SECURITIES AND EXCHANGE COMMISSION
                                    Washington, D.C. 20549

                                            FORM 10-Q

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

                            FOR THE QUARTER ENDED SEPTEMBER 11, 1998

                                               OR

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


                                 Commission File No. 0-24463

                        MARRIOTT DIVERSIFIED AMERICAN HOTELS, L.P.
                        ------------------------------------------
                  (Exact name of registrant as specified in its charter)

     Delaware                                      52-1646207               
 -------------------------          ----------------------------------- 
(State of Organization)             (I.R.S. Employer Identification Number)

  10400 Fernwood Road, Bethesda,   MD                20817-1109
--------------------------------------      -----------------------------------
(Address of  principal  executive offices)           (Zip Code)

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

         Securities registered pursuant to Section 12(b) of the Act:
                                   Not Applicable

     Securities  registered  pursuant to Section 12(g) of  the Act:

                   Units of Limited Partnership Interest
                   -------------------------------------
                             (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes No . (Not  Applicable) The  Partnership  became subject to
Section 13 reporting on August 11, 1998.

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


<PAGE>


===============================================================================
                  MARRIOTT DIVERSIFIED AMERICAN HOTELS, L.P.
===============================================================================


                                TABLE OF CONTENTS

                                                                     PAGE NO.
                          PART I - FINANCIAL INFORMATION


Item 1. Financial Statements

        Condensed Consolidated Statement of Operations
         Twelve and Thirty-Six Weeks Ended September 11, 1998 (Unaudited)
         and September 12, 1997 (Unaudited).................... ............ 1

        Condensed Consolidated Balance Sheet
         September 11, 1998 (Unaudited) and December 31, 1997............... 2

        Condensed Consolidated Statement of Cash Flows
         Thirty-Six Weeks Ended September 11, 1998 (Unaudited)
           and September 12, 1997 (Unaudited)..............................  3

        Notes to Condensed Consolidated Financial Statements (Unaudited)...  4

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


                            PART II - OTHER INFORMATION


Item 1. Legal Proceedings...................................................13

Item 6. Exhibits and Reports on Form 8-K....................................13




<PAGE>




                           PART I. FINANCIAL INFORMATION

                            ITEM 1. FINANCIAL STATEMENTS

                     MARRIOTT DIVERSIFIED AMERICAN HOTELS, L.P.
                   CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                    (Unaudited)
                        (in thousands, except per Unit amounts)


<TABLE>


                                                   Twelve Weeks Ended                 Thirty-Six Weeks Ended
                                                       September 1l,   September 12,      September 11,     September 12,
                                                           1998             1997                1998              1997
                                                     ----------------  ---------------    ----------------  ---------------
<S>                                                  <C>               <C>                <C>               <C>  
REVENUES (Note 4)....................................$          5,830  $         5,950    $         20,351  $        18,454
                                                     ----------------  ---------------    ----------------  ---------------

OPERATING COSTS AND EXPENSES
     Depreciation and amortization...................           1,360            1,919               4,139            4,300
     Base management fees............................             531              514               1,675            1,556
     Property taxes and other........................             610              484               1,983            1,697
                                                     ----------------  ---------------    ----------------  ---------------

                                                                2,501            2,917               7,797            7,553
                                                     ----------------  ---------------    ----------------  ---------------

OPERATING PROFIT.....................................           3,329            3,033              12,554           10,901
     Interest expense................................          (1,891)          (2,066)             (6,030)          (6,241)
     Interest income.................................             147              189                 457              280
                                                     ----------------  ---------------    ----------------  ---------------

NET INCOME     ......................................$          1,585          $  1,156         $    6,981          $  4,940
                                                             ========           ========         ==========          ========

ALLOCATION OF NET INCOME
     General Partner.................................$             16  $            12    $             70  $            49
     Limited Partners................................           1,569            1,144               6,911            4,891
                                                     ----------------  ---------------    ----------------  ---------------
                                                     $          1,585  $         1,156    $          6,981  $         4,940
                                                     ================  ===============    ================  ===============

NET INCOME PER LIMITED PARTNER UNIT
     (414 Units).....................................$          3,790  $         2,763    $         16,693  $        11,814
                                                     =================  ===============   ================  ===============












            See Notes To Condensed Consolidated Financial Statements.

</TABLE>


<PAGE>


                   MARRIOTT DIVERSIFIED AMERICAN HOTELS, L.P.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 (in thousands)
<TABLE>
   



                                                                                          September 11,       December 31,
                                                                                              1998                1997
                                                                                         ---------------    ---------------
                                                                                           (unaudited)
     <S>                                                                                <C>                 <C>     
                                     ASSETS

     Property and equipment, net........................................................$        105,567    $       108,153
     Mortgage escrow....................................................................           9,167             11,624
     Due from Marriott Hotel Services, Inc..............................................           4,097              3,714
     Debt service reserve fund..........................................................           3,000              3,000
     Other assets.......................................................................           2,442              2,203
     Cash and cash equivalents..........................................................           1,414              1,137
                                                                                        ----------------    ---------------

                                                                                        $        125,687    $       129,831
                                                                                        ================    ===============


                        LIABILITIES AND PARTNERS' DEFICIT

LIABILITIES
     Mortgage debt......................................................................$        109,962    $       122,014
     Debt service guarantee and related interest payable to
       Host Marriott Corporation........................................................          20,577             19,762
     Note payable and related interest due to the General Partner.......................           2,936              2,804
     Deferred purchase debt and related interest payable to
       Host Marriott Corporation........................................................             720                676
     Accounts payable and accrued expenses..............................................             990              1,054
                                                                                        ----------------    ---------------

