<PAGE>   1

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                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C. 20549

                            ------------------------

                                   FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                            ------------------------

                         INTERSTATE HOTELS CORPORATION
                                FOSTER PLAZA TEN
                               680 ANDERSEN DRIVE
                         PITTSBURGH, PENNSYLVANIA 15220
                                 (412) 937-0600

<TABLE>
<S>                        <C>                     <C>
        MARYLAND                  0-26805                75-2767215
(State of Incorporation)   (Commission File No.)      (I.R.S. Employer
                                                   Identification Number)
</TABLE>

     The Company (1) has filed all reports to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the period that the Company was
required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days.

     The total number of shares of the Company's Common Stock, par value $0.01
per share, outstanding at May 4, 2000 was 6,394,996.

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<PAGE>   2

                                     INDEX

                         INTERSTATE HOTELS CORPORATION

<TABLE>
<CAPTION>
                                                                        PAGE NO.
                                                                        --------
<S>       <C>                                                           <C>
PART I    FINANCIAL INFORMATION
Item 1.   Financial Statements (Unaudited)............................      2
          Consolidated Balance Sheets - December 31, 1999 and March
          31, 2000....................................................      2
          Consolidated Statements of Operations - Three Months Ended
          March 31, 1999 and March 31, 2000...........................      3
          Consolidated Statements of Cash Flows - Three Months Ended
          March 31, 1999 and March 31, 2000...........................      4
          Notes to Consolidated Financial Statements..................      5

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

Item 3.   Quantitative and Qualitative Disclosures About Market
          Risk........................................................     11

PART II   OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K............................     12
</TABLE>
<PAGE>   3

                        PART I -- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED).

                         INTERSTATE HOTELS CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                              DECEMBER 31,     MARCH 31,
                                                                  1999           2000
                                                              ------------    -----------
                                                                  (A)         (UNAUDITED)
<S>                                                           <C>             <C>
                           ASSETS
Current assets:
  Cash and cash equivalents.................................    $ 22,440        $ 35,682
  Accounts receivable, net of allowance for doubtful
    accounts of $486 in 1999 and $479 in 2000...............      16,779          16,987
  Deferred income taxes.....................................       1,172           1,907
  Net investment in direct financing leases.................         464             401
  Prepaid expenses and other assets.........................       1,148           1,606
  Related party receivables -- management contracts.........         423              --
                                                                --------        --------
      Total current assets..................................      42,426          56,583
Restricted cash.............................................       1,701           1,445
Marketable securities.......................................       2,134           2,264
Property and equipment, net.................................      16,049          15,854
Officer and employee notes receivable.......................       3,541           3,385
Notes receivable -- affiliates, net of reserve for
  uncollectible notes receivable of
  $333 in 2000..............................................      10,838          10,440
Net investment in direct financing leases...................         928             802
Intangible and other assets.................................      64,842          61,005
                                                                --------        --------
      Total assets..........................................    $142,459        $151,778
                                                                ========        ========

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable -- trade.................................       3,430           4,405
  Accounts payable -- health trust..........................       3,358           5,209
  Accounts payable -- related parties.......................       3,991           4,032
  Accrued payroll and related benefits......................       8,252           5,955
  Accrued rent..............................................       5,348           5,341
  Other accrued liabilities.................................      12,486          17,149
  Current portion of long-term debt.........................          --              87
                                                                --------        --------
      Total current liabilities.............................      36,865          42,178
Deferred income taxes.......................................       2,454           1,991
Deferred compensation.......................................       2,134           2,264
Long-term debt..............................................          --           7,465
                                                                --------        --------
      Total liabilities.....................................      41,453          53,898
Minority interest...........................................      41,000          38,702
Commitments and contingencies...............................          --              --
Stockholders' equity:
  Preferred stock, $.01 par value; 10,000,000 shares
    authorized; no shares issued or outstanding at March 31,
    2000....................................................          --              --
  Common stock, $.01 par value; 65,000,000 shares
    authorized; 6,394,996 shares issued and outstanding at
    March 31, 2000..........................................          64              64
  Paid-in capital...........................................      66,705          66,705
  Retained deficit..........................................      (5,889)         (6,794)
  Unearned compensation.....................................        (874)           (797)
                                                                --------        --------
      Total stockholders' equity............................      60,006          59,178
                                                                --------        --------
      Total liabilities and stockholders' equity............    $142,459        $151,778
                                                                ========        ========
</TABLE>

---------------

(A) The year-end balance sheet information was derived from audited financial
    statements, but does not include all disclosures required by generally
    accepted accounting principles.

