<PAGE>



                                  UNITED STATES
                       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

                           OR

         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934


For the Quarter Ended March 31, 2003               Commission File No. 0-16728


                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
                  ---------------------------------------------
             (Exact name of registrant as specified in its charter)


         Delaware                                       52-1638296
         --------                                       ----------
(State or other jurisdiction of                       (I.R.S. Employer
   incorporation or organization)                   Identification No.)


          P.O. Box 9507, 7 Bulfinch Place - Suite 500, Boston, MA 02114
          -------------------------------------------------------------
                    (Address of principal executive offices)

                                 (617) 570-4600
                                 --------------
              (Registrant's telephone number, including area code)


Indicate by check 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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X   No
                                      ---     ---

Indicated by check whether registrant is an accelerated filer (as identified in
Rule 12b-2 of the Exchange Act). Yes      No  X
                                     ---     ---


<PAGE>



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

                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP

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



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                               PAGE NO.
                                                                                               --------
<S>                                                                                            <C>
PART I - FINANCIAL INFORMATION

Item 1   Financial Statements (unaudited)

         Condensed Balance Sheets as of March 31, 2003 and December 31, 2002                       3

         Condensed Statements of Operations - Quarters Ended March 31, 2003 and 2002               4

         Condensed Statements of Cash Flows - Quarters Ended March 31, 2003 and 2002               5

         Notes to Condensed Financial Statements                                                   6

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations     9

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                               12

Item 4.  Controls and Procedures                                                                  13

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                                        14

Item 6.  Exhibits and Reports on Form 8-K                                                         14

SIGNATURES                                                                                        15
</TABLE>


                                       2


<PAGE>



                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
                            CONDENSED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                      March 31,           December 31,
                                                                                         2003                 2002
                                                                                    ---------------      ----------------
                                                                                     (unaudited)
<S>                                                                                 <C>                  <C>
ASSETS
     Property and equipment, net                                                           $98,105            $   99,626
     Property held for sale                                                                     --                 1,122
     Deferred financing costs, net of accumulated amortization                               1,758                 1,875
     Accounts receivable                                                                     1,181                 1,008
     Prepaid insurance and other current assets                                              1,253                 1,270
     Inventory                                                                                 920                   920
     Due from Marriott International, Inc.                                                     387                   387
     Property improvement fund                                                               2,785                 2,785
     Restricted cash                                                                         1,191                     8
     Cash and cash equivalents                                                               5,462                 5,900
                                                                                    ---------------      ----------------

                                                                                        $  113,042           $   114,901
                                                                                    ===============      ================

LIABILITIES AND PARTNERS' DEFICIT

LIABILITIES
     Mortgage debt in default                                                             $137,024           $   137,070
     Due to Marriott International, Inc., affiliates and other in default                    5,904                 5,034
     Accounts payable and accrued liabilities                                               12,507                 8,546
                                                                                    ---------------      ----------------

         Total Liabilities                                                                 155,435               150,650
                                                                                    ===============      ================

PARTNERS' DEFICIT
     General Partner                                                                         (373)                 (307)
     Limited Partners                                                                     (42,020)              (35,442)
                                                                                    ---------------      ----------------

         Total Partners' Deficit                                                          (42,393)              (35,749)
                                                                                    ---------------      ----------------

                                                                                        $  113,042           $   114,901
                                                                                    ===============      ================
</TABLE>












                  See Notes to Condensed Financial Statements.


                                       3


<PAGE>



                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
                       CONDENSED STATEMENTS OF OPERATIONS
           (UNAUDITED, IN THOUSANDS, EXCEPT UNIT AND PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
                                                                              Quarter Ended         Quarter Ended March
                                                                                March 31,                   31,
                                                                                  2003                      2002
                                                                            ------------------      ---------------------
<S>                                                                         <C>                     <C>
REVENUES
     Rooms                                                                          $  15,589                  $  17,718

     Other inn revenues                                                                   217                        306
                                                                            ------------------      ---------------------
                                                                                       15,806                     18,024
                                                                            ------------------      ---------------------

OPERATING EXPENSES
     Rooms                                                                              5,637                      5,968
     Other department costs and expenses                                                  296                        279
     Selling, administrative and other                                                  6,194                      6,049
     Depreciation                                                                       2,376                      2,445
     Ground rent, taxes and other (Note 4)                                              2,604                      2,286
     Base management fee                                                                  479                        548
     Loss on impairment of long-lived assets (Note 3)                                   1,958                         --
                                                                            ------------------      ---------------------
                                                                                       19,544                     17,575
                                                                            ------------------      ---------------------


OPERATING (LOSS) PROFIT                                                               (3,738)                        449

     Interest expense                                                                 (2,920)                     (3,110)
     Interest income                                                                       14                         54
                                                                            ------------------      ---------------------

NET LOSS                                                                            $ (6,644)                  $ (2,607)
                                                                            ==================      =====================


ALLOCATION OF NET LOSS
     General Partner                                                                $    (66)                  $    (26)
     Limited Partners                                                                 (6,578)                    (2,581)
                                                                            ------------------      ---------------------

                                                                                    $ (6,644)                  $ (2,607)
                                                                            ==================      =====================


NET LOSS PER LIMITED PARTNER UNIT   (83,337 Units)                                  $    (79)                  $    (31)
                                                                            ==================      =====================
</TABLE>







                  See Notes to Condensed Financial Statements.

