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

                       Securities and Exchange Commission

                             Washington, D.C. 20549

                                    Form 10-Q

            [X]      Quarterly Report Pursuant to Section 13 or 15(d)
                          of the Securities Exchange Act of 1934

                       For the Quarter ended June 20, 1997

                                       OR
             [_]     Transition Report Pursuant to Section 13 or 15(d)
                          of the Securities Exchange Act of 1934

                         Commission File Number: 0-15736

                   COURTYARD BY MARRIOTT LIMITED PARTNERSHIP
             ------------------------------------------------------

             (Exact name of registrant as specified in its charter)

           Delaware                                      52-1468081
-------------------------------            ------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

                               10400 Fernwood Road
                               Bethesda, Maryland
                                      20817
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

        Registrant's telephone number, including area code: 301-380-2070


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes ___ No ____ (Not Applicable). On August 25, 1992, the
Registrant filed an application for relief from the reporting requirements of
the Securities Exchange Act of 1934 pursuant to Section 12(h) thereof. Pursuant 
to a grant of the relief requested in such application, the Registrant was not
required to, and did not make, any filings pursuant to the Securities Exchange
Act of 1934 from October 23, 1989 until the application was voluntarily
withdrawn on January 27, 1998.

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<PAGE>
 
--------------------------------------------------------------------------------
                    Courtyard By Marriott Limited Partnership
================================================================================
<TABLE> 
<CAPTION> 

                                TABLE OF CONTENTS
                                -----------------
                                                                                              PAGE NO.
                         PART I - FINANCIAL INFORMATION                                       --------

<S>      <C>                                                                                  <C> 
Item 1.  Financial Statements

           Condensed Statement of Operations
              Twelve and Twenty-Four Weeks Ended June 20, 1997 and June 14, 1996..................1

           Condensed Balance Sheet
              June 20, 1997 and December 31, 1996.................................................2

           Condensed Statement of Cash Flows
              Twelve and Twenty-Four Weeks ended June 20, 1997 and June 14, 1996..................3

           Notes to Condensed Financial Statements................................................4

Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations.................................................6

<CAPTION> 
                           PART II - OTHER INFORMATION
<S>      <C>                                                                                      <C> 
Item 1.  Legal Proceedings........................................................................8

</TABLE> 
<PAGE>
 
                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                    COURTYARD BY MARRIOTT LIMITED PARTNERSHIP
                        CONDENSED STATEMENT OF OPERATIONS
                                   (Unaudited)
                     (In thousands except per Unit amounts)

<TABLE> 
<CAPTION> 

                                                              Twelve Weeks Ended                Twenty-Four Weeks Ended
                                                           June 20,         June 14,           June 20,         June 14,
                                                             1997             1996               1997             1996
                                                        -------------     ------------       ------------     ------------
<S>                                                     <C>               <C>                <C>              <C> 
REVENUES................................................$      24,502     $     23,040       $     46,190     $     41,946
                                                        -------------     ------------       ------------     ------------

OPERATING COSTS AND EXPENSES
   Depreciation ........................................        3,933            4,559              8,040            9,117
   Incentive management fee.............................        4,512            2,474              4,512            4,371
   Base and Courtyard management fees...................        2,785            2,638              5,392            5,022
   Ground rent, taxes and other.........................        2,656            3,354              6,253            6,802
                                                        -------------     ------------       ------------     ------------
                                                               13,886           13,025             24,197           25,312
                                                        -------------     ------------       ------------     ------------

OPERATING PROFIT........................................       10,616           10,015             21,993           16,634
   Interest expense.....................................       (6,113)          (5,360)           (11,693)         (10,755)
   Interest income......................................          276              166                360              420
                                                        -------------     ------------       ------------     ------------

INCOME BEFORE EXTRAORDINARY ITEMS.......................        4,779            4,821             10,660            6,299

EXTRAORDINARY ITEMS
   Gain on forgiveness of deferred fees.................           --               --             14,896               --
   Loss on extinguishment of debt.......................           --               --             (2,423)              --
                                                        -------------     ------------       ------------     ------------
                                                                   --               --             12,473               --
                                                        -------------     ------------       ------------     ------------

NET INCOME..............................................$       4,779     $      4,821       $     23,133     $      6,299
                                                        =============     ============       ============     ============

EXTRAORDINARY ITEMS PER LIMITED
   PARTNER UNIT (1,150 Units)...........................$          --               --       $     10,304     $         --
                                                        =============     ============       ============     ============

NET INCOME PER LIMITED PARTNER UNIT
   (1,150 Units)........................................$       3,948     $      3,983       $     19,110     $      5,204
                                                        =============     ============       ============     ============
</TABLE> 
                  See Notes to Condensed Financial Statements.

