United States Securities and Exchange Commission
                             Washington, D.C. 20549
                     
                                   FORM 10-Q
                               
(Mark One)
    X      Quarterly Report Pursuant to Section 13 or 15(d) of the
           Securities Exchange Act of 1934

               For the Quarterly Period Ended September 30, 1996
                               
        or

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

                For the Transition period from ______  to ______
                               
                               
                        Commission File Number: 33-6678
                               
                               
                       UNION SQUARE HOTEL PARTNERS, L.P.
              Exact Name of Registrant as Specified in its Charter


           Delaware                                    13-3389008
  State or Other Jurisdiction of
  Incorporation or Organization            I.R.S. Employer Identification No.


 3 World Financial Center, 29th Floor,
 New York, NY    Attn.: Andre Anderson                    10285
Address of Principal Executive Offices                   Zip Code

                                 (212) 526-3237
               Registrant's Telephone Number, Including Area Code
                              
                              
                              
                              
                              
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 (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 ____


                              


                              


Balance Sheets
                                           At September 30,   At December 31,
                                                      1996              1995
Assets Real estate, at cost:
  Land                                      $            0    $   32,231,229
  Building                                               0        80,121,007
  Furniture, fixtures and equipment                      0        29,586,047
                                            --------------    --------------
                                                         0       141,938,283
Less accumulated depreciation                            0       (43,176,995)
                                            --------------    --------------
                                                         0        98,761,288
Property held for disposition                   96,076,204                 0
Cash and cash equivalents                        3,469,909         3,378,174
Replacement reserve receivable                     903,639           500,440
Rent receivable                                  1,074,110           318,626
Deferred charges, net of accumulated
amortization of $4,195,084 in 1996
and $3,849,203 in 1995                             400,946           495,582
                                            --------------    --------------
     Total Assets                           $  101,924,808    $  103,454,110
                                            ==============    ==============
Liabilities and Partners' Deficit
Liabilities:
  Accounts payable and accrued expenses     $       42,720    $       41,645
  Due to affiliates                                 24,133            20,397
  Mortgage loan payable                         70,000,000        70,000,000
  Accrued interest                              12,560,535        13,104,156
  Deferred interest                              9,672,070         8,800,319
  Notes and loans - affiliate                   56,484,017        53,016,740
  Loan payable - Hyatt                           3,772,578         3,772,578
                                            --------------    --------------
     Total Liabilities                         152,556,053       148,755,835
                                            --------------    --------------
Partners' Deficit:
  General Partner                               (1,189,532)       (1,136,237)
  Limited Partners                             (49,441,713)      (44,165,488)
                                            --------------    --------------
     Total Partners' Deficit                   (50,631,245)      (45,301,725)
                                            --------------    --------------
  Total Liabilities and Partners' Deficit   $  101,924,808    $  103,454,110
                                            ==============    ==============





Statement of Partners' Deficit
For the nine months ended September 30, 1996

                                        Limited        General
                                       Partners        Partner           Total
Balance at December 31, 1995      $ (44,165,488)  $ (1,136,237)  $ (45,301,725)
Net loss                             (5,276,225)       (53,295)     (5,329,520)
                                  -------------   ------------   -------------
Balance at September 30, 1996     $ (49,441,713)  $ (1,189,532)  $ (50,631,245)
                                  =============   ============   =============




