EXHIBIT 10.4



                           APPLE HOSPITALITY TWO, INC.

                  2001 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

















                                                          Effective _______,2001


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                           APPLE HOSPITALITY TWO, INC.

                  2001 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

PURPOSE.  The purpose of this Apple  Hospitality  Two,  Inc.  2001  Non-Employee
Directors  Stock  Option Plan (the  "Plan") is to  encourage  ownership in Apple
Hospitality  Two, Inc. (the "Company") by non-employee  members of the Board, in
order to promote long-term stockholder value and to provide non-employee members
of the Board with an incentive to continue as directors of the Company.

DEFINITIONS.  As used  in the  Plan,  the  following  terms  have  the  meanings
indicated:

"Act" means the Securities Exchange Act of 1934, as amended.

"Board" means the board of directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended.

"Company" means Apple Hospitality Two, Inc., a Virginia corporation.

"Company  Stock" means common stock,  no par value,  of the Company.  If the par
value  of the  Company  Stock is  changed,  or in the  event of a change  in the
capital  structure  of the  Company  (as  provided  in Section  12),  the shares
resulting  from such a change  shall be deemed to be  Company  Stock  within the
meaning of the Plan.

"Date of Grant" means the date as of which an Eligible Director is automatically
awarded an Option pursuant to Section 7.

"Disability"  or "Disabled"  means a physical or mental  condition that prevents
the director from  performing his customary  duties with the Company.  The Board
shall determine  whether a Disability  exists on the basis of competent  medical
evidence, and such determination shall be conclusive.

"Eligible Director" means a director described in Section 4.

"Employer"  means the Company,  Apple Suites  Advisors,  Inc.,  and Apple Suites
Realty Group, Inc.

"Fair Market Value" means, on any given date, (i) if the Company Stock is traded
on an exchange, the closing registered sales prices of the Company Stock on such
day on the exchange on which it generally has the greatest trading volume,  (ii)
if the  Company  Stock is traded on the  over-the-counter  market,  the  average
between the closing bid and asked  prices on such day as reported by NASDAQ,  or
(iii) if the Company  Stock is not traded on any  exchange  or  over-the-counter
market,  the fair  market  value  shall be  determined  by the  Board  using any
reasonable method in good faith.

"Initial  Closing" means the first closing of the Offering that will occur after
the Minimum Offering is achieved.

"Insider" means a person subject to Section 16(b) of the Act.

"Minimum Offering" means the sale of the initial 10,000,000 in shares of Company
Stock pursuant to the Offering.

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"Offering" means, collectively,  (1) the sale of up to $200,000,000 in shares of
Company  Stock  to the  public  and the  registration  of such  shares  with the
Securities  and Exchange  Commission,  as authorized by resolutions of the Board
dated  ___________,  2001  (the  "Initial  Offering"),  and (2) the  sale of any
additional  shares of Company Stock to the public and the  registration  of such
shares with the Securities and Exchange Commission, as authorized by resolutions
of the Board from time to time,  which sales occur before the expiration of five
years from ________, 2001 (the "Additional Offerings").

"Option"  means a right to acquire  Company  Stock  granted under the Plan, at a
price determined in accordance with the Plan.

Administration.  The Plan shall be administered  by the Board.  Options shall be
granted as  described  in Section 7.  However,  the Board  shall have all powers
vested  in it by the  terms of the  Plan,  including,  without  limitation,  the
authority (within the limitations described herein) to prescribe the form of the
agreement embodying the grant of Options, to construe the Plan, to determine all
questions  arising under the Plan, and to adopt and amend rules and  regulations
for the administration of the Plan as it may deem desirable. Any decision of the
Board in the administration of the Plan, as described herein, shall be final and
conclusive.  The Board may act only by a  majority  of its  members  in  office,
except that members thereof may authorize any one or more of their number or any
officer of the Company to execute and deliver  documents on behalf of the Board.
No member of the Board shall be liable for  anything  done or omitted to be done
by him or any other member of the Board in connection with the Plan,  except for
his own willful misconduct or as expressly provided by statute. Participation in
the Plan.  Each  director of the Company who is not otherwise an employee of the
Employer  or any  subsidiary  of the  Company  and  was not an  employee  of the
Employer  or  subsidiary  for a period of at least one year  before  the Date of
Grant shall be eligible to participate in the Plan.