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                        2
<PAGE>   4

                         INTERSTATE HOTELS CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
          (UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                                    MARCH 31,
                                                              ---------------------
                                                               1999         2000
                                                              -------    ----------
<S>                                                           <C>        <C>
Lodging revenues:
  Rooms.....................................................  $40,270    $   42,995
  Other departmental........................................    2,325         2,730
Net management fees.........................................    8,569         6,184
Other fees..................................................    2,980         2,901
                                                              -------    ----------
                                                               54,144        54,810
                                                              -------    ----------
Lodging expenses:
  Rooms.....................................................    9,735        10,466
  Other departmental........................................    1,506         1,594
  Property costs............................................   12,817        14,105
General and administrative..................................    4,078         3,184
Payroll and related benefits................................    4,908         5,320
Lease expense...............................................   20,897        20,156
Depreciation and amortization...............................    4,658         4,288
                                                              -------    ----------
                                                               58,599        59,113
                                                              -------    ----------
Operating loss..............................................   (4,455)       (4,303)
Other income:
  Interest, net.............................................       59           446
  Other, net................................................      382            --
                                                              -------    ----------
Loss before income tax benefit..............................   (4,014)       (3,857)
Income tax benefit..........................................   (1,625)         (603)
                                                              -------    ----------
Loss before minority interest...............................   (2,389)       (3,254)
Minority interest...........................................       49        (2,349)
                                                              -------    ----------
Net loss....................................................  $(2,438)   $     (905)
                                                              =======    ==========
Earnings per common share and common share equivalent (Note
  4):
  Basic.....................................................       --    $     (.15)
                                                              =======    ==========
  Diluted...................................................       --    $     (.15)
                                                              =======    ==========
Weighted average number of common share and common share
  equivalents outstanding:
  Basic.....................................................       --     6,063,079
                                                              =======    ==========
  Diluted...................................................       --     6,063,079
                                                              =======    ==========
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                        3
<PAGE>   5

                         INTERSTATE HOTELS CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (UNAUDITED, IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED
                                                                       MARCH 31,
                                                              ----------------------------
                                                                  1999            2000
                                                              ------------    ------------
<S>                                                           <C>             <C>
Cash flows from operating activities:
  Net loss..................................................    $(2,438)        $  (905)
  Adjustments to reconcile net loss to net cash from
     operating activities:
     Depreciation and amortization..........................      4,658           4,288
     Equity in earnings from unconsolidated subsidiaries....       (382)             --
     Minority interest......................................         49          (2,349)
     Deferred income taxes..................................     (2,688)         (1,198)
     Other..................................................         --             410
  Cash (used in) provided by assets and liabilities:
     Accounts receivable, net...............................     (2,114)           (208)
     Prepaid expenses and other assets......................       (623)           (458)
     Related party receivables..............................       (154)            515
     Accounts payable.......................................        992             529
     Accrued liabilities....................................      6,108           4,690
                                                                -------         -------
       Net cash provided by operating activities............      3,408           5,314
                                                                -------         -------
Cash flows from investing activities:
  Net investment in direct financing leases.................        330             189
  Change in restricted cash.................................        954             256
  Purchase of property and equipment, net...................        (67)           (112)
  Purchases of marketable securities........................       (909)           (400)
  Proceeds from sale of marketable securities...............        838             374
  Net cash received from unconsolidated subsidiaries........        162              --
  Change in officer and employee notes receivable...........       (277)            156
  Net investment in management contracts....................       (681)            (59)
  Change in notes receivable -- affiliates, net.............       (989)             65
  Other.....................................................         84              (8)
                                                                -------         -------
       Net cash (used in) provided by investing
        activities..........................................       (555)            461
                                                                -------         -------
Cash flows from financing activities:
  Proceeds from long-term debt..............................         --           7,560
  Repayment of long-term debt...............................         --              (8)
  Financing costs paid......................................         --             (85)
  Net distributions to minority interest....................        (36)             --
  Related party payables....................................      7,232              --
  Net distributions to owners...............................     (9,043)             --
                                                                -------         -------
       Net cash (used in) provided by financing
        activities..........................................     (1,847)          7,467
                                                                -------         -------
Net increase in cash and cash equivalents...................      1,006          13,242
Cash and cash equivalents at beginning of period............      1,652          22,440
                                                                -------         -------
Cash and cash equivalents at end of period..................    $ 2,658         $35,682
                                                                =======         =======
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                        4
<PAGE>   6