Statements of Operations
                                   Three months ended        Nine months ended
                                      September 30,             September 30,
                                    1996         1995         1996        1995
Income Rental income:
  Operating income           $ 2,822,558  $ 2,268,521  $ 7,570,975  $ 5,840,807
  Replacement escrow             358,749      315,779    1,026,492      921,767
Interest income                   28,660       18,394      107,172       88,837
Miscellaneous income                 300          630        1,375        1,990
                             -----------  -----------  -----------  -----------
     Total Income              3,210,267    2,603,324    8,706,014    6,853,401
                             -----------  -----------  -----------  -----------
Expenses
Interest expense               3,396,780    3,280,293   10,240,708    9,861,532
Depreciation and amortization    995,668    1,319,067    3,654,258    4,085,770
General and administrative        62,732      109,856      140,568      179,139
                             -----------  -----------  -----------  -----------
     Total Expenses            4,455,180    4,709,216   14,035,534   14,126,441
                             -----------  -----------  -----------  -----------
     Net Loss                $(1,244,913) $(2,105,892) $(5,329,520) $(7,273,040)
                             ===========  ===========  ===========  ===========
Net Loss Allocated:
To the General Partner       $   (12,449) $   (21,059) $   (53,295) $   (72,730)
To the Limited Partners       (1,232,464)  (2,084,833)  (5,276,225)  (7,200,310)
                             -----------  -----------  -----------  -----------
                             $(1,244,913) $(2,105,892) $(5,329,520) $(7,273,040)
                             ===========  ===========  ===========  ===========
Per limited partnership unit
(7,174,100 outstanding)            $(.17)       $(.29)       $(.74)      $(1.00)
                             -----------  -----------  -----------  -----------



Statements of Cash Flows
For the nine months ended September 30,                   1996            1995

Cash Flows From Operating Activities:
Net loss                                          $ (5,329,520)   $ (7,273,040)
Adjustments to reconcile net loss to net
cash provided by (used for) operating activities:
  Depreciation and amortization                      3,654,258       4,085,770
  Rental income from replacement escrow             (1,026,492)       (921,767)
  Increase in deferred interest on notes
  and loans - affiliate                              3,467,277       3,129,619
  Increase (decrease) in cash arising from
  changes in operating assets and liabilities:
    Rent receivable                                   (755,484)       (611,260)
    Deferred charges                                  (251,245)              0
    Accounts payable and accrued expenses                1,075          12,306
    Due to affiliates                                    3,736           6,030
    Accrued and deferred interest                      328,130       1,170,138
                                                  ------------    ------------
Net cash provided by (used for)
    operating activities                                91,735        (402,204)
                                                  ------------    ------------
Cash Flows From Investing Activities:
Proceeds from replacement reserve receivable           623,293         544,816
Additions to real estate                              (623,293)       (544,816)
                                                  ------------    ------------
Net cash used for investing activities                       0               0
                                                  ------------    ------------
Net increase (decrease) in cash and
    cash equivalents                                    91,735        (402,204)
Cash and cash equivalents, beginning of period       3,378,174       2,668,685
                                                  ------------    ------------
Cash and cash equivalents, end of period          $  3,469,909    $  2,266,481
                                                  ============    ============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest          $  6,445,301    $  5,561,775
                                                  ------------    ------------



Notes to the Financial Statements

The unaudited financial statements should be read in conjunction with the
Partnership's 1995 audited financial statements within Form 10-K.

The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of September 30, 1996 and the results of operations and cash flows
for the nine months ended September 30, 1996 and 1995 and the statement of
partner's deficit for the nine months ended September 30, 1996. Results of
operations for the periods are not necessarily indicative of the results to be
expected for the full year.

The following significant events have occurred subsequent to fiscal year 1995
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5):

On July 2, 1996, a payment of $2,609,326 was made to the Bank of Nova Scotia
("BNS") representing the excess of rents received by the Partnership less
disbursements for the period from July 1, 1995 through June 30, 1996, as
defined in the Amended and Restated Promissory Note Secured by the Deed of
Trust dated June 30, 1992.  This payment was applied toward reducing BNS'
portion of the accrued interest on the Partnership's first mortgage.

As discussed in prior reports, the Partnership has been exploring viable
options with respect to the January 1997 maturity of the Partnership's secured
mortgage debt.  To this end, the Partnership retained a nationally recognized
real estate firm to facilitate a sale of the Hotel or obtain replacement
financing for the Partnership's debt.  In late August 1996, after evaluating
several purchase offers, the Partnership commenced exclusive negotiations with
one prospective purchaser.

