<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 JUNE 30, 2001

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

                         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 preceding 12 months, 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 August 13, 2001 was as follows: Class A shares
5,815,985 and Class B shares 242,555.

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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
          Condensed Consolidated Balance Sheets - December 31, 2000
          and June 30, 2001...........................................      2
          Condensed Consolidated Statements of Operations - Three
          Months and Six Months Ended June 30, 2000 and June 30,
          2001........................................................      3
          Condensed Consolidated Statements of Cash Flows - Six Months
          Ended June 30, 2000 and June 30, 2001.......................      4
          Notes to Condensed Consolidated Financial Statements........      5

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................      8

Item 3.   Quantitative and Qualitative Disclosures About Market
          Risk........................................................     12

PART II   OTHER INFORMATION

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

Item 4.   Submission of Matters to a Vote of Security Holders.........     13

Item 6.   Exhibits and Reports on Form 8-K............................     13
</Table>
<PAGE>   3

                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED).

                         INTERSTATE HOTELS CORPORATION

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

<Table>
<Caption>
                                                              DECEMBER 31,     JUNE 30,
                                                                  2000           2001
                                                              ------------    -----------
                                                                  (A)         (UNAUDITED)
<S>                                                           <C>             <C>

                           ASSETS
Current assets:
  Cash and cash equivalents.................................    $ 51,327       $ 38,261
  Accounts receivable, net of allowance for doubtful
    accounts of $542 in 2000 and
    $265 in 2001............................................      17,066         15,655
  Deferred income taxes.....................................       1,891          1,873
  Other current assets......................................       1,587            732
                                                                --------       --------
      Total current assets..................................      71,871         56,521
Restricted cash.............................................       2,173          1,281
Marketable securities.......................................       2,289          2,816
Property and equipment, net.................................      15,084         14,868
Officers and employees notes receivable.....................       3,442          2,364
Affiliates notes receivable, net of reserve for
  uncollectible notes receivable of $666....................      10,235         10,389
Equity investments in hotel real estate.....................       8,779         17,277
Deferred income taxes.......................................       3,086          3,897
Intangible and other assets.................................      27,014         23,005
                                                                --------       --------
      Total assets..........................................    $143,973       $132,418
                                                                ========       ========

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable -- trade.................................       2,922            811
  Accounts payable -- health trust..........................       4,459          4,179
  Accounts payable -- related parties.......................       2,473          2,562
  Accrued payroll and related benefits......................       9,992          3,765
  Accrued rent..............................................       5,227            254
  Other accrued liabilities.................................      14,449         11,453
  Current portion of long-term debt.........................       8,343          8,347
                                                                --------       --------
      Total current liabilities.............................      47,865         31,371
Deferred compensation.......................................       2,289          2,816
Long-term debt..............................................      36,820         40,936
                                                                --------       --------
      Total liabilities.....................................      86,974         75,123
Minority interest...........................................         433            433
Mandatorily redeemable preferred stock......................       4,708          5,114
Commitments and contingencies...............................          --             --
Stockholders' equity:
  Preferred stock, $.01 par value; 10,000,000 shares
    authorized; no shares issued or outstanding at December
    31, 2000 and June 30, 2001..............................          --             --
  Common stock, $.01 par value; 64,939,361 shares
    authorized; 6,399,744 and 6,527,340 shares issued and
    outstanding at December 31, 2000 and June 30, 2001,
    respectively............................................          64             65
  Common stock options/warrants.............................          --            287
  Paid-in capital...........................................      66,725         66,869
  Retained deficit..........................................     (14,931)       (15,473)
                                                                --------       --------
      Total stockholders' equity............................      51,858         51,748
                                                                --------       --------
      Total liabilities and stockholders' equity............    $143,973       $132,418
                                                                ========       ========
</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

