<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 June 30, 2002                  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 [ ]




<PAGE>



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

                  FAIRFIELD INN BY MARRIOTT LIMITED PARTNERSHIP
================================================================================



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                               PAGE NO.
                                                                                               --------

<S>                                                                                              <C>
PART I - FINANCIAL INFORMATION

Notice of Incomplete Filing                                                                         3

Item 1   Financial Statements (unaudited)

         Condensed Balance Sheets as of June 30, 2002 and December 31, 2001                         4

         Condensed Statements of Operations - Quarter and Six Months ended June 30, 2002
                  and Twelve and Twenty-Four Weeks Ended June 15, 2001                              5

         Condensed Statements of Cash Flows - Six Months Ended June 30, 2002
                  and Twenty-Four Weeks Ended June 15, 2001                                         6

         Notes to Condensed Financial Statements                                                    7

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations     11

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                15


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                                         16

Item 6.  Exhibits and Reports on Form 8-K                                                          16

SIGNATURES                                                                                         17

EXHIBIT INDEX                                                                                      18
</TABLE>




                                       2
<PAGE>


                          PART I. FINANCIAL INFORMATION

This quarterly report on Form 10-Q is incomplete. Rule 10-01(d) of Regulation
S-X requires interim financial statements included in quarterly reports on Form
10-Q be reviewed by an independent public accountant using professional
standards and procedures for conducting such reviews, as established by
generally accepted auditing standards, as may be modified or supplemented by the
Commission. The accompanying financial statements, as of June 30, 2002 and for
the three-month and six-month periods then ended, have not been reviewed by an
independent public accountant in accordance with Statement of Auditing Standards
No. 71, Review of Interim Financial Information (SAS 71). Effective May 17,
2002, we dismissed our previous independent public accountants and have not yet
appointed a replacement.








                                       3
<PAGE>


ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

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

<TABLE>
<CAPTION>

                                                                   June 30,      December 31,
                                                                     2002            2001
                                                                -------------   --------------
                                                                 (unaudited)
<S>                                                             <C>               <C>
ASSETS
     Property and equipment, net                                    $ 105,774       $ 110,039
     Property held for sale                                             5,709           5,709
     Deferred financing costs, net of accumulated amortization          2,207           2,451
     Due from manager                                                     496           1,069
     Inventory                                                          1,000           1,000
     Property improvement fund                                          7,620           5,220
     Restricted cash                                                    2,575           3,127
     Cash and cash equivalents                                          3,317           1,597
                                                                    ---------       ---------

                                                                    $ 128,698       $ 130,212
                                                                    =========       =========

LIABILITIES AND PARTNERS' DEFICIT

LIABILITIES
     Mortgage debt                                                  $ 146,331       $ 148,850
     Due to Marriott International, Inc., affiliates and other          2,777           2,503
     Accounts payable and accrued liabilities                           4,481           3,660
                                                                    ---------       ---------

         Total Liabilities                                            153,589         155,013
                                                                    =========       =========

PARTNERS' DEFICIT
     General Partner                                                     (199)           (198)
     Limited Partners                                                 (24,692)        (24,603)
                                                                    ---------       ---------

         Total Partners' Deficit                                      (24,891)        (24,801)
                                                                    ---------       ---------

                                                                    $ 128,698       $ 130,212
                                                                    =========       =========
</TABLE>








                  See Notes to Condensed Financial Statements.




                                       4
<PAGE>


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

<TABLE>
<CAPTION>
                                                  Quarter          Twelve         Six Months       Twenty-Four
                                                   Ended         Weeks Ended         Ended         Weeks Ended
                                               June 30, 2002    June 15, 2001    June 30, 2002    June 15, 2001
                                               -------------    -------------    -------------    -------------
<S>                                               <C>              <C>              <C>              <C>
REVENUES
     Rooms                                        $ 22,267         $ 20,525         $ 39,985         $ 38,292
     Other inn revenues                                291              401              597              763
     Other revenues                                  1,374               --            1,374              656
                                                  --------         --------         --------         --------
                                                    23,932           20,926           41,956           39,711
                                                  --------         --------         --------         --------