                         INTERSTATE HOTELS CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       (UNAUDITED, DOLLARS IN THOUSANDS)

1. ORGANIZATION AND BASIS OF PRESENTATION:

     Interstate Hotels Corporation (together with its subsidiaries and
predecessors, the "Company") was formed pursuant to a series of events
culminating in the spin-off of the Company's operations from Wyndham
International, Inc., formerly Patriot American Hospitality, Inc. ("Wyndham"), on
June 18, 1999. On June 2, 1998, Interstate Hotels Company (the predecessor of
the Company, and together with its subsidiaries, "Old Interstate") merged into
Wyndham (the "Merger"). Prior to the Merger, Marriott International, Inc.
("Marriott") filed a lawsuit to stop the closing of the Merger as a result of a
dispute over certain franchise agreements between Marriott and Old Interstate.
On June 18, 1999, pursuant to a settlement agreement with Marriott, Wyndham
transferred to the Company, which was then a newly formed corporation, the
third-party hotel management business of Old Interstate, equity interests in The
Charles Hotel Complex, a hotel, retail and office complex located in Cambridge,
Massachusetts, and long-term leasehold interests in 79 hotels. Wyndham then
spun-off the Company to its shareholders (the "Spin-off"). In connection with
the Spin-off, Marriott purchased 4% of the Company's common stock, Wyndham
retained 4% of the Company's common stock, and the remaining 92% of the
Company's common stock was distributed to Wyndham's shareholders.

     Prior to the Spin-off, the Company was not a separate legal entity.
Therefore, the accompanying consolidated financial statements of the Company
have been carved out of Old Interstate's financial statements. The financial
statements include only those assets, liabilities, revenues and expenses
directly attributable to the third-party hotel management business, the equity
interests in The Charles Hotel Complex and the leased hotels which were retained
by the Company in connection with the Spin-off. These consolidated financial
statements have been prepared as if the Company had operated as a separate
entity for all periods presented.

     The Company's principal subsidiaries include Interstate Hotels, LLC ("IH
LLC") and Interstate Pittsburgh Hotel Holdings, L.L.C. IH LLC has assumed the
third-party hotel management business previously conducted by Old Interstate and
holds the leasehold interests in the Company's leased hotels, as well as
provides ancillary services such as centralized purchasing, equipment leasing
and insurance services. The Company owns a 45% managing member interest and
Wyndham owns a 55% non-controlling ownership interest in IH LLC. Interstate
Pittsburgh Hotel Holdings, L.L.C. is a wholly owned subsidiary of the Company
which owns the Pittsburgh Airport Residence Inn by Marriott.

     In accordance with IH LLC's limited liability company agreement, the
Company is required to distribute 55% of IH LLC's cash flows from operations to
Wyndham and allocate between IH LLC and the Company the costs and expenses
relating to services provided by one party for the benefit of the other in
accordance with generally accepted accounting principles, on the basis of which
party benefited from the expenditure. To the extent that the allocation of any
such costs and expenses, including general and administrative expenses, cannot
be fairly apportioned, IH LLC and the Company will allocate such costs and
expenses based upon their respective gross revenues, so that each party's profit
margins are substantially the same for similar services.

     The Company includes the revenues and expenses and the working capital of
the leased hotels in the financial statements because the risk of operating
these hotels is borne by the Company, as lessee, under the terms of the leases.
Revenues and expenses from the operation of the managed hotels are not included
in the financial statements because the hotel management contracts are generally
cancellable, not transferable and do not shift the risks of operation to the
Company. Therefore, the Company records revenues from management fees only for
its managed hotels.