                                       4
<PAGE>



                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
                       CONDENSED STATEMENTS OF CASH FLOWS
                            (UNAUDITED, IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   Quarter Ended        Quarter Ended
                                                                                     March 31,          March 31, 2002
                                                                                       2003
                                                                                  ----------------     -----------------
<S>                                                                               <C>                  <C>
   OPERATING ACTIVITIES
        Net loss                                                                        $  (6,644)           $   (2,607)
        Depreciation                                                                        2,376                 2,445
        Loss on impairment of long-lived assets                                             1,958                    --
        Amortization of deferred financing costs                                              117                   122
        Amortization of mortgage debt premium                                                 (46)                  (88)
        Changes in operating accounts                                                       3,492                 2,222
                                                                                  ----------------     -----------------

            Cash provided by operating activities                                           1,253                 2,094
                                                                                  ----------------     -----------------

   INVESTING ACTIVITIES
        Additions to property and equipment                                               (1,691)                    --
        Change in property improvement fund                                                    --               (1,290)
                                                                                  ----------------     -----------------

            Cash used in investing activities                                             (1,691)               (1,290)
                                                                                  ----------------     -----------------

   FINANCING ACTIVITIES
        Repayment of mortgage debt                                                             --               (1,193)
        Change in restricted cash                                                              --                 1,193
                                                                                  ----------------     -----------------

            Cash used in financing activities                                                  --                    --
                                                                                  ----------------     -----------------

   (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                         (438)                   804

   CASH AND CASH EQUIVALENTS at beginning of period                                         5,900                 1,597
   CASH OF THE INNS, as restated                                                               --                 4,384
                                                                                  ----------------     -----------------
   CASH AND CASH EQUIVALENTS at end of period                                           $   5,462            $    6,785
                                                                                  ================     =================


   SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
        Cash paid for mortgage interest                                                 $      --            $    3,081
                                                                                  ================     =================
</TABLE>









                  See Notes to Condensed Financial Statements.

                                       5

<PAGE>


                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       ORGANIZATION

Fairfield Inn by Marriott Limited Partnership, a Delaware limited partnership
(the "Partnership"), owns 46 Fairfield Inn by Marriott properties (the "Inns")
located in sixteen states within the contiguous United States. The Partnership
leases the land underlying 30 of the Inns from Marriott International, Inc.
("MII") and certain of its affiliates. Effective November 30, 2001, Sage
Management Resources III, LLC ("Sage"), an affiliate of Sage Hospitality
Resources, LLC, began providing management at the properties. Prior to such
date, the Inns were managed by Fairfield FMC Corporation, a wholly-owned
subsidiary of Marriott International, as part of the Fairfield Inn by Marriott
hotel system under a long-term management agreement. Under Sage the Inns
continue to be operated under the Fairfield Inn by Marriott system.

2.       GOING CONCERN UNCERTAINTY, LIQUIDITY AND FINANCING REQUIREMENTS

Adequate liquidity and capital are critical to the ability of the Partnership to
continue as a going concern. Annual revenues have declined each year, from $94.4
million in 1998 to $78.8 million in 2002. The decline in Inn operations is
primarily due to increased competition, over-supply of limited service hotels in
the markets where the Partnership's Inns operate, increased pressure on room
rates, lack of funds for capital improvements needed to make the Inns more
competitive in their marketplaces, and a slowdown in the economy resulting in a
softness in the lodging industry as a whole. Exacerbating this trend was the
impact of the events of September 11, 2001 and the war with Iraq which have had
a significant detrimental effect on the hospitality industry in general and the
Inns in particular as travel nationwide has severely decreased. The Partnership
did not have sufficient cash flow from current operations to make its required
debt service payments beginning in November 2002, nor did it have sufficient
cash flow to make its property improvement fund contributions beginning in
September 2002. Further, on March 26, 2003, the Partnership received notice from
Marriott International that it was in default under the ground lease agreements,
due to its failure to pay the full amount due of minimum rentals owed under the
Ground Leases beginning in January 2003. A default under the ground lease
agreements also constitutes a default under the loan agreement. On May 7, 2003,
the Partnership received notice from Marriott International that the Ground
Leases would be terminated effective June 15, 2003 for nonpayment. On May 9,
2003, the lender exercised its right to cure the default and paid the
non-subordinated ground rent owed under the Ground Leases through March 2003.

