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                                                                    Exhibit 10.1

                               ADVISORY AGREEMENT

                                     BETWEEN

                          APPLE HOSPITALITY FIVE, INC.

                                       AND

                      APPLE HOSPITALITY FIVE ADVISORS, INC.



         THIS ADVISORY AGREEMENT, dated as of December __, 2002, is between
APPLE HOSPITALITY FIVE, INC., a Virginia corporation (the "Company"), and APPLE
HOSPITALITY FIVE ADVISORS, INC., a Virginia corporation (the "Advisor").

                                    RECITALS

         A.  The purpose of the Company is to invest primarily in upper-end,
extended-stay hotel properties in selected metropolitan areas of the United
States and, to a lesser extent, in certain other permitted investments described
in the Prospectus (as hereinafter defined). The Company intends to qualify as a
real estate investment trust pursuant to Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended.

         B.  The Company desires to engage the Advisor to provide information,
advice, assistance and facilities to the Company and to have the Advisor
undertake the duties and responsibilities hereinafter set forth, all subject to
the supervision of the Company's Board of Directors, on the terms and conditions
set forth herein. In consideration therefor, the Company desires to pay the
Advisor certain fees as herein set forth.

         NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties agree as follows:

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     1.   Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below.

          (a) "Affiliate" means (i) any Person directly or indirectly
     controlling, controlled by or under common control with another Person,
     (ii) any Person owning or controlling 10% or more of the outstanding voting
     securities or beneficial interests of such other Person, (iii) any officer,
     director, trustee or general partner of such Person and (iv) if such other
     Person is an officer, director, trustee or partner of another entity, then
     the entity for which that Person acts in any such capacity. "Affiliated"
     means being an Affiliate of a specified Person.

          (b) "Articles of Incorporation" means the Company's Articles of
     Incorporation filed with the Virginia State Corporation Commission,
     including all amendments, restatements or modifications thereof.

          (c) "Asset Management Fee" means the fee payable to the Advisor for
     its services hereunder. Such fee will be paid pursuant and subject to
     Section 11 of this Agreement.

          (d) "Average Invested Assets" for any period means the average of the
     aggregate book value of the assets of the Company invested, directly or
     indirectly, in equity interests in and loans secured by real estate, before
     reserves for depreciation or bad debts or other similar non-cash reserves,
     computed by taking the average of such values at the end of each month
     during such period.

          (e) "Board of Directors" means the Company's Board of Directors as of
     any particular time.

          (f) "Bylaws" means the Company's Bylaws, including all amendments,
     restatements or modifications thereof.

          (g) "Calendar Year" means the year ended December 31st and any portion
     thereof treated by the Internal Revenue Service as a reporting period for
     the Company.

          (h) "Code" means the Internal Revenue Code of 1986, as amended from
     time to time, including successor statutes thereto.

          (i) "Company Net Income" for any period means the total revenues of
     the Company for such period, less expenses applicable to such period other
     than additions to reserves for depreciation or bad debts or other similar
     non-cash reserves. "Company Net Income," for purposes of calculating
     Operating Expenses in Section 15 of this Agreement, does not include the
     gain from the sale of the Company's assets.

          (j) "Directors" means, as of any particular time, the directors of the
     Company holding office at such time.

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          (k) "Independent Director" means a Director of the Company who is not
     Affiliated, directly or indirectly, with the Advisor, whether by ownership
     of, ownership interest in, employment by, any material business or
     professional relationship with, or serving as an officer or director of,
     the Advisor, or an Affiliated business entity of the Advisor (other than as
     an Independent Director of up to three other real estate investment trusts
     advised by the Advisor or an Affiliate of the Advisor). An Independent
     Director may perform no other services for the Company, except as a
     Director. Notwithstanding anything to the contrary herein, any member of a
     law firm whose only material business or professional relationship with the
     Company, the Advisor and their Affiliates is as legal counsel to any of
     such entities shall constitute an Independent Director (unless such person
     serves as a director for more than three real estate investment trusts
     organized by the Advisor and its Affiliates). An "indirect" affiliation
     shall be deemed to refer to circumstances in which a member of the
     "immediate family" of a Director is Affiliated with the Advisor, and a
     person's "immediate family" shall mean such person's spouse, parents,
     children, siblings, mother and father-in-law, sons and daughters-in-law and
     brothers and sisters-in-law.