         Total Liabilities..............................................................         135,185            146,310
                                                                                        ----------------    ---------------

PARTNERS' DEFICIT
     General Partner....................................................................             (44)              (114)
     Limited Partners...................................................................          (9,454)           (16,365)
                                                                                        ----------------    ---------------

         Total Partners' Deficit........................................................          (9,498)           (16,479)
                                                                                        ----------------    ---------------

                                                                                        $        125,687    $       129,831
                                                                                        ================    ===============







            See Notes To Condensed Consolidated Financial Statements.
</TABLE>


<PAGE>


                   MARRIOTT DIVERSIFIED AMERICAN HOTELS, L.P.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)

<TABLE>


                                                                                               Thirty-Six Weeks Ended
                                                                                          September 11,       September 12,
                                                                                              1998                1997
                                                                                        ----------------    ---------------
<S>                                                                                     <C>                 <C>                     
OPERATING ACTIVITIES
   Net income ..........................................................................$          6,981    $         4,940
   Noncash items........................................................................           5,292              5,417
   Change in operating accounts.........................................................            (897)              (114)
                                                                                        ----------------    ---------------

       Cash provided by operating activities............................................          11,376             10,243
                                                                                        ----------------    ---------------

INVESTING ACTIVITIES
   Additions to property and equipment, net.............................................          (1,522)            (2,675)
   Change in property improvement fund..................................................            (432)               546
   Return of working capital from Marriott Hotel Services, Inc..........................             450                 --
                                                                                        ----------------    ---------------

       Cash used in investing activities................................................          (1,504)            (2,129)
                                                                                        ----------------    ---------------

FINANCING ACTIVITIES
   Repayment of mortgage debt...........................................................         (12,052)            (6,423)
   Capital distributions to partners....................................................              --             (1,382)
   Change in mortgage escrow............................................................           2,457             (1,673)
                                                                                        ----------------    ---------------

       Cash used in financing activities................................................          (9,595)            (9,478)
                                                                                        ----------------    ---------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................................             277             (1,364)

CASH AND CASH EQUIVALENTS at beginning of period........................................           1,137              2,762
                                                                                        ----------------    ---------------

CASH AND CASH EQUIVALENTS at end of period..............................................$          1,414    $         1,398
                                                                                        ================    ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid for mortgage interest......................................................$          4,596    $         5,212
                                                                                        ================    ===============











            See Notes To Condensed Consolidated Financial Statements.

</TABLE>

<PAGE>


                   MARRIOTT DIVERSIFIED AMERICAN HOTELS, L.P.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

1.    The accompanying  condensed  consolidated  financial  statements have been
      prepared by Marriott Diversified American Hotels, L.P. (the "Partnership")
      without  audit.  Certain  information  and footnote  disclosures  normally
      included in financial  statements  presented in accordance  with generally
      accepted  accounting  principles  have been  condensed or omitted from the
      accompanying statements. The Partnership believes the disclosures made are
      adequate to make the information  presented not misleading.  However,  the
      condensed  consolidated financial statements should be read in conjunction
      with the Partnership's  financial statements and notes thereto included in
      the  Partnership's  annual  report for the fiscal year ended  December 31,
      1997.

      In the opinion of the Partnership, the accompanying condensed consolidated
      financial  statements  reflect all adjustments  (which include only normal
      recurring  adjustments) necessary to present fairly the financial position
      of the Partnership as of September 11, 1998, the results of operations for
      the twelve and thirty-six weeks ended September 11, 1998 and September 12,
      1997 and the cash flows for the thirty-six  weeks ended September 11, 1998
      and September 12, 1997. Interim results are not necessarily  indicative of
      fiscal year performance because of seasonal and short-term variations.

      For  financial  reporting  purposes,  net  income  of the  Partnership  is
      allocated  99% to the  Limited  Partners  and 1% to the  General  Partner.
      Significant  differences  exist  between  the  net  income  for  financial
      reporting  purposes  and the net income  reported  for Federal  income tax
      purposes.  These  differences are due primarily to the use, for income tax
      purposes,  of  accelerated  depreciation  methods and shorter  depreciable
      lives of the  assets  and  differences  in the  timing of  recognition  of
      incentive management fee expense.

2.    The  Partnership  owns and operates the Marriott  Research  Triangle Park,
      Southfield  Marriott,  Detroit  Marriott at Livonia,  Fullerton  Marriott,
      Fairview Park Marriott and Dayton  Marriott.  The sole general  partner of
      the Partnership, with a 1% interest, is Marriott MDAH One Corporation (the
      "General Partner"), a wholly-owned subsidiary of Host Marriott Corporation
      ("Host Marriott").  The remaining 99% interest in the Partnership is owned
      by the limited partners.

3.    Certain   reclassifications   were  made  to  the  prior  year   condensed
      consolidated financial statements to conform to the 1998 presentation.

4.    The Partnership's depreciation expense for the third quarter 1997 included
      a correction of an error of  approximately  $500,000 which occurred in the
      second quarter 1997.  Without the impact of this adjustment,  depreciation
      expense  would have been  approximately  $1.4 million for the twelve weeks
      ended September 12, 1997.

