EXHIBIT 10.1

                               ADVISORY AGREEMENT

                                     BETWEEN

                           APPLE HOSPITALITY TWO, INC.

                                       AND

                           APPLE SUITES ADVISORS, INC.
                               ADVISORY AGREEMENT



         THIS ADVISORY AGREEMENT, dated as of ________________, 2001, is between
APPLE HOSPITALITY TWO, INC., a Virginia  corporation (the "Company"),  and APPLE
SUITES ADVISORS, INC., a Virginia corporation (the "Advisor").

                                    RECITALS

         The  purpose  of the  Company  is to  invest  primarily  in  upper-end,
extended-stay  hotel  properties  in selected  metropolitan  areas of the United
States and, to a lesser extent, in certain other permitted investments described
in the Prospectus (as hereinafter defined).  The Company intends to qualify as a
real  estate  investment  trust  pursuant  to  Sections  856  through 860 of the
Internal Revenue Code of 1986, as amended.

         The  Company  desires  to engage the  Advisor  to provide  information,
advice,  assistance  and  facilities  to the  Company  and to have  the  Advisor
undertake the duties and responsibilities  hereinafter set forth, all subject to
the supervision of the Company's Board of Directors, on the terms and conditions
set forth herein.  In  consideration  therefor,  the Company  desires to pay the
Advisor certain fees as herein set forth.

         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants and agreements contained herein, the parties agree as follows:

<PAGE>

DEFINITIONS.  For purposes of this Agreement, the following terms shall have the
meanings set forth below.

"Affiliate" means (i) any Person directly or indirectly controlling,  controlled
by or under  common  control  with  another  Person,  (ii) any Person  owning or
controlling  10% or more of the  outstanding  voting  securities  or  beneficial
interests of such other Person, (iii) any officer,  director, trustee or general
partner of such Person and (iv) if such other  Person is an  officer,  director,
trustee or partner of another entity, then the entity for which that Person acts
in any such  capacity.  "Affiliated"  means  being an  Affiliate  of a specified
Person.

"Articles of Incorporation"  means the Company's Articles of Incorporation filed
with the  Virginia  State  Corporation  Commission,  including  all  amendments,
restatements or modifications thereof.

"Asset  Management  Fee" means the fee payable to the  Advisor for its  services
hereunder.  Such fee will be paid  pursuant  and  subject  to Section 11 of this
Agreement.

"Average Invested Assets" for any period means the average of the aggregate book
value of the assets of the Company invested,  directly or indirectly,  in equity
interests in and loans secured by real estate,  before reserves for depreciation
or bad debts or other similar non-cash reserves,  computed by taking the average
of such values at the end of each month during such period.

"Board of Directors" means the Company's Board of Directors as of any particular
time.

"Bylaws" means the Company's Bylaws,  including all amendments,  restatements or
modifications thereof.

"Calendar  Year"  means the year ended  December  31st and any  portion  thereof
treated by the Internal Revenue Service as a reporting period for the Company.

"Code"  means the Internal  Revenue Code of 1986,  as amended from time to time,
including successor statutes thereto.

"Company Net Income" for any period means the total  revenues of the Company for
such period,  less expenses  applicable  to such period other than  additions to
reserves  for  depreciation  or bad debts or other  similar  non-cash  reserves.
"Company Net Income," for purposes of calculating  Operating Expenses in Section
15 of this  Agreement,  does not include the gain from the sale of the Company's
assets.

"Directors"  means,  as of any  particular  time,  the  directors of the Company
holding office at such time.

"Independent  Director"  means a Director of the Company who is not  Affiliated,
directly or  indirectly,  with the Advisor,  whether by ownership of,  ownership
interest in, employment by, any material  business or professional  relationship
with,  or serving as an officer or director  of, the

<PAGE>


Advisor,  or an  Affiliated  business  entity of the  Advisor  (other than as an
Independent  Director of up to three other real estate investment trusts advised
by the Advisor or an  Affiliate of the  Advisor).  An  Independent  Director may
perform no other services for the Company, except as a Director. Notwithstanding
anything to the contrary  herein,  any member of a law firm whose only  material
business or professional  relationship  with the Company,  the Advisor and their
Affiliates  is as legal  counsel to any of such  entities  shall  constitute  an
Independent  Director  (unless  such person  serves as a director  for more than
three  real  estate   investment   trusts  organized  by  the  Advisor  and  its
Affiliates). An "indirect" affiliation shall be deemed to refer to circumstances
in which a member of the "immediate family" of a Director is Affiliated with the
Advisor,  and a person's  "immediate  family" shall mean such  person's  spouse,
parents, children, siblings, mother and father-in-law, sons and daughters-in-law
and brothers and sisters-in-law.