          (l) "Modified Net Income" means net income (computed in accordance
     with generally accepted accounting principles) excluding gains (or losses)
     from debt restructuring and sales of property, plus depreciation of real
     property, and after adjustments for significant non-recurring items and
     unconsolidated partnerships and joint ventures. Adjustments for
     unconsolidated partnerships and joint ventures will be calculated to
     reflect modified net income on the same basis.

          (m) "Offering" means the public offering of the Company's Common
     Shares.

          (n) "Operating Expenses" means all operating, general and
     administrative expenses of the Company as determined under generally
     accepted accounting principles (including regular compensation payable to
     the Advisor), excluding, however, the following:

              (i)    expenses of raising capital;

              (ii)   interest payments;

              (iii)  taxes;

              (iv)   non-cash expenditures, such as depreciation, amortization
          and bad debt;

              (v)    reserves;

              (vi)   incentive fees paid to the Advisor, if any; and

              (vii)  costs related directly to asset acquisition, operation a
          disposition.

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          (o) "Organizational and Offering Expenses" means all expenses incurred
     in connection with the formation and registration of the Company and in
     qualifying and marketing the Shares under applicable federal and state law,
     and any other expenses actually incurred and directly related to the
     qualification, registration, offer and sale of the Shares, including such
     expenses as (i) all marketing expenses and payments made to broker-dealers
     as compensation or reimbursement for all costs of reviewing the Offering,
     including due diligence investigations and fees and expenses of their
     attorneys, accountants and other experts; (ii) registration fees, filing
     fees and taxes; (iii) the costs of printing, amending, supplementing and
     distributing the registration statement and Prospectus; (iv) the costs of
     obtaining regulatory clearances of, and printing and distributing, sales
     materials used in connection with the offer and sale of the Shares; (v) the
     costs related to investor and broker-dealer sales meetings concerning the
     Offering; and (vi) accounting and legal fees incurred in connection with
     any of the foregoing.

          (p) "Person" includes an individual, corporation, partnership, joint
     venture, association, company, trust, bank or other entity, or government
     and any agency and political subdivision of a government.

          (q) "Property" or "Properties" means partial or entire equity
     interests, including equity participation interests such as general
     partnership interests and joint venture interests, owned by the Company in
     real property as described in the Prospectus.

          (r) "Prospectus" has the meaning given to that term by Section 2(10)
     of the Securities Act of 1933, as amended, and as used herein, the term
     means the Prospectus of the Company pursuant to which the Shares are
     offered to the public.

          (s) "Return Ratio" means, for any period, the ratio of Modified Net
     Income to Total Contributions.

          (t) "Shares" or "Common Shares" means the Common Shares of the
     Company, no par value, and the Series A Preferred Shares of the Company,
     which are collectively being offered as "Units" pursuant to the Company's
     Prospectus.

          (u) "Shareholders" means the holders of record of the Company's Common
     Shares.

          (v) "Total Contributions" means the gross offering proceeds which have
     been received by the Company from time to time from the sale or sales of
     the Shares. Total Contributions shall be calculated to reflect the average
     of the daily amounts during the period in question of the gross offering
     proceeds which have been received by the Company from time to time from the
     sales of Shares, to extent such Shares are issued and such sales have
     actually been closed.