5.    Revenues  represent  house  profit of the  Partnership's  Hotels since the
      Partnership  has delegated  substantially  all of the operating  decisions
      related to the  generation of house profit of the Hotels to Marriott Hotel
      Services,  Inc. (the  "Manager").  House profit  reflects hotel  operating
      results which flow to the  Partnership  as property  owner and  represents
      gross hotel sales less property-level expenses, excluding depreciation and
      amortization,  base and incentive  management fees, property taxes, ground
      rent,  insurance and other costs,  which are  disclosed  separately in the
      condensed consolidated statement of operations.

      On November  20,  1997,  the  Emerging  Issues Task Force  ("EITF") of the
      Financial  Accounting  Standards  Board  reached a consensus  on EITF 97-2
      "Application  of FASB Statement No. 94 and APB Opinion No. 16 to Physician
      Practice  Management  Entities and Certain Other Entities with Contractual
      Management Arrangements." EITF 97-2 addresses the circumstances in which a
      management  entity may  include  the  revenues  and  expenses of a managed
      entity in its financial statements.

      The  Partnership has considered the impact of EITF 97-2 and concluded that
      it should be applied to its  Hotels.  Accordingly,  upon  adoption,  Hotel
      sales and  property-level  expenses  will be reflected on the statement of
      operations.  This change in  accounting  principle  will be adopted in the
      financial  statements  during the fourth quarter of 1998 as of and for the
      year ended December 31, 1998 with  retroactive  effect in prior periods to
      conform to the new  presentation.  Application  of EITF 97-2 will increase
      both revenues and operating  expenses by  approximately  $11.9 million and
      $11.2 million for the twelve weeks ended  September 11, 1998 and September
      12,  1997,  respectively,  and $35.5  million  and $33.4  million  for the
      thirty-six  weeks ended  September  11,  1998,  and  September  12,  1997,
      respectively, and will have no impact on operating profit or net income.


<PAGE>
      Revenues consist of the following hotel operating results (in thousands):
<TABLE>
      
                                                             Twelve Weeks Ended                 Thirty-Six Weeks Ended
                                                     September 11,     September 12,      September 11,      September 12,
                                                          1998             1997                1998              1997
                                                     --------------    ---------------   -----------------  ---------------
      <S>                                            <C>               <C>                <C>               <C>                  
      HOTEL SALES
         Rooms.......................................$         12,086  $        11,465    $         37,179  $        34,175
         Food and beverage...........................           4,667            4,676              15,721           14,892
         Other.......................................             942              988               2,923            2,807
                                                     ----------------  ---------------    ----------------  ---------------
                                                               17,695           17,129              55,823           51,874
                                                     ----------------  ---------------    ----------------  ---------------
      HOTEL EXPENSES
         Departmental direct costs
           Rooms.....................................           3,023            2,819               9,018            8,392
           Food and beverage.........................           4,007            3,826              12,430           11,764
           Other.....................................           4,835            4,534              14,024           13,264
                                                     ----------------  ---------------    ----------------  ---------------
                                                               11,865           11,179              35,472           33,420
                                                     ----------------  ---------------    ----------------  ---------------

      REVENUES.......................................$          5,830  $         5,950    $         20,351  $        18,454
                                                     ================  ===============    ================  ===============
</TABLE>

6.   Host Marriott  Corporation  ("Host  Marriott"),  the parent company of the 
     General Partner of the  Partnership,  has adopted a plan to  restructure  
     its business  operations  so that it will qualify as a real estate  
     investment  trust("REIT").  As part of this restructuring  (the "REIT 
     Conversion"),  Host Marriott and its consolidated  subsidiaries will
     Contribute their full-service  hotel properties and certain other 
     businesses and assets to Host Marriott,  L.P., a Delaware limited 
     partnership (the "Operating  Partnership"),  in exchange for units of 
     limited partnership interest in the Operating  Partnership ("OP Units")
     and the assumption of liabilities.  As part of the REIT  Conversion,  Host
     Marriott  proposes to merge into HMC Merger  Corporation  (to be renamed 
     "Host  Marriott  Corporation"),  a Maryland corporation ("Host REIT"), 
     and thereafter  continue and expand its full-service hotel ownership  
     business.  Host REIT expects to qualify as a REIT  beginning  with its 
     first full taxable year  commencing  after the REIT  Conversion  is
     completed,  which Host Marriott  currently  expects to be the year
     beginning  January 1, 1999 (but which might not be until the year 
     beginning January 1, 2000).  Host REIT will be the sole general partner of 
     the Operating Partnership.

      The Operating Partnership is proposing to acquire by merger (the "Merger")
      the  Partnership.  The Limited Partners in the Partnership have been given
      an  opportunity  to  receive,  on a  tax-deferred  basis,  OP Units in the
      Operating  Partnership in exchange for their current  limited  partnership
      interests.  At any time prior to 5:00 p.m.  on the  fifteenth  trading day
      following the effective date of the Merger, the Limited Partners can elect
      to exchange the OP Units received in connection with the Merger for either
      common stock of Host REIT or a 6.56%  callable  note due December 15, 2005
      of the Operating  Partnership.  Exercise of either the election to receive
      common stock or a note would be a taxable transaction.

      Beginning one year after the Merger,  Limited Partners who retain OP Units
      may  exchange  such OP Units for Host REIT common  stock on a  one-for-one
      basis (or their cash equivalent, as determined by Host REIT).