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

<Table>
<Caption>
                                               THREE MONTHS ENDED          SIX MONTHS ENDED
                                                    JUNE 30,                   JUNE 30,
                                             -----------------------    -----------------------
                                                2000         2001          2000         2001
                                             ----------   ----------    ----------   ----------
<S>                                          <C>          <C>           <C>          <C>
Lodging revenues:
  Rooms....................................  $   51,913   $    1,386    $   94,908   $    2,451
  Other departmental.......................       3,164           37         5,894           73
Net management fees........................       7,861        6,404        14,045       12,880
Other fees.................................       2,727        4,437         5,628        7,945
                                             ----------   ----------    ----------   ----------
                                                 65,665       12,264       120,475       23,349
                                             ----------   ----------    ----------   ----------
Lodging expenses:
  Rooms....................................      11,999          299        22,465          570
  Other departmental.......................       1,915           21         3,509           45
  Property costs...........................      15,449          431        29,554          821
General and administrative.................       3,288        2,911         6,472        5,748
Payroll and related benefits...............       5,433        5,461        10,753       10,818
Lease expense..............................      24,221          188        44,377          282
Depreciation and amortization..............       4,300        2,782         8,588        5,575
                                             ----------   ----------    ----------   ----------
                                                 66,605       12,093       125,718       23,859
                                             ----------   ----------    ----------   ----------
Operating income (loss)....................        (940)         171        (5,243)        (510)
Other income (expense):
  Interest, net............................         538          (77)          984          (57)
  Other, net...............................          24          157            24          334
                                             ----------   ----------    ----------   ----------
Income (loss) before income tax expense
  (benefit)................................        (378)         251        (4,235)        (233)
Income tax expense (benefit)...............        (274)          79          (877)        (129)
                                             ----------   ----------    ----------   ----------
Income (loss) before minority interest.....        (104)         172        (3,358)        (104)
Minority interest..........................         307           54        (2,042)          90
                                             ----------   ----------    ----------   ----------
Net income (loss)..........................        (411)         118        (1,316)        (194)
Mandatorily redeemable preferred stock:
  Dividends................................          --          159            --          318
  Accretion................................          --           15            --           30
                                             ----------   ----------    ----------   ----------
Net loss available to common
  stockholders.............................  $     (411)  $      (56)   $   (1,316)  $     (542)
                                             ==========   ==========    ==========   ==========
Earnings per common share and common share
  equivalent:
  Basic....................................  $     (.07)  $     (.01)   $     (.21)  $     (.08)
                                             ==========   ==========    ==========   ==========
  Diluted..................................  $     (.07)  $     (.01)   $     (.21)  $     (.08)
                                             ==========   ==========    ==========   ==========
Weighted average number of common share and
  common share equivalents outstanding:
  Basic....................................   6,158,558    6,538,917     6,158,558    6,510,209
                                             ==========   ==========    ==========   ==========
  Diluted..................................   6,158,558    6,538,917     6,158,558    6,510,209
                                             ==========   ==========    ==========   ==========
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                        3
<PAGE>   5

                         INTERSTATE HOTELS CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (UNAUDITED, IN THOUSANDS)

<Table>
<Caption>
                                                               SIX MONTHS ENDED
                                                                   JUNE 30,
                                                              ------------------
                                                               2000       2001
                                                              -------    -------
<S>                                                           <C>        <C>
Cash flows from operating activities:
  Net loss..................................................  $(1,316)   $  (194)
  Adjustments to reconcile net loss to net cash from
     operating activities:
     Depreciation and amortization..........................    8,588      5,575
     Equity in earnings from unconsolidated subsidiaries....       --       (319)
     Minority interest......................................   (2,042)        90
     Deferred income taxes..................................   (1,758)      (793)
     Amortization of mandatorily redeemable preferred
      stock.................................................       --        376
     Other..................................................      572        287
  Cash (used in) provided by assets and liabilities:
     Accounts receivable, net...............................     (155)     1,711
     Other current assets...................................     (539)       555
     Accounts payable.......................................   (1,174)    (8,618)
     Accrued liabilities....................................    7,201     (7,985)
                                                              -------    -------
       Net cash provided by (used in) operating
        activities..........................................    9,377     (9,315)
                                                              -------    -------
Cash flows from investing activities:
  Change in restricted cash.................................       14        892
  Purchases of property and equipment, net..................     (217)      (388)
  Purchases of marketable securities........................   (1,151)    (2,377)
  Proceeds from sale of marketable securities...............    1,111      2,394
  Net cash invested in unconsolidated subsidiaries..........       --     (8,179)
  Change in officers and employees notes receivable, net....     (233)     1,078
  Net investment in management contracts....................      (71)      (471)
  Change in affiliates notes receivable, net................     (355)      (154)
  Other.....................................................      102       (229)
                                                              -------    -------
       Net cash used in investing activities................     (800)    (7,434)
                                                              -------    -------
Cash flows from financing activities:
  Proceeds from long-term debt..............................    7,560      4,169
  Repayment of long-term debt...............................      (31)       (49)
  Financing fees paid.......................................      (85)      (262)
  Proceeds from issuance of common stock....................       --        215
  Dividends paid on mandatorily redeemable preferred
     stock..................................................       --       (318)
  Related party payables....................................   (3,940)        (1)
  Common stock repurchased and retired......................       --        (71)
                                                              -------    -------
       Net cash provided by financing activities............    3,504      3,683
                                                              -------    -------
Net increase (decrease) in cash and cash equivalents........   12,081    (13,066)
Cash and cash equivalents at beginning of period............   22,440     51,327
                                                              -------    -------
Cash and cash equivalents at end of period..................  $34,521    $38,261
                                                              =======    =======
</Table>

