % |   |   | 3.15 | % |
|                           |   |   | $      | 23,865 |   |   | $      | 55,698 |   |   | $      | 32,450 |   |   | $      | 42,556 |   |       | $      | 88,664 |   |   | $ | 404,585 |   |   | $ | 647,818 |   |
|                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Credit Facility                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |       |   |   |   |   |   |   |   |   |   |   |   |
|                           |   |   | $      | -      |   |   | $      | -      |   |   | $      | 63,000 |   |   | $      | -      |   |       | $      | -      |   |   | $ | - |   |   | $ | 63,000 |   |
| Weighted Average Interest Rate |   |   |   |   |   |   |   |   |   |   |   | 4.25   | %      |   |   |   |   |       |   |   |   |   |   |   |   |   |   | 4.25 | % |
|                           | TOTAL  |   | $      | 23,865 |   |   | $      | 55,698 |   |   | $      | 95,450 |   |   | $      | 42,556 |   |       | $      | 88,664 |   |   | $ | 404,585 |   |   | $ | 710,818 |   |

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|   | · | the Company’s exercise of each of the extension options within its discretion or upon lender approval, and |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | the lender’s extension of the maturity of the revolving line of credit extension option. |
|--------|--------|------------------------------------------------------------------------------------------------|

|                                                          |   | 2011   |   |   | 2012   |   |    | 2013   |   |   | 2014    |   |   | 2015   |    |   | Thereafter |   |   | Total  |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|------------|--------|--------|--------|--------|
|                                                          |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |   |   |   |
| Principal repayments due as of March 31, 2011, as noted above |   | $      | 23,865 |   |   | $      | 55,698  |   |   | $      | 95,450  |   |   | $      | 42,556  |   |       | $      | 88,664 |   |   | $ | 404,585 |   |   | $ | 710,818 |   |
|                                                          |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Adjustments (1)                                               |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Hampton Inn - West Haven, CT (2)                              |   |   | -      |   |   |   | (7,515  | )      |   |   | -       |   |   |   | -       |   |       |   | 7,515  |   |   |   | - |   |   |   | - |   |
| Residence Inn - Carlisle (3)                                  |   |   | -      |   |   |   | -       |   |   |   | (6,697  | )      |   |   | -       |   |       |   | -      |   |   |   | 6,697 |   |   |   | - |   |
| Nu Hotel - Brooklyn, NY (4)                                   |   |   | -      |   |   |   | (18,000 | )      |   |   | 18,000  |   |   |   | -       |   |       |   | -      |   |   |   | - |   |   |   | - |   |
| Line of Credit Facility (5)                                   |   |   | -      |   |   |   | -       |   |   |   | (63,000 | )      |   |   | 63,000  |   |       |   | -      |   |   |   | - |   |   |   | - |   |
|                                                          |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |   |   |   |   |   |   |   |   |   |   |
| Pro Forma Principal Repayments                                |   | $      | 23,865 |   |   | $      | 30,183  |   |   | $      | 43,753  |   |   | $      | 105,556 |   |       | $      | 96,179 |   |   | $ | 411,282 |   |   | $ | 710,818 |   |

| (1) | Adjustments reflect principal balances as of March 31, 2011.  Adjustments do not include amortization of principal scheduled to occur subsequent to March 31, 2011 through maturity date or extended maturity date if options are exercised. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Represents the mortgage debt on the Hampton Inn – West Haven, CT, which contains a three-year extension option, which is subject to the lender’s approval in its discretion, effectively extending the maturity from November of 2012 to November of 2015. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Represents the mortgage debt on the Residence Inn – Carlisle, PA, which contains a three-year extension option, which is subject to the lender’s approval in its discretion, effectively extending the maturity from January of 2013 to January of 2016. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Represents mortgage debt on the nu Hotel Brooklyn – New York, NY, which contains a one-year extension option, which can be exercised at our discretion, effectively extending the maturity from January of 2012 to January of 2013. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Represents the revolving line of credit agreement entered into on November 5, 2010, which contains a one-year extension option, which is subject to the lender's approval in its discretion, effectively extending the maturity from November of 2013 to November of 2014. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ExhibitNumber |   | Exhibit Description                                                                                 |
|---------------|--------|-----------------------------------------------------------------------------------------------------|
|          |   |                                                                                                |
| 31.1          |   | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|          |   |                                                                                                |
| 31.2          |   | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|          |   |                                                                                                |
| 32.1          |   | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|          |   |                                                                                                |
| 32.2          |   | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

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NA

|        | HERSHA HOSPITALITY TRUST |
|-------------|--------------------------|
|        |                     |
|        |                     |
| May 5, 2011 | /s/ Ashish R. Parikh     |
|        | Ashish R. Parikh         |
|        | Chief Financial Officer  |

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