<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, 2004                 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 [ ]      No [X]

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)

         Statements of Net Liabilities in Liquidation (Liquidation Basis) as of March 31, 2004
                  and December 31, 2003                                                                       3

         Statement of Changes in Net Liabilities in Liquidation (Liquidation Basis) for the period
                  from January 1, 2004 through March 31, 2004                                                 4

         Condensed Statement of Operations (Going Concern Basis) for the three months ended
                  March 31, 2003                                                                              5

         Condensed Statement of Cash Flows (Going Concern Basis) for the three months ended
                  March 31, 2003                                                                              6

         Notes to Condensed Financial Statements                                                              7

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations               10

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                          14

Item 4.  Controls and Procedures                                                                             14

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                   15

Item 6.  Exhibits and Reports on Form 8-K                                                                    15

SIGNATURE                                                                                                    16

EXHIBIT INDEX AND CERTIFICATIONS                                                                             17
</TABLE>


                                       2


<PAGE>




                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
        STATEMENTS OF NET LIABILITIES IN LIQUIDATION (LIQUIDATION BASIS)
                   AS OF MARCH 31, 2004 AND DECEMBER 31, 2003
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                      Liquidation Basis

                                                                                    March 31,    December 31,
                                                                                      2004          2003
                                                                                   (unaudited)
                                                                                   -----------   -----------
<S>                                                                                <C>           <C>

ASSETS
     Properties held for sale                                                      $   114,736   $   124,972
     Accounts receivable                                                                 1,112         1,162
     Prepaid insurance and other current assets                                            983         1,325
     Property improvement fund                                                           1,819         2,156
     Restricted cash                                                                     8,421         5,280
                                                                                   -----------   -----------
              Total Assets                                                         $   127,071   $   134,895
                                                                                   ===========   ===========

LIABILITIES
     Mortgage debt in default, net                                                 $   135,004   $   135,311
     Due to Marriott International, Inc., affiliates and other in default                2,649         2,267
       Land purchase obligation due to Marriott International, Inc.                     45,010        50,471
     Accounts payable and accrued liabilities                                           15,098        16,480
       Reserve for estimated costs during the period of liquidation                      1,500         1,500
                                                                                   -----------   -----------

             Total Liabilities                                                         199,261       206,029
                                                                                   -----------   -----------

               Net Liabilities in Liquidation                                      $    72,190   $    71,134
                                                                                   ===========   ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements


                                       3
<PAGE>



                 FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
             STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
                               (LIQUIDATION BASIS)
                            (UNAUDITED, IN THOUSANDS)


                                                                   Period from
                                                                 January 1, 2004
                                                                     through
                                                                  March 31, 2004
                                                                 ---------------
Net Liabilities in Liquidation as of  January 1, 2004             $     71,134
Operating Loss                                                           1,583
Changes in Net Liabilties in Liquidation:
         Increase in fair value of real estate                            (527)
                                                                  ------------
Net Liabilities in Liquidation as of March 31, 2004               $     72,190
                                                                  ============



   The accompanying notes are an integral part of these financial statements



                                       4
<PAGE>

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


                                                             Three Months Ended
                                                                  March 31,
                                                                    2003
                                                             -------------------
REVENUES
     Rooms                                                       $   15,589
     Other inn revenues                                                 217
                                                                 ----------
                                                                     15,806
                                                                 ----------
OPERATING EXPENSES
     Rooms                                                            5,637
     Other department costs and expenses                                296
     Selling, administrative and other                                6,194
     Depreciation                                                     2,376
     Ground rent, taxes and other                                     2,604
     Base management fee                                                479
     Loss on impairment of long-lived assets                          1,958
                                                                 ----------
                                                                     19,544
                                                                 ----------

OPERATING LOSS                                                       (3,738)

     Interest expense                                                (2,920)
     Interest income                                                     14
                                                                 ----------
NET LOSS                                                         $   (6,644)
                                                                 ==========

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

                                                                 $   (6,644)
                                                                 ==========

NET LOSS PER LIMITED PARTNER UNIT   (83,337 Units)               $      (79)
                                                                 ==========