      On June 2, 1998, the Operating Partnership filed a Registration  Statement
      on Form S-4 with the Securities and Exchange Commission.  In October 1998,
      the Prospectus/Consent Solicitation Statement, which formed a part of such
      Registration Statement,  was mailed to the Limited Partners who have until
      December 12, 1998 to vote on this Merger, unless extended.


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

FORWARD-LOOKING STATEMENTS

Certain matters discussed in this Form 10-Q include  forward-looking  statements
including,  without  limitation,  statements related to the proposed real estate
investment trust ("REIT") conversion,  the terms,  structure and timing thereof,
and the  expected  effects of the  proposed  REIT  conversion  and  business and
operating strategies in the future. All forward-looking statements involve known
and unknown  risks,  uncertainties  and other factors which may cause the 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.   Certain  of  the  transactions
described  herein are  subject to certain  consents  of  shareholders,  lenders,
debtholders  and partners of Host Marriott and its affiliates and of other third
parties and various other  conditions  and  contingencies,  and future  results,
performance and achievements will be affected by general economic,  business and
financing  conditions,   competition  and  government  actions.  The  cautionary
statements set forth in reports filed under the Securities Act of 1934 contained
important factors with respect to such  forward-looking  statements,  including:
(i) national and local economic and business  conditions that will,  among other
things,  affect demand for hotels and other  properties,  the level of rates and
occupancy that can be achieved by such properties and the availability and terms
of  financing;  (ii) the ability to maintain  the  properties  in a  first-class
manner;  (iii) the  ability to compete  effectively;  (iv) the ability to obtain
required  consents of shareholders,  lenders,  debtholders,  partners and ground
lessors in connection with Host Marriott's  proposed conversion to a REIT and to
consummate all of the transactions constituting the REIT conversion; (v) changes
in  travel  patterns,  taxes  and  government  regulations;   (vi)  governmental
approvals, actions and initiatives; (vii) the effects of tax legislative action;
and (viii) the timing of Host Marriott's  election to be taxed as a REIT and the
ability to satisfy  complex rules in order to qualify for taxation as a REIT for
federal income tax purposes and to operate  effectively  within the  limitations
imposed by these rules.  Although  the  Partnership  believes  the  expectations
reflected  in  such   forward-looking   statements  are  based  upon  reasonable
assumptions,  it can give no assurance that its expectations will be attained or
that  any  deviations  will  not be  material.  The  Partnership  undertakes  no
obligation   to  publicly   release  the  result  of  any   revisions  to  these
forward-looking  statements  that may be made to reflect  any  future  events or
circumstances.


<PAGE>


RESULTS OF OPERATIONS

The following chart  summarizes  REVPAR and the percentage  change in REVPAR for
each Partnership Hotel:
<TABLE>

                                    Twelve-Weeks Ended                               Thirty-Six Weeks Ended
                       September 11,     September 12,    % Increase     September 11,     September 12,
                           1998              1997         (Decrease)          1998             1997          % Increase
                      --------------    -------------     -----------    -------------    --------------    -----------
<S>                   <C>               <C>               <C>            <C>              <C>      
Fairview Park         $      94         $      88             7%         $      97        $      90              8%
Livonia                      94                83            13%                93               83             12%
Research Triangle            86                81             6%                91               83             10%
Southfield                   93                80            16%                90               78             15%
Dayton                       82                83           (1)%                83               79              5%
Fullerton                    58                62           (6)%                66               63              5%
                    
Combined Average      $      85         $      80             6%         $      87        $      80              9%
                      ==============    =============     ===========    =============    ==============    =======
</TABLE>

Hotel  Revenues:  Hotel  revenues  decreased  2% to $5.8  million  for the third
quarter of 1998 and increased 10% to $20.4  million for the  year-to-date  1998,
when  compared  to the same  periods in 1997.  Although  total  sales  increased
$566,000,  or 3%,  for  the  quarter,  revenues  decreased  primarily  due to an
increase in direct  rooms and food and beverage  costs.  These  increased  costs
resulted in a slight decrease in rooms profit margins.  Food and beverage profit
margins  decreased  from 18% in the  third  quarter  of 1997 to 14% in the third
quarter of 1998 primarily due to increased food and labor costs. The increase in
year-to-date  revenue  is  primarily  due to  increases  in REVPAR  and food and
beverage  sales.   REVPAR,  or  revenue  per  available  room,   represents  the
combination  of the  average  daily  room rate  charged  and the  average  daily
occupancy  achieved  and is a  commonly  used  indicator  of  hotel  performance
(although it is not a GAAP, or generally accepted accounting principles, measure
of revenue).  For the  thirty-six  weeks ended  September 11, 1998, the combined
average room rate increased 11% to $114,  while the combined  average  occupancy
decreased one percentage point to 77%, when compared to the same period in 1997.
This resulted in a 9%, or $7 increase in REVPAR to $87. For the thirty-six weeks
ended September 11, 1998, room profit margins increased slightly to 76% and food
and beverage profit margins remained stable at 21%.

Operating Costs and Expenses: Operating costs and expenses decreased 14% to $2.5
million and  increased  3% to $7.8 million for the twelve and  thirty-six  weeks
ended  September  11, 1998,  respectively,  when compared to the same periods of
1997. The principal components of this category are:

         Depreciation   and   Amortization:   As   discussed   in  Note  4,  the
         Partnership's  depreciation expense for the third quarter 1997 included
         a correction of an error of  approximately  $500,000  which occurred in
         the  second  quarter  1997.  Without  the  impact  of this  adjustment,
         depreciation expense would have been approximately $1.4 million for the
         twelve weeks ended September 12, 1997.  Depreciation  and  amortization
         decreased  approximately  $73,000, or 5%, for the third quarter 1998 as
         compared to the same  quarter of 1997,  after  adjusting  for the error
         discussed  in  Note  4.  On  a  year-to-date  basis,  depreciation  and
         amortization  decreased  approximately  $161,000, or 4%, as compared to
         1997.  The decrease in  depreciation  is due to furniture and equipment
         that has become fully depreciated.