     2.   Duties of the Advisor. Subject to the terms of the Articles of
Incorporation, the Bylaws, and the supervision of the Board of Directors, the
Advisor, at its own cost and expense, unless otherwise set forth herein, on
behalf of the Company, shall:

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          (a) serve as the Company's investment advisor and consultant in
     connection with policy and investment decisions to be made by the Board of
     Directors, furnish reports to the Board of Directors, and provide research,
     economic and statistical data in connection with the acquisition,
     financing, refinancing, holding, leasing and disposition of Properties and
     other investments of the Company;

          (b) administer the day-to-day operations of the Company and perform or
     supervise the various administrative functions reasonably necessary for the
     management of the Company;

          (c) investigate, select and, on behalf of the Company, engage and
     conduct business with (including, but not limited to, entering into
     contracts in the name of the Advisor or the Company) consultants,
     accountants, correspondents, lenders, servicers, technical advisors,
     attorneys, brokers, underwriters, corporate fiduciaries, escrow agents,
     depositaries, custodians, agents for collection, insurers, insurance
     agents, banks, builders, developers, property owners, mortgagors, and other
     mortgage and investment participants, any and all agents for any of the
     foregoing, including Affiliates of the Advisor, and Persons acting in any
     other capacity deemed by the Board of Directors necessary or desirable for
     the performance of any of the foregoing services;

          (d) act as attorney-in-fact or agent in acquiring, financing,
     refinancing, leasing and disposing of Properties and other investments, in
     disbursing and collecting funds of the Company, in paying the debts and
     fulfilling the obligations of the Company and in handling, prosecuting and
     settling any claims of the Company, including the foreclosure or other
     enforcement of any mortgage or other lien securing Properties or other
     investments, and exercise its own discretion in doing so; provided that any
     fees and costs payable to independent Persons incurred by the Advisor in
     connection with the foregoing shall be the responsibility of the Company;

          (e) negotiate on behalf of the Company with banks or other lenders for
     loans to be made to the Company, and negotiate on behalf of the Company
     with investment banking firms and broker-dealers or negotiate private sales
     of the securities of the Company or obtain loans for the Company, but in no
     event in such a way so that the Advisor shall be acting as broker-dealer or
     underwriter; and provided, further, that any fees and costs payable to
     third parties incurred by the Advisor in connection with the foregoing
     shall be the responsibility of the Company;

          (f) invest or reinvest any money of the Company, as directed by the
     Board of Directors or subject to such discretionary powers as the Board of
     Directors may from time to time delegate;

          (g) if requested by the Company, provide appraisal reports on any real
     property that is, or is proposed to be, acquired by the Company for
     investment;

          (h) at any time reasonably requested by the Board of Directors (but
     not more than monthly) make reports of its performance of services to the
     Company;

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          (i) communicate on behalf of the Company with the Shareholders of the
     Company as required to satisfy the continuous reporting and other
     requirements of any governmental bodies or agencies to the Shareholders and
     third parties and to maintain effective relations with the Shareholders;

          (j) counsel the Company in connection with policy decisions to be made
     by the Board of Directors;

          (k) provide the executive and administrative personnel, office space
     and services required in rendering the foregoing services to the Company;
     and

          (l) perform such other services as may be required from time to time
     for management and other activities relating to the assets of the Company
     as the Advisor shall deem appropriate under the particular circumstances.

     3.   Commitments. In order to meet the investment requirements of the
Company, but only as determined by the Board of Directors, or any authorized
committee thereof, from time to time, the Advisor agrees at the direction of the
Board of Directors or any such committee to issue on behalf of the Company
commitments on such terms as are established by the Board of Directors or any
such committee, for the acquiring of Properties or other assets.

     4.   Duties of the Board of Directors. In order for the Advisor to fulfill
its duties, the Board of Directors shall, to the extent it deems proper, provide
the Advisor with full information concerning the Company, its capitalization and
investment policies and the intentions of the Board of Directors with respect to
future investments. The Company shall furnish the Advisor with a copy of all
audited financial statements, a signed copy of each report prepared by
independent accountants, and such other information with regard to its affairs
as the Advisor may from time to time reasonably request.