   The accompanying notes are an integral part of these financial statements


                                       5
<PAGE>



                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
             CONDENSED STATEMENT OF CASH FLOWS (GOING CONCERN BASIS)
                            (UNAUDITED, IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                          Three Months
                                                                        Ended March 31,
                                                                             2003
                                                                        ---------------
<S>                                                                             <C>
OPERATING ACTIVITIES
     Net loss                                                            $     (6,644)
     Depreciation                                                               2,376
     Loss on impairment of long-lived assets                                    1,958
     Amortization of deferred financing costs                                     117
     Amortization of mortgage debt premium                                        (46)
     Changes in operating accounts                                              3,492
                                                                         ------------
         Cash provided by operating activities                                  1,253
                                                                         ------------

INVESTING ACTIVITIES
     Additions to property and equipment                                       (1,691)
                                                                         ------------
         Cash used in investing activities                                     (1,691)
                                                                         ------------
DECREASE IN CASH AND CASH EQUIVALENTS                                            (438)

CASH AND CASH EQUIVALENTS at beginning of period                                5,900
                                                                         ------------
CASH AND CASH EQUIVALENTS at end of period                               $      5,462
                                                                         ============

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


   The accompanying notes are an integral part of these financial statements


                                       6
<PAGE>



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

1.       ORGANIZATION AND BASIS OF PRESENTATION

Fairfield Inn by Marriott Limited Partnership, a Delaware limited partnership
(the "Partnership"), owns 42 Fairfield Inn by Marriott properties (the "Inns")
located in sixteen states within the contiguous United States. The Partnership
leases the land underlying 28 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 MII, 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.

On December 5, 2003, as a result of the agreement reached between its lender and
MII, the Partnership adopted the liquidation basis of accounting for all periods
beginning after September 30, 2003 and accordingly adjusted the assets to
estimated net realizable value and liabilities were adjusted to estimated
settlement amounts, including estimated costs associated with carrying out the
liquidation.

2.       PLAN OF LIQUIDATION

Effective December 5, 2003, the Partnership entered into an agreement with its
lender as well as MII, which provides that the lender and MII will forbear in
the exercise of their remedies under the relevant documents due to certain
existing defaults, including the non-payment of debt service and ground rent and
the failure to complete required MII product improvement plans on a timely
basis, all due to a lack of operating revenues, and to implement a liquidation
of the Partnership's Inns.

In exchange for the agreement to liquidate, the lender has agreed to pay the
Partnership: (i) $65,217 per Inn sold, payable upon the sale of each Inn, and
(ii) an additional amount equal to 10% of the aggregate net sale proceeds from
the sale of all Inns in excess of a graduated incentive fee base, plus any
additional amounts the lender advances in connection with the liquidation
process. Based upon estimates by management, the Inns will not generate gross
sales proceeds in excess of the threshold amount. It is anticipated that the
lender will advance funds to: (a) permit capital improvements to be conducted at
the Inns, which is required by MII, and will also increase the marketability of
the Inns for sale, and (b) fund operating expenses, including payment of real
estate taxes, as a result of insufficient operating revenue. In the event all
the Inns are not sold by April 1, 2005, the Partnership has agreed to allow the
lender to exercise its rights under the loan documents, which may include
foreclosure, without interference from the Partnership.

In connection with the agreement, an affiliate of MII, as ground lessor, has
agreed to waive up to $1.2 million of ground rent for a period of up to one
year, and any additional ground rent due in excess of $1.2 million will be
deferred until the earlier of: (i) the sale of an Inn, or (ii) April 1, 2005;
provided, however that in the event a default arises under the agreements
reached with MII at any time, all ground rent shall become immediately due and
payable. MII, as franchisor, has agreed that for those Inns that will remain in
the Fairfield Inn by Marriott system, the property improvement plans are not
required to be completed until April 1, 2005, however the work must be commenced
by September 1, 2004, and has also agreed to waive any liquidated damages that
otherwise may be due to MII arising from the early termination of a franchise
agreement due to the sale of an Inn through September 1, 2004, and thereafter
reduced the amount to $25,000 per property for Inns sold between September 1,
2004 and November 30, 2004. In exchange for these ground rent and franchise
termination fee concessions, the Partnership has agreed to remove 12 of the
Inns, as identified by MII, from the Fairfield Inn by Marriott system no later
than September 1, 2004 and keep six of the Inns, as identified by MII, in the
Fairfield Inn by Marriott system. The remaining Inns can be sold either as a
Fairfield Inn by Marriott or without the franchise agreement. In the event
product improvement plans are not completed by April 1, 2005 for any Inn not
sold, it will result in a default under the MII agreements, and permit MII to
terminate the franchise agreements. Further, upon the termination of any
franchise agreement, the Partnership must purchase MII's interest under all
ground leases.