The Partnership is not projecting improved results for 2003 over 2002.
Partnership cash, including $1.2 million held in lender reserve accounts at
March 31, 2003 and December 31, 2002, respectively, totaled approximately $6.7
million and $5.9 million at March 31, 2003 and December 31, 2002, respectively.
As of November 11, 2002, the Partnership is in default under the mortgage loan
agreement due to its failure to pay the regularly scheduled debt service payment
due on that date. The Partnership is also in default under the Franchise
Agreements with Marriott International due to its failure to make its property
improvement fund contributions beginning in September 2002, also resulting in
technical default under the mortgage loan agreement. The Partnership had
requested from the lender further modifications to the mortgage loan agreement.
These modifications included paying debt service solely from available cash
flow, selling certain of the Partnership's properties and applying the proceeds
from the sales toward replenishing reserves held by the lender. This proposal
has been rejected by the lender. The Partnership is currently in negotiations
with the lender to seek an agreement to permit the Partnership to retain its
interest in the Inns. If the Partnership is unable to reach an agreement with
the lender, the Partnership may be required to seek protection by filing for
bankruptcy (Chapter 7 (liquidation) or Chapter 11 (reorganization)) and/or the
Partnership's properties may be lost through foreclosure.

The lack of available funds from operations over the past several years has also
delayed room refurbishments at the Inns. Based upon information provided by
Sage, the capital expenditure needs for 2002 and 2003 for the Inns are estimated
to total approximately $19 million. As of April 1, 2003, the Partnership has
spent approximately $5.2 million toward the completion of the property
improvements plans required under the Franchise Agreements with Marriott
International. The Partnership is required to provide evidence by no later than
November 30, 2003 that at least $23 million has been set aside to complete a
portion of these capital improvements. If the capital improvements are not
completed, the Franchise Agreement could be terminated and the Inns could be
prohibited from operating as "Fairfield Inn by Marriott". If this were to occur,
which is likely, the Partnership would seek to become part of a comparable,


                                       6

<PAGE>


                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

2.       GOING CONCERN UNCERTAINTY, LIQUIDITY AND FINANCING REQUIREMENTS
         (CONTINUED)

nationally recognized hotel system in order to continue to comply with the
obligations under its loan documents. If the Partnership is unable to retain
another nationally recognized brand, it could significantly impair its revenues
and cash flow. The Partnership estimates that the shortfall in available funds
for capital expenditures will be approximately $6.2 million by the end of 2003.

For the years ended December 31, 2002, 2001 and 2000, the Partnership
contributed $3.5 million, $5.8 million, $6.0 million, respectively, to the
property improvement fund. For the quarters ended March 31, 2003 and 2002, the
Partnership contributed $0 and $1.3 million, respectively, to the property
improvement fund.

The Partnership had insufficient cash flow from operations beginning in
September 2002 to make its property improvement fund contributions. This
resulted in a default under the Partnership's Franchise Agreements with Marriott
International, and thus a technical default under the mortgage loan agreement.
If the Partnership is unable to reach an agreement with the lender, the
Partnership may be required to seek protection by filing for bankruptcy (Chapter
7 (liquidation) or Chapter 11 (reorganization)) and/or the Partnership's
properties may be lost through foreclosure.


All of the above mentioned factors raise substantial doubt about the
Partnership's ability to continue as a going concern. These financial statements
have been prepared on a going concern basis. In the event of liquidation, the
carrying values as presented in the accompanying financial statements could be
materially different and the accompanying financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed financial statements have been prepared
without audit. Certain information and footnote disclosures normally included in
financial statements presented in accordance with accounting principles
generally accepted in the United States 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
unaudited, condensed financial statements should be read in conjunction with the
Partnership's financial statements and notes thereto for the year ended December
31, 2002.

In the opinion of the Partnership, the accompanying unaudited, condensed
financial statements reflect all normal and recurring adjustments necessary to
present fairly the financial position of the Partnership as of March 31, 2003
and 2002, the results of its operations for the quarters ended March 31, 2003
and 2002, and its cash flows for the quarters ended March 31, 2003 and 2002.
Interim results are not necessarily indicative of full year performance because
of seasonal and short-term variations. In addition, the Partnership sold four of
its hotels during 2002.