     5.   Advice. In addition to the services described in Section 2 above, the
Advisor shall consult with the Board of Directors and the officers of the
Company and shall furnish them with advice and recommendations with respect to
the acquiring of Properties or commitments therefor, or other investments of, or
investments considered by, the Company, and shall furnish advice and
recommendations with respect to other aspects of the business and affairs of the
Company. In order to facilitate the investment of the funds of the Company and
enable it to avail itself of investment opportunities as they arise, the Advisor
may from time to time be granted, but is not hereby granted, the power and
authority to make and dispose of investments and to make and terminate
commitments for investments, on behalf of and in the name of the Company,
without further or express authority from the Board of Directors; provided,
however that the Board of Directors shall have the power to revoke, suspend,
modify or limit such power and authority at any time or from time to time, but
not retroactively. Unless otherwise notified by the Board of Directors, a
representative of the Advisor shall attend all regular and special meetings of
the Board of Directors, and the Board of Directors shall notify the Advisor of
such meetings.

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     6.   Bank Accounts. The Advisor may establish and maintain one or more bank
accounts in the name of the Company and may collect and deposit into any such
account or accounts, and disburse from any such account or accounts, any money
on behalf of the Company, under such terms and conditions as the Board of
Directors may approve, provided that all such accounts shall be maintained in
such fashion as to make clear that the funds therein are the property of the
Company and not of the Advisor. The Advisor shall from time to time render
appropriate accountings of such collections and payments to the Board of
Directors and to the auditors of the Company.

     7.   Investment Undertakings. The Advisor shall use its best efforts to
assure that (i) any mortgage securing a Property of the Company shall be and
remain a valid lien upon the mortgaged property according to its terms; (ii) the
title to any Property is insured by appropriate policies of title insurance;
(iii) any Property is duly insured against loss or damage by fire, with extended
coverage, and against such other insurable hazards and risks as is customary and
appropriate in the circumstances; and (iv) the policies from time to time
specified by the Board of Directors with regard to the protection of the
Company's investments are carried out. Any and all fees and costs incurred by
the Advisor in performing such functions, whether payable to its Affiliates or
independent Persons shall be borne by the Company.

     8.   Records; Confidentiality. The Advisor shall maintain appropriate
records of all its activities hereunder and make such records available for
inspection by the Board of Directors and by counsel, auditors and authorized
agents of the Company, at any time or from time to time during normal business
hours. The Advisor shall at all reasonable times have access to the books and
records of the Company. The Advisor shall keep confidential any and all
information obtained in connection with the services rendered hereunder and
shall not disclose any such information to nonaffiliated Persons except with the
prior consent of the Board.

     9.   Limitation of Activities. Anything else in this Agreement to the
contrary notwithstanding:

          (a) The Advisor shall refrain from taking any action which, in its
     sole judgment made in good faith, would adversely affect the status of the
     Company as a real estate investment trust as defined in the Code, subject
     the Company to regulation under the Investment Company Act of 1940, violate
     any law, rule or regulation or would otherwise not be permitted by the
     Articles of Incorporation or Bylaws of the Company, except if such action
     shall be ordered by the Board of Directors, in which case the Advisor shall
     notify promptly the Board of Directors of the Advisor's judgment of the
     potential impact of such action and shall refrain from taking such action
     until it receives further clarification or instructions from the Board of
     Directors. Notwithstanding the foregoing, the Advisor and its stockholders,
     directors, officers and employees shall not be liable to the Company, or to
     the Company's Board of Directors or Shareholders for any act or omission by
     the Advisor, or its stockholders, directors, officers or employees except
     as provided in Section 16 of this Agreement.

          (b) In performing its duties and obligations under this Agreement, the
     Advisor shall abide by and comply with the provisions and policies set
     forth in the Articles of Incorporation and Bylaws.

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     10.  Relationship with Board of Directors. Employees of the Advisor may
serve as members of the Board of Directors or any committee thereof and as
officers of the Company, except that no employee of the Advisor who also is a
Director or officer of the Company shall receive any compensation from the
Company for serving as a Director or officer other than for reasonable
reimbursement for travel and related expenses incurred in attending meetings of
the Board of Directors or any committee thereof.