2. INTERIM FINANCIAL STATEMENTS:

     The accompanying consolidated interim financial statements have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with

                                        5
<PAGE>   7
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
                       (UNAUDITED, DOLLARS IN THOUSANDS)

2. INTERIM FINANCIAL STATEMENTS--CONTINUED

generally accepted accounting principles have been omitted pursuant to such
rules and regulations. These consolidated interim financial statements should be
read in conjunction with the consolidated financial statements, notes thereto
and other information included in the Company's Annual Report on Form 10-K/A for
the year ended December 31, 1999.

     The accompanying consolidated interim financial statements reflect, in the
opinion of management, all adjustments necessary for a fair presentation, in all
material respects, of the financial position and results of operations for the
periods presented. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The results
of operations for the interim periods are not necessarily indicative of the
results for the entire year.

3. PRO FORMA INFORMATION:

     The following pro forma information for the three-month periods ended March
31, 1999 and 2000 is presented to include the effects of the Spin-off, the sale
of equity interests in The Charles Hotel Complex and certain other adjustments
as if all of the transactions had occurred on January 1, 1999. Such other
adjustments principally include the elimination and addition of certain
management fee and other fee revenues related to Wyndham-owned hotels, the
management of which was transferred to Wyndham, Marriott or the Company as a
result of the Spin-off. The adjustments also include the elimination of a $2,000
one-time charge for additional incentive lease expense for 1999 paid in
settlement of a dispute with Equity Inns, Inc. resulting from the Merger, and
the addition of minority interest to reflect Wyndham's 55% non-controlling
interest in IH LLC prior to the Spin-off.

     In management's opinion, all material pro forma adjustments necessary to
reflect the effects of these transactions have been made. The pro forma
information does not include earnings on the Company's pro forma cash and cash
equivalents or certain one-time charges to income relating to the Merger, and
does not purport to present what the actual results of operations of the Company
would have been if the previously mentioned transactions had occurred on such
date or to project the results of operations of the Company for any future
period.

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                  MARCH 31,
                                                              ------------------
                                                               1999       2000
                                                              -------    -------
<S>                                                           <C>        <C>
Total revenues..............................................  $52,057    $54,810
Operating loss..............................................   (4,942)    (4,303)
Net loss....................................................   (1,232)      (905)
Pro Forma basic earnings per common share...................     (.19)      (.14)
Pro Forma diluted earnings per common share.................     (.19)      (.14)
</TABLE>

4. EARNINGS PER SHARE:

     Prior to the Spin-off, the Company was not a separate legal entity.
Therefore, the accompanying consolidated financial statements of the Company
have been carved out of the financial statements of Old Interstate and Wyndham,
and principally include those assets, liabilities, revenues and expenses
directly attributable to the third-party hotel management and leasing businesses
conducted by the Company. Accordingly, the Company believes that the historical
earnings per share calculations required in accordance with Statement of
Financial Accounting Standard No. 128 are not meaningful for periods prior to
the Spin-off and, therefore, have not been provided.

                                        6
<PAGE>   8
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
                       (UNAUDITED, DOLLARS IN THOUSANDS)

5. LONG-TERM DEBT:

     In February 2000, Interstate Pittsburgh Hotel Holdings, L.L.C. entered into
a limited-recourse mortgage note with a bank. The proceeds from the note, which
has a two-year term with a one-year extension if certain minimum financial
requirements are met, totaled $7,560. Monthly payments are due based on a
25-year amortization schedule for principal, with interest based on variable
rate options using the prime rate or the LIBOR rate. The note is collateralized
by the Pittsburgh Airport Residence Inn by Marriott, which was acquired by the
Company in November 1999, and provides for a guarantee by the Company of up to
$3,000. The outstanding principal balance on the note is due and payable at
maturity.

6.  COMMITMENTS AND CONTINGENCIES:

     In accordance with hotel lease agreements with Equity Inns, Inc. ("Equity
Inns"), the Company is required to maintain performance standards with respect
to the leased hotels, including requirements to maintain room revenue per
available room and expenditures to within specified percentages of the amounts
targeted in the hotels' operating budgets and a minimum net worth covenant.
Equity Inns' sole remedy for a failure to satisfy the performance standards is
to terminate the subject lease or leases, without penalty. A failure to maintain
the minimum net worth would be a default under the leases.