         Management Fees: Base management fees are calculated as a percentage of
         Hotel sales. The increase in this expense for the twelve and thirty-six
         weeks ended September 11, 1998 was directly  related to the increase in
         Hotel sales.

         Property  Taxes and Other:  Property tax expense  increased by 125% and
         21% for the twelve and thirty-six weeks ended September 11, 1998 due to
         real estate tax refunds  received in the third  quarter of 1997,  which
         reduced that year's  expense.  These refunds were not received in 1998.
         The  increase in property  taxes was  partially  offset by decreases in
         other expenses.

Operating  Profit:  Operating profit increased 10% to $3.3 million for the third
quarter of 1998,  when compared to the same period in 1997.  However,  operating
profit decreased  approximately  $190,000,  or 5%, for the third quarter 1998 as
compared to third quarter 1997 after  adjusting  for the  correction of an error
discussed in Note 4 of the condensed  consolidated  financial  statements.  On a
year-to-date basis,  operating profit increased 15% to $12.6 million as compared
to the same period in 1997.  The increase in  year-to-date  operating  profit is
attributable  to the  increase in  revenues  which was  partially  offset by the
increase in operating costs and expenses.

Interest  Expense:  Interest expense  decreased 8% to $1.9 million for the third
quarter 1998 and 3% to $6.0 million for the thirty-six weeks ended September 11,
1998, when compared to the same periods in 1997 due to principal amortization of
the mortgage debt. The weighted  average  interest rate on the mortgage debt was
6.5% for the thirty-six  weeks ended September 11, 1998, as compared to 6.4% for
the comparable period in 1997.

Net Income:  Net income increased 37% to $1.6 million for the third quarter 1998
and 41% to $7.0 million for the thirty-six  weeks ended September 11, 1998, when
compared to the same periods in 1997  primarily due to improved  operations  and
the decrease in interest expense, as discussed above.

Individual hotel operating results are discussed below:

Revenues for the Fairview Park Hotel decreased  $136,000,  to $1.7 million,  for
the third quarter 1998,  primarily due to lower food and beverage profit margins
and increases in other hotel  operating  costs when compared to the same quarter
of 1997. Revenues for the year-to-date 1998 increased $356,000, to $6.4 million,
when  compared to the prior year,  primarily  due to an 8% increase in REVPAR to
approximately  $97. This increase was primarily due to a 13% increase in average
room rate to  approximately  $130  which was  offset by a 2.9  percentage  point
decrease in average  occupancy to 75%. The increase in the average room rate for
the third  quarter 1998 was  primarily  due to increases in the  corporate  rate
while occupancy has decreased because of a softening in transient demand.

REVPAR for the Livonia  Hotel  increased  13% for the third quarter 1998 and 12%
year-to-date to approximately  $94 and $93,  respectively,  when compared to the
same periods in 1997. The increase in REVPAR was primarily due to an increase in
the average room rate of 7% to approximately $117 for the third quarter 1998 and
9% year-to-date to approximately  $116. The increase in room rates was primarily
due to corporate  rate  increases  and  improvement  in the mix of corporate and
premium rated rooms. In addition,  average  occupancy was  approximately 80% for
the  third  quarter  1998  and for  year-to-date  1998.  This  represents  a 4.1
percentage  point increase for the quarter and a 2.2  percentage  point increase
year-to-date  as compared to the comparable  periods in 1997. As a result of the
increases in REVPAR, Hotel revenues increased $48,000 for the third quarter 1998
and $271,000 year-to-date 1998 representing a 7% and 13% increase, respectively,
when compared to the same periods in 1997.

Revenues from the Research Triangle Park Hotel increased 11% to $739,000 for the
third  quarter 1998 and 13% to $2.5 million  year-to-date  when  compared to the
same periods in 1997 due to increases in REVPAR.  REVPAR increased by 6% for the
third  quarter 1998 due  primarily to an increase in the average room rate of 6%
to $115.  Average  occupancy  for the  third  quarter  1998  remained  stable at
approximately  75% when compared to the third quarter of 1997. On a year-to-date
basis, REVPAR increased 10% to $91 primarily due to a 9% increase in the average
room rate to $118 while average occupancy  remained stable at approximately 77%.
An increase in corporate and premium  rates  accounted for most of the increases
in revenues.  

REVPAR at the Southfield Hotel increased 16% for the third quarter
1998 to approximately $93 when compared to the same period in 1997 due to an 11%
increase in the  average  room rate to  approximately  $113  coupled  with a 3.6
percentage  point  increase in average  occupancy  to 82%.  Year-to-date  REVPAR
increased 15% to approximately  $90 when compared to the same period in 1997 due
to an 11% increase in average room rate to $113,  combined with a 3.1 percentage
point  increase in average  occupancy  to 80%. The increase in average room rate
for both the third quarter and  year-to-date  1998 is primarily due to increases
in the corporate and premium  rates.  Additionally,  management  controlled  the
customer mix so that higher rated  business was not displaced as weekday  demand
is strong.  As a result of the  increases in REVPAR,  Hotel  revenues  increased
$52,000  for  the  third  quarter  1998  and  $363,000  for  year-to-date   1998
representing an increase of 8% and 19%, respectively,  when compared to the same
periods in 1997.