                                       7
<PAGE>

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


2.       PLAN OF LIQUIDATION (CONTINUED)

On November 20, 2003, the Partnership engaged a nationally recognized broker to
begin marketing the Inns for sale. It is expected that the Partnership will, in
all likelihood, be dissolved in 2005, either upon the sale of all Inns or as a
result of the foreclosure by the lender of any remaining Inns not otherwise
sold. The Partnership sold 4 of its Inns during the first quarter of 2004, sold
2 of its Inns to date in the second quarter and has entered into contracts to
sell an additional 17 of its Inns. It is expected that these properties will be
sold, if at all, during the second quarter of 2004.

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 audited financial statements and notes thereto for the year ended
December 31, 2003 as filed on form 10-K.

Due to the agreement reached between the Partnership, its lender and MII on
December 5, 2003, the Partnership adopted the liquidation basis of accounting
for all periods beginning after September 30, 2003. In accordance with the
liquidation basis of accounting, the Partnership adjusted its assets to their
estimated net realizable value and liabilities were adjusted to estimated
settlement amounts, including estimated costs associated with carrying out the
liquidation. The valuation of real estate held for sale is based on current
contracts, estimates and other indication of sales value, net of estimated
selling costs (including brokerage commissions, transfer taxes, legal costs).
Additionally, the Partnership suspended recording any further depreciation
expense. The valuations of other assets and liabilities are based on
management's estimates as of March 31, 2004. Actual values realized for assets
and settlement of liabilities may differ materially from amounts estimated.
Significant differences may occur based upon local economic market conditions
which have resulted in weaker operating results at some of the hotels.
Additionally, Marriott may revoke its franchise agreement at certain hotels.

However, in accordance with FASB No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities", the
non-recourse mortgage debt and related mortgage premium were not adjusted to its
estimated settlement amount as the Partnership has not been legally released
from being the primary obligor under the mortgage debt. Accordingly, the
outstanding mortgage balance and accrued and unpaid interest will continue to be
presented at its historical basis.

Certain amounts have been reclassified to conform to the current periods
presentation.

During the three months ended March 31, 2004, the net fair value of the real
estate was increased by $527,000 to reflect revision as a result of contracts
received.

Reserve for Estimated Costs during the Period of Liquidation

Under the liquidation basis of accounting, the Partnership is required to
estimate and accrue the non-operating costs associated with executing the plan
of liquidation. These amounts can vary significantly due to, among other things,
the timing and realized proceeds from property sales, the costs of retaining
agents and trustees to oversee the liquidation, including the costs of
insurance, the timing and amounts associated with discharging known and
contingent liabilities and the non-operating costs associated with cessation of
the Partnership's operations. These non-operating costs are estimates and are
expected to be paid out over the liquidation period. Such costs do not include
costs incurred in connection with ordinary operations.

                                       8
<PAGE>


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

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Prior to adopting the liquidation basis of accounting, the Partnership assessed
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, certain Inns experienced
declining cash flows, primarily due to additional competition in their local
markets and therefore were impaired. The Partnership recorded an impairment
charge of $2 million in the first quarter of 2003.

For financial reporting purposes, for the period ended March 31, 2003 the net
income of the Partnership was 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.       PROPERTY SALES

         On March 24, 2004, the Partnership sold its Inn located in Norcross,
Georgia for $1.5 million. After closing costs and the payment to the Partnership
of the $65,217 as agreed to under the liquidation plan, the net proceeds from
the sale of approximately $1.4 million were applied toward the Partnership's
mortgage debt. The Partnership recognized a loss on the sale of $3,000.

         On March 25, 2004, the Partnership sold its Inns located in Buena Park
and Placentia, California for an aggregate price of $8.75 million. After payment
for the purchase of the fee interest for $3.6 million, closing costs and the
payment to the Partnership of $130,434, as agreed to under the liquidation plan,
the net proceeds from the sale of approximately $4.5 million were applied toward
the Partnership's mortgage debt. The Partnership recognized a gain on the sale
of $37,000.