OPERATING EXPENSES
     Rooms                                           6,739            6,324           12,707           12,041
     Other department costs and expenses               522              675              801              962
     Selling, administrative and other               6,809            6,219           12,858           12,301
     Depreciation                                    2,415            2,757            4,860            5,423
     Ground rent, taxes and other                    1,831            1,955            3,485            4,297
     Incentive management fee                           --              660               --            1,076
     Fairfield Inn system fee                           --              628               --            1,172
     Base management fee                               683              418            1,231              781
                                                  --------         --------         --------         --------
                                                    18,999           19,636           35,942           38,053
                                                  --------         --------         --------         --------

OPERATING PROFIT                                     4,933            1,290            6,014            1,658
     Interest expense                               (3,118)          (2,970)          (6,228)          (5,889)
     Interest income                                    70              264              124              421
                                                  --------         --------         --------         --------

NET INCOME (LOSS)                                 $  1,885         $ (1,416)        $    (90)        $ (3,810)
                                                  ========         ========         ========         ========

ALLOCATION OF NET INCOME (LOSS)
     General Partner                              $     19         $    (14)        $     (1)        $    (38)
     Limited Partners                                1,866           (1,402)             (89)          (3,772)
                                                  --------         --------         --------         --------

                                                  $  1,885         $ (1,416)        $    (90)        $ (3,810)
                                                  ========         ========         ========         ========

NET INCOME (LOSS) PER LIMITED PARTNER UNIT
(83,337 Units)                                    $     22         $    (17)        $     (1)        $    (46)
                                                  ========         ========         ========         ========
</TABLE>





                  See Notes to Condensed Financial Statements.


                                       5
<PAGE>


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

<TABLE>
<CAPTION>
                                                     Six Months      Twenty-Four
                                                        Ended        Weeks Ended
                                                    June 30, 2002   June 15, 2001
                                                    -------------   -------------
<S>                                                     <C>             <C>
OPERATING ACTIVITIES
     Net loss                                           $   (90)        $(3,810)
     Depreciation                                         4,860           5,423
     Gain on disposition of fixed assets                     --             (10)
     Amortization of deferred financing costs               244             225
     Amortization of mortgage debt premium                 (175)           (161)
     Amortization of deferred ground rent                   (13)             --
     Deferral of incentive management fee                    --           1,076
     Changes in operating accounts                        2,422              83
                                                        -------         -------

         Cash provided by operating activities            7,248           2,826
                                                        -------         -------

INVESTING ACTIVITIES
     Additions to property and equipment                   (595)         (5,445)
     Change in property improvement fund                 (2,400)          1,476
                                                        -------         -------

         Cash used in investing activities               (2,995)         (3,969)
                                                        -------         -------

FINANCING ACTIVITIES
     Repayment of mortgage debt                          (2,344)         (2,156)
     Change in restricted cash                             (189)            598
                                                        -------         -------

         Cash used in financing activities               (2,533)         (1,558)
                                                        -------         -------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS          1,720          (2,701)

CASH AND CASH EQUIVALENTS at beginning of period          1,597           7,702
                                                        -------         -------

CASH AND CASH EQUIVALENTS at end of period              $ 3,317         $ 5,001
                                                        =======         =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
     Cash paid for mortgage interest                    $ 6,205         $ 6,232
                                                        =======         =======

</TABLE>







                  See Notes to Condensed Financial Statements.



                                       6
<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 50 Fairfield Inn by Marriott properties (the "Inns")
located in sixteen states within the contiguous United States. The Partnership
leases the land underlying 32 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 will 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. Since 1996, annual revenues have declined each
year, from $97.4 million in 1996 to $83.9 million in 2001. The operating profit
has declined over the same period from a $17.3 million operating profit in 1996
to a $496,000 operating profit in 2001. 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, the deferral of capital improvements needed to make the Inns more
competitive in their marketplaces because of a lack of funds, and a slowdown in
the economy resulting in a softness in the lodging industry as a whole.
Exacerbating this trend is the impact of the events of September 11, 2001 which
have had a significant detrimental effect on the hospitality industry in general
and the Inns in particular as travel nationwide has severely decreased. Should
operating results significantly decline in 2002, the partnership may not have
sufficient cash flow from current operations to make the required debt service
payments for the remainder of 2002. These factors and those discussed below
raise substantial doubt about the partnership's ability to continue as a going
concern. Accordingly, in connection with the audit of our December 31, 2001
financial statements, our auditors issued a going-concern modification to their
opinion discussing such matters. These factors are ongoing; however, the
partnership is working to address liquidity as discussed below.