"Modified Net Income" means net income  (computed in accordance  with  generally
accepted   accounting   principles)   excluding  gains  (or  losses)  from  debt
restructuring  and sales of property,  plus  depreciation of real property,  and
after  adjustments  for  significant   non-recurring  items  and  unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated partnerships and
joint  ventures will be  calculated to reflect funds from  operation on the same
basis.

"Offering" means the public offering of the Company's Common Shares.

"Operating Expenses" means all operating, general and administrative expenses of
the  Company  as  determined  under  generally  accepted  accounting  principles
(including regular compensation payable to the Advisor), excluding, however, the
following:

expenses of raising capital;

interest payments;

taxes;

non-cash expenditures, such as depreciation, amortization and bad debt reserves;

incentive fees paid to the Advisor, if any; and

costs related directly to asset acquisition, operation and disposition.

"Organizational and Offering Expenses" means all expenses incurred in connection
with the  formation  and  registration  of the  Company  and in  qualifying  and
marketing  the Shares  under  applicable  federal  and state law,  and any other
expenses   actually   incurred  and  directly  related  to  the   qualification,
registration,  offer and sale of the Shares,  including such expenses as (i) all
marketing  expenses and  payments  made to  broker-dealers  as  compensation  or
reimbursement  for all costs of reviewing the Offering,  including due diligence
investigations  and fees and expenses of their attorneys,  accountants and other
experts;  (ii)  registration  fees,  filing  fees and taxes;  (iii) the costs of
printing,  amending,  supplementing and distributing the registration  statement
and  Prospectus;  (iv) the costs of  obtaining  regulatory  clearances  of,  and
printing and distributing, sales materials used in connection with the offer and
sale of the Shares;  (v) the costs related to investor and  broker-dealer  sales
meetings concerning the Offering; and (vi) accounting and legal fees incurred in
connection with any of the foregoing.

<PAGE>

"Person"  includes  an  individual,  corporation,  partnership,  joint  venture,
association,  company, trust, bank or other entity, or government and any agency
and political subdivision of a government.

"Property" or "Properties"  means partial or entire equity interests,  including
equity participation  interests such as general partnership  interests and joint
venture  interests,  owned by the Company in real  property as  described in the
Prospectus.

"Prospectus"  has the  meaning  given  to  that  term by  Section  2(10)  of the
Securities  Act of 1933,  as  amended,  and as used  herein,  the term means the
Prospectus  of the  Company  pursuant  to which the  Shares  are  offered to the
public.

"Return  Ratio" means,  for any period,  the ratio of [Funds from  Operation] to
Total Contributions.

"Shares"  or "Common  Shares"  means the Common  Shares of the  Company,  no par
value.

"Shareholders" means the holders of record of the Company's Common Shares.

"Total Contributions" means the gross offering proceeds which have been received
by the  Company  from time to time from the sale or sales of the  Shares.  Total
Contributions  shall be  calculated  to reflect the average of the daily amounts
during the period in question  of the gross  offering  proceeds  which have been
received  by the Company  from time to time from the sales of Shares,  to extent
such Shares are issued and such sales have actually been closed.

Duties of the Advisor.  Subject to the terms of the  Articles of  Incorporation,
the Bylaws, and the supervision of the Board of Directors,  the Advisor,  at its
own cost and  expense,  unless  otherwise  set  forth  herein,  on behalf of the
Company, shall:

serve as the Company's  investment  advisor and  consultant  in connection  with
policy and  investment  decisions to be made by the Board of Directors,  furnish
reports  to  the  Board  of  Directors,  and  provide  research,   economic  and
statistical  data in connection with the  acquisition,  financing,  refinancing,
holding,  leasing and  disposition  of Properties  and other  investments of the
Company;

administer the day-to-day operations of the Company and perform or supervise the
various administrative  functions reasonably necessary for the management of the
Company;

investigate,  select and, on behalf of the Company,  engage and conduct business
with (including,  but not limited to, entering into contracts in the name of the
Advisor  or the  Company)  consultants,  accountants,  correspondents,  lenders,
servicers,  technical  advisors,  attorneys,  brokers,  underwriters,  corporate
fiduciaries,  escrow agents,  depositaries,  custodians,  agents for collection,
insurers,  insurance  agents,  banks,  builders,  developers,  property  owners,
mortgagors,