The Partnership assesses impairment of its real estate properties based on
whether estimated future undiscounted cash flows from such properties will be
less than their net book value upon the evidence of impairment indicators. If a
property is impaired, its basis is adjusted to its estimated fair value. In
2002, Inns located in Atlanta, Georgia; Birmingham, Alabama; Detroit, Michigan;
Greenville, South Carolina; and St. Louis, Missouri experienced declining cash
flows, primarily due to additional competition in their local markets and
therefore were impaired. As a result, during 2002, the Partnership concluded
that these Inns were impaired and adjusted their basis to their estimated fair
market value. An impairment charge was also taken on one of the Inns held for
sale, located in Orlando, Florida, based on the most recent sales offer. The
Partnership recorded an impairment charge of $5.3 million in the third quarter
of 2002.


                                       7

<PAGE>


                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

As of December 31, 2002, the Partnership had four of its Inns remaining as held
for sale. These Inns were located in Orlando, Florida; Columbus, Ohio;
Charlotte, North Carolina; and Raleigh, North Carolina. Effective January 1,
2003, after the Partnership determined to no longer market these Inns for sale,
the Partnership reclassified these Inns as held and used. Accordingly, upon
reclassification an impairment charge was taken to record these Inns at the
lower of carrying value when classified as held and used, less depreciation not
taken during the period they were held for sale, or fair value. During the
quarter ended March 31, 2003, Inns located in Atlanta, Georgia also experienced
declining cash flows, primarily due to additional competition in their local
markets and therefore were impaired. As a result, the Partnership recorded an
impairment charge of $2.0 million during the quarter ended March 31, 2003.

In 2002, the Partnership concluded that the components of the working capital
managed by Sage should be consolidated with the working capital of the
Partnership. Previously reported financial statements have been revised to
reflect this accounting presentation. This revision did not impact the statement
of operations, partners' deficit or the net operating, investing and financing
cash flows, but did affect the comparability of the components of the operating
cash flows for 2003 to 2002.

For financial reporting purposes, the net income of the Partnership is allocated
99% to the limited partners and 1% to the general partner of the Partnership.
Significant differences exist between the net income for financial reporting
purposes and the net income for Federal income tax purposes. These differences
are due primarily to the use, for Federal income tax purposes, of accelerated
depreciation methods and shorter depreciable lives for certain assets and
differences in the timing of the recognition of certain fees and straight-line
rent adjustments.

4.       AMOUNTS PAYABLE TO MARRIOTT INTERNATIONAL, INC.

The following table provides the significant expenses payable to Marriott
International and its affiliates for the periods ended March 31, 2003 and 2002
(in thousands):

<TABLE>
<CAPTION>
                                                              Year-to-Date as of
                                                                   March 31,
                                                             2003               2002
                                                       -----------------    -------------
<S>                                                    <C>                  <C>
                  Royalty fee                                    $1,013         $  1,152
                  Ground rent                                       777              657
                  Reservation costs                                 156              177
                                                       -----------------    -------------
                           Total                                 $1,946          $ 1,986
                                                       =================    =============
</TABLE>

On March 26, 2003, the Partnership received notice from Marriott International
that it was in default under the ground lease agreements, due to its failure to
pay the full amount due of minimum rentals owed under the Ground Leases
beginning in January 2003. On May 7, 2003, the Partnership received notice from
Marriott International that the Ground Leases would be terminated effective June
15, 2003 for nonpayment. On May 9, 2003, the lender exercised its right to cure
the default and paid the non-subordinated ground rent owed under the Ground
Leases through March 2003.

During the fourth quarter of 2002, the Partnership recorded an adjustment to
recognize its ground rent expense on a straight-line basis for fiscal year 2002.
An adjustment has been made for the quarter ended March 31, 2002 to present
ground rent expense under the straight-line method. This revision increased
ground rent expense and increased net loss by approximately $632,000 for the
quarter ended March 31, 2002.


                                       8
<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. We have based
these forward-looking statements on our current expectations and projections
about future events. Certain, but not necessarily all, of such forward-looking
statements can be identified by the use of forward-looking terminology, such as
"believes," "expects," "may," "will," "should," "estimates," or "anticipates,"
or the negative thereof or other variations thereof or comparable terminology.
All forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause our actual transactions, results, performance
or achievements to be materially different from any future transactions,
results, performance or achievements expressed or implied by such
forward-looking statements. Although we believe the expectations reflected in
such forward-looking statements are based upon reasonable assumptions, we can
give no assurance that our expectations will be attained or that any deviations
will not be material. We disclaim any obligations or undertaking to publicly
release any updates or revisions to any forward-looking statement contained in
this quarterly report on Form 10-Q to reflect any change in our expectations
with regard thereto or any change in events, conditions or circumstances on
which any such statement is based.