On November 5, 1996, the Partnership and HT-Hotel Equities, Inc. ("HT"), an
affiliate of California Hyatt Corporation, the current operator of the Hotel,
entered into a Purchase and Sale Agreement and Joint Escrow Instructions (the
"Purchase and Sale Agreement") providing for the sale of the Hotel, subject to
certain conditions, for $126,900,000 in cash and the assumption by HT of
certain of the Partnership's debt owed to an affiliate of HT (collectively, the
"Transaction"), all as more fully described in the Purchase and Sale Agreement.
HT will assume all obligations of the Partnership with respect to the Hotel's
current management arrangements.

In connection with the sale of the Hotel, the Partnership expects to repay in
full all indebtedness outstanding under the first deed of trust note secured by
the Hotel, the balance of which, it is estimated, will be approximately
$89,700,000 as of December 31, 1996.  In addition, the Partnership has also
entered into an Allocation and Release Agreement (the "Allocation Agreement")
with Capital Growth Mortgage Investors, L.P. ("Capital Growth"), the holder of
a second deed of trust note secured by the Hotel.  Pursuant to the Allocation
Agreement, Capital Growth has agreed, subject to certain limitations, to
temporarily forebear during the pendency of the sale from pursuing a
foreclosure action on the second deed of trust note, and to accept
approximately $30 million in repayment of all of the Partnership's obligations
to Capital Growth (including unsecured debt obligations and the obligation to
reimburse Capital Growth for certain costs).  Capital Growth's willingness to
accept these terms is conditioned on, among other matters, the proposed
Transaction being consummated by March 31, 1997.  The general partner of
Capital Growth is an affiliate of the General Partner.  Consequently, the
Partnership and Capital Growth each engaged an independent, nationally
recognized investment banking firm to negotiate the allocation of proceeds
available from the sale of the Hotel (after the payment of transaction costs,
the making of closing adjustments, and the repayment of the first deed of trust
note) between the Partnership and Capital Growth.

The Partnership has been advised by its independent investment banking firm
that, in such firm's opinion as investment bankers, the allocation of available
proceeds to be made between the Partnership and Capital Growth pursuant to the
Allocation Agreement is fair, from a financial point of view, to the
unitholders of the Partnership, and in that context, the amount of the
allocation is at least as favorable to the Partnership as might have been
obtained if the allocation had been negotiated with an unaffiliated lender in
similar circumstances.

In addition, as a condition to the effectiveness of the Allocation Agreement,
certain affiliates of the General Partner, other than Capital Growth, have
entered into a Consent and Release Agreement (the "Unsecured Debt Release
Agreement"), pursuant to which they have agreed to fully release the
Partnership from the Partnership's unsecured indebtedness to them in an
aggregate amount projected to be approximately $14,300,000 as of December 31,
1996.

Upon completion of the sale of the Hotel, the General Partner intends to
dissolve the Partnership and to make one or more liquidating distributions in
accordance with the terms of the Partnership Agreement.  Any such distributions
will be made only after satisfaction of all debts, liabilities and obligations
of the Partnership (excluding the amount of the unsecured debt obligations
forgiven as described above), payment of other expenses of the Transaction and
of the dissolution and liquidation of the Partnership, and the establishment of
any reserves for contingencies that the General Partner deems necessary.
Neither the amount that will be available for distribution to the unitholders
of the Partnership, nor the timing thereof, can be determined with complete
certainty at this time.  However, it is currently anticipated that the proceeds
remaining after the above described sale of the Hotel (together with the
estimated Partnership cash reserves), and after the preceding payments have
been made and the unsecured debt referred to above has been forgiven, can be
expected to be in the approximate range of $9 million to $12 million, or
approximately $1.25 to $1.67 per Partnership unit outstanding, assuming a
closing of the sale of the Hotel on or prior to March 31, 1997. In addition,
the amount of any distribution to the unitholders would depend upon the timing
of the sale, and will vary depending on results of operations prior to the sale
and, if necessary, the willingness of the holder of the first deed of trust to
renegotiate any maturing debt, or to otherwise forebear from initiating
foreclosure proceedings as described below.