Stock  Subject to the Plan.  Subject to Section 12 of the Plan,  there  shall be
reserved  for issuance  under the Plan an aggregate of 45,000  shares of Company
Stock  plus 1.8% of the total  number of  shares of  Company  Stock  sold in the
Offering  in excess of the Minimum  Offering,  which  shall be  authorized,  but
unissued  shares.  Shares allocable to Options or portions thereof granted under
the Plan that expire or otherwise  terminate  unexercised may again be subjected
to an Option under the Plan.

Non-Statutory  Stock  Options.  All  options  granted  under  the Plan  shall be
non-statutory in nature and shall not be entitled to special tax treatment under
Code section 422.

Award, Terms,  Conditions and Form of Options. Each Option shall be evidenced by
a written  agreement in such form as the Board shall from time to time  approve,
which  agreement  shall  comply with and be subject to the  following  terms and
conditions:

Automatic Award of Option.

As of the Initial Closing, each Eligible Director shall automatically receive an
Option to purchase  5,500 shares of Company  Stock plus 0.0125% of the number of
shares of Company  Stock in excess of the Minimum  Offering  sold by the Initial
Closing.

As of each June 1 during the years 2002 through 2006 (inclusive),  each Eligible
Director  shall  automatically  receive an Option to purchase 0.02% of the total
number of shares of Company Stock issued and outstanding on that date. As of the
election as a director of any new person who qualifies as an Eligible  Director,
such Eligible Director shall  automatically  receive an Option to purchase 5,000
shares of Company Stock.

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If at any time under the Plan there are not sufficient shares available to fully
permit the  automatic  Option  grants  described in this  paragraph,  the Option
grants shall be reduced pro rata (to zero if  necessary) so as not to exceed the
number of shares available.

Option Exercise Price.  The Option exercise price shall be the Fair Market Value
of the shares of Company Stock subject to the Option on the Date of Grant.

Options Not  Transferable.  An Option shall not be  transferable by the optionee
otherwise than by will, or by the laws of descent and distribution, and shall be
exercised during the lifetime of the optionee only by him. An Option transferred
by will or by the laws of  descent  and  distribution  may be  exercised  by the
optionee's personal representative within one year of the date of the optionee's
death to the extent the optionee  could have exercised the Option on the date of
his death. No Option or interest therein may be transferred,  assigned,  pledged
or hypothecated by the optionee during his lifetime, whether by operation of law
or otherwise, or be made subject to execution, attachment or similar process.

Exercise of Options. In no event shall an Option be exercisable earlier than six
months  from the later of the Date of Grant or the date of  approval of the Plan
by stockholders of the Company.  Furthermore, no Option may be exercised: unless
at such time the  optionee  is a director  of the  Company,  except  that he may
exercise the Option within three years of the date he ceases to be a director of
the Company if he ceased to be a director more than six months after the Date of
Grant of the Option;  after the  expiration of ten years from the Date of Grant;
and except by written notice to the Company at its principal office, stating the
number of shares the optionee has elected to purchase, accompanied by payment in
cash and/or by delivery  to the  Company of shares of Company  Stock  (valued at
Fair  Market  Value on the date of  exercise)  in the amount of the full  Option
exercise price for the shares of Company Stock being acquired thereunder.

Withholding.  If the Company is  required  by law to  withhold  federal or state
income taxes when an Option is  exercised,  the Company  shall have the right to
retain or sell without notice shares of Company Stock having a Fair Market Value
sufficient on such date or dates as may be determined by the Board (but not more
than five business  days prior to the date on which such shares would  otherwise
have been  delivered)  to cover the amount of any  federal  or state  income tax
required to be  withheld or  otherwise  deducted  and paid with  respect to such
payment and the exercise of the Option,  remitting  any balance to the optionee;
provided,  however,  that  the  optionee  shall  have the  right  to make  other
arrangements  satisfactory  to the Company or to provide  the  Company  with the
funds to enable it to pay such tax.  Notwithstanding the foregoing,  the Company
shall not sell  shares of Company  Stock if the  Optionee is an Insider and such
sale will cause the  Optionee to incur a liability  under  Section  16(b) of the
Exchange Act.  Modification,  Extension and Renewal of Options.  The Board shall
have the power to modify,  extend or renew outstanding  Options and to authorize
the grant of new Options in substitution therefor, provided that any such action
may not enhance the rights of the optionee without stockholder  approval or have
the effect of altering,  enhancing or impairing any rights or obligations of any
person under any Option previously granted without the consent of the optionee.