LIQUIDITY AND CAPITAL RESOURCES

Going Concern and Other Important Risk Factors: Adequate liquidity and capital
are critical to the ability of the Partnership to continue as a going concern.
Annual revenues have declined each year, from $94.4 million in 1998 to $78.8
million in 2002. The decline in Inn operations is primarily due to increased
competition, over-supply of limited service hotels in the markets where the
Partnership's Inns operate, increased pressure on room rates, lack of funds for
capital improvements needed to make the Inns more competitive in their
marketplaces, and a slowdown in the economy resulting in a softness in the
lodging industry as a whole. Exacerbating this trend was the impact of the
events of September 11, 2001 and the war with Iraq which have had a significant
detrimental effect on the hospitality industry in general and the Inns in
particular as travel nationwide has severely decreased. The Partnership did not
have sufficient cash flow from current operations to make its required debt
service payments beginning in November 2002, nor did it have sufficient cash
flow to make its property improvement fund contributions beginning in September
2002. Further, on March 26, 2003, the Partnership received notice from Marriott
International that it was in default under the ground lease agreements, due to
its failure to pay the full amount due of minimum rentals owed under the Ground
Leases beginning in January 2003. On May 7, 2003, the Partnership received
notice from Marriott International that the Ground Leases would be terminated
effective June 15, 2003 for nonpayment. On May 9, 2003, the lender exercised its
right to cure the default and paid the non-subordinated ground rent owed under
the Ground Leases through March 2003.

The Partnership is not projecting improved results for 2003 over 2002.
Partnership cash, including $1.2 million and $8,000 held in lender reserve
accounts at March 31, 2003 and December 31, 2002, respectively, totaled $6.7
million and $5.9 million at March 31, 2003 and December 31, 2002, respectively.
As of November 11, 2002, the Partnership is in default under the mortgage loan
agreement due to its failure to pay the regularly scheduled debt service payment
due on that date. The Partnership is also in default under the Franchise
Agreements with Marriott International due to its failure to make its property
improvement fund contributions beginning in September 2002, also resulting in
technical default under the mortgage loan agreement. The Partnership had
requested from the lender further modifications to the mortgage loan agreement.
These modifications included paying debt service solely from available cash
flow, selling certain of the Partnership's properties and applying the proceeds
from the sales toward replenishing reserves held by the lender. This proposal
has been rejected by the lender. The Partnership is currently in negotiations
with the lender to seek an agreement to permit the Partnership to retain its
interest in the Inns. If the Partnership is unable to reach an agreement with
the lender, the Partnership may be required to seek protection by filing for
bankruptcy (Chapter 7 (liquidation) or Chapter 11 (reorganization)) and/or the
Partnership's properties may be lost through foreclosure.

The lack of available funds from operations over the past several years has also
delayed room refurbishments at the Inns. Based upon information provided by
Sage, the capital expenditure needs for 2002 and 2003 for the Inns are estimated
to total approximately $19 million. As of April 1, 2003, the Partnership has
spent approximately $5.2 million toward the completion of the property
improvements plans required under the Franchise Agreements with Marriott


                                       9

<PAGE>

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
       OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

International. The Partnership is required to provide evidence by no later than
November 30, 2003 that at least $23 million has been set aside to complete a
portion of these capital improvements. If the capital improvements are not
completed, the Franchise Agreement could be terminated and the Inns could be
prohibited from operating as "Fairfield Inn by Marriott". If this were to occur,
which is likely, the Partnership would seek to become part of a comparable,
nationally recognized hotel system in order to continue to comply with the
obligations under its loan documents. If the Partnership is unable to retain
another nationally recognized brand, it could significantly impair its revenues
and cash flow. The Partnership estimates that the shortfall in available funds
for capital expenditures will be approximately $6.2 million by the end of 2003.

For the years ended December 31, 2002 and 2001, the Partnership contributed $3.5
million and $5.8 million, respectively, to the property improvement fund. For
the quarters ended March 31, 2003 and 2002, the Partnership contributed $0 and
$1.3 million, respectively, to the property improvement fund. The Partnership
had insufficient cash flow from operations beginning in September 2002 to make
its property improvement fund contributions. This resulted in a default under
the Partnership's Franchise Agreements with Marriott International, and thus a
technical default under the mortgage loan agreement. If the Partnership is
unable to reach an agreement with the lender, the Partnership may be required to
seek protection by filing for bankruptcy (Chapter 7 (liquidation) or Chapter 11
(reorganization)) and/or the Partnership's properties may be lost through
foreclosure.


All of the above mentioned factors raise substantial doubt about the
Partnership's ability to continue as a going concern. These financial statements
have been prepared on a going concern basis. In the event of liquidation, the
carrying values as presented in the accompanying financial statements could be
materially different and the accompanying financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

Partnership cash, including $1.2 million held in lender reserve accounts,
totaled $6.7 million at March 31, 2003.