The Transaction is subject to the satisfaction of certain conditions, including
the Partnership obtaining the approval of a majority in interest of the
outstanding unitholders.  A proxy statement will be mailed for this purpose as
promptly as practicable following the filing with the Securities and Exchange
Commission and clearance of the requisite disclosure documents.

Because most of the Partnership's debt is scheduled to mature on January 2,
1997, in the event the Transaction cannot be consummated by that date, the
Partnership expects to seek the agreement of the holder of its first deed of
trust note to renegotiate any maturing debt, or to otherwise forebear from
exercising any remedies in respect of the Hotel, in order to permit, if
necessary, the Transaction to be consummated after such maturity date.  If no
such agreement can be reached, or the Transaction were not to be consummated,
there can be no assurance that a satisfactory alternative with respect to the
Partnership's debt can be implemented, or that the secured lenders will not
initiate foreclosure proceedings against the Hotel.  If foreclosure proceedings
are started, the General Partner will make a determination at such time as to
whether a filing on behalf of the Partnership under Chapter 11 of the United
States Bankruptcy Code would be beneficial.


Part I, Item 2.  Management's Discussion and Analysis of Financial Condition
                 and Results of Operations

Liquidity and Capital Resources

The Partnership has suffered continuing losses, including losses incurred each
year since the date of the Restructuring (as defined herein).  Although the
Partnership has met the minimum debt service payments required by the
Restructuring, income from the Hotel's operations has not been adequate to fund
all accrued interest and other debt service obligations of the Partnership,
resulting in losses and an increasing level of indebtedness for each of the
years since the date of the Restructuring.

As a result of these losses, increasing aggregate indebtedness, and the
impending January 2, 1997 maturity date of the Partnership's secured mortgage
loans, the audit report on the financial statements presented for the year
ended December 31, 1995 by the Partnership's independent accountants, Coopers &
Lybrand L.L.P., included an explanatory paragraph describing the uncertainty
about the Partnership's ability to continue as a going concern.  The financial
statements presented herein do not reflect any impact upon the Partnership's
business or financial condition that would result from the Partnership's
cessation of the active conduct of business as a going concern nor the
occurrence of a bankruptcy filing or foreclosure proceeding.  The values
reflected on the financial statements for the Hotel and other Partnership
property and various other elements of the Partnership's financial condition
would be adversely impacted by the cessation of business.

The Partnership's liquidity and capital resources were substantially impacted
by the funding of the Renovation Plan which was completed in January 1990 (the
"Renovation Plan") and extensive borrowing subsequent to the initial offering.
Combined with poor hotel market conditions and weak results from operations
from 1989 through 1994, these factors led to a default by the Partnership on
its January 2, 1992 debt service payment with respect to its $70 million first
mortgage loan (the "Mortgage Loan").  This default created other defaults under
the Partnership's subordinate financings.  Effective June 30, 1992, a
restructuring of the Partnership's indebtedness and property leasing
arrangements (the "Restructuring") was successfully executed resulting in the
waiver or cure of each of the Partnership's defaults.  Although the Partnership
has met its minimum debt service payments to date, there can be no assurance
that the Hotel will generate sufficient cash flow to enable the Partnership to
satisfy its future debt service obligations.