     The Company is currently engaged in a dispute with Equity Inns regarding 41
of the 76 hotels leased from Equity Inns or its affiliates. Equity Inns has
asserted that the Company has failed to spend the required percentages of the
amounts targeted in certain categories of the hotels' operating budgets for the
measuring period from July 1, 1999 through December 31, 1999 with respect to 41
leases. The Company disagrees with and is vigorously disputing Equity Inns'
interpretation of this requirement. If, however, the Company is determined to
have failed to spend the required amount under the leases, Equity Inns' sole
remedy is to terminate the subject lease or leases. The carrying value of the
Company's leased hotel intangible assets related to the 41 hotel leases amounted
to approximately $6,200 at March 31, 2000. The termination of the subject lease
or leases could result in accelerated amortization of all or the applicable
portion of the leased hotel intangible assets on the date of termination. At
this time, Equity Inns has not notified the Company of its intent to terminate
any of the 41 subject leases.

7.  SEGMENT INFORMATION:

     The Company's reportable segments are: (i) operations of luxury and upscale
hotels, and (ii) operations of mid-scale, upper economy and budget hotels. The
luxury and upscale hotels segment derives revenues from management fees and
other services which directly relate to providing management services, including
revenues from insurance, purchasing and equipment leasing. The mid-scale, upper
economy and budget segment derives revenues from managing and leasing hotels and
certain specialized support services.

                                        7
<PAGE>   9
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
                       (UNAUDITED, DOLLARS IN THOUSANDS)

7.  SEGMENT INFORMATION--CONTINUED:

     The table below presents revenue and operating income (loss) information
for each reportable segment for the three-month periods ended March 31, 1999 and
2000.

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                  MARCH 31,
                                                              ------------------
                                                               1999       2000
                                                              -------    -------
<S>                                                           <C>        <C>
REVENUES:
Luxury and Upscale Hotels...................................  $10,709    $ 8,064
Mid-Scale, Upper Economy
  and Budget Hotels.........................................   43,435     46,746
                                                              -------    -------
  Consolidated totals.......................................  $54,144    $54,810
                                                              =======    =======
OPERATING INCOME (LOSS):
Luxury and Upscale Hotels...................................  $   485    $(1,834)
Mid-Scale, Upper Economy and Budget Hotels*.................   (4,940)    (2,469)
                                                              -------    -------
  Consolidated totals.......................................  $(4,455)   $(4,303)
                                                              =======    =======
</TABLE>

---------------

* The 1999 amount includes a $2,000 one-time charge for additional incentive
  rent paid in settlement of a dispute with Equity Inns, Inc. resulting from the
  Merger.

     Depreciation and amortization included in segment operating income (loss)
for the three-month periods ended March 31, 1999 and 2000 were as follows:

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                  MARCH 31,
                                                              ------------------
                                                               1999       2000
                                                              -------    -------
<S>                                                           <C>        <C>
Luxury and Upscale Hotels...................................  $3,345     $3,317
Mid-Scale, Upper Economy and Budget Hotels..................   1,313        971
                                                              ------     ------
  Consolidated totals.......................................  $4,658     $4,288
                                                              ======     ======
</TABLE>

     The net book value of intangible and other assets by segment consisted of
the following at December 31, 1999 and March 31, 2000:

<TABLE>
<CAPTION>
                                                     DECEMBER 31, 1999    MARCH 31, 2000
                                                     -----------------    --------------
<S>                                                  <C>                  <C>
Luxury and Upscale Hotels..........................       $42,736            $39,599
Mid-Scale, Upper Economy and Budget Hotels.........        22,106             21,406
                                                          -------            -------
  Consolidated totals..............................       $64,842            $61,005
                                                          =======            =======
</TABLE>

     The following table reconciles the Company's measure of segment profit to
consolidated net loss for the three-month periods ended March 31, 1999 and 2000.