Principal Sources and Uses of Cash: The Partnership's principal source of cash
has been from operations. The Partnership's principal uses of cash are to make
debt service payments, fund the property improvement fund and maintain reserves
required pursuant to the terms of the mortgage debt.

The Partnership's cash and cash equivalents declined to $5.5 million compared to
$6.8 million at March 31, 2002 and compared to $5.9 million at December 31,
2002. The decline from year end is due to $1.7 million of cash used in investing
activities, which was partially offset by $1.3 million of cash provided by
operating activities. Cash used in investing activities consisted of capital
expenditures.

Shortfall in Funds Available for Capital Expenditures: In light of the age of
the Partnership's Inns, which range from 13 to 16 years, major capital
expenditures are required over the next several years in an effort to remain
competitive in the markets where the Partnership operates and to satisfy brand
standards required by the franchise agreement. These capital expenditures
include room refurbishments planned for 22 of the Inns over the next several
years and the replacement of roofs, facades, carpets, wall vinyl and furniture.
The capital expenditure needs for the Partnership's Inns for 2002 and 2003 are
estimated to total approximately $19 million.

The cost of future capital expenditures for the Partnership's Inns is estimated
to exceed available funds. The Partnership's property improvement fund became
insufficient to meet anticipated capital expenditures in 1999 and continued to
be insufficient through the first quarter of 2003. To address this shortfall,
the Partnership deposited an additional $2.4 million into the property
improvement fund during 1999 from its Partnership cash beyond the required
contributions. In addition, the contribution rate to the property improvement
fund was increased to 7% of gross sales for 1997 and thereafter. The Partnership
contributed $3.5 million and $5.8 million during 2002 and 2001, respectively,

                                       10
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

to the property improvement fund. The Partnership has not made any contributions
to the property improvement fund during the quarter ended March 31, 2003.

The estimated property improvement fund shortfall is expected to be $6.2 million
of projected capital expenditure requirements by the end of 2003. Until the
Partnership reaches a resolution concerning funding of the Partnership's
operating and capital expenditure shortfalls, any proposed capital expenditures
exceeding the amount available in the property improvement fund will be
deferred.

As discussed above, existing Partnership operations do not generate sufficient
revenue to enable the Partnership to meet its operating expenses, debt service
payments and ground lease payments. As such, the Partnership is currently in
default under both its loan agreement and its ground lease agreements. The
Partnership has entered into negotiations with the lender to address this
situation. If an agreement cannot be reached, the Partnership may seek to
protect its investment in the Inns by filing for bankruptcy protection (Chapter
7 (liquidation) or Chapter 11 (reorganization)) and/or could lose some or all of
its Inns through foreclosure or to the ground lessor.

RESULTS OF OPERATIONS

Net loss. The net loss increased $4.0 million to $6.6 million in the first
quarter 2003 as compared to the net loss of $2.6 million in first quarter of
2002. This increase is due primarily to the decrease in revenues and increase in
operating expenses discussed below.

Operating (Loss) Profit. Operating loss for the first quarter of 2003 increased
by $4.2 million to $3.7 million when compared to operating income of $449,000
for the first quarter of 2002. The increase in operating loss is due to the
decrease in revenues and increase in operating expenses.

Total Revenues. Total revenues decreased $2.2 million, or 12.3%, to $15.8
million for first quarter year-to-date 2003 from $18.0 million in the first
quarter of 2002. The decrease is primarily due to the decline in rooms revenues.

Rooms Revenues. Rooms revenues decreased $2.1 million, or approximately 12.0% to
$15.6 million for the first quarter of 2003 from $17.7 million for the first
quarter of 2002, reflecting a 1.2% decrease in occupancy to 55.0%, and a $1.11
decrease in average room rate to $50.91. These changes in occupancy and room
rates caused a decrease in revenue per available room ("REVPAR") of 4.3% to
$28.00. The decrease in average occupancy was primarily the result of increased
competition in the economy segment and the deferral of capital improvements
needed to make our inns more competitive in their marketplaces because of the
lack of funds. The decrease in rooms revenues is not proportional to the
decreases in occupancy and average room rate due to the sale of four of the
Partnership's hotels during 2002. Excluding the effect on revenues of the sale
of these four hotels, rooms revenues for the remaining 46 Inns decreased $0.9
million, or approximately 5.3% to $15.6 million in the first quarter of 2003
from $16.5 million in the first quarter of 2002.


Operating Expenses. Operating expenses increased during the first quarter of
2003 by $2.0 million or 11.2% to $19.5 million when compared to the first
quarter of 2002. The increase is primarily due to the loss on impairment of $2.0
million recorded during the first quarter of 2003.

Interest Expense. Interest expense decreased $190,000 to $2.9 million in first
quarter 2003 when compared to the first quarter of 2002. This decrease is due to
the payment of $11.4 million of principal on the mortgage debt during 2002 as a
result of proceeds applied from Inn sales.