Termination.  The Plan shall  terminate  upon the earlier of: the  adoption of a
resolution of the Board terminating the Plan; or _________, 2011.

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No  termination  of the Plan shall without his consent  materially and adversely
affect  any of  the  rights  or  obligations  of any  person  under  any  Option
previously granted under the Plan.

Limitation of Rights.

No Right to  Continue as a  Director.  Neither  the Plan nor the  granting of an
Option nor any other action taken  pursuant to the Plan shall  constitute  or be
evidence of any agreement or understanding, express or implied, that the Company
will retain any person as a director for any period of time.

No  Stockholders  Rights Under  Options.  An optionee  shall have no rights as a
stockholder  with  respect to shares  covered  by his  Option  until the date of
exercise of the  Option,  and,  except as provided in Section 12, no  adjustment
will be made for dividends or other rights for which the record date is prior to
the date of such exercise.

Changes in Capital Structure.

In the  event  of a stock  dividend,  stock  split  or  combination  of  shares,
recapitalization or merger in which the Company is the surviving  corporation or
other change in the Company's capital stock (including,  but not limited to, the
creation or issuance to  shareholders  generally of rights,  options or warrants
for the purchase of common stock or preferred stock of the Company),  the number
and kind of shares of stock or  securities  of the  Company to be subject to the
Plan and to Options then  outstanding or to be granted  thereunder,  the maximum
number of shares  or  securities  which  may be  delivered  under the Plan,  the
exercise price and other relevant provisions shall be appropriately  adjusted by
the  Board,  whose  determination  shall  be  binding  on  all  persons.  If the
adjustment  would  produce  fractional  shares with  respect to any  unexercised
Option,  the Board may adjust  appropriately the number of shares covered by the
Option so as to eliminate the fractional shares.

If the Company is a party to a consolidation or a merger in which the Company is
not the surviving corporation,  a transaction that results in the acquisition of
substantially  all of the  Company's  outstanding  stock by a single  person  or
entity, or a sale or transfer of substantially all of the Company's assets,  the
Board may take such  actions with  respect to  outstanding  Options as the Board
deems appropriate.

Notwithstanding  anything  in the Plan to the  contrary,  the Board may take the
foregoing   actions  without  the  consent  of  any  optionee  and  the  Board's
determination shall be conclusive and binding on all persons for all purposes.

Amendment  of the Plan.  The Board  (except as  provided  below) may  suspend or
discontinue  the Plan or  revise  or amend  the Plan in any  respect;  provided,
however, that without approval of the stockholders of the Company no revision or
amendment  shall  increase  the number of shares  subject to the Plan (except as
provided  in  Section  12) or  materially  increase  the  benefits  accruing  to
participants  under the Plan. The Plan shall not be amended more than once every
six months  other  than an  amendment  required  to comply  with  changes in the
Internal Revenue Code or the Employee  Retirement Income Security Act of 1974 or
regulations thereunder.

Notwithstanding the foregoing, the Board may unilaterally amend the Plan and the
terms of Options granted  hereunder to ensure  compliance with Rule 16b-3 of the
Securities and Exchange Commission promulgated under the Securities Exchange Act
of 1934, as amended.

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Notice. All notices and other  communications  required or permitted to be given
under this Plan shall be in writing  and shall be deemed to have been duly given
if delivered  personally or mailed first class, postage prepaid, as follows: (a)
if the  Company - at its  principal  business  address to the  attention  of the
President;  (b) if to any  participant - at the last address of the  participant
know to the sender at the time the notice or other communication is sent.

Governing  Law.  The terms of this  Plan  shall be  governed  by the laws of the
Commonwealth of Virginia.



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         IN WITNESS  WHEREOF,  the  Company  has caused this Plan to be executed
this __th day of __________, 2001.


                                      APPLE HOSPITALITY TWO, INC.



                                      By
                                        -------------------------
                                           Glade M. Knight,
                                           Chairman of the Board