Based upon forecasts provided by Sage, the partnership is not projecting
improved results for 2002 over 2001. Partnership cash, including $2.6 million
and $3.1 million held in lender reserve accounts, totaled $5.9 million and $4.7
million at June 30, 2002 and December 31, 2001, respectively. Along with
forecasted operating cash flow, partnership cash, and reserves held by the
lender, the partnership expects to be able to meet debt service for the
remainder of 2002. However, this will require maintaining a debt service reserve
at levels below lender requirements, which constitutes a technical default under
the mortgage loan agreement. As of August 14, 2002, the partnership has not
received notification from the lender regarding this deficiency.

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 the next two years for the Inns are
estimated to total approximately $19 million. 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,
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, and result in a
default under its loan agreement.

Based upon information provided by Sage, the estimated capital expenditure
shortfall in available funds at the end of 2003 will be approximately $1.8
million. As a result, any proposed capital expenditures exceeding the amount
available in the property improvement fund will be deferred.


                                       7
<PAGE>


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


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

For the years ended December 31, 2001, 2000 and 1999, the partnership
contributed $5,828,000, $5,987,000, $6,516,000, respectively, to the property
improvement fund. For the six months ended June 30, 2002 and the twenty-four
weeks ended June 15, 2001, the partnership contributed $2,906,000 and
$2,734,000, respectively, to the property improvement fund. However, the
partnership's property improvement fund became insufficient beginning in 1999.
Therefore, in 2001, 2000 and 1999 the partnership deposited $2.5 million, $2.4
million, and $2.4 million, respectively to the property improvement fund to
cover the capital expenditure shortfall. The shortfall is primarily due to room
refurbishments, which are planned for a majority of the partnership's Inns in
the next several years. However, cash from 2002 operations will be reserved to
cover the shortfall. Therefore, no cash is expected to be available for
distribution to the partners in 2002 or the foreseeable future.


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed financial statements have been prepared by
the partnership. 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 included in the
partnership's annual report on Form 10-K for the year ended December 31, 2001.

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 June 30, 2002,
the results of its operations for the six months and quarter ended June 30, 2002
and twenty-four and twelve weeks ended June 15, 2001, and its cash flows for the
six months ended June 30, 2002 and twenty-four weeks ended June 15, 2001.
Interim results are not necessarily indicative of full year performance because
of seasonal and short-term variations. In addition, the partnership changed its
interim reporting periods to reflect calendar quarters beginning in 2002, rather
than twelve-week periods as previously reported.

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.


Recently Issued Accounting Standards

On January 1, 2001, the partnership adopted Statement of Financial Accounting
Standards "SFAS" No. 133." The Statement requires companies to recognize all
derivatives on the balance sheet as assets or liabilities, measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted for depending on the use of the derivative and whether they
qualify for hedge accounting. The partnership has no derivatives, therefore
there was no effect from this Statement on the partnership's financial
statements.

Financial Accounting Standards Board ("FASB") SFAS No. 141 "Business
Combinations" requires that all business combinations be accounted for under the
purchase method of accounting. SFAS No. 141 also changes the criteria for the
separate recognition of intangible assets acquired in a business combination.
SFAS No. 141 is effective for all business combinations initiated after June 30,
2001. This statement will not affect the partnership's financial statements.



                                       8
<PAGE>


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


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SFAS No. 142 "Goodwill and Other Intangible Assets" addresses accounting and
reporting for intangible assets acquired, except for those acquired in a
business combination. SFAS No. 142 presumes that goodwill and certain intangible
assets have indefinite useful lives. Accordingly, goodwill and certain
intangibles will not be amortized but rather will be tested at least annually
for impairment. SFAS No. 142 also addresses accounting and reporting for
goodwill and other intangible assets subsequent to their acquisition. SFAS No.
142 is effective beginning January 1, 2002. This statement will not affect the
partnership's financial statements.