                                       11
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (CONTINUED)

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions in certain circumstances that affect amounts reported in the
accompanying financial statements and related footnotes. In preparing these
financial statements, management has made its best estimates and judgments of
certain amounts included in the financial statements, giving due consideration
to materiality. The Partnership does not believe there is a great likelihood
that materially different amounts would be reported related to the accounting
policies described below. However, application of these accounting policies
involves the exercise of judgment and use of assumptions as to future
uncertainties and, as a result, actual results could differ from these
estimates.

Impairment of long-lived assets: At March 31, 2003 and December 31, 2002, the
Partnership had $98.1 million and $99.6 million of property and equipment (net),
and $0 million and $1.1 million of properties held for sale, accounting for
approximately 87% and 88%, respectively, of the Partnership's total assets.
Property and equipment is carried at cost but is adjusted to fair value if there
is an impairment loss.

During the years ended December 31, 2002, 2001, and 2000, the Partnership
recognized $5.2 million, $3.8 million, and $8.1 million, respectively, of
impairment losses related to its property and equipment. For the quarter ended
March 31, 2003, the Partnership recognized an additional $2.0 million impairment
loss related to property and equipment at its Inns located in Atlanta, Georgia;
Charlotte, North Carolina; Columbus, Ohio; Orlando, Florida; and Raleigh, North
Carolina. An impairment loss must be recorded for an Inn if estimated
undiscounted future cash flows are less than the book value of the Inn.
Impairment losses are measured based on the estimated fair value of the Inn. The
Partnership bases its estimates of fair values primarily upon appraisals. In
assessing the recoverability of the Partnership's property and equipment the
Partnership must consider the forecasted financial performance of its
properties. If these estimates or their related assumptions change in the
future, the Partnership may be required to record additional impairment charges.

Useful lives of long-lived assets: Property and equipment, and certain other
long-lived assets, are amortized over their useful lives. Useful lives are based
on management's estimates of the period that the assets will generate revenue.

Deferred ground rent: Deferred ground rent payable to Marriott International and
its affiliates at March 31, 2003 and December 31, 2002 was $4.7 million and $4.7
million, respectively, and is included in Due to Marriott International, Inc.,
affiliates and other on the accompanying balance sheet. The Partnership's
deferred ground rent of $2.2 million that remained payable at November 30, 2001
was waived in accordance with the amended lease agreement that was entered
between the Partnership and Marriott International and its affiliates. The
amount of deferred ground rent waived as a result of the ground lease amendment
will be recognized as a reduction in ground rent expense over the remaining life
of the new lease term, which has been extended to November 30, 2098, since it
represents a new operating lease as of November 30, 2001, for accounting
purposes. Ground rent expense is recognized on a straight-line basis over the
term of the lease. The excess of ground rent expense recognized over rental
payments required by the lease agreement of $2.5 million is deferred at March
31, 2003.

ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not have market risk with respect to interest rates, foreign currency
exchanges or other market rate or price risk, and we do not hold any financial
instruments for trading purposes. As of March 31, 2003, all of our debt has a
fixed interest rate.

                                       12


<PAGE>


ITEM 4.           CONTROLS AND PROCEDURES

The general partner's principal executive officer and principal financial
officer have, within 90 days of the filing date of this quarterly report,
evaluated the effectiveness of the Partnership's disclosure controls and
procedures (as defined in Exchange Act Rules 13a - 14(c) and have determined
that such disclosure controls and procedures are adequate. There have been no
significant changes in the Partnership's internal controls or in other factors
that could significantly affect such internal controls since the date of
evaluation. Accordingly, no corrective actions have been taken with regard to
significant deficiencies or material weaknesses.

                                       13
<PAGE>



                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

The Partnership is 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 condition or results of
operations of the Partnership.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibits required by Item 601 of Regulation S-K are filed herewith or
incorporated herein by reference and are listed in the attached Exhibit Index.


(b)  Reports on Form 8-K

         No Current Reports on Form 8-K were filed by the Partnership during the
         three month period ended March 31, 2003.



                                       14




<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 this 15th day of May, 2003.