         On March 29, 2004, the Partnership sold its Inns located in Orlando,
Florida for an aggregate price of $2.15 million. After payment for the purchase
of the fee interest for $1.75 million, closing costs and the payment to the
Partnership of $65,217, as agreed to under the liquidation plan, the net
proceeds from the sale of approximately $163,000 were applied toward the
Partnership's mortgage debt. The Partnership recognized a loss on the sale of
$12,000.

5.       SUBSEQUENT EVENTS

         Subsequent to March 31, 2004, the Partnership sold its Inns located in
Indianapolis, Indiana and Hazelwood, Missouri for a combined aggregate sales
price of $5.1 million. After payment for the purchase of the fee interest of
$1.22 million closing costs and payment to the Partnership of $130,434, as
agreed to under the liquidation plan, the net proceeds from the sale of
approximately $3.3 million were applied towards the Partnership's mortgage debt.
The Partnership expects to recognize a net loss on these properties of
approximately $17,000 during the second quarter of 2004.

                                       9
<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

As further discussed below, the Partnership has begun liquidating its
properties. It is anticipated that the Partnership, in all likelihood, will be
dissolved in 2005, either upon the sale of all Inns or as a result of the
foreclosure by the lender of any remaining Inns not otherwise sold.

Effective December 5, 2003, the Partnership entered into an agreement with its
lender as well as MII, which provides that the lender and MII will forbear in
the exercise of their remedies under the relevant documents due to certain
existing defaults, including the non-payment of debt service and ground rent and
the failure to complete required MII product improvement plans on a timely
basis, all due to a lack of operating revenues, and to implement a liquidation
of the Partnership's Inns.

In exchange for the agreement to liquidate, the lender has agreed to pay the
Partnership: (i) $65,217 per Inn sold, payable upon the sale of each Inn, and
(ii) an additional amount equal to 10% of the aggregate net sale proceeds from
the sale of all Inns in excess of a graduated incentive fee base, plus any
additional amounts the lender advances in connection with the liquidation
process. Based upon estimates by management, the Inns will not generate gross
sales proceeds in excess of the threshold amount. It is anticipated that the
lender will advance funds to: (a) permit capital improvements to be conducted at
the Inns, which is required by MII, and will also increase the marketability of
the Inns for sale, and (b) fund operating expenses, including payment of real
estate taxes, as a result of insufficient operating revenue. In the event all
the Inns are not sold by April 1, 2005, the Partnership has agreed to allow the
lender to exercise its rights under the loan documents, which may include
foreclosure, without interference from the Partnership.

Due to the agreement reached between the Partnership, its lender and MII on
December 5, 2003, the Partnership adopted the liquidation basis of accounting
for all periods beginning after September 30, 2003. In accordance with the
liquidation basis of accounting, the Partnership adjusted its assets to their
estimated net realizable value and liabilities were adjusted to estimated
settlement amounts, including estimated costs associated with carrying out the
liquidation. The valuation of real estate held for sale is based on current
contracts, estimates and other indication of sales value, net of estimated
selling costs (including brokerage commissions, transfer taxes, legal costs).
Additionally, the Partnership suspended recording any further depreciation
expense. The valuations of other assets and liabilities are based on
management's estimates as of March 31, 2004. Actual values realized for assets
and settlement of liabilities may differ materially from amounts estimated.
Significant differences may occur based upon local economic market conditions
which have resulted in weaker operating results at some of the hotels.
Additionally, Marriott may revoke its franchise agreement at certain hotels.

However, in accordance with FASB No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities", the
non-recourse mortgage debt and related mortgage premium were not adjusted to its
estimated settlement amount as the Partnership has not been legally released
from being the primary obligor under the

                                       10
<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

mortgage debt. Accordingly, the outstanding mortgage balance and accrued and
unpaid interest will continue to be presented at its historical basis.