SFAS No. 144 "Accounting for Impairment or Disposal of Long-Lived Assets"
replaces SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of." The standard provides guidance beyond
that previously specified in Statement 121 to determine when a long-lived asset
should be classified as held for sale, among other things. This Statement is
effective January 1, 2002. Implementation of the statement did not have a
material effect on the partnership.


4.   AMOUNTS PAYABLE TO MARRIOTT INTERNATIONAL, INC.

The following table provides the significant expenses incurred to Marriott
International and its affiliates for the six months ended June 30, 2002 and the
twenty-four weeks ended June 15, 2001 (in thousands):

                                                  Year-to-Date as of
                                              June 30,         June 15,
                                                2002             2001
                                           -------------     ------------

         Royalty fee                           $2,599            $  --
         Fairfield Inn system fee                  --            1,172
         Ground rent                               50            1,342
         Reservation costs                        396            1,212
         Marketing fund contribution               --              957
         Incentive management fee                  --            1,076
         Base management fee                       --              781
         Chain services allocation                 --              683
                                              -------          -------
                  Total                       $ 3,045          $ 7,223
                                              =======          =======


Amounts paid to Marriott International are significantly lower for the first six
months of 2002 as compared to the first twenty-four weeks of 2001. This decrease
is due to the termination of Fairfield FMC Corporation's, a Marriott
International affiliate, management agreement with the partnership in 2001.
Effective November 30, 2001, Sage, an unaffiliated third party, took over
management responsibilities for the partnership's Inns. Also on November 30,
2001, the partnership entered into a new Franchise Agreement with Marriott
International.


5.   SUBSEQUENT EVENTS

On July 29, 2002, the partnership sold one of its inns located in Montgomery,
Alabama (classified as property held for sale on the accompanying condensed
balance sheet) for $3,125,000. The net proceeds from the sale of approximately
$2.9 million will be applied toward the partnership's mortgage debt, in
accordance with the terms of the loan agreement. The partnership will recognize
a gain on the sale of approximately $2 million.

On August 12, 2002, the partnership sold its inn located in Charlotte (Airport),
North Carolina (classified as property held for sale on the accompanying balance
sheet) for $2,450,000. The net proceeds from the sale of approximately $341,000,
which is net of approximately $1.9 million attributed to the ground lease
buyout, will be applied toward the partnership's mortgage debt, in accordance
with the terms of the loan agreement. The partnership will recognize a gain on
the sale of approximately $180,000.



                                       9
<PAGE>


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


5.   SUBSEQUENT EVENTS (CONTINUED)

On August 14, 2002, the partnership sold its inn located in Atlanta (Southlake),
Georgia (classified as property held for sale on the accompanying balance sheet)
for $2,950,000. The net proceeds from the sale of approximately $2.8 million
will be applied toward the partnership's mortgage debt, in accordance with the
terms of the loan agreement. The partnership will recognize a gain on the sale
of approximately $150,000.



















                                       10
<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 partnership's ability to continue as a going concern. The
partnership's inns have experienced a substantial decline in operating results
over the past several years. Since 1996, the partnership's annual revenues have
declined each year, from $97.4 million in 1996 to $83.9 million in 2001.
Further, operating profit has declined over the same periods from a $17.3
million operating profit in 1996 to a $496,000 operating profit in 2001. Through
the second quarter of 2002, rooms revenues, operating profits and net loss for
the period improved over the prior year comparable period. For the six months
ended June 30, 2002 as compared to the twenty-four weeks ended June 15, 2001
(the "year-to-date comparable periods"), rooms revenues increased $1.7 million
from $38.3 million to $40.0 million. Operating profits increased for the
year-to-date comparable periods from $1.7 million in 2001 to $6.0 million in
2002. For the year-to-date comparable periods, net loss decreased from $3.8
million in 2001 to $90,000 in 2002.