For the third quarter 1998,  revenues from the Dayton Hotel decreased 5% to $1.6
million  primarily due to a 1% decrease in REVPAR to approximately  $82 combined
with higher direct rooms and food and beverage  costs when compared to the third
quarter of 1997.  The decrease in REVPAR for the third  quarter 1998 is due to a
4.2  percentage  point  decrease  in  average  occupancy  to 81%  offset by a 4%
increase  in  average  room  rate to  $101.  1998  year-to-date  Hotel  revenues
increased  10% to $5.1  million  primarily  due to a 5%  increase  in  REVPAR to
approximately  $83 combined with improved food and beverage  profit margins when
compared to the same  period in 1997.  The  increase in REVPAR for  year-to-date
1998  is due to a 9%  increase  in  average  room  rate to  $105  offset  by a 3
percentage  point  decrease in average  occupancy  to 79%.  The increase in room
rates was  primarily due to increasing  the weekday  corporate  room rates and a
weekend rate increase.  The Dayton market is  experiencing a softening in demand
which has impacted  average  occupancy at the Hotel and management is evaluating
and targeting group business in order to build occupancy.

Revenues for the Fullerton  Hotel for the third quarter 1998  decreased  15%, or
$62,000,  due to a 6% decrease in REVPAR combined with lower profit margins when
compared to the third quarter of 1997.  Although the average room rate increased
13% to $93, average occupancy decreased by 13 percentage points to approximately
62%. Hotel revenues for the year-to-date 1998 increased 12%, or $177,000, due to
a 5%  increase in REVPAR  combined  with a 110%  increase  in food and  beverage
revenues of  $107,000  when  compared  to the same period in 1997.  Year-to-date
REVPAR increased when compared to the same period in 1997 primarily due to a 14%
increase in average room rate to $96 offset by a 6.4  percentage  point decrease
in average  occupancy  to 69%.  The increase in the average room rate was due to
corporate  rate  increases.  The decrease in occupancy  was primarily due to the
lack of citywide conventions because of the Anaheim Convention Center renovation
which is currently underway. The Convention Center renovation is scheduled to be
completed in the year 2000. During the renovation period,  hotel management will
be challenged to find ways to increase  occupancies  while  maintaining the rate
structure.

CAPITAL RESOURCES AND LIQUIDITY

The  Partnership's  financing needs have  historically  been funded through loan
agreements with independent financial institutions and Host Marriott Corporation
("Host  Marriott").  The General Partner believes that the Partnership will have
sufficient  capital  resources and liquidity to continue to conduct its business
in the ordinary course.

Principal Sources and Uses of Cash

The  Partnership's  principal source of cash is from  operations.  Its principal
uses of  cash  are to make  debt  service  payments  and to  fund  the  property
improvement fund.

Cash provided by operations  for the thirty-six  weeks ended  September 11, 1998
and September 12, 1997, was $11.4 million and $10.2 million,  respectively.  The
increase  in cash  provided  by  operations  is mainly due to an increase in net
income partially offset by changes in operating accounts. 

Cash used in investing activities was $1.5 million for the thirty-six  weeks 
ended  September 11, 1998, and $2.1 million for the thirty-six weeks ended 
September 12, 1997. Cash used in investing  activities  is mainly  comprised  of
capital  expenditures  primarily related to furniture,  fixtures,  and equipment
renewals and replacements at the Hotels.  During the thirty-six  weeks ended 
September 11, 1998 and September 12, 1997, capital expenditures totaled $1.5 
million and $2.7 million,  respectively. Contributions to the property  
improvement fund, including interest earned, were $1.9 million and $1.7 million
for the thirty-six  weeks ended September 11, 1998 and  September  12, 1997.  
It is  anticipated  that  shortfalls  in the property improvement  fund will 
occur in the  future.  The General  Partner  will work to resolve the expected
shortfall.

During the  thirty-six  weeks ended  September 11, 1998,  the Manager,  Marriott
Hotel Services, Inc. returned $450,000 of working capital to the Partnership.

Cash used in  financing  activities  was $9.6  million and $9.5  million for the
first three quarters of 1998 and 1997, respectively. During the first thirty-six
weeks of 1998 and 1997, the  Partnership  repaid $12.1 million and $6.4 million,
respectively,  of principal on the mortgage debt.  During the  thirty-six  weeks
ended September 11, 1998, the  Partnership  utilized a net $2.5 million from the
mortgage  escrow account while during the thirty-six  weeks ended  September 12,
1997, a net $1.7 million was placed in the mortgage escrow account. Also, during
the  thirty-six   weeks  ended   September  12,  1997,  the   Partnership   made
distributions  totaling $1.4 million to the Partners,  while for the  thirty-six
weeks ended September 11, 1998, no distributions were made.

YEAR 2000 ISSUE

The "Year 2000 Issue" has arisen  because many  existing  computer  programs and
chip-based  embedded technology systems use only the last two digits to refer to
a year,  and  therefore do not  properly  recognize a year that begins with "20"
instead of the familiar "19." If not corrected, many computer applications could
fail or create erroneous results.  The following disclosure provides information
regarding the current status of the Partnership's Year 2000 compliance program.