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                  MARCH 31,
                                                              ------------------
                                                               1999       2000
                                                              -------    -------
<S>                                                           <C>        <C>
Total after-tax operating loss..............................  $(2,673)   $(2,581)
Unallocated amounts, net of tax:
  Interest, net.............................................       35        267
  Other, net................................................      229         --
  Minority interest.........................................      (29)     1,409
                                                              -------    -------
Consolidated net loss.......................................  $(2,438)   $  (905)
                                                              =======    =======
</TABLE>

                                        8
<PAGE>   10

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

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

     Lodging revenues, which consist of rooms, food and beverage and other
departmental revenues from the leased hotels and one hotel acquired by the
Company in November 1999. Lodging revenues increased by $3.1 million, or 7.3%,
from $42.6 million in the three months ended March 31, 1999 (the "1999 Three
Months") to $45.7 million in the three months ended March 31, 2000 (the "2000
Three Months"). This increase was partially due to incremental revenues of $1.0
million related to the acquired hotel. In addition, the Company entered into
leases for two newly constructed hotels in June 1999 that earned revenues of
approximately $3.2 million during the 2000 Three Months. These additional
revenues were offset by the loss of five hotel operating leases since January 1,
1999, increased competition and general negative trends in the limited-service
hotel sector.

     The average daily room rate for the leased hotels increased by 5.7%, from
$73.83 during the 1999 Three Months to $77.30 during the 2000 Three Months, and
the average occupancy rate decreased to 60% during the 2000 Three Months from
61.3% during the 1999 Three Months. This resulted in an increase in room revenue
per available room of 2.5% to $46.35 during the 2000 Three Months. The operating
results of the Company's leased hotels were consistent with the current trends
within the lodging industry. The increase in the average daily room rate
primarily resulted from inflationary rate increases, and the decrease in the
average occupancy rate resulted from an increase of new supply within the
lodging industry.

     Net management fees decreased by $2.4 million, or 27.8%, from $8.6 million
in the 1999 Three Months to $6.2 million in the 2000 Three Months. This decrease
was due to the net loss of 13 management contracts since January 1, 1999, which
were primarily hotels whose management was transferred to either Wyndham or
Marriott in connection with the Spin-off. Contributing to the net loss of
management contracts was the uncertainty surrounding the timing and completion
of the Spin-off, which impaired the Company's ability to add new management
contracts. Other fees decreased slightly from $3.0 million in the 1999 Three
Months to $2.9 million in the 2000 Three Months. The impact on other fees
related to the reduction in the total number of hotels operated by the Company
in 2000 as compared to 1999 was offset by an increase in insurance revenues,
which increased by $0.1 million in the 2000 Three Months as compared to the 1999
Three Months.

     Lodging expenses consist of rooms, food and beverage, property costs and
other departmental expenses from the leased hotels and one hotel acquired by the
Company in November 1999. Lodging expenses increased by $2.1 million, or 8.8%,
from $24.1 million in the 1999 Three Months to $26.2 million in the 2000 Three
Months. This increase was partially due to incremental expenses of $0.6 million
related to the acquired hotel. For the leased hotels, increased competition
resulting from an increased supply of limited-service hotels in certain markets
required higher operating costs to maintain and increase revenue levels. In
addition, the Company entered into leases for two newly constructed hotels in
June 1999 that incurred operating expenses of approximately $1.9 million during
the 2000 Three Months. These additional expenses were offset by the loss of five
hotel operating leases since January 1, 1999. The operating margin of the leased
and owned hotels decreased from 43.5% during the 1999 Three Months to 42.8%
during the 2000 Three Months due primarily to the increased costs associated
with the leased hotels. The Company expects the increased competition and
over-supply of limited-service hotels to continue to affect negatively the
future operating margin of the Company's leased hotels.

     General and administrative expenses are associated with the management of
hotels and consist primarily of centralized management expenses such as
operations management, sales and marketing, finance and other hotel support
services, as well as general corporate expenses. General and administrative
expenses decreased by $0.9 million, or 21.9%, from $4.1 million in the 1999
Three Months to $3.2 million in the 2000 Three Months. During the 2000 Three
Months, the Company incurred an expense for a $0.3 million deficiency between
the amount of premiums received as compared to actual and estimated claims
incurred under the Company's self-insured health and welfare plan. The
deficiency that was recorded by the Company was $1.0 million during the 1999
Three Months. General and administrative expenses as a percentage of revenues
decreased to 5.8% during the 2000 Three Months compared to 7.5% during the 1999
Three Months. This decrease was due to the increase in total revenues and the
decrease in general and administrative expenses.