In addition, the partnership has faced increasing needs to make substantial
capital improvements to its inns to enable it to compete more effectively in the
markets and to satisfy standards for the Fairfield Inn brand, as required by the
franchise agreements. The partnership had approximately $3.3 million of
unrestricted cash as of June 30, 2002. In addition, the partnership had
approximately $7.6 million in its property improvement fund as of June 30, 2002.

Further to the slowdown in the hotel industry (due to softness in the economy),
the September 11th terrorist attacks have caused general travel in the United
States to significantly decline, thereby further exacerbating the partnership's
financial difficulties. The partnership had significant declines in occupancy
levels and RevPAR in the fourth quarter of 2001 as a result. While the
partnership is working with Sage to attempt to offset this trend, the
partnership expects results in 2002 to be below historical levels.

The partnership had $146.3 million of mortgage debt outstanding as of June 30,
2002. The annual principal and interest debt service requirements are
approximately $17 million. There can be no assurances that the partnership will
be able to sustain improved operations, or obtain the additional financing that
may be required to meet operating needs in the future, and make the necessary
property improvement plans ("PIPs") to avoid default under the partnership's
franchise agreements with Marriott International. The above factors raise
substantial doubt about the partnership's ability to continue as a going
concern. Accordingly, in connection with the audit of our December 31, 2001
financial statements, our auditors issued a going-concern modification to their
opinion discussing such matters.



                                       11
<PAGE>


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

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

As a result of the partnership's continued decline in operating results, which
are discussed above, the prior general partner, FIBM One LLC, developed a
restructuring plan for the partnership. In connection with this plan, the
consent of limited partners of the partnership was sought for the transfer of
FIBM One LLC's general partner interest in the partnership to the current
general partner. Effective August 16, 2001, following the receipt of the
necessary consent to the transfer of the general partner interest, FIBM One LLC,
transferred its general partner interest in the partnership to AP-Fairfield GP,
LLC.

Also, as part of the restructuring plan, the partnership filed a Form S-1
Registration Statement, in which the partnership sought to offer its limited
partners the right to purchase $23 million in subordinated notes due in 2007
(the "Offering"). The proceeds of the Offering, if made, are expected to be used
for capital improvements at the Inns.

On November 30, 2001, the second phase of the Restructuring Plan was implemented
as the partnership (i) replaced Fairfield FMC Corporation as the property
manager at the partnership's properties with Sage, (ii) entered into new
Franchise Agreements with Marriott International, (iii) entered into Ground
Lease modifications which provide for substantially reduced rent for the year
2002, and an extension of the term to November 30, 2098, and (iv) agreed to
complete the PIPs required by Marriott International at the properties by no
later than November 30, 2003.

Partnership cash, including $2.6 million held in lender reserve accounts,
totaled $5.9 million at June 30, 2002. Along with forecasted operating cash
flow, partnership cash, and reserves held by the lender, at present the
partnership anticipates that it will be able to meet debt service for the
remainder of 2002. However, this will require maintaining a debt service reserve
at levels below lender requirements.

Principal Sources and Uses of Cash: The partnership's principal source of cash
has been cash 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 increased to $3,317,000 compared to
$1,597,000 at December 31, 2001. The improvement from year end is due to
$7,248,000 of cash provided by operating activities, which was partially offset
by $2,995,000 of cash used in investing activities and $2,533,000 of cash used
in financing activities. Cash used in investing activities consisted of the
contributions to the property improvement fund and capital improvements and
equipment purchases. Cash used in financing activities consisted of principal
payments on the partnership's mortgage loan and changes to the restricted cash
reserves as required under the terms of the mortgage debt.

Sales of Properties. On July 29, 2002, the partnership sold its inn located in
Montgomery, Alabama (classified as property held for sale on the accompanying
balance sheet) for $3,125,000. The net proceeds from the sale of approximately
$2.9 million will be applied toward the partnership's mortgage debt, in
accordance with the terms of the loan agreement. The partnership will recognize
a gain on the sale of approximately $2 million.

On August 12, 2002, the partnership sold its inn located in Charlotte (Airport),
North Carolina (classified as property held for sale on the accompanying balance
sheet) for $2,450,000. The net proceeds from the sale of approximately $341,000,
which is net of approximately $1.9 million attributed to the ground lease
buyout, will be applied toward the partnership's mortgage debt, in accordance
with the terms of the loan agreement. The partnership will recognize a gain on
the sale of approximately $180,000.