On April 27, 1993, an affiliate of the General Partner, Lehman Brothers
Holdings Inc. ("Lehman"), elected not to renew the Guaranty of the minimum pay
rate under the restructured Mortgage Loan for the year commencing July 4, 1993.
Nevertheless, the Partnership has continued to make its quarterly minimum debt
service payments to the Bank of Nova Scotia ("BNS") with cash flow from
operations, including the payments due on July 2, 1996 and October 2, 1996.  In
addition, on July 2, 1996, a payment of $2,609,326 was made to BNS representing
the excess of rents received by the Partnership less disbursements for the
period from July 1, 1995 through June 30, 1996, as defined in the Amended and
Restated Promissory Note Secured by the Deed of Trust dated June 30, 1992. This
payment was applied toward reducing BNS' portion of the accrued interest on the
Partnership's first mortgage.

As discussed in prior reports, the Partnership has been exploring viable
options with respect to the January 1997 maturity of the Partnership's secured
mortgage debt.  To this end, the Partnership retained a nationally recognized
real estate firm to facilitate a sale of the Hotel or obtain replacement
financing for the Partnership's debt.  In late August 1996, after evaluating
several purchase offers, the Partnership commenced exclusive negotiations with
one prospective purchaser.

On November 5, 1996, the Partnership and HT-Hotel Equities, Inc. ("HT"), an
affiliate of California Hyatt Corporation, the current operator of the Hotel,
entered into a Purchase and Sale Agreement and Joint Escrow Instructions (the
"Purchase and Sale Agreement") providing for the sale of the Hotel, subject to
certain conditions, for $126,900,000 in cash and the assumption by HT of
certain of the Partnership's debt owed to an affiliate of HT (collectively, the
"Transaction"), all as more fully described in the Purchase and Sale Agreement.
HT will assume all obligations of the Partnership with respect to the Hotel's
current management arrangements.

In connection with the sale of the Hotel, the Partnership expects to repay in
full all indebtedness outstanding under the first deed of trust note secured by
the Hotel, the balance of which, it is estimated, will be approximately
$89,700,000 as of December 31, 1996.  In addition, the Partnership has also
entered into an Allocation and Release Agreement (the "Allocation Agreement")
with Capital Growth Mortgage Investors, L.P. ("Capital Growth"), the holder of
a second deed of trust note secured by the Hotel.  Pursuant to the Allocation
Agreement, Capital Growth has agreed, subject to certain limitations, to
temporarily forebear during the pendency of the sale from pursuing a
foreclosure action on the second deed of trust note, and to accept
approximately $30 million in repayment of all of the Partnership's obligations
to Capital Growth (including unsecured debt obligations and the obligation to
reimburse Capital Growth for certain costs).  Capital Growth's willingness to
accept these terms is conditioned on, among other matters, the proposed
Transaction being consummated by March 31, 1997.  The general partner of
Capital Growth is an affiliate of the General Partner.  Consequently, the
Partnership and Capital Growth each engaged an independent, nationally
recognized investment banking firm to negotiate the allocation of proceeds
available from the sale of the Hotel (after the payment of transaction costs,
the making of closing adjustments, and the repayment of the first deed of trust
note) between the Partnership and Capital Growth.

The Partnership has been advised by its independent investment banking firm
that, in such firm's opinion as investment bankers, the allocation of available
proceeds to be made between the Partnership and Capital Growth pursuant to the
Allocation Agreement is fair, from a financial point of view, to the
unitholders of the Partnership, and in that context, the amount of the
allocation is at least as favorable to the Partnership as might have been
obtained if the allocation had been negotiated with an unaffiliated lender in
similar circumstances.

In addition, as a condition to the effectiveness of the Allocation Agreement,
certain affiliates of the General Partner, other than Capital Growth, have
entered into a Consent and Release Agreement (the "Unsecured Debt Release
Agreement"), pursuant to which they have agreed to fully release the
Partnership from the Partnership's unsecured indebtedness to them in an
aggregate amount projected to be approximately $14,300,000 as of December 31,
1996.

Copies of the Purchase and Sale Agreement, the Allocation Agreement and the
Unsecured Debt Release Agreement are filed as exhibits hereto, and the
description of the Transaction contained herein is qualified in its entirety by
reference to such agreements.