     11.  Fees.

          (a)  Asset Management Fee. The Company shall pay to the Advisor
     quarterly, for services rendered under this Agreement, an Asset Management
     Fee calculated as follows: The Asset Management Fee for any calendar
     quarter shall be a applicable percentage of the Total Contributions. The
     applicable percentage used to calculate such Asset Management Fee shall be
     based upon the Return Ratio, calculated on a per annum basis, for the
     preceding calendar quarter. The Asset Management Fee shall be as follows
     with respect to any such quarter: 0.1% of Total Contributions if the Return
     Ratio for the preceding calendar quarter is 6.0% per annum or less; 0.15%
     of Total Contributions if the Return Ratio for the preceding calendar
     quarter is more than 6.0% per annum but not more than 8.0% per annum; and
     0.25% of Total Contributions if the Return Ratio for the preceding calendar
     is above 8.0% per annum. If the Asset Management Fee is payable with
     respect to any partial calendar quarter, it shall be prorated based on the
     number of days elapsed during any such partial calendar quarter.

          (b)  Payment of Asset Management Fee. The Advisor shall compute the
     compensation payable to it under Section 11(a) of this Agreement within 45
     days of the end of each calendar quarter. A copy of the computations made
     by the Advisor to calculate its compensation shall thereafter promptly be
     delivered to the Board of Directors and, upon such delivery, payment of the
     compensation earned under Section 11(a) of this Agreement shown therein
     shall be due and payable within 60 days after the end of such calendar
     quarter.

     12.  Expenses.

          (a)  The Company shall pay directly or reimburse the Advisor for the
     following expenses in addition to the compensation provided for in this
     Agreement:

               (i)   all costs of personnel employed by the Company and involved
          in the business of the Company;

               (ii)  expenses incurred in connection with the initial investment
          of the funds of the Company, including all direct expenses incurred in
          connection with investigation and acquisition of Properties;

               (iii) interest and other costs for borrowed money, including
          discounts, points and other similar fees;

               (iv)  taxes and assessments on income or property and taxes as an
          expense of doing business;

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               (v)    fees and commissions, including finder's fees and
          brokerage commissions with respect to the acquisition and disposition
          of assets of the Company, whether payable to an Affiliate of the
          Advisor or an unrelated Person, including, without limitation, costs
          of foreclosure, maintenance, repair and improvement of Property;

               (vi)   costs associated with insurance required in connection
          with the business of the Company or by the Board of Directors;

               (vii)  expenses of managing and operating real property owned by
          the Company, whether payable to an Affiliate of the Advisor or an
          unrelated Person;

               (viii) fees and expenses of legal counsel for the Company;

               (ix)   fees and expenses of independent auditors and accountants
          for the Company;

               (x)    all expenses in connection with payments to the Board of
          Directors or any committee thereof and meetings of the Board of
          Directors or any committee thereof and Shareholders;

               (xi)   expenses associated with listing the Shares on a national
          stock exchange or quoting the Shares on the NASDAQ National Market
          System if requested by the Board of Directors, or with the issuance
          and distribution of any additional Shares of the Company at any time,
          such as taxes, legal and accounting fees, listing and registration
          fees, and other expenses;

               (xii)  dividend and dividend distributions;

               (xiii) expenses of organizing, revising, amending, converting,
          modifying or terminating the Company, the Articles of Incorporation or
          the Bylaws; and

               (xiv)  expenses of maintaining communications with Shareholders,
          including the cost of preparation, printing, and mailing annual
          reports and other Shareholder reports, proxy statements and other
          reports required by governmental entities.

          Expenses incurred by the Advisor on behalf of the Company and payable
pursuant to this Section, shall be reimbursed quarterly to the Advisor within 60
days after the end of each quarter. The Advisor shall prepare a statement
documenting the expenses of the Company during each quarter, and shall deliver
such statement to the Company within 45 days after the end of each quarter.

          (b)  Except as otherwise provided herein, the Advisor shall pay all
     expenses of performing its obligations under this Agreement, including,
     without limitation, the following expenses:

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               (i)   employment expenses of the Advisor, including, but not
          limited to, salaries, wages, payroll taxes, costs of employee benefit
          plans, and temporary help expenses, except to the extent that such
          expenses are otherwise reimbursable pursuant to Section 12(a) of this
          Agreement or the Articles of Incorporation or Bylaws;

               (ii)  audit fees and expenses of the Advisor;

               (iii) legal fees and other expenses of professional services to
          the Advisor;

               (iv)  rent, telephone, utilities and other office expenses of the
          Advisor;

               (v)   insurance of the Advisor; and

               (vi)  all other administrative expenses of the Advisor.