On August 14, 2002, the partnership sold its inn located in Atlanta (Southlake),
Georgia (classified as property held for sale on the accompanying balance sheet)
for $2,950,000. The net proceeds from the sale of approximately $2.8 million
will be applied toward the partnership's mortgage debt, in accordance with the
terms of the loan agreement. The partnership will recognize a gain on the sale
of approximately $150,000.




                                       12
<PAGE>


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

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

In addition, the partnership currently has under contract for sale its Lansing,
Illinois and Columbus, Ohio inns which are expected to close, if at all, during
the fourth quarter of 2002. Further, the partnership is marketing its inns
located in Charlotte (Northeast), North Carolina, Orlando (South), Florida and
Raleigh, North Carolina. There can be no assurance that any of these inns will
ultimately be sold.

Shortfall in Funds Available for Capital Expenditures: In light of the age of
the partnership's inns, which range from 12 to 15 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 18 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 2001. 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 $2.9 million
and $2.7 million through the second quarters of 2002 and 2001, respectively, to
the property improvement fund.

Based upon information provided by Sage, the estimated property improvement fund
shortfall is expected to be $1.8 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.

The partnership recently received a private complaint with respect to its
Birmingham, Alabama property that it was not ADA compliant. The partnership is
currently negotiating with the complainant to determine the scope of work
required to make the property ADA compliant. It is believed that the cost of
such work will not exceed $100,000.

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 not be operated
"Fairfield Inn by Marriott". If this were to occur, 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 manager, it could
significantly impair its revenues and cash flow, and result in a default under
its loan agreement.


RESULTS OF OPERATIONS

Beginning January 1, 2002, the partnership changed its interim reporting periods
to reflect calendar quarters, rather than twelve-week periods as previously
reported. Therefore, year to date 2002 reflects 181 revenue days compared to 166
revenue days for the comparable period of 2001. On a prorated basis for revenue
days, rooms revenues have slightly decreased, operating expenses have declined
and operating profits are favorable compared to the prior quarter and prior
year.

Rooms Revenues. Rooms revenues increased $1.7 million, or approximately 8.4% to
$22.3 million for the second quarter of 2002 from $20.5 million for the second
twelve week period in 2001. For the year-to-date comparable periods, rooms
revenues increased $1.7 million, or approximately 4.4%, to $40.0 million in 2002
from $38.3 million in 2001, reflecting a $0.34 increase in the average room rate
to $54.58. However, occupancy rates declined from the prior year. Year to date,
occupancy declined 3.3 percentage points to 60.1% for 2002. These changes in
occupancy and room rates caused a decrease in revenue per available room of 4.6%
to $32.79. The decrease in average occupancy was


                                       13
<PAGE>


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

RESULTS OF OPERATIONS (CONTINUED)

primarily the result of increased competition in the economy segment and
exacerbated by the continued effect of the September 11th terrorist attacks,
which hurt the hospitality industry in general, and the deferral of capital
improvements needed to make the inns more competitive in their marketplaces
because of the lack of funds. The increase in rooms revenues is not proportional
to the decreases in occupancy and revenue per available room rate due to the
change in interim reporting periods.

Total Revenues. Total revenues increased $3.0 million, or 14%, to $23.9 million
for the second quarter of 2002 from $20.9 million for the second twelve week
period in 2001. Total revenues increased $2.3 million, or approximately 6%, to
$42.0 million for the six months ended June 30, 2002 from $39.7 million for the
twenty-four weeks ended June 15, 2001. The increase for both comparable periods
is partially due to the increase in rooms revenues described above.
Additionally, the increase is due to the final settlement of outstanding
accruals maintained by the Partnership's former manager, Marriott International
("MI"). The partnership received approximately $700,000 from MI in April 2002.
As a result of the settlement, the Partnership recognized non-recurring revenues
of approximately $1.4 million. These increases are partially offset by other
revenues of $656,000 that was recognized in the first quarter of 2001. The other
revenues in 2001 represent a reimbursement of funds previously paid by the
partnership to On Command Video to provide for television equipment maintenance.
The television program provider determined that the equipment maintenance was no
longer necessary and the funds were subsequently reimbursed to the partnership
during the first quarter of 2001.