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     Payroll and related benefits increased by $0.4 million, or 8.4%, from $4.9
million in the 1999 Three Months to $5.3 million in the 2000 Three Months. This
increase was due to the addition of the Company's Chief Executive Officer and
three marketing and development vice-presidents who were hired in connection
with the Spin-off. Payroll and related benefits as a percentage of revenues
increased slightly to 9.7% during the 2000 Three Months compared to 9.1% during
the 1999 Three Months.

     Lease expense represents base rent and participating rent that is based on
a percentage of rooms and food and beverage revenues from the leased hotels,
adjusted for increases in the consumer price index. Lease expense decreased by
$0.7 million, or 3.5%, from $20.9 million in the 1999 Three Months to $20.2
million in the 2000 Three Months. The impact on lease expense related to the
increase in lodging revenues was offset by a $2.0 million one-time charge that
was incurred by the Company in the 1999 Three Months for additional incentive
rent paid in settlement of a dispute with Equity Inns, Inc. resulting from the
Merger.

     Depreciation and amortization decreased by $0.4 million from $4.7 million
in the 1999 Three Months to $4.3 million in the 2000 Three Months. In the fourth
quarter of 1999, a $16.4 million non-cash impairment loss was incurred related
to the Company's leased hotel intangible assets and three leased hotels were
sold by Equity Inns, Inc., both of which events reduced future amortization.
Future terminations of hotel leases by Equity Inns, Inc. could result in
accelerated amortization of the remaining leased hotel intangible assets.

     As a result of the changes noted above, an operating loss of $4.3 million
was incurred in the 2000 Three Months as compared to an operating loss of $4.5
million in the 1999 Three Months.

     Other income in the 1999 Three Months consisted primarily of equity in
earnings from The Charles Hotel Complex, which was sold on June 18, 1999.

     Income tax benefit for the three-month periods in 1999 and 2000 was
computed based on an effective tax rate of 40% after reduction of minority
interest.

     Minority interest in the 2000 Three Months reflected Wyndham's 55%
non-controlling interest in IH LLC which it retained after the Spin-off.
Minority interest in the 1999 Three Months related to The Charles Hotel Complex.

     As a result of the changes noted above, a net loss of $0.9 million was
incurred in the 2000 Three Months as compared to a net loss of $2.4 million in
the 1999 Three Months.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash and cash equivalent assets were $35.7 million at March
31, 2000 compared to $22.4 million at December 31, 1999, and current assets
exceeded current liabilities by $14.4 million at March 31, 2000.

     The Company's principal source of liquidity during the 2000 Three Months
was cash from operations and proceeds from the issuance of long-term debt. Net
cash provided by operating activities was $5.3 million during the 2000 Three
Months compared to $3.4 million during the 1999 Three Months. The increase
resulted primarily from an increase in operating income (adjusted for non-cash
items) of $1.0 million from 1999 to 2000, and an increase of $0.8 million in
cash provided by changes in assets and liabilities.

     Net cash of $7.5 million was provided by financing activities during the
2000 Three Months compared to net cash of $1.8 million used in financing
activities during the 1999 Three Months. In February 2000, the Company entered
into a $7.6 million limited-recourse mortgage note that is collateralized by the
Pittsburgh Airport Residence Inn by Marriott, which was acquired by the Company
in November 1999. Monthly payments are due based on a 25-year amortization
schedule for principal, with interest based on variable rate options using the
prime rate or the LIBOR rate. The outstanding principal balance on the note is
due and payable in 2002 with a one-year extension if certain minimum financial
requirements are met.

     Net cash of $0.5 million was provided by investing activities during the
2000 Three Months compared to net cash of $0.6 million used in investing
activities during the 1999 Three Months. The Company's capital expenditure
budget for the year ending December 31, 2000 relating to current operations is
approximately $150,000 consisting primarily of expenditures for office and
telephone equipment.