In connection with the agreement, an affiliate of MII, as ground lessor, has
agreed to waive up to $1.2 million of ground rent for a period of up to one
year, and any additional ground rent due in excess of $1.2 million will be
deferred until the earlier of: (i) the sale of an Inn, or (ii) April 1, 2005;
provided, however that in the event a default arises under the agreements
reached with MII at any time, all ground rent shall become immediately due and
payable. MII, as franchisor, has agreed that for those Inns that will remain in
the Fairfield Inn by Marriott system, the property improvement plans are not
required to be completed until April 1, 2005, however the work must be commenced
by September 1, 2004, and has also agreed to waive any liquidated damages that
otherwise may be due to MII arising from the early termination of a franchise
agreement due to the sale of an Inn through September 1, 2004, and thereafter
reduced the amount to $25,000 per property for Inns sold between September 1,
2004 and November 30, 2004. In exchange for these ground rent and franchise
termination fee concessions, the Partnership has agreed to remove 12 of the
Inns, as identified by MII, from the Fairfield Inn by Marriott system no later
than September 1, 2004 and keep six of the Inns, as identified by MII, in the
Fairfield Inn by Marriott system. The remaining Inns can be sold either as a
Fairfield Inn by Marriott or without the franchise agreement. In the event
product improvement plans are not completed by April 1, 2005 for any Inn not
sold, it will result in a default under the MII agreements, and permit MII to
terminate the franchise agreements. Further, upon the termination of any
franchise agreement, the Partnership must purchase MII's interest under all
ground leases.

On November 20, 2003, the Partnership engaged a nationally recognized broker to
begin marketing the Inns for sale. It is expected that the Partnership will, in
all likelihood, be dissolved in 2005, either upon the sale of all Inns or as a
result of the foreclosure by the lender of any remaining Inns not otherwise
sold. The Partnership sold 4 of its Inns during the first quarter of 2004 and
has entered into contracts to sell an additional 17 of its Inns. It is expected
that these properties will be sold, if at all, during the second quarter of
2004.

The Partnership's only source of cash will be the $65,217 received upon the sale
of each Inn. It is expected that these funds will be used to pay costs
associated with winding down the affairs of the Partnership.

In 2003 during the period in which the Partnership operated as a going concern,
January 1 through March 31, 2003, the Partnership's cash and cash equivalents,
excluding funds held in lender reserves, decreased by $923,000 to $4.9 million
at March 31, 2003 compared to $5.9 million at December 31, 2003. The decrease
from the prior year is due to $3.5 million of cash used in investing activities
and $1.8 million of cash used in financing activities, which were partially
offset by $4.4 million of cash provided by operating activities. Cash used in
investing activities consisted of capital improvements and equipment purchases.
Cash used in financing activities consisted of changes to the restricted cash
reserves as required under the terms of the mortgage debt.

RESULTS OF OPERATIONS

Changes in Net Liabilities in Liquidation

January 1, 2004 to March 31, 2004

Net liabilities in liquidation decreased by $1.1 million from January 1, 2004 to
March 31, 2004. Operating loss, which includes property related income and
expenses, interest expense and property sales were $1.6 million for the period.
The fair value of real estate increased by $.5 million due to changes in
anticipated proceeds from future property sales based upon current trends in the
real estate markets.

                                       11
<PAGE>



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

RESULTS OF OPERATIONS (CONTINUED)

         On March 24, 2004, the Partnership sold its Inn located in Norcross,
Georgia for $1.5 million. After closing costs and the payment to the Partnership
of the $65,217 as agreed to under the liquidation plan, the net proceeds from
the sale of approximately $1.4 million were applied toward the Partnership's
mortgage debt. The Partnership recognized a loss on the sale of $3,000.

         On March 25, 2004, the Partnership sold its Inns located in Buena Park
and Placentia, California for an aggregate price of $8.75 million. After payment
for the purchase of the fee interest for $3.6 million, closing costs and the
payment to the Partnership of $130,434, as agreed to under the liquidation plan,
the net proceeds from the sale of approximately $4.5 million were applied toward
the Partnership's mortgage debt. The Partnership recognized a gain on the sale
of $37,000.

         On March 29, 2004, the Partnership sold its Inns located in Orlando,
Florida for an aggregate price of $2.15 million. After payment for the purchase
of the fee interest for $1.75 million, closing costs and the payment to the
Partnership of $65,217, as agreed to under the liquidation plan, the net
proceeds from the sale of approximately $163,000 were applied toward the
Partnership's mortgage debt. The Partnership recognized a loss on the sale of
$12,000.