Operating Expenses. Operating expenses declined during the second quarter of
2002 by $637,000 or 3.2% to $19.0 million when compared to the second twelve
week period in 2001. For the six months ended June 30, 2002, operating expenses
decreased by $2.1 million or 5.5% to $35.9 when compared to the twenty-four week
period ended June 15, 2001. The decline is partially due to a decrease in ground
rent of $1.3 million due to the concessions provided by Marriott International
for fiscal year 2002. Additionally, incentive management fees are no longer owed
by the partnership due to the termination of the management agreement with
Fairfield FMC Corporation in 2001. These fees totaled $1.1 million for the
twenty-four weeks ended June 15, 2001. Under the management agreement with Sage,
the partnership must attain certain levels of net operating income before
incentive management fees are owed. The partnership has not yet attained these
levels of performance.

Operating Profit. Operating profit for the second quarter of 2002 increased by
approximately $3.6 million to $4.9 million when compared to the second twelve
week period in 2001. For the year-to-date comparable periods, operating profit
increased by $4.4 million to $6.0 million. The increase in operating profit is
due to the increase in revenues and decline in operating expenses discussed
above.

Interest Expense. Interest expense increased $148,000 to approximately $3.1
million in second quarter 2002 when compared to the second twelve week period in
2002. For the year-to-date comparable periods, interest expense increased by
$339,000 to $6.2 million. This increase is due to the change in interim
reporting periods, which results in 181 days of interest for the six months
ended June 30, 2002 compared to 166 days of interest for the twenty-four weeks
ended June 15, 2001.

Net income (loss). The Partnership generated net income of approximately $1.9
million in the second quarter of 2002 as compared to a net loss of $1.4 million
in the second quarter of 2001. For the year-to-date comparable periods, net loss
decreased $3.7 million to $90,000. This decrease is due primarily to the
increase in revenues and decrease in operating expenses discussed above.

Seasonality The partnership's hotels have historically experienced seasonal
variations typical of the hotel industry with higher revenues in the second and
third quarters of the calendar years compared with the first and fourth
quarters. Seasonality may effect our hotel operating revenue but we do not
expect seasonal variations to have a material impact upon our financial results
of operations.



                                       14
<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 June 30, 2002 and December 31, 2001, the
partnership had $105.8 million and $110.0 million of property and equipment
(net), and $5.7 million and $5.7 million of properties held for sale, accounting
for approximately 87% and 89%, 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, 2001, 2000, and 1999, the Partnership
recognized $3.8 million, $8.1 million, and $2.8 million, respectively, of
impairment losses related to its property and equipment. 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. 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: Ground rent payable to Marriott International and its
affiliates at June 30, 2002 and December 31, 2001 was $2,191,000 and $2,204,000,
respectively, and is included in Due to Marriott International, Inc., affiliates
and other on the accompanying condensed balance sheet. The partnership's
deferred ground rent 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.


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 June 30, 2002, all of our debt has a
fixed interest rate.



                                       15
<PAGE>


                           PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

The partnership recently received a private complaint with respect to its
Birmingham, Alabama property that it was not ADA compliant. The partnership is
currently negotiating with the complainant to determine the scope of work
required to make the property ADA compliant. It is believed that the cost of
such work will not exceed $100,000.

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. EXHIBIT AND REPORTS ON FORM 8-K

       a)     Exhibits:

              99.1  Certification Pursuant to Section 906 of the Sarbanes-Oxley
                    Act of 2002.

       b)     Reports on Form 8-K:

              A Form 8-K with respect to the dismissal of Arthur Andersen, LLP
              as the partnership's independent auditors (Item 4) on May 17, 2002
              was filed with the Securities and Exchange Commission during the
              three months ended June 30, 2002.














                                       16
<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 August, 2002.


                           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















                                       17
<PAGE>


                                  Exhibit Index


         Exhibit                                                       Page No.
         -------                                                       --------

99.1     Certification Pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002.                                       19

























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