     13.  Limitation on the Advisor's Investment Advice. Notwithstanding
anything to the contrary in this Agreement, the Advisor shall not be required
to, and shall not, advise the Company as to any investments in securities,
except when, and to the extent that, the Advisor and the Company specifically
agree (i) that such advice is desirable, and (ii) that such advice can be
rendered consistently with applicable legal requirements, including any
applicable provisions of relevant "investment advisor" laws.

     14.  Other Services. Should the Board of Directors request that the Advisor
or any employee thereof render material services for the Company other than set
forth in Section 2, such services shall be separately compensated and shall not
be deemed to be services pursuant to the terms of this Agreement.

     15.  Limitation on Operating Expenses. Within 120 days from the end of any
Calendar Year, the Advisor shall refund to the Company the amount, if any, by
which the Operating Expenses of the Company, excluding extraordinary
nonrecurring items and those items referred to in Section 14, during such
Calendar Year exceeded the greater of either of the following limitations:

          (a)  2% of the Average Invested Assets of the Company for such
     Calendar Year; or

          (b)  25% of the Company's Company Net Income for such Calendar Year,
     determined in accordance with generally accepted accounting principles.

          The Independent Directors of the Company may determine that, because
of unusual and nonrecurring factors which they deem sufficient, a higher level
of Operating Expenses is justified for such Calendar Year. The Advisor shall be
promptly reimbursed for any payments made under this Section 15 if, in any
succeeding Calendar Year, the Operating Expenses of the Company are less than
the permitted level of Operating Expenses.

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     16.  Advisory Responsibility. The Advisor assumes no responsibility under
this Agreement other than to render the services called for hereunder in good
faith and with integrity, and shall not be responsible for any action of the
Company in following or declining to follow any advice or recommendation of the
Advisor. Neither the Advisor, its shareholders, directors, officers nor
employees nor any of its Affiliates, nor any Person contracting with the Advisor
for services and its shareholders, directors, officers and employees nor any of
its Affiliates shall be liable to the Company or its Shareholders, except by
reason of acts constituting gross negligence or willful misconduct. The Advisor
hereby agrees to look solely to the assets of the Company for satisfaction of
all claims against the Company, and in no event shall any Shareholder, Director,
officer or agent of the Company have any personal liability for the obligation
of the Company under this Agreement.

     17.  Incorporation of the Articles of Incorporation and Bylaws. To the
extent the Articles of Incorporation and Bylaws impose obligations or
restrictions on the Advisor or grant the Advisor certain rights which are not
set forth in this Agreement, the Advisor shall abide by such obligations or
restrictions and such rights shall inure to the benefit of the Advisor with the
same force and effect as if they were set forth herein.

     18.  Fiduciary Duty and Indemnification. Subject to Section 16, the Advisor
shall have a fiduciary relationship to the Shareholders. However, the Company
shall indemnify the Advisor, to the fullest extent permitted by law, for its
liabilities and losses arising from the operations of the Company (including its
costs and expenses, including legal fees and expenses, incurred in connection
with investigating and defending itself against such liabilities and losses) if
the following conditions are met:

          (a)  the Directors have determined, in good faith, that the course of
     conduct which caused the liability or loss was undertaken in good faith
     within what the Advisor reasonably believed to be the scope of its
     employment or authority and for a purpose which it reasonably believed to
     be in the best interests of the Company;

          (b)  the Directors have determined, in good faith, that the liability
     or loss was not the result of willful misconduct, bad faith, reckless
     disregard of duties or violation of the criminal law on the part of the
     Advisor; and

          (c)  the indemnified amount is recoverable only out of the assets of
     the Company and not from the Shareholders.