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     In accordance with the terms of IH LLC's limited liability company
agreement, the Company is required to distribute 55% of IH LLC's cash flows from
operations to Wyndham. The Company's required distribution to Wyndham for the
period from the Spin-off through March 31, 2000 totaled $3.9 million, which
amount was paid to Wyndham in the second quarter of 2000. In addition, the
agreement requires the Company to allocate between IH LLC and the Company the
costs and expenses relating to services provided by one party for the benefit of
the other in accordance with generally accepted accounting principles, on the
basis of which party benefited from the expenditure. To the extent that the
allocation of any such costs and expenses, including general and administrative
expenses, cannot be fairly apportioned, IH LLC and the Company will allocate
such costs and expenses based upon their respective gross revenues, so that each
party's profit margins are substantially the same for similar services.

     In the second quarter of 2000, the Company paid additional incentive rent
in the amount of $0.5 million to Equity Inns, Inc. in connection with the sale
of one of the Company's leased hotels by Equity Inns, Inc.

     The Company intends to pursue future opportunities to manage or lease
hotels on behalf of third-party owners, as well as pursue other business
opportunities, such as selective hotel investments and the formation of
strategic alliances. Such opportunities may require capital investments by the
Company. The Company believes that its cash on hand and future cash flows from
operations may be insufficient to fund fully all such capital opportunities. As
a result, the Company will be required to obtain debt or equity financing or
modify its business plan. Management is currently pursuing possible alternatives
to augment its capital resources to enable it to more effectively pursue its
growth strategy. The principal focus of this effort to date has been potential
capital partners. There can be no assurance that these efforts will be
successful or, if so, as to the timing or terms thereof. If these efforts are
not successful, or if the Company does not obtain additional financing, its
pursuit of its business strategy and growth may be impaired.

NEW ACCOUNTING PRONOUNCEMENT

     In December 1999, the Securities and Exchange Commission (the "SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." This SAB summarizes and clarifies the SEC's position in applying
generally accepted accounting principles to revenue recognition in financial
statements. In March 2000, the SEC issued SAB No. 101A, "Amendment: Revenue
Recognition in Financial Statements," which extends the date that the Company
may report a change in accounting principle to no later than the second quarter
of 2000. Management is currently assessing the impact of this SAB on the
Company's consolidated financial statements.

FORWARD-LOOKING STATEMENTS

     This Report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and information based on the
beliefs of the Company's management, as well as assumptions made by and
information currently available to the Company's management. When used herein,
words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to the Company or the Company's management,
are intended to identify these forward-looking statements. Such statements are
subject to certain risks and uncertainties that could cause the Company's
business and results of operations to differ materially from those reflected in
the Company's forward-looking statements.

     Forward-looking statements are not guarantees of future performance. The
Company's forward-looking statements are based on trends that the Company's
management anticipates in the lodging industry and the effect on those trends of
such factors as industry capacity, the seasonal nature of the lodging industry
and product demand and pricing. In addition, such forward-looking statements are
subject to the Company's reversing the current negative trend in its business
and financial results.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The quantitative and qualitative disclosures required by this Item 3 and by
Rule 305 of SEC Regulation S-K are not applicable to the Company at this time.
Interest rate exposure on indebtedness is discussed in "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

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                           PART II--OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

     (a) Exhibits.

          10.1  Loan Agreement by and between Interstate Pittsburgh Hotel
                Holdings, L.L.C. and PNC Bank, National Association, dated
                February 14, 2000

          10.2  Open-End Mortgage and Security Agreement by Interstate
                Pittsburgh Hotel Holdings, L.L.C. in favor of PNC Bank, National
                Association, dated February 14, 2000

          10.3  Agreement of Guaranty and Suretyship by Interstate Hotels
                Corporation, dated February 14, 2000

          27.1  Financial Data Schedule

     (b) Reports on Form 8-K.

          No reports on Form 8-K were filed during the quarter for which this
          Report is filed.

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                                   SIGNATURES

     Pursuant to the requirements of Section 13 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.

                                          INTERSTATE HOTELS CORPORATION

Date: May 15, 2000                        By:   /s/ J. WILLIAM RICHARDSON
                                            ------------------------------------
                                                   J. William Richardson
                                             Vice Chairman and Chief Financial
                                                           Officer
                                               (Principal Financial Officer)

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