<PAGE>

and other  mortgage and investment  participants,  any and all agents for any of
the foregoing,  including  Affiliates of the Advisor,  and Persons acting in any
other capacity  deemed by the Board of Directors  necessary or desirable for the
performance of any of the foregoing services;

act as attorney-in-fact or agent in acquiring, financing,  refinancing,  leasing
and disposing of Properties and other investments,  in disbursing and collecting
funds of the Company,  in paying the debts and fulfilling the obligations of the
Company and in  handling,  prosecuting  and  settling any claims of the Company,
including the  foreclosure  or other  enforcement  of any mortgage or other lien
securing  Properties or other  investments,  and exercise its own  discretion in
doing  so;  provided  that any fees and costs  payable  to  independent  Persons
incurred  by  the  Advisor  in  connection  with  the  foregoing  shall  be  the
responsibility of the Company;

negotiate on behalf of the Company  with banks or other  lenders for loans to be
made to the Company,  and  negotiate  on behalf of the Company  with  investment
banking firms and broker-dealers or negotiate private sales of the securities of
the Company or obtain  loans for the  Company,  but in no event in such a way so
that the Advisor shall be acting as broker-dealer or underwriter;  and provided,
further,  that any fees and  costs  payable  to third  parties  incurred  by the
Advisor in connection  with the  foregoing  shall be the  responsibility  of the
Company;

invest  or  reinvest  any  money of the  Company,  as  directed  by the Board of
Directors or subject to such discretionary  powers as the Board of Directors may
from time to time delegate;

if requested by the Company, provide appraisal reports on any real property that
is, or is proposed to be, acquired by the Company for investment;

at any time  reasonably  requested by the Board of Directors  (but not more than
monthly) make reports of its performance of services to the Company;

communicate  on behalf of the Company  with the  Shareholders  of the Company as
required to satisfy  the  continuous  reporting  and other  requirements  of any
governmental  bodies or agencies to the  Shareholders  and third  parties and to
maintain effective relations with the Shareholders;

counsel the Company in connection with policy  decisions to be made by the Board
of Directors;

provide the executive and  administrative  personnel,  office space and services
required in rendering the foregoing services to the Company; and

perform such other  services as may be required from time to time for management
and other activities  relating to the assets of the Company as the Advisor shall
deem appropriate under the particular circumstances.

Commitments.  In order to meet the investment  requirements of the Company,  but
only as  determined  by the  Board of  Directors,  or any  authorized  committee
thereof,  from time to time, the Advisor agrees at the direction of the Board of
Directors or any such committee to issue on behalf of the Company commitments on
such terms as are  established by the Board of Directors or any such  committee,
for the acquiring of Properties or other assets.

<PAGE>

Duties of the  Board of  Directors.  In order for the  Advisor  to  fulfill  its
duties, the Board of Directors shall, to the extent it deems proper, provide the
Advisor with full information  concerning the Company,  its  capitalization  and
investment policies and the intentions of the Board of Directors with respect to
future  investments.  The Company  shall  furnish the Advisor with a copy of all
audited  financial  statements,  a  signed  copy  of  each  report  prepared  by
independent  accountants,  and such other information with regard to its affairs
as the Advisor may from time to time reasonably request.

Advice.  In addition to the services  described in Section 2 above,  the Advisor
shall  consult with the Board of  Directors  and the officers of the Company and
shall furnish them with advice and recommendations with respect to the acquiring
of Properties or commitments  therefor,  or other investments of, or investments
considered by, the Company,  and shall furnish advice and  recommendations  with
respect to other aspects of the business and affairs of the Company. In order to
facilitate  the  investment  of the funds of the  Company and enable it to avail
itself of investment  opportunities  as they arise, the Advisor may from time to
time be granted,  but is not hereby granted, the power and authority to make and
dispose of investments and to make and terminate commitments for investments, on
behalf of and in the name of the Company,  without further or express  authority
from the Board of Directors; provided, however that the Board of Directors shall
have the power to revoke,  suspend,  modify or limit such power and authority at
any time or from time to time, but not retroactively.  Unless otherwise notified
by the Board of  Directors,  a  representative  of the Advisor  shall attend all
regular  and  special  meetings  of the  Board of  Directors,  and the  Board of
Directors shall notify the Advisor of such meetings.