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

                         INTERSTATE HOTELS CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
          (UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. ORGANIZATION AND BASIS OF PRESENTATION:

     Interstate Hotels Corporation (the "Company") was formed on June 18, 1999,
pursuant to a series of events culminating in the spin-off of the Company's
operations from Wyndham International, Inc. ("Wyndham") (the "Spin-off"). As of
June 30, 2001, the Company managed or performed related services for 134 hotels
with a total of 27,163 rooms in 36 states in the United States, and in Canada,
the Caribbean and Russia. These hotels are operated under a number of franchise
agreements, with the largest franchisors being Marriott International, Inc. and
Promus Hotels, Inc. The Company wholly owns one of these properties, the
156-suite Pittsburgh Airport Residence Inn by Marriott (the "Owned Hotel"), and
has non-controlling equity interests in 11 of these hotels.

     The consolidated financial statements of the Company consist of the
historical results of the Company and its subsidiaries and the operations of the
Owned Hotel from its respective date of acquisition.

     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 (the "SEC"). Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with 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 for the year ended December 31, 2000.

     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 the Company's 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.

2. EARNINGS PER SHARE:

     Basic earnings per common share was calculated by dividing net loss
available to common stockholders by the weighted average number of shares of
common shares outstanding. Diluted earnings per common share assumes the
issuance of common stock for all potentially dilutive equivalents outstanding.
The effect of the conversion of the Company's Subordinated Convertible Notes and
the Series B Convertible Preferred Stock into Class A Common Stock and the Class
A shares issuable upon the exercise of outstanding stock options

                                        5
<PAGE>   7
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
          (UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

2. EARNINGS PER SHARE--CONTINUED

are considered to be anti-dilutive. The details of basic and diluted earnings
per common share for the three-and six-month periods ended June 30, 2000 and
2001 were as follows:

<Table>
<Caption>
                                                THREE MONTHS ENDED          SIX MONTHS ENDED
                                                     JUNE 30,                   JUNE 30,
                                              -----------------------    -----------------------
                                                 2000         2001          2000         2001
                                              ----------   ----------    ----------   ----------
<S>                                           <C>          <C>           <C>          <C>
Net loss available to common stockholders...  $     (411)  $      (56)   $   (1,316)  $     (542)
                                              ----------   ----------    ----------   ----------
Weighted average number of common shares
  outstanding...............................   6,158,558    6,538,917     6,158,558    6,510,209
                                              ----------   ----------    ----------   ----------
Basic earnings per common share.............  $     (.07)  $     (.01)   $     (.21)  $     (.08)
                                              ----------   ----------    ----------   ----------
Shares issuable upon exercise of dilutive
  outstanding stock options.................          --           --            --           --
                                              ----------   ----------    ----------   ----------
Weighted average number of diluted common
  shares outstanding........................   6,158,558    6,538,917     6,158,558    6,510,209
                                              ----------   ----------    ----------   ----------
Diluted earnings per common share...........  $     (.07)  $     (.01)   $     (.21)  $     (.08)
                                              ==========   ==========    ==========   ==========
</Table>

3. COMMITMENTS AND CONTINGENCIES:

     The Company has committed to invest $25,000 of the total proceeds received
from the issuance of the Company's Subordinated Convertible Notes and the Series
B Convertible Preferred Stock into a joint venture with entities affiliated with
Lehman Brothers Holdings Inc. Such amount is expected to be invested
concurrently with the closings of hotel property acquisitions.

4. 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 hotels segment primarily derives revenues from management
fees and certain specialized support services, as well as the operating revenues
from the Owned Hotel.

     The table below presents revenue and operating income (loss) information
for each reportable segment for the three- and six-month periods ended June 30,
2000 and 2001.