                                       1
<PAGE>
 
                    COURTYARD BY MARRIOTT LIMITED PARTNERSHIP
                             CONDENSED BALANCE SHEET
                                 (in thousands)

<TABLE> 
<CAPTION> 
                                                                                June 20,          December 31,
                                                                                  1997                1996
                                                                             --------------     ----------------
                                                                               (Unaudited)
<S>                                                                          <C>                <C> 
ASSETS

  Property and equipment, net................................................$      300,646     $        300,939
  Due from Courtyard Management Corporation..................................         9,244                5,325
  Other assets...............................................................        18,327               11,536
  Cash and cash equivalents..................................................        10,051               12,709
                                                                             --------------     ----------------

                                                                             $      338,268     $        330,509
                                                                             ==============     ================


LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

LIABILITIES
  Debt.......................................................................$      323,874     $        288,975
  Due to Marriott International, Inc. and affiliates.........................        19,741               19,848
  Due to Host Marriott Corporation...........................................        13,297               12,975
  Incentive management fees due to Courtyard Management Corporation..........         6,500               25,596
  Accounts payable and accrued liabilities...................................         1,437                2,445
                                                                             --------------     ----------------

     Total Liabilities.......................................................       364,849              349,839
                                                                             --------------     ----------------

PARTNERS' CAPITAL (DEFICIT)
  General Partner............................................................            (3)                 474
  Limited Partners...........................................................       (26,578)             (19,804)
                                                                             --------------     ----------------

     Total Partners' Deficit.................................................       (26,581)             (19,330)
                                                                             --------------     ----------------

                                                                             $      338,268     $        330,509
                                                                             ==============     ================
</TABLE> 

                  See Notes to Condensed Financial Statements.

                                       2
<PAGE>
 
                   COURTYARD BY MARRIOTT LIMITED PARTNERSHIP
                       CONDENSED STATEMENT OF CASH FLOWS
                                  (Unaudited)
                                (in thousands)

<TABLE> 
<CAPTION> 
                                                                           Twenty-Four Weeks Ended
                                                                        June 20,            June 14,
                                                                          1997                1996
                                                                     --------------     ---------------
<S>                                                                  <C>                <C> 
OPERATING ACTIVITIES
     Net income......................................................$       23,133     $         6,299
     Extraordinary items.............................................       (12,473)                 --
                                                                     --------------     ---------------

     Income before extraordinary items...............................        10,660     $         6,299
     Noncash items...................................................         8,789              14,284
     Changes in operating accounts...................................        (9,234)             (4,777)
                                                                     --------------     ---------------

        Cash provided by operating activities........................        10,215              15,806
                                                                     --------------     ---------------

INVESTING ACTIVITIES
     Additions to property and equipment, net........................        (7,747)             (8,452)
     Change in property improvement funds............................        (3,752)              4,261
                                                                     --------------     ---------------

        Cash used in investing activities............................       (11,499)             (4,191)
                                                                     --------------     ---------------

FINANCING ACTIVITIES
     Proceeds from mortgage debt ....................................       325,000                  --
     Repayments of mortgage debt ....................................      (290,101)            (13,727)
     Capital distributions...........................................       (30,384)                 --
     Payment of financing costs......................................        (5,889)                 --
                                                                     --------------     ---------------

        Cash used in financing activities............................        (1,374)            (13,727)
                                                                     --------------     ---------------

DECREASE IN CASH AND CASH EQUIVALENTS................................        (2,658)             (2,112)

CASH AND CASH EQUIVALENTS at beginning of period.....................        12,709              11,013
                                                                     --------------     ---------------

CASH AND CASH EQUIVALENTS at end of period...........................$       10,051     $         8,901
                                                                     ==============     ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid for mortgage interest.................................$       11,945     $        11,292
                                                                     ==============     ===============
</TABLE> 

                 See Notes to Condensed Financial Statements.