The Advisor  shall first  present to the  Company all  investment  opportunities
which are suitable for the Company,  because such investment  opportunities  are
within the investment objectives and policies of the Company, before the Advisor
offers such  opportunities to any other Person or takes for its own account.  It
is expressly  understood,  however,  that the primary investments of the Company
are expected to be existing residential  apartment  communities in Texas and the
southwestern region of the United States.

Bank Accounts.  The Advisor may establish and maintain one or more bank accounts
in the name of the Company and may collect and deposit  into any such account or
accounts, and disburse from any such account or accounts, any money on behalf of
the  Company,  under such terms and  conditions  as the Board of  Directors  may
approve,  provided that all such accounts shall be maintained in such fashion as
to make clear that the funds  therein are the property of the Company and not of
the Advisor. The Advisor shall from time to time render appropriate  accountings
of such  collections  and payments to the Board of Directors and to the auditors
of the Company.

Investment  Undertakings.  The Advisor shall use its best efforts to assure that
(i) any mortgage  securing a Property of the Company shall be and remain a valid
lien upon the mortgaged  property  according to its terms; (ii) the title to any
Property  is insured  by  appropriate  policies  of title  insurance;  (iii) any
Property is duly insured against loss or damage by fire, with extended coverage,
and  against  such  other  insurable  hazards  and  risks  as is  customary  and
appropriate  in the  circumstances;  and (iv)  the  policies  from  time to time
specified  by the  Board of  Directors  with  regard  to the  protection  of the
Company's  investments  are carried out. Any and all fees and costs  incurred by
the Advisor in performing such  functions,  whether payable to its Affiliates or
independent Persons shall be borne by the Company.

<PAGE>

Records; Confidentiality.  The Advisor shall maintain appropriate records of all
its activities  hereunder and make such records  available for inspection by the
Board of  Directors  and by  counsel,  auditors  and  authorized  agents  of the
Company,  at any time or from time to time during  normal  business  hours.  The
Advisor  shall at all  reasonable  times have access to the books and records of
the  Company.  The  Advisor  shall  keep  confidential  any and all  information
obtained  in  connection  with the  services  rendered  hereunder  and shall not
disclose any such  information  to  nonaffiliated  Persons except with the prior
consent of the Board.

Limitation  of  Activities.  Anything  else in this  Agreement  to the  contrary
notwithstanding:

The Advisor  shall  refrain from taking any action  which,  in its sole judgment
made in good faith,  would adversely  affect the status of the Company as a real
estate  investment  trust  as  defined  in the  Code,  subject  the  Company  to
regulation  under the Investment  Company Act of 1940,  violate any law, rule or
regulation or would otherwise not be permitted by the Articles of  Incorporation
or Bylaws of the Company, except if such action shall be ordered by the Board of
Directors,  in  which  case the  Advisor  shall  notify  promptly  the  Board of
Directors of the Advisor's  judgment of the potential  impact of such action and
shall refrain from taking such action until it receives further clarification or
instructions  from the Board of Directors.  Notwithstanding  the foregoing,  the
Advisor and its  stockholders,  directors,  officers and employees  shall not be
liable to the Company,  or to the Company's  Board of Directors or  Shareholders
for any act or omission by the Advisor, or its stockholders, directors, officers
or employees except as provided in Section 16 of this Agreement.

In performing its duties and obligations under this Agreement, the Advisor shall
abide by and comply with the  provisions  and policies set forth in the Articles
of Incorporation and Bylaws.

Relationship  with Board of  Directors.  Employees  of the  Advisor may serve as
members of the Board of  Directors or any  committee  thereof and as officers of
the  Company,  except  that no employee of the Advisor who also is a Director or
officer of the  Company  shall  receive  any  compensation  from the Company for
serving as a Director or officer  other than for  reasonable  reimbursement  for
travel and  related  expenses  incurred  in  attending  meetings of the Board of
Directors or any committee thereof.

Fees.