                           FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP

                           By:      AP-Fairfield GP, LLC
                                    General Partner

                                    By:     AP-Fairfield Manager Corp.
                                            Manager

                                            By:      /s/ Carolyn Tiffany
                                               -------------------------------
                                                     Carolyn Tiffany
                                                     Vice President




                                       15

<PAGE>



                                 CERTIFICATIONS

         I, THOMAS C. STAPLES, certify that:

         1.       I have reviewed this quarterly report on Form 10-Q of
                  Fairfield Inn by Marriott Limited Partnership;

         2.       Based on my knowledge, this quarterly report does not contain
                  any untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  quarterly report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in this quarterly report,
                  fairly present in all material respects the financial
                  condition, results of operations and cash flows of the
                  registrant as of, and for, the periods presented in this
                  quarterly report;

         4.       The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and have:

                  a)       designed such disclosure controls and procedures to
                           ensure that material information relating to the
                           registrant is made known to us, particularly during
                           the period in which this quarterly report is being
                           prepared:

                  b)       evaluated the effectiveness of the registrant's
                           disclosure controls and procedures as of a date
                           within 90 days prior to the filing date of this
                           quarterly report (the "Evaluation Date"); and

                  c)       presented in this quarterly report our conclusions
                           about the effectiveness of the disclosure controls
                           and procedures on our evaluation as of the Evaluation
                           Date;

         5.       The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of registrant's
                  board of directors (or persons performing the equivalent
                  functions):

                  a)       all significant deficiencies in the design or
                           operation of internal controls which could adversely
                           affect the registrant's ability to record, process,
                           summarize and report financial data and have
                           identified for the registrant's auditors any material
                           weaknesses in internal controls; and


                  b)       any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal controls; and

         6.       The registrant's other certifying officers and I have
                  indicated in this quarterly report whether there were
                  significant changes in internal controls or in other factors
                  that could significantly affect internal controls subsequent
                  to the date of our most recent evaluation, including any
                  corrective actions with regard to significant deficiencies and
                  material weaknesses.



         Date:    May 15, 2003              /s/ Thomas Staples
                                            ---------------------------
                                            Thomas C. Staples
                                            Chief Financial Officer

                                       16

<PAGE>



                                 CERTIFICATIONS

         I, MICHAEL L. ASHNER, certify that:

         1.       I have reviewed this quarterly report on Form 10-Q of
                  Fairfield Inn by Marriott Limited Partnership;

         2.       Based on my knowledge, this quarterly report does not contain
                  any untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  quarterly report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in this quarterly report,
                  fairly present in all material respects the financial
                  condition, results of operations and cash flows of the
                  registrant as of, and for, the periods presented in this
                  quarterly report;

         4.       The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and have:

                  a)       designed such disclosure controls and procedures to
                           ensure that material information relating to the
                           registrant is made known to us, particularly during
                           the period in which this quarterly report is being
                           prepared:

                  b)       evaluated the effectiveness of the registrant's
                           disclosure controls and procedures as of a date
                           within 90 days prior to the filing date of this
                           quarterly report (the "Evaluation Date"); and

                  c)       presented in this quarterly report our conclusions
                           about the effectiveness of the disclosure controls
                           and procedures on our evaluation as of the Evaluation
                           Date;

         5.       The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of registrant's
                  board of directors (or persons performing the equivalent
                  functions):

                  a)       all significant deficiencies in the design or
                           operation of internal controls which could adversely
                           affect the registrant's ability to record, process,
                           summarize and report financial data and have
                           identified for the registrant's auditors any material
                           weaknesses in internal controls; and


                  b)       any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal controls; and

         6.       The registrant's other certifying officers and I have
                  indicated in this quarterly report whether there were
                  significant changes in internal controls or in other factors
                  that could significantly affect internal controls subsequent
                  to the date of our most recent evaluation, including any
                  corrective actions with regard to significant deficiencies and
                  material weaknesses.



         Date:    May 15, 2003                      /s/ Michael L. Ashner
                                                    ---------------------
                                                    Michael L. Ashner
                                                    Chief Executive Officer

                                       17
<PAGE>


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

        No.     Exhibit                                                                                         Page
        ---     -------                                                                                         ----
<S>             <C>                                                                                             <C>
        2.1     Amended and Restated Agreement of Limited Partnership of Fairfield Inn by Marriott Limited       (1)
                Partnership by and among Marriott FIBM One Corporation (General Partner), Christopher, G.
                Townsend (Organizational Limited Partner), and those persons who become Limited Partners
                (Limited Partners) dated July 31, 1990.

        2.2     First Amendment to Amended and Restated Agreement of Limited Partnership dated as of December    (2)
                28, 1998.

       10.1     Loan Agreement between Fairfield Inn by Marriott Limited Partnership and Nomura Asset Capital    (1)
                Corporation dated January 13, 1997.

       10.2     Secured Promissory Note made by Fairfield Inn by Marriott Limited Partnership (the "Maker") to   (1)
                Nomura Asset Capital Corporation (the "Payee") dated January 13, 1997.

       10.3     Form of Ground Lease                                                                             (1)

         16     Letter from Arthur Andersen LLP to the Securities and Exchange Commission dated May 20, 2002.    (4)

         99     Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                          19
</TABLE>


                                               18