Upon completion of the sale of the Hotel, the General Partner intends to
dissolve the Partnership and to make one or more liquidating distributions in
accordance with the terms of the Partnership Agreement.  Any such distributions
will be made only after satisfaction of all debts, liabilities and obligations
of the Partnership (excluding the amount of the unsecured debt obligations
forgiven as described above), payment of other expenses of the Transaction and
of the dissolution and liquidation of the Partnership, and the establishment of
any reserves for contingencies that the General Partner deems necessary.
Neither the amount that will be available for distribution to the unitholders
of the Partnership, nor the timing thereof, can be determined with complete
certainty at this time.  However, it is currently anticipated that the proceeds
remaining after the above described sale of the Hotel (together with the
estimated Partnership cash reserves), and after the preceding payments have
been made and the unsecured debt referred to above has been forgiven, can be
expected to be in the approximate range of $9 million to $12 million, or
approximately $1.25 to $1.67 per Partnership unit outstanding, assuming a
closing of the sale of the Hotel on or prior to March 31, 1997. In addition,
the amount of any distribution to the unitholders would depend upon the timing
of the sale, and will vary depending on results of operations prior to the sale
and, if necessary, the willingness of the holder of the first deed of trust to
renegotiate any maturing debt, or to otherwise forebear from initiating
foreclosure proceedings as described below.

The Transaction is subject to the satisfaction of certain conditions, including
the Partnership obtaining the approval of a majority in interest of the
outstanding unitholders.  A proxy statement will be mailed for this purpose as
promptly as practicable following the filing with the Securities and Exchange
Commission and clearance of the requisite disclosure documents.

Because most of the Partnership's debt is scheduled to mature on January 2,
1997, in the event the Transaction cannot be consummated by that date, the
Partnership expects to seek the agreement of the holder of its first deed of
trust note to renegotiate any maturing debt, or to otherwise forebear from
exercising any remedies in respect of the Hotel, in order to permit, if
necessary, the Transaction to be consummated after such maturity date.  If no
such agreement can be reached, or the Transaction were not to be consummated,
there can be no assurance that a satisfactory alternative with respect to the
Partnership's debt can be implemented, or that the secured lenders will not
initiate foreclosure proceedings against the Hotel.  If foreclosure proceedings
are started, the General Partner will make a determination at such time as to
whether a filing on behalf of the Partnership under Chapter 11 of the United
States Bankruptcy Code would be beneficial.

In view of the previous decision to market the Hotel, the Partnership's real
estate at cost, less accumulated depreciation at September 30, 1996, has been
recorded on the Partnership's Balance Sheet as "Property held for disposition."
Property held for disposition at September 30, 1996 was $96,076,204.

This Form 10-Q contains certain forward-looking statements that are based on
current expectations.  In light of the important factors that can materially
affect results, including those set forth above and in the Form 10-K previously
filed, the inclusion of forward-looking information herein should not be
regarded as a representation by the General Partner or any other person that
the objectives or plans of the Partnership will be achieved.

At September 30, 1996, the Partnership had cash and cash equivalents, which are
held in an interest-bearing account, of $3,469,909, compared to $3,378,174 at
December 31, 1995.  The increase is due to cash provided by operating
activities.

A reserve account has been established on behalf of the Partnership to cover
certain costs for replacement of furniture and equipment at the Hotel and is
noted as "Replacement reserve receivable" on the Partnership's balance sheet.
Replacement reserve receivable increased from $500,440 at December 31, 1995 to
$903,639 at September 30, 1996, largely due to contributions to the reserve
exceeding expenditures for furniture, fixtures and equipment ("FF&E").  Rent
receivable increased by $755,484 from December 31, 1995 to $1,074,110 at
September 30, 1996, due to the timing of payments and the increase in rent from
operations.