Asset  Management  Fee.  The  Company  shall pay to the Advisor  quarterly,  for
services  rendered under this Agreement,  an Asset  Management Fee calculated as
follows: The Asset Management Fee for any calendar quarter shall be a applicable
percentage  of the  Total  Contributions.  The  applicable  percentage  used  to
calculate  such  Asset  Management  Fee shall be based  upon the  Return  Ratio,
calculated on a per annum basis, for the preceding  calendar quarter.  The Asset
Management  Fee shall be as follows  with respect to any such  quarter:  0.1% of
Total  Contributions  if the Return Ratio for the preceding  calendar quarter is
6.0% per annum or less;

<PAGE>

0.15% of Total  Contributions  if the Return  Ratio for the  preceding  calendar
quarter is more than 6.0% per annum but not more than 8.0% per annum;  and 0.25%
of Total  Contributions if the Return Ratio for the preceding  calendar is above
8.0% per  annum.  If the Asset  Management  Fee is payable  with  respect to any
partial  calendar  quarter,  it shall be  prorated  based on the  number of days
elapsed during any such partial calendar quarter.

Payment of Asset  Management  Fee. The Advisor  shall  compute the  compensation
payable to it under Section 11(a) of this Agreement within 45 days of the end of
each  calendar  quarter.  A copy  of the  computations  made by the  Advisor  to
calculate its compensation  shall thereafter  promptly be delivered to the Board
of Directors and, upon such delivery,  payment of the compensation  earned under
Section 11(a) of this Agreement shown therein shall be due and payable within 60
days after the end of such calendar quarter.

Expenses.

The Company  shall pay  directly  or  reimburse  the  Advisor for the  following
expenses in addition to the compensation provided for in this Agreement:

[all costs of personnel  employed by the Company and involved in the business of
the Company];

expenses incurred in connection with the initial  investment of the funds of the
Company, including all direct expenses incurred in connection with investigation
and acquisition of Properties;

interest and other costs for borrowed  money,  including  discounts,  points and
other similar fees;

[taxes and  assessments  on income or property  and taxes as an expense of doing
business];

fees and  commissions,  including  finder's fees and brokerage  commissions with
respect to the  acquisition  and  disposition of assets of the Company,  whether
payable to an  Affiliate  of the  Advisor  or an  unrelated  Person,  including,
without limitation, costs of foreclosure, maintenance, repair and improvement of
Property;

costs associated with insurance  required in connection with the business of the
Company or by the Board of Directors;

expenses of managing and operating real property  owned by the Company,  whether
payable to an Affiliate of the Advisor or an unrelated Person;

fees and expenses of legal counsel for the Company;

fees and expenses of independent auditors and accountants for the Company;

all  expenses  in  connection  with  payments to the Board of  Directors  or any
committee  thereof  and  meetings  of the Board of  Directors  or any  committee
thereof and Shareholders;

<PAGE>

expenses  associated  with  listing the Shares on a national  stock  exchange or
quoting the Shares on the NASDAQ  National  Market  System if  requested  by the
Board of  Directors,  or with the issuance and  distribution  of any  additional
Shares of the Company at any time,  such as taxes,  legal and  accounting  fees,
listing and registration fees, and other expenses;

dividend and dividend distributions;

expenses of organizing, revising, amending, converting, modifying or terminating
the Company, the Articles of Incorporation or the Bylaws; and

expenses of maintaining communications with Shareholders,  including the cost of
preparation, printing, and mailing annual reports and other Shareholder reports,
proxy statements and other reports required by governmental entities.

Expenses  incurred by the Advisor on behalf of the Company and payable  pursuant
to this  Section,  shall be reimbursed  quarterly to the Advisor  within 60 days
after the end of each quarter. The Advisor shall prepare a statement documenting
the  expenses  of the  Company  during  each  quarter,  and shall  deliver  such
statement to the Company within 45 days after the end of each quarter.

Except as  otherwise  provided  herein,  the Advisor  shall pay all  expenses of
performing its obligations under this Agreement,  including, without limitation,
the following expenses:

employment  expenses of the Advisor,  including,  but not limited to,  salaries,
wages,  payroll  taxes,  costs of employee  benefit  plans,  and temporary  help
expenses,  except to the extent that such  expenses are  otherwise  reimbursable
pursuant to Section 12(a) of this Agreement or the Articles of  Incorporation or
Bylaws;

audit fees and expenses of the Advisor;

legal fees and other expenses of professional services to the Advisor;

rent, telephone, utilities and other office expenses of the Advisor;

insurance of the Advisor; and

all other administrative expenses of the Advisor.