          Notwithstanding the foregoing, indemnification will not be allowed for
any liability imposed by judgment, and costs associated therewith, including
attorneys' fees, arising from or out of a violation of state or federal
securities laws associated with the Offering of the Common Shares unless (i)
there has been a successful adjudication on the merits of each count involving
alleged securities laws violations as to the particular indemnitee, or (ii) such
claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular indemnitee or (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular
indemnitee.

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     19.  Transactions between the Advisor and the Company. All transactions
between the Advisor and the Company shall require the approval by a majority of
the Directors (including a majority of the Independent Directors) and shall
otherwise comply with the conflict of interest provisions of the Bylaws.

     20.  Relationship of Advisor and Company. The Company and the Advisor are
not partners or joint ventures with each other, and nothing herein shall be
construed to make them such partners or joint ventures or impose any liability
as such on either of them.

     21.  Other Activities. Except as otherwise expressly provided herein,
nothing contained herein shall limit the right of the Advisor or any of its
officers, directors or employees, whether or not a Director, officer or employee
of the Company, to engage in other business activities or to render services of
any kind to any other Person even if such other business activities or services
may be in direct competition with the Company.

     22.  Term; Termination of Agreement.

          (a)  This Agreement shall have an initial term ending five years after
     April 30, 2001, and thereafter shall be renewed for additional two-year
     terms upon the consent of the Directors.

          (b)  Prior to any renewal of this Agreement, the Independent Directors
     shall review (i) the performance of the Advisor hereunder to determine its
     compliance with the provisions of this Agreement, and (ii) the fees payable
     to the Advisor hereunder to determine whether they are reasonable in
     relation to the nature and quality of services performed. The findings of
     the Independent Directors shall be recorded in the minutes of the
     Directors.

          (c)  This Agreement shall be terminable (i) without cause by the
     Advisor or (ii) without cause by a majority of the Independent Directors,
     in each case upon 60 days' prior written notice to the non-terminating
     party.

          (d)  In the event of the termination of the Advisor, the Advisor will
     cooperate with the Company and take all reasonable steps requested to
     assist the Directors in making an orderly transition of the advisory
     function to another Person.

          (e)  At the sole option of a majority of the Independent Directors,
     this Agreement may be terminated for cause by written notice of termination
     from the Company to the Advisor if any of the following events occur:

               (i)  if the Advisor shall violate or default in the performance
          of any material provision of this Agreement and, after written notice
          of such violation or default, shall not cure such violation or default
          within 30 days;

               (ii) if the Advisor shall be adjudged bankrupt or insolvent by a
          court of competent jurisdiction, or an order shall be made by a court
          of competent jurisdiction for the appointment of a receiver,
          liquidator or trustee of the Advisor, or of all or substantially all
          of its property by reason of the foregoing, or

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          approving any petition filed against the Advisor for reorganization,
          and such adjudication or order shall remain in force or unstayed for a
          period of 30 days; or

               (iii) if the Advisor shall institute proceedings for voluntary
          bankruptcy or shall file a petition seeking reorganization under the
          federal bankruptcy laws, or for relief under any law for relief of
          debtors, or shall consent to the appointment of a receiver for itself
          or for all or substantially all of its property, or shall make a
          general assignment for the benefit of its creditors, or shall admit in
          writing its inability to pay its debts, generally, as they become due.

          (f)  Any notice of termination under this Section shall (except to the
     extent this Section requires a different notice period) be effective on the
     date specified in such notice, which may be the day on which such notice is
     given or any date thereafter. The Advisor agrees that if any of the events
     specified in subparagraph (ii) or (iii) of Section 22(e) shall occur, it
     shall give written notice thereof to the Board of Directors within 5 days
     after the occurrence of such event.

     23.  Action Upon Termination.

          (a)  From and after the effective date of termination of this
     Agreement pursuant to Section 22 hereof, the Advisor shall not be entitled
     to compensation for further services rendered hereunder, but shall be
     entitled to receive from the Company within 30 days after the effective
     date of such termination, an amount in cash equal to all earned but unpaid
     Asset Management Fees payable to the Advisor prior to the termination of
     this Agreement.