                                       3
<PAGE>
 
                   COURTYARD BY MARRIOTT LIMITED PARTNERSHIP
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  (Unaudited)


1.   The accompanying condensed financial statements have been prepared by the
     Courtyard By Marriott Limited Partnership (the "Partnership") without
     audit. Certain information and footnote disclosures normally included in
     financial statements presented in accordance with generally accepted
     accounting principles have been condensed or omitted from the accompanying
     statements. The Partnership believes the disclosures made are adequate to
     make the information presented not misleading. However, the condensed
     financial statements should be read in conjunction with the Partnership's
     financial statements and notes thereto included in the Partnership's Annual
     Report for the fiscal year ended December 31, 1996. Interim results are not
     necessarily indicative of fiscal year performance because of seasonal and
     short-term variations.

     For financial reporting purposes, the net income of the Partnership is
     allocated 95% to the Limited Partners and 5% to the General Partner.
     Significant differences exist between the net income for financial
     reporting purposes and the net income reported for Federal income tax
     purposes. These differences are due primarily to the use for income tax
     purposes of accelerated depreciation methods, shorter depreciable lives for
     the assets, differences in the timing of the recognition of certain fees
     and straight-line rent adjustments.

2.   Revenues consist of Hotel operating results as follows (in thousands):

<TABLE> 
<CAPTION> 

                                                      Twelve Weeks Ended              Twenty-Four Weeks Ended
                                                  June 20,         June 14,           June 20,         June 14,
                                                    1997             1996               1997             1996
                                                ------------    -------------      -------------    ------------
     <S>                                        <C>             <C>                <C>              <C> 
     HOTEL SALES
         Rooms..................................$     41,793    $      39,104      $      80,694    $     74,366
         Food and beverage......................       3,055            3,184              6,078           6,124
         Other..................................       1,576            1,682              3,100           3,209
                                                ------------    -------------      -------------    ------------
                                                      46,424           43,970             89,872          83,699
                                                ------------    -------------      -------------    ------------
     HOTEL EXPENSES
         Departmental direct costs
             Rooms..............................       8,704            8,391             16,958          16,325
             Food and beverage..................       2,614            2,605              5,114           5,156
         Other..................................      10,604            9,934             21,610          20,272
                                                ------------    -------------      -------------    ------------
                                                      21,922           20,930             43,682          41,753
                                                ------------    -------------      -------------    ------------

     REVENUES...................................$     24,502    $      23,040      $      46,190    $     41,946
                                                ============    =============      =============    ============
</TABLE> 

3.   On March 21, 1997, the Partnership completed a refinancing of both the 49
     Hotels and Hartford Hotel mortgage loan. The total amount of the debt was
     increased from $280.8 million to $325 million. The net proceeds from the
     refinancing was used to (i) repay the 49 Hotels and Hartford Hotel mortgage
     loans of $280.8 million; (ii) make a $7 million contribution to the
     property improvement fund to cover anticipated shortfalls; (iii) reserve $7
     million to pay financing costs; and (iv) make a $30.2 million partial
     return of capital distribution to the partners.

     The remaining balance of $2.4 million in financing costs related to the 49
     Hotels and Hartford Hotel mortgage loans were written-off in connection
     with the refinancing and has been reflected as an extraordinary loss on the
     statement of operations.

4.   The General Partner has undertaken, on behalf of the Partnership, to
     pursue, subject to further approval of the partners, a potential
     transaction (the "Consolidation") in which (i) subsidiaries of CRF Lodging
     Company, L.P. (the "Company"), a newly formed Delaware limited partnership,
     would merge with and into the Partnership and up to five other limited
     partnerships, with the Partnership and the other limited partnerships being
     the surviving entities (each, a "Merger" and collectively, the "Mergers"),
     subject to the satisfaction or waiver of certain conditions, (ii) CRF
     Lodging Trust ("CRFLT"), a Maryland real estate investment trust, the sole
     general partner of the Company, would offer its common shares of beneficial
     interest, par value $0.01 per share (the "Common Shares") to investors in
     an underwritten public offering and would invest the proceeds of such
     offering in the Company in exchange for units of limited partnership
     interests in the Company ("Units") and (iii) the Partnership would enter
     into a Lease for the operation of its Hotels pursuant to which a Lessee
     would pay rent to the Partnership based upon the greater of a fixed dollar
     amount of base rent or specified percentages of gross sales, as specified
     in the Lease. If the partners approve the transaction and other conditions
     are satisfied, the partners of the Partnership would receive Units in the
     Merger in exchange for their interests in the Partnership.