<Table>
<Caption>
                                                 THREE MONTHS ENDED     SIX MONTHS ENDED
                                                      JUNE 30,              JUNE 30,
                                                 -------------------   ------------------
                                                   2000       2001       2000      2001
                                                 --------   --------   --------   -------
<S>                                              <C>        <C>        <C>        <C>
REVENUES:
Luxury and Upscale Hotels......................  $ 9,402    $ 8,798    $ 17,466   $16,568
Mid-Scale, Upper Economy and Budget
  Hotels(1)....................................   56,263      3,466     103,009     6,781
                                                 -------    -------    --------   -------
  Consolidated totals..........................  $65,665    $12,264    $120,475   $23,349
                                                 =======    =======    ========   =======
OPERATING INCOME (LOSS):
Luxury and Upscale Hotels......................  $  (768)   $   (25)   $ (2,602)  $  (829)
Mid-Scale, Upper Economy and Budget
  Hotels(1)....................................     (172)       196      (2,641)      319
                                                 -------    -------    --------   -------
  Consolidated totals..........................  $  (940)   $   171    $ (5,243)  $  (510)
                                                 =======    =======    ========   =======
</Table>

---------------
(1) The 2000 amounts include the operating revenues and expenses of previously
    leased hotels that are no longer reflected in the financial statements of
    the Company as a result of the Equity Inns Conversion. In 2001, the Company
    records revenues earned from management fees only. See Item 2, "Management's

                                        6
<PAGE>   8
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
          (UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

4. SEGMENT INFORMATION:--CONTINUED:

    Discussion and Analysis of Financial Condition and Results of Operations"
    for information on the Equity Inns Conversion.

     Depreciation and amortization included in segment operating income (loss)
information for the three-and six-month periods ended June 30, 2000 and 2001
were as follows:

<Table>
<Caption>
                                                     THREE MONTHS
                                                         ENDED         SIX MONTHS ENDED
                                                       JUNE 30,            JUNE 30,
                                                    ---------------    -----------------
                                                     2000     2001      2000      2001
                                                    ------   ------    -------   -------
<S>                                                 <C>      <C>       <C>       <C>
Luxury and Upscale Hotels.........................  $3,317   $2,273    $6,634    $4,560
Mid-Scale, Upper Economy and Budget Hotels........     983      509     1,954     1,015
                                                    ------   ------    ------    ------
  Consolidated totals.............................  $4,300   $2,782    $8,588    $5,575
                                                    ======   ======    ======    ======
</Table>

     The net book value of intangible and other assets and equity investments in
hotel real estate by segment consisted of the following at December 31, 2000 and
June 30, 2001:

<Table>
<Caption>
                                                              DECEMBER 31,   JUNE 30,
                                                                  2000         2001
                                                              ------------   --------
<S>                                                           <C>            <C>
Luxury and Upscale Hotels...................................    $30,524      $26,289
Mid-Scale, Upper Economy and Budget Hotels..................      5,269       13,993
                                                                -------      -------
  Consolidated totals.......................................    $35,793      $40,282
                                                                =======      =======
</Table>

     The following table reconciles the Company's measure of operating income
(loss) to consolidated net income (loss) for the three- and six-month periods
ended June 30, 2000 and 2001.

<Table>
<Caption>
                                                     THREE MONTHS
                                                        ENDED        SIX MONTHS ENDED
                                                       JUNE 30,          JUNE 30,
                                                     ------------    -----------------
                                                     2000    2001      2000      2001
                                                     -----   ----    --------   ------
<S>                                                  <C>     <C>     <C>        <C>
Total after-tax operating income (loss)............  $(565)  $102    $(3,146)   $(306)
Unallocated amounts, net of tax:
  Interest, net....................................    323    (46)       590      (34)
  Other, net.......................................     14     94         14      200
  Minority interest................................   (183)   (32)     1,226      (54)
                                                     -----   ----    -------    -----
Consolidated net income (loss).....................  $(411)  $118    $(1,316)   $(194)
                                                     =====   ====    =======    =====
</Table>

                                        7
<PAGE>   9

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

THREE AND SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE AND SIX MONTHS ENDED
JUNE 30, 2000

     Lodging revenues consist of rooms, food and beverage and other departmental
revenues from the Owned Hotel and one leased hotel. Lodging revenues decreased
by $53.7 million, or 97.4%, from $55.1 million in the three months ended June
30, 2000 (the "2000 Three Months") to $1.4 million in the three months ended
June 30, 2001 (the "2001 Three Months") and by $98.3 million, or 97.5%, from
$100.8 million in the six months ended June 30, 2000 (the "2000 Six Months") to
$2.5 million in the six months ended June 30, 2001 (the "2001 Six Months").
Pursuant to a Master Lease Termination Agreement dated September 12, 2000
between the Company and Equity Inns, Inc. ("Equity Inns"), all of the lease
agreements for 75 hotels previously leased from Equity Inns were terminated
effective January 1, 2001, and the Company and Equity Inns simultaneously
entered into management agreements for 54 of the hotels formerly leased to the
Company (the "Equity Inns Conversion"). As a result, effective January 1, 2001,
the operating revenues of these hotels are no longer reflected in the financial
statements of the Company. Instead, the Company records revenues from management
fees only. In the 2000 Three and Six Months, the Company recorded $53.6 million
and $98.1 million, respectively, of lodging revenues related to these leased
hotels.