The Partnership  processes its records on computer hardware and software systems
maintained by Host Marriott Corporation ("Host Marriott"), the parent company of
the General Partner of the  Partnership.  Host Marriott has adopted a compliance
program  because it  recognizes  the  importance  of  minimizing  the number and
seriousness  of any  disruptions  that may  occur as a result  of the Year  2000
Issue.  Host  Marriott's  compliance  program  includes  an  assessment  of Host
Marriott's  hardware and software computer systems and embedded systems, as well
as an  assessment  of the Year 2000 issues  relating to third parties with which
the Partnership has a material relationship or whose systems are material to the
operations of the Partnership's  Hotels.  Host Marriott's efforts to ensure that
its  computer  systems are Year 2000  compliant  have been  segregated  into two
separate phases: in-house systems and third-party systems.

In-House  Systems.   Host  Marriott  has  invested  in  the  implementation  and
maintenance of accounting and reporting  systems and equipment that are intended
to  enable  the  Partnership  to  provide  adequately  for its  information  and
reporting  needs and which are also Year 2000  compliant.  Substantially  all of
Host  Marriott's  in-house  systems  have  already  been  certified as Year 2000
compliant through testing and other mechanisms and Host Marriott has not delayed
any systems projects due to the Year 2000 Issue. Host Marriott is in the process
of  engaging a third  party to review its Year 2000  in-house  compliance.  Host
Marriott  believes  that future costs  associated  with Year 2000 Issues for its
in-house  systems  will be  insignificant  and will  therefore  not  impact  the
Partnership's  business,  financial  condition and results of  operations.  Host
Marriott has not developed, and does not plan to develop, a separate contingency
plan  for its  in-house  systems  due to their  current  Year  2000  compliance.
However,  Host Marriott does have  detailed  contingency  plans for its in-house
systems  covering a variety of possible  events,  including  natural  disasters,
interruption of utility service and similar events.

Third-Party  Systems.  The  Partnership  relies upon  operational and accounting
systems  provided by third  parties,  primarily  the  Manager of its Hotels,  to
provide  the  appropriate   property-specific   operating   systems   (including
reservation,  phone, elevator,  security, HVAC and other systems) and to provide
it with financial information.  Based on discussions with the third parties that
are critical to the Partnership's business, including the Manager of its Hotels,
Host Marriott  believes that these parties are in the process of studying  their
systems and the systems of their respective  vendors and service  providers and,
in many cases,  have begun to  implement  changes,  to ensure that they are Year
2000 compliant.  To the extent these changes impact property-level  systems, the
Partnership may be required to fund capital  expenditures for upgraded equipment
and software. Host Marriott does not expect these charges to be material, but is
committed to making  these  investments  as  required.  To the extent that these
changes relate to the Manager's  centralized  systems  (including  reservations,
accounting,   purchasing,   inventory,   personnel  and  other   systems),   the
Partnership's  management  agreement  generally  provides  for these costs to be
charged to the Partnership's Hotels. Host Marriott expects that the Manager will
incur Year 2000 costs for its  centralized  systems in lieu of costs  related to
system  projects  that  otherwise  would have been  pursued and  therefore,  its
overall level of centralized charges allocated to the Hotels will not materially
increase as a result of the Year 2000 compliance effort.  Host Marriott believes
that this deferral of certain system projects will not have a material impact on
its future  results of  operations,  although it may delay certain  productivity
enhancements at the Partnership's Hotels. Host Marriott will continue to monitor
the efforts of these third  parties to become Year 2000  compliant and will take
appropriate steps to address any non-compliance issues. The Partnership believes
that in the event of material Year 2000 non-compliance caused by a breach of the
Manager's  duties,  the Partnership will have the right to seek recourse against
the Manager under its third party management agreement. The management agreement
generally  does  not  specifically  address  the  Year  2000  compliance  issue.
Therefore the amount of any recovery in the event of Year 2000 non-compliance at
a property, if any, is not determinable at this time.

Host  Marriott  will work  with the third  parties  to ensure  that  appropriate
contingency  plans will be developed to address the most reasonably likely worst
case  Year  2000  scenarios,  which  may not  have  been  identified  fully.  In
particular,  Host Marriott has had extensive discussions regarding the Year 2000
Issue  with  Marriott  International,  the  Manager  of the  Hotels.  Due to the
significance of Marriott International to the Partnership's business, a detailed
description of Marriott International's state of readiness follows.

Marriott  International  has  adopted an  eight-step  process  toward  Year 2000
readiness,  consisting of the following: (i) Awareness:  fostering understanding
of, and  commitment  to, the problem and its potential  risks;  (ii)  Inventory:
identifying and locating systems and technology components that may be affected;
(iii)  Assessment:  reviewing  these  components for Year 2000  compliance,  and
assessing the scope of Year 2000 issues;  (iv) Planning:  defining the technical
solutions and labor and work plans  necessary for each  particular  system;  (v)
Remediation/Replacement:  completing the  programming to renovate or replace the
problem software or hardware; (vi) Testing and Compliance Validation: conducting
testing,  followed by independent validation by a separate internal verification
team; (vii)  Implementation:  placing the corrected  systems and technology back
into the  business  environment;  and  (viii)  Quality  Assurance:  utilizing  a
dedicated  audit team to review and test  significant  projects for adherence to
quality standards and program methodology.