     A preliminary Prospectus/Consent Solicitation was filed as part of a
     Registration Statement on Form S-4 with the Securities and Exchange
     Commission and which describes the potential transaction in greater detail.
     Any offer of Units in connection with the Consolidation will be made solely
     by a final Prospectus/Consent Solicitation.

                                       4
<PAGE>
 
     In connection with this refinancing, a new management agreement was
     negotiated with Courtyard Management Corporation (the "Manager"). Under the
     new agreement, the Partnership paid $4.2 million of deferred management
     fees at closing and the Manager agreed to forgive $14.9 million of deferred
     fees leaving a $6.5 million balance of accrued incentive management fees.
     The forgiveness of deferred fees of $14.9 million has been reflected as an
     extraordinary gain on the statement of operations.

                                       5
<PAGE>
 
      ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS


FORWARD-LOOKING STATEMENTS

Certain matters discussed herein are forward-looking statements within the
meaning of the Private Litigation Reform Act of 1995 and as such may involve
known and unknown risks, uncertainties, and other factors which may cause the
actual results, performance or achievements of the Partnership to be different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Although the Partnership believes the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will be
attained. These risks are detailed from time to time in the Partnership's
filings with the Securities and Exchange Commission. The Partnership undertakes
no obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.

RESULTS OF OPERATIONS

First Two Quarters 1997 Compared to First Two Quarters 1996

Revenues. Revenues (hotel sales less direct hotel operating costs and expenses)
for the first two quarters 1997 increased $4.2 million to $46.2 million, a 10%
increase when compared to the first two quarters 1996. The Partnership's
revenues and operating profit were impacted by improved lodging results. The
increase was driven primarily by growth in revenue per available room
("REVPAR"). REVPAR is a commonly used indicator of market performance for hotels
which represents the combination of daily room charged and the average daily
occupancy achieved. REVPAR does not include food and beverage or other ancillary
revenues generated by the property. For the first two quarters of 1997, hotel
sales increased $6.2 million to $89.9 million, a 7% increase compared to the
first two quarters 1996.

REVPAR increased 9% to $67 for the first two quarters 1997 when compared to the
first two quarters 1996. This is primarily due to the increase in combined
average room rate of $5 to $81 year-to-date and the increase of the combined
average occupancy of two percentage points to 82% year-to-date. Due to the
continued high occupancy of these properties, the Partnership expects future
increases in REVPAR to be driven by room rate increases, rather than changes in
occupancy. However, there can be no assurance that REVPAR will continue to
increase in the future.

Operating Costs and Expenses. The Partnership's operating costs and expenses
decreased 4% from $25.3 million for the first two quarters 1996 to $24.2 million
for the first two quarters 1997 primarily due to a decrease in depreciation
expense. As a percentage of revenues, hotel operating costs and expenses were
52% and 60% for the first two quarters 1997 and first two quarters 1996,
respectively.

Operating Profit. As a result of changes in revenues and operating costs and
expenses discussed above, operating profit increased for the first two quarters
1997 by $5.4 million to $22 million, or 48% of revenues from $16.6 million, or
40% of revenues, for the first two quarters 1996.

Interest Expense. Interest expense increased $938,000, or 9%, to $11.7 million
for the first two quarters 1997 over the first two quarters 1996 due to the
refinancing of the mortgage debt from a short term loan at variable rates to a
long term loan at a higher fixed rate and an increase of the loan balance to
$325 million.

                                       6
<PAGE>
 
Income before Extraordinary Items. Income before extraordinary items increased
by $4.4 million to $10.7 million for the first two quarters 1997 when compared
to the first two quarters 1996.

Extraordinary Items. The Partnership recognized a net extraordinary gain in the
first quarter 1997 of $12.5 million representing the forgiveness of deferred
management fees by Marriott International, Inc. partially offset by an
extraordinary loss on the early extinguishment of debt.