     Net management fees decreased by $1.5 million, or 18.5%, from $7.9 million
in the 2000 Three Months to $6.4 million in the 2001 Three Months and by $1.1
million, or 8.3%, from $14.0 million in the 2000 Six Months to $12.9 million in
the 2001 Six Months. Pursuant to the Company's redemption of substantially all
of Wyndham's 55% non-controlling ownership interest in Interstate Hotels, LLC
("IH LLC") in the fourth quarter of 2000, the Company's management agreements
for seven Wyndham-owned hotels were terminated. During 2000, the Company earned
management fee revenue of $0.6 million in the three-month period and $1.3
million in the six-month period. In addition, the Company earned lower incentive
management fee revenue on three full-service hotels during the three- and
six-month periods in 2001 in the amounts of $1.1 million and $1.4 million,
respectively, due to recent market downturns. This decrease in net management
fees was offset by additional management fee revenue of $0.4 million during the
2001 Three Months and $0.8 million during the 2001 Six Months earned from hotels
as a result of the Equity Inns Conversion, as discussed above. In accordance
with Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements," base and incentive management fees are accrued as earned based on
the profitability of the hotel, subject to the specific terms of each individual
management agreement.

     Other fees increased by $1.7 million, or 62.7%, from $2.7 million in the
2000 Three Months to $4.4 million in the 2001 Three Months and by $2.3 million,
or 41.2%, from $5.6 million in the 2000 Six Months to $7.9 million in the 2001
Six Months. This increase was primarily due to an increase in insurance income
of $1.2 million during the 2001 Three Months and $1.0 million during the 2001
Six Months as a result of an increase in insurance premium revenue.

     Lodging expenses consist of rooms, food and beverage, property costs and
other departmental expenses from the Owned Hotel and one leased hotel. Lodging
expenses decreased by $28.6 million, or 97.4%, from $29.4 million in the 2000
Three Months to $0.8 million in the 2001 Three Months and by $54.1 million, or
97.4%, from $55.5 million in the 2000 Six Months to $1.4 million in the 2001 Six
Months. As a result of the Equity Inns Conversion effective January 1, 2001, the
operating expenses of the previously leased hotels are no longer reflected in
the financial statements of the Company. Instead, the Company records revenues
from management fees only. In the 2000 Three and Six Months, the Company
recorded $28.6 million and $54.1 million, respectively, of lodging expenses
related to these 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 $0.4 million, or 11.5%, from $3.3 million in the 2000
Three Months to $2.9 million in the 2001 Three Months and by $0.8 million, or
11.2%, from $6.5 million in the 2000 Six Months to $5.7 million in the 2001 Six
Months. During the 2000 Six Months, the Company incurred $0.7 million of
expenses for reserves for doubtful accounts related to notes receivable. The
Company incurred no such expenses during the 2001 Six Months. General and
administrative expenses as a percentage of revenues increased to 23.7% during
the 2001
                                        8
<PAGE>   10

Three Months compared to 5.0% during the 2000 Three Months and to 24.6% during
the 2001 Six Months compared to 5.4% during the 2000 Six Months. This increase
was due to the decrease in total revenues resulting from the Equity Inns
Conversion.

     Payroll and related benefits increased slightly from $5.4 million in the
2000 Three Months to $5.5 million in the 2001 Three Months and from $10.7
million in the 2000 Six Months to $10.8 million in the 2001 Six Months. This
increase was primarily due to variable plan stock option expense incurred by the
Company for the repricing of stock options that were previously granted under
the Company's Equity Incentive Plan. Under the terms of the repricing, each
optionee was given the right to elect to keep their options at the stated
exercise price of $4.50 or to return 40% of their options, but reducing the
exercise price to $2.00 for their remaining options. As a result, 939,500
options were cancelled and replaced with 563,700 options at an exercise price of
$2.00. In future periods, fluctuations in the Company's stock price will have a
non-cash effect on the future results of operations under variable plan
accounting for these options. Payroll and related benefits as a percentage of
revenues increased to 44.5% during the 2001 Three Months compared to 8.3% during
the 2000 Three Months and to 46.3% during the 2001 Six Months compared to 8.9%
during the 2000 Six Months. This increase was due to the decrease in total
revenues resulting from the Equity Inns Conversion.