Marriott  International  has  grouped  its  systems  and  technology  into three
categories  for  purposes  of Year 2000  compliance:  (i)  information  resource
applications  and  technology  (IT  Applications)  --  enterprise-wide   systems
supported  by  Marriott   International's   centralized  information  technology
organization ("IR"); (ii) Business-initiated Systems ("BIS") - systems that have
been  initiated by an individual  business  unit,  and that are not supported by
Marriott  International's  IR organization;  and (iii) Building Systems - non-IT
equipment at properties  that use embedded  computer  chips,  such as elevators,
automated  room  key  systems  and HVAC  equipment.  Marriott  International  is
prioritizing its efforts based on how severe an effect  noncompliance would have
on customer service, core business processes or revenues,  and whether there are
viable, non-automated fallback procedures (System Criticality).

Marriott International measures the completion of each phase based on documented
and quantified results,  weighted for System  Criticality.  As of the end of the
1998 third  quarter,  the awareness  and  inventory  phases were complete for IT
Applications  and  nearly  complete  for  BIS  and  Building  Systems.   For  IT
Applications,  the Assessment,  Planning and Remediation/Replacement phases were
each over 80 percent  complete,  and Testing and Compliance  Validation had been
completed for a number of key systems,  with most of the  remaining  work in its
final stage. For BIS and Building  Systems,  Assessment and Planning were in the
mid- to upper-range of completion, with a substantial amount of work in process,
while the progress level for  Remediation/Replacement and Testing and Compliance
Validation had not yet been documented and quantified. Quality Assurance is also
in progress for IT  Applications  and is scheduled to begin for BIS and Business
Systems in the near future.  Marriott  International's  goal is to substantially
complete the  Remediation/Replacement and Testing phases for its System Critical
IT   Applications  by  the  end  of  1998,  with  1999  reserved  for  unplanned
contingencies and for Compliance  Validation and Quality  Assurance.  For System
Critical BIS and Building Systems,  the same level of completion is targeted for
June 1999 and September 1999, respectively.

Marriott  International has initiated Year 2000 compliance  communications  with
its significant third party suppliers,  vendors and business partners, including
its franchisees.  Marriott International is focusing its efforts on the business
interfaces most critical to its customer  service and revenues,  including those
third parties that support the most critical  enterprise-wide  IT  Applications,
franchisees  generating  the most  revenues,  suppliers  of the most widely used
Building  Systems and BIS, the top 100 suppliers,  by dollar  volume,  of non-IT
products,  and  financial  institutions  providing  the  most  critical  payment
processing functions.  Responses have been received from a majority of the firms
in this group.

Marriott  International  is also  establishing a common approach for testing and
addressing  Year  2000   compliance   issues  for  its  managed  and  franchised
properties.  This includes a guidance  protocol for operated  properties,  and a
Year 2000 "Toolkit" for  franchisees  containing  relevant Year 2000  compliance
information. Marriott International is also utilizing a Year 2000 best-practices
sharing system.

Risks.  There can be no assurance that Year 2000  remediation by the Partnership
or third  parties  will be properly and timely  completed,  and failure to do so
could have a material  adverse effect on the  Partnership,  its business and its
financial condition.  The Partnership cannot predict the actual effects to it of
the Year 2000  Issue,  which  depends  on  numerous  uncertainties  such as: (i)
whether  significant  third  parties  properly and timely  address the Year 2000
Issue;  and (ii) whether  broad-based or systemic  economic  failures may occur.
Host  Marriott is also unable to predict the  severity  and duration of any such
failures,  which  could  include  disruptions  in  passenger  transportation  or
transportation  systems  generally,  loss of utility  and/or  telecommunications
services,  the loss or  distortion of hotel  reservations  made on a centralized
reservation  system and errors or failures in financial  transactions or payment
processing systems such as credit cards. Due to the general uncertainty inherent
in the Year 2000 Issue and the  Partnership's  dependence on third parties,  the
Partnership is unable to determine at this time whether the consequences of Year
2000 failures will have a material  impact on the  Partnership.  Host Marriott's
Year 2000 compliance  program is expected to  significantly  reduce the level of
uncertainty  about  the Year  2000  Issue and Host  Marriott  believes  that the
possibility of significant interruptions of normal operations should be reduced.




<PAGE>


                           PART II. OTHER INFORMATION


ITEM 1.       LEGAL PROCEEDINGS

Neither the  Partnership  nor the Hotels are  presently  subject to any material
litigation nor, to the General Partner's  knowledge,  is any material litigation
threatened against the Partnership or the Hotels,  other than 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)           None.

(b)           Reports on Form 8-K

              A Form 8-K was filed with the Securities  and Exchange  Commission
              on  September  16,  1998.  This  filing,  Item 5 -  Other  Events,
              discloses  that the General  Partner sent the limited  partners of
              the  Partnership  a letter to inform them that  September 18, 1998
              will be the  record  date for  voting in the  forthcoming  consent
              solicitation.  Those limited partners whose ownership is reflected
              on the records of the  General  Partner as of  September  18, 1998
              will be eligible to vote on the merger and proposed amendments.  A
              copy of the  letter  was  included  as an Item 7 - Exhibit in this
              Form 8-K filing.











<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.


                               MARRIOTT DIVERSIFIED AMERICAN HOTELS
                               LIMITED PARTNERSHIP

                               By:   MARRIOTT MDAH CORPORATION
                                     General Partner



October 26, 1998               By:  __/s/  Earla L. Stowe_______________
                                    Earla L. Stowe
                                    Vice President and Chief Accounting Officer