          (b)  Within a reasonable period of time, but in no event later than 30
     days after the termination of this Agreement, the Advisor shall:

               (i)   pay over to the Company all money collected and held for
          the account of the Company pursuant to this Agreement, after deducting
          any accrued compensation and reimbursement for its expenses to which
          it is then entitled;

               (ii)  deliver to the Board of Directors a full accounting,
          including a statement showing all payments collected by it and a
          statement of all money held by it, covering the period following the
          date of the last accounting furnished to the Board of Directors; and

               (iii) deliver to the Board of Directors all property and
          documents of the Company then in the custody of the Advisor.

          The Advisor shall be entitled to receive, promptly after such 30-day
period, reimbursement for any additional expenses to which it is entitled (and
for which it has not been reimbursed under clause (i) of Section 23(b)).

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<PAGE>

     24.  Assignment. This Agreement may be assigned by the Advisor with the
approval of a majority of the Board of Directors; provided, however, that such
approval shall not be required in the case of an assignment to a corporation,
association, trust or organization which may take over the assets and carry on
the affairs of the Advisor, provided that at the time of such assignment, such
successor organization shall be owned substantially by the Advisor or its
Affiliates and that an officer of the Advisor shall deliver to the Board of
Directors a statement in writing indicating the ownership structure of the
successor organization. Such an assignment shall bind the assignees hereunder in
the same manner as the Advisor is bound hereunder and the assignee shall be
entitled to any and all rights under this Agreement, including those set forth
in section 18. Upon assignment of this Agreement, the Advisor shall be
discharged from its future duties and shall not be entitled to any of the rights
granted under this Agreement. This Agreement shall not be assigned by the
Company without the consent of the Advisor, except in the case of an assignment
by the Company to a corporation or other organization which is a successor to
the Company, in which case such successor organization shall be bound hereunder
and by the terms of said assignment in the same manner as the Company is bound
hereunder.

     25.  Bylaws. The execution and performance of this Agreement hereby is
expressly made subject to Article VIII of the Bylaws of the Company.

     26.  Notices. Any notice, report or other communication required or
permitted to be given hereunder shall be in writing unless some other method of
giving such notice, report or other communication is accepted by the party to
whom it is given, and shall be given by being delivered to the addresses set
forth herein:

To the Board of Directors or to the Company:

          Apple Hospitality Five, Inc.
          10 South Third Street
          Richmond, Virginia 23219
          Attn: Board of Directors

To the Advisor:

          Apple Hospitality Five Advisors, Inc.
          10 South Third Street
          Richmond, Virginia 23219
          Attn: Glade M. Knight

Either party may at any time give notice in writing to the other party of a
change in its address for the purposes of this Section.

     27.  Modification. This Agreement shall not be changed, modified, amended,
terminated or discharged, in whole or in part, except by an instrument in
writing signed by both parties hereto, or their respective successors or
assigns.

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<PAGE>

     28.  Shareholder Liability. No Shareholder of the Company shall be
personally liable for any of the obligations of the Company under this
Agreement.

     29. Severability. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

     30. Binding. This Agreement shall bind any successors or permitted assigns
of the parties hereto as herein provided.

     31. Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the Commonwealth of Virginia.

     32. Entire Agreement. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.

     33. Indulgences, Not Waivers. Neither the failure nor any delay on the part
of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.

     34. Gender. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.

     35. Titles Not to Affect Interpretation. The titles of sections and
subsections contained in this Agreement are for convenience only, and they
neither form a part of this Agreement nor are they to be used in the
construction or interpretation hereof.

     36. Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.

                                       15

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the date first written above.

                                     APPLE HOSPITALITY FIVE, INC.
                                     a Virginia corporation

                                     By:    _________________________________
                                     Title: Glade M. Knight, President


                                     APPLE HOSPITALITY FIVE ADVISORS, INC.,
                                     a Virginia corporation

                                     By:    _________________________________
                                     Title: Glade M. Knight, President

                                       16