Accounts payable and accrued expenses were $42,720 at September 30, 1996,
largely unchanged from $41,645 at December 31, 1995.  Accrued interest
decreased to $12,560,535 at September 30, 1996 compared with $13,104,156 at
December 31, 1995.  The change primarily represents the net of accrued interest
expense for the period less the minimum interest payments made on January 2,
1996, April 2, 1996 and July 2, 1996 and the annual excess cash flow payment
made on July 2, 1996. Deferred interest increased from $8,800,319 at December
31, 1995 to $9,672,070 at September 30, 1996, and Notes and Loans Affiliate
increased from $53,016,740 at December 31, 1995 to $56,484,017 at September 30,
1996.  These accounts have increased due to the compounding of unpaid interest
on the principal balances.

Results of Operations

The average occupancy rate and average room rate at the Hotel for the
nine-month period ended September 30, 1996 were 86.5% and $154.54,
respectively, compared to 81.2% and $141.88, respectively, for the comparable
nine-month period in 1995.

For the three-month and nine-month periods ended September 30, 1996, the
Partnership incurred net losses of $1,244,913 and $5,329,520, respectively,
compared to net losses of $2,105,892 and $7,273,040, respectively, for the
three- and nine-month periods ended September 30, 1995.  The decrease in the
Partnership's net loss is primarily attributable to an increase in rental and
interest income, and a decrease in depreciation and amortization and general
and administrative expenses, which was partially offset by an increase in
interest expense.

For the three-month and nine-month periods ended September 30, 1996, rental
income included operating income of $2,822,558 and $7,570,975, respectively,
compared to $2,268,521 and $5,840,807, respectively, for the same periods in
1995. The improvement for the 1996 periods is due primarily to improved Hotel
operating results.  Operating results were positively impacted by higher
average occupancy and room rates at the Hotel during 1996 compared to 1995,
which resulted in increases in room sales and telecommunication sales for the
1996 periods.  Interest income for the three-month and nine- month periods
ended September 30, 1996 was $28,660 and $107,172, respectively, compared with
$18,394 and $88,837, respectively, for the same periods in 1995.  The increases
in 1996 are due primarily to higher average cash balances being maintained by
the Partnership.

Total expenses were $4,455,180 and $14,035,534 for the three- month and
nine-month periods ended September 30, 1996, respectively, compared to
$4,709,216 and $14,126,441, respectively for the three-month and nine-month
periods ended September 30, 1995.  The decreases are due primarily to lower
depreciation and amortization and general and administrative expenses, which
was partially offset by higher interest expense resulting from the compounding
of interest on the principal debt balances.


Part II     Other Information

Items 1-5   Not applicable.

Item 6      Exhibits and reports on Form 8-K.

            (a)  Exhibits -

              (10)(a)  Purchase and Sale Agreement and Joint Escrow
                       Instructions dated as of November 4, 1996

              (10)(b)  Allocation and Release Agreement dated as of
                       November 1, 1996

              (10)(c)  Consent and Release Agreement dated as of
                       November 1, 1996

              (27)     Financial Data Schedule

            (b)  Reports on Form 8-K -

                On September 6, 1996, the Partnership filed a Form 8-K which
                provided an update on certain information relating to the
                current status of the Partnership and the Hotel, the Grand
                Hyatt San Francisco.  The Partnership also reported that it
                retained Eastdil Realty Company, a nationally-recognized real
                estate firm, to facilitate a sale of the Hotel or obtain
                replacement financing for the Partnership's debt. On
                November 8, 1996, the Partnership filed a Form 8-K which
                provided a discussion of definitive agreements executed by the
                Partnership relating to the proposed sale of the Hotel, the
                Grand Hyatt San Francisco.
            
            
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                          UNION SQUARE HOTEL PARTNERS, L.P.

                          BY:     UNION SQUARE/GP CORP.
                                  General Partner



Date:  November 14, 1996

                          BY:     /s/ Jeffrey C. Carter
                                  President, Director and
                                  Chief Financial Officer