     Lease expense represents base rent and participating rent that is based on
a percentage of rooms and food and beverage revenues from one leased hotel.
Lease expense decreased by $24.0 million, or 99.2%, from $24.2 million in the
2000 Three Months to $0.2 million in the 2001 Three Months and by $44.1 million,
or 99.4%, from $44.4 million in the 2000 Six Months to $0.3 million in the 2001
Six Months. As a result of the Equity Inns Conversion effective January 1, 2001,
the Company no longer incurs lease expense related to the previously leased
hotels.

     Depreciation and amortization decreased by $1.5 million, or 35.3%, from
$4.3 million in the 2000 Three Months to $2.8 million in the 2001 Three Months
and by $3.0 million, or 35.1%, from $8.6 million in the 2000 Six Months to $5.6
million in the 2001 Six Months. This decrease was partially due to the Equity
Inns Conversion that resulted in a non-cash impairment loss of $12.6 million in
2000 related to the carrying value of the Company's long-term intangible assets.
This loss reduced the Company's investment in lease agreements and resulted in
decreased amortization of $0.6 million in the 2001 Six Months. In addition,
during the fourth quarter of 2000, the Company redeemed from affiliates of
Wyndham substantially all of their 55% non-controlling ownership interest in
Interstate Hotels, LLC ("IH LLC"), a subsidiary of the Company, that Wyndham
retained after the Spin-off. This redemption resulted in a $14.1 million
reduction of the carrying value of long-term intangible assets related to the
Company's investment in management agreements and resulted in decreased
amortization of $2.6 million in the 2001 Six Months.

     As a result of the changes noted above, operating income of $0.2 million
was earned in the 2001 Three Months as compared to an operating loss of $0.9
million in the 2000 Three Months. In the six-month periods, an operating loss of
$0.5 million was incurred in 2001 as compared to an operating loss of $5.2
million in 2000.

     Net interest income of $0.5 million was recorded in the 2000 Three Months
as compared to net interest expense of $0.1 million in the 2001 Three Months
primarily due to $0.5 million of incremental interest expense that was incurred
by the Company related to the $25.0 million Subordinated Convertible Notes. In
the six-month periods, net interest income of $1.0 million was recorded in 2000
as compared to net interest expense of $0.1 million in 2001.

     Other income of $0.2 million in the 2001 Three Months and $0.3 million in
the 2001 Six Months consisted of equity in earnings related to four
non-controlling equity investments.

     Income tax expense (benefit) for 2000 and 2001 was computed based on an
effective tax rate of 40% after reduction of minority interest.

     Minority interest in 2000 reflected Wyndham's 55% non-controlling interest
in IH LLC. Minority interest in 2001 reflected the reduction of Wyndham's common
interest in IH LLC in the fourth quarter of 2000 to a 1.6627% interest, as
discussed above.

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<PAGE>   11

     As a result of the changes noted above, net income of $0.1 million was
earned in the 2001 Three Months as compared to a net loss of $0.4 million in the
2000 Three Months. In the six-month periods, a net loss of $0.2 million was
incurred in 2001 as compared to a net loss of $1.3 million in 2000.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash and cash equivalent assets were $38.3 million at June
30, 2001 compared to $51.3 million at December 31, 2000, and current assets
exceeded current liabilities by $25.2 million at June 30, 2001 compared to $24.0
million at December 31, 2000. At June 30, 2001, the Company's cash and cash
equivalents included $8.6 million that was paid to Wyndham in July 2001 in
connection with the Company's redemption of Wyndham's 55% non-controlling
interest in IH LLC. In addition, the Company has committed to invest $25.0
million of its cash and cash equivalents into a joint venture with entities
affiliated with Lehman Brothers Holdings Inc.

     Net cash used in operating activities was $9.3 million during the 2001 Six
Months compared to net cash provided by operating activities of $9.4 million
during the 2000 Six Months. The decrease resulted primarily from an increase in
operating income (adjusted for non-cash items) of $1.0 million from 2000 to
2001, offset by a decrease of $19.7 million in cash used in changes in assets
and liabilities, primarily as a result of the payment of accrued rent and other
current liabilities associated with the previously leased hotels.