         On April 7, 2004, the Partnership sold its property located in
Indianapolis, Indiana for an aggregate price of $2.35 million. After payment for
the purchase of the fee interest for $1.22 million, closing costs and the
payment to the Partnership of $65,217, as agreed to under the liquidation plan,
the net proceeds from the sale of approximately $865,000 were applied toward the
Partnership's mortgage debt. The Partnership recognized a loss on the sale of
$3,000.

         On April 23, 2004, the Partnership sold its Inn located in Hazelwood,
Missouri for an aggregate price of $2.7 million. After payment for closing costs
and the payment to the Partnership of $65,217, as agreed to under the
liquidation plan, the net proceeds from the sale of approximately $2.5 were
applied toward the Partnership's mortgage debt. The Partnership recognized a
loss on the sale of $14,000.



                                       12
<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.

None of the recently issue accounting standards had any effect on the
Partnership's financial statements.

SEASONALITY

Our hotels have historically experienced seasonal differences typical of the
U.S. Hotel Industry with higher revenues in the second and third quarters of the
calendar years compared with the first and fourth quarters. This seasonality can
cause material fluctuations in our income.



                                       13
<PAGE>

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, 2004, all of our debt has a
fixed interest rate.


ITEM 4.           CONTROLS AND PROCEDURES

The Registrant's management, with the participation of the Registrant's Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Registrant's disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of
the end of the period covered by this report. Based on such evaluation, the
Reigstrant's Chief Executive Officer and Chief Financial Officer have concluded
that, as of the end of such period, the Registrant's disclosure controls and
procedures are effective.

There have not been any changes in the Registrant's internal control over
financial reporting (as defined in Rule 13a-15(f) under the Securities and
Exchange Act of 1934, as amended) during the fiscal quarter to which this report
relates that have materially affected, or are reasonably likely to materially
affect, the Registrant's internal control over financial reporting.



                                       14
<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:

On January 22, 2004, a current report on Form 8-K was filed with respect to the
Registrant's change in independent auditors.


                                       15
<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 14th day of May, 2004.


                           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


                                       16
<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              (1)
          Limited 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            (2)
          December 28, 1998.

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

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

10.3      Form of Ground Lease                                                                            (1)

10.4      2003 Omnibus Agreement, dated December 5, 2003, among Marriott International, Inc.,
          Big Boy Properties, Inc., Fairfield Inn By Marriott Limited Partnership, Lasalle
          Bank, N.A., Sage Management Resources III, LLC, and Winthrop Financial Associates, A
          Limited Partnership

10.5      Third Amendment to Loan Agreement, dated December 5, 2003 between Fairfield Inn by
          Marriott Limited Partnership, and Clarion Partners, LLC, as Special Servicer on
          behalf of LaSalle Bank National Association, a national banking association, as
          trustee, in respect of the Asset Securitization Corporation Commercial Mortgage
          Pass-Through Certificates Series 1997-MD VII Securitization.

10.6      Unconditional Limited Guaranty of Payment from Fairfield Inn by Marriott Limited                (5)
          Partnership in favor of Asset Securitization Corporation Commercial Mortgage
          Pass-Through Certificates Series 1997-MD VII Securitization, dated December 5, 2003

10.7      Amendment to Ground Leases, dated December 5, 2003, between Fairfield Inn by Marriott           (6)
          Limited Partnership and Big Boy Properties, Inc.

10.8      Amendment to Franchise Agreement, dated December 5, 2003, between Marriott                      (7)
          International Inc. and Fairfield Inn by Marriott Limited Partnership

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

  31      Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                        (18)

  32      Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                         (20)
</TABLE>

(1) Incorporated by reference to the Registrant's Form 10 filed on January 29,
    1998.

(2) Incorporated by reference to the Registrant's Form 10/A filed on April 11,
    2001

(3) Incorporated by reference to the Registrant's Annual Report on Form 10K
    filed for the year ended December 31, 2001.

(4) Incorporated by reference to the Registrant's Current Report on Form 8K
    filed May 20, 2002.

(5) Attached as Exhibit E to Exhibit 10.4

(6) Attached as Exhibit I to Exhibit 10.4

(7) Attached as Exhibit J to Exhibit 10.4

                                       17