Net Income. Net income for the first two quarters 1997 increased $16.8 million
to $23.1 million, or 50% of revenues when compared to net income of $6.3
million, or 15% of revenues, for the first two quarters 1996 as a result of the
items discussed above.

Second Quarter 1997 Compared to Second Quarter 1996

Revenues. Revenues increased $1.5 million for second quarter 1997, a 6% increase
when compared to second quarter 1996, due to the increase in REVPAR as described
below.

REVPAR for second quarter 1997 increased 7% to $69 when compared to the same
period in 1996 primarily due to the increase in combined average room rate of $5
to $82 for the second quarter 1997 and the increase of the combined average
occupancy of one percentage point to 84% over the same period in 1996.

Operating Costs and Expenses. The Partnership's operating costs and expenses
increased $1 million, or 7%, to $13.9 million for second quarter 1997 when
compared to the same period in 1996 primarily due to increases in incentive
management fees.

Operating Profit. As a result of changes in revenues and operating costs and
expenses discussed above, operating profit increased for second quarter 1997 by
$600,000, or 6%, to $10.6 million, when compared to the same period in 1996.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operations was $10.2 million and $15.8 million for the first
two quarters 1997 and the first two quarters 1996, respectively. The large
decrease in cash provided by operations was due to the payment of $4.2 million
of deferred management fees in connection with the refinancing.

Cash used in investing activities was $11.5 million and $4.2 million for the
first two quarters 1997 and the first two quarters 1996, respectively. The
Partnership's cash investing activities consists primarily of contributions to
the property improvement fund and capital expenditures for improvements to
existing hotels. As part of the debt refinancing, contributions to the property
improvement fund will remain at 5% of gross hotel sales through 1998 and can be
increased to 6% in 1999 and 2000 and 7% thereafter.

Cash used in financing activities was $1.4 million and $13.7 million for the
first two quarters 1997 and the first two quarters 1996, respectively. In the
first quarter 1997, the Partnership received refinancing proceeds in excess of
repayments of the mortgage debt providing cash to the Partnership which was
offset by the cash used to pay refinancing costs and return of capital
distributions made to the partners.

In March 1997, the Partnership refinanced all of its outstanding mortgage debt.
The total amount of debt increased from $280.8 million to $325 million. The
$44.2 million of excess refinancing proceeds were used to make a $7 million
contribution to the property improvement fund, a $30.2 million partial return of
capital distribution to the partners and to pay $7 million of refinancing costs.
The new non-recourse loan matures in April 2012, requires principal amortization
on a 20-year term and carries a fixed interest rate of 7.865%.

                                       7
<PAGE>
 
                          PART II. OTHER INFORMATION

                           ITEM 1. LEGAL PROCEEDINGS

     Marvin Schick, et. al. v. Host Marriott Corporation, et. al. In the 
     -----------------------------------------------------------
Chancery Court for New Castle County, Delaware; C.A. No. 15991. The plaintiffs,
two members of an ad hoc committee of Courtyard by Marriott Limited Partners,
recently filed this purported class action lawsuit against Host, Marriott
International and others, alleging breach of fiduciary duty, breach of contract,
tortious interference and aiding and abetting liability in connection with the
refinancings of Courtyard by Marriott's debt. Among other things, the plaintiffs
contend that certain changes to Courtyard by Marriott's Management Agreement
could not be made without the consent of a majority vote of the Courtyard by
Marriott Limited Partners. The defendants (which do not include Courtyard by
Marriott) believe that the lawsuit is without merit and, if current discussions
fail to resolve the dispute, intend to vigorously defend the suit.

The Partnership and the Hotels are involved in routine litigation and
administrative proceedings arising in the ordinary course of business, some of
which are expected to be covered by liability insurance and which collectively
are not expected to have a material adverse effect on the business, financial
conditions or results of operations of the Partnership.

                                       8
<PAGE>
 
                                   SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 10-Q to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                  COURTYARD BY MARRIOTT
                                  LIMITED PARTNERSHIP

                                  By:  CBM ONE CORPORATION
                                       General Partner



        January 27, 1998          By:  /s/ Earla L. Stowe
                                       -----------------------------------------
                                       Earla L. Stowe
                                       Vice President and Chief Accounting 
                                       Officer

                                       9