     Net cash used in investing activities was $7.4 million during the 2001 Six
Months compared to net cash used in investing activities of $0.8 million during
the 2000 Six Months. In March 2001, the Company invested $8.5 million for a 50%
non-controlling equity interest in eight hotels. The Company's capital
expenditure budget for the year ending December 31, 2001 is approximately $0.5
million consisting primarily of expenditures for computer and systems-related
equipment. In addition, the Company has committed to invest $25.0 million of the
total proceeds received from the issuance of the $25.0 million Subordinated
Convertible Notes and the $5.0 million Series B Convertible Preferred Stock into
a joint venture with entities affiliated with Lehman Brothers Holdings Inc. Such
amount is expected to be invested concurrently with the closings of hotel
property acquisitions. As of August 13, 2001, no amounts have been invested.

     The Company acquired a 20% non-controlling interest in a partnership that
owns the Renaissance Worldgate Hotel in Kissimmee, Florida during the fourth
quarter of 2000. As of June 30, 2001, the Company's net book value of its equity
investment in the hotel was approximately $3.3 million and the Company's
accounts receivable for management fees and reimbursable costs from this hotel
amounted to approximately $0.9 million. The hotel is currently experiencing a
severe market downturn, which is believed by the Company's management to be
temporary. This financial difficulty has resulted in the majority owners and the
property lenders pursuing a financial restructuring to meet its current
obligations. The Company's management currently believes that the accounts
receivable will be collected and that the equity investment is recoverable. The
Company's management will continue to evaluate the recoverability of the
accounts receivable and the equity investment on a quarterly basis based on the
financial results of the hotel and any final restructuring agreements reached by
the majority owners and lenders. There is no assurance that the restructuring
will be completed or, if so, the timing or terms thereof. The majority owners
and the principle lender for the hotel have representation on the Company's
board of directors and are affiliates with the holders of the Subordinated
Convertible Notes and the Series B Convertible Preferred Stock.

     Net cash provided by financing activities was $3.7 million during the 2001
Six Months compared to net cash provided by financing activities of $3.5 million
during the 2000 Six Months. In March 2001, the Company entered into a $4.2
million promissory note to fund the acquisition of a 50% non-controlling equity
interest in eight hotels. Interest on the note is payable monthly at the rate of
12% per annum and the outstanding principal balance is due and payable on
December 31, 2010. In February 2000, the Company entered into a $7.6 million
limited-recourse mortgage note that is collateralized by the Company's Owned
Hotel.

     On July 31, 2001, the Company entered into a $40.0 million senior secured
credit facility co-arranged by Lehman Brothers Holdings Inc., d/b/a Lehman
Capital, and Credit Lyonnais New York Branch. The credit facility, which may be
used to obtain management agreements for hotel properties and to finance the
                                        10
<PAGE>   12

acquisition of hotel properties, has a two-year term and carries varying rates
of interest. In addition to mandatory prepayment provisions, the credit facility
contains restrictive covenants, including the maintenance of financial ratios,
restrictions on the payment of dividends and limitations on additional
indebtedness. As of August 8, 2001, there were no borrowings against the credit
facility and the Company was in compliance with all of the restrictive
covenants.

     In accordance with the terms of IH LLC's limited liability company
agreement, and prior to the execution of the redemption of substantially all of
Wyndham's 55% non-controlling interest, the Company was required to distribute
55% of IH LLC's cash flows from operations to Wyndham through October 31, 2000.
Thereafter, the Company is required to distribute 1.6627% of IH LLC's cash flows
from operations based on Wyndham's remaining common interest in IH LLC. As part
of this redemption, Wyndham retained a preferred membership interest that was
redeemed by IH LLC in July 2001 for $8.25 million plus accrued interest. The
Company's required distribution to Wyndham for the period from January 1, 2000
through October 31, 2000 totaled $2.5 million and is expected to be paid in the
third quarter of 2001.

     In February 2001, the Company's Board of Directors approved a stock
repurchase program providing for the purchase of shares of its Class A Common
Stock, with an aggregate purchase price of up to $2.0 million. During the second
quarter of 2001, the Company purchased, and subsequently cancelled, 26,300
shares of its Class A Common Stock for an aggregate purchase price of
approximately $70,000. During the third quarter of 2001 and as of August 13,
2001, the Company purchased, and subsequently cancelled, an additional 468,800
shares of its Class A Common Stock for an aggregate purchase price of
approximately $1.3 million.

     The Company intends to pursue future opportunities to manage hotels on
behalf of third-party owners, including through the joint venture, 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 the proceeds from the
issuance of the Subordinated Convertible Notes and the Series B Convertible
Preferred Stock, together with the credit facility, cash on hand and future cash
flows from operations, will be sufficient to pursue its business strategy and to
fund its presently foreseeable capital requirements.

NEW ACCOUNTING PRONOUNCEMENTS

     During the second quarter of 2001, the SEC proposed an announcement,
"Accounting for Management Fees Based on a Formula." This pronouncement is
consistent with the Company's method of recognizing incentive management fee
revenue. No significant financial impact is expected as a result of the
pronouncement.

     The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets," on June
30, 2001. Management is currently investigating the impact of this new
pronouncement on the accounting for its intangible assets. Management does not
expect the implementation of this new pronouncement to have a significant impact
on the Company's financial position or its results of operation.

FORWARD-LOOKING STATEMENTS

     In addition to historical information, 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 or phrases such as "will likely result,"
"are expected to," "will continue," "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

                                        11
<PAGE>   13

effect on those trends by such factors as industry capacity, the seasonal nature
of the lodging industry and product demand and pricing.

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 material to the Company at this time. The
Company does not have any foreign currency or commodities contracts. Interest
rates governing the majority of the Company's outstanding debt are fixed and
therefore not subject to market risk.

                                        12
<PAGE>   14

                           PART II--OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     In January 2001, Columbus Hotels Properties, LLC sought termination of
eight hotel management agreements and a master agreement between it and a
subsidiary of the Company. In response to this attempt to terminate the
agreements, the Company filed a demand for arbitration with the American
Arbitration Association. Following the Company's demand for arbitration,
Columbus Hotel Properties, LLC and Corporate Capital, LLC commenced an action
against Interstate Hotels Company, Crossroads Hospitality Company (sic) and
Crossroads Hospitality Management Company, which are subsidiaries of the
Company, on March 22, 2001 in the Civil District Court for the Parish of Orleans
in the State of Louisiana. The action alleges, among other things, fraudulent
misrepresentations inducing the plaintiff to enter into a master agreement and
certain hotel management agreements and to purchase the Company's common stock.
In addition, the action alleges gross negligence in defendants' performance
under those agreements and breach of the agreements and fiduciary duties to the
plaintiffs. The action seeks, among other things, compensatory and consequential
damages in such amounts as may be determined by a jury, termination of the
agreements and a rescission of certain transactions between the parties.

     The Company's management believes that this legal proceeding will not have
a material effect on the Company's financial condition or results of its
operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     The annual meeting of the stockholders of Interstate Hotels Corporation was
held on June 14, 2001. The Class A Common Stockholders of record at the close of
business of April 19, 2001 elected two Class A-2 Directors to the Company's
Board of Directors, with votes cast as follows:

<Table>
<Caption>
      NOMINEE         VOTES FOR   VOTES WITHHELD
--------------------  ---------   --------------
<S>                   <C>         <C>
Benjamin D. Holloway  5,051,105      424,819
John J. Russell, Jr.  5,051,126      424,798
</Table>

     Marriott Hotel Services, Inc., the holder of the Company's Class B Common
Stock, voted all its shares of Class B Common Stock in favor of the re-election
of Stephen P. Joyce, as the sole Class B Director. In addition, CGLH Partners I
LP, the holder of the Company's Series B Preferred Stock, voted all its shares
of Series B Preferred Stock in favor of the re-election of Karim J. Alibhai,
Joseph J. Flannery, Alan J. Kanders, Mahmood J. Khimji and Sherwood M. Weiser,
as the Series B Preferred Directors. The following directors continued their
terms as directors: J. William Richardson, as Class A-1 Director, and Thomas F.
Hewitt and Phillip H. McNeill, Sr., as Class A-3 Directors.

     The stockholders also voted to ratify the appointment of
PricewaterhouseCoopers LLP as the independent accountants to audit the financial
statements of the Company for fiscal year 2001, with votes cast as follows:
5,099,054 votes for, 7,928 votes against and 611,497 votes abstained.

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

     (a) Exhibits.

          None.

     (b) Reports on Form 8-K.

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

                                        13
<PAGE>   15

                                   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: August 14, 2001                     By:   /s/ J. WILLIAM RICHARDSON
                                            ------------------------------------
                                                   J. William Richardson
                                             Vice Chairman and Chief Financial
                                                           Officer
                                               (Principal Financial Officer)

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