Limitation on the Advisor's Investment Advice.  Notwithstanding  anything to the
contrary in this Agreement, the Advisor shall not be required to, and shall not,
advise the Company as to any investments in securities,  except when, and to the
extent that, the Advisor and the Company specifically agree (i) that such advice
is  desirable,  and (ii) that such  advice  can be  rendered  consistently  with
applicable legal requirements,  including any applicable  provisions of relevant
"investment advisor" laws.

<PAGE>

Other  Services.  Should the Board of Directors  request that the Advisor or any
employee  thereof render material  services for the Company other than set forth
in Section 2, such  services  shall be separately  compensated  and shall not be
deemed to be services pursuant to the terms of this Agreement.

Limitation on Operating  Expenses.  Within 120 days from the end of any Calendar
Year,  the Advisor shall refund to the Company the amount,  if any, by which the
Operating Expenses of the Company,  excluding  extraordinary  nonrecurring items
and those items  referred to in Section 14,  during such  Calendar Year exceeded
the greater of either of the following limitations:

2% of the Average Invested Assets of the Company for such Calendar Year; or

25% of the Company's  Company Net Income for such Calendar  Year,  determined in
accordance with generally accepted accounting principles.

The Independent  Directors of the Company may determine that, because of unusual
and nonrecurring factors which they deem sufficient, a higher level of Operating
Expenses is justified  for such  Calendar  Year.  The Advisor  shall be promptly
reimbursed  for any payments  made under this  Section 15 if, in any  succeeding
Calendar Year, the Operating Expenses of the Company are less than the permitted
level of Operating Expenses.

Advisory  Responsibility.  The  Advisor  assumes  no  responsibility  under this
Agreement  other than to render the services  called for hereunder in good faith
and with  integrity,  and shall not be responsible for any action of the Company
in following or declining to follow any advice or recommendation of the Advisor.
Neither the Advisor, its shareholders, directors, officers nor employees nor any
of its Affiliates,  nor any Person contracting with the Advisor for services and
its  shareholders,  directors,  officers and employees nor any of its Affiliates
shall be liable to the  Company  or its  Shareholders,  except by reason of acts
constituting gross negligence or willful  misconduct.  The Advisor hereby agrees
to look  solely to the  assets of the  Company  for  satisfaction  of all claims
against the Company, and in no event shall any Shareholder, Director, officer or
agent of the Company  have any  personal  liability  for the  obligation  of the
Company under this Agreement.

Incorporation  of the Articles of  Incorporation  and Bylaws.  To the extent the
Articles of Incorporation  and Bylaws impose  obligations or restrictions on the
Advisor  or grant the  Advisor  certain  rights  which are not set forth in this
Agreement,  the Advisor shall abide by such obligations or restrictions and such
rights  shall inure to the benefit of the Advisor with the same force and effect
as if they were set forth herein.

Fiduciary  Duty and  Indemnification.  Subject to Section 16, the Advisor  shall
have a fiduciary  relationship to the Shareholders.  However,  the Company shall
indemnify  the  Advisor,  to the  fullest  extent  permitted  by  law,  for  its
liabilities and losses arising from the operations of the Company (including its
costs and expenses,  including  legal fees and expenses,  incurred in connection
with  investigating and defending itself against such liabilities and losses) if
the following conditions are met:

<PAGE>

the Directors have determined,  in good faith,  that the course of conduct which
caused  the  liability  or loss was  undertaken  in good faith  within  what the
Advisor  reasonably  believed to be the scope of its employment or authority and
for a purpose  which it reasonably  believed to be in the best  interests of the
Company;

the Directors have determined, in good faith, that the liability or loss was not
the result of willful  misconduct,  bad faith,  reckless  disregard of duties or
violation of the criminal law on the part of the Advisor; and

the indemnified  amount is recoverable only out of the assets of the Company and
not from the Shareholders.

Notwithstanding  the  foregoing,  indemnification  will not be  allowed  for any
liability  imposed  by  judgment,  and  costs  associated  therewith,  including
attorneys'  fees,  arising  from  or out of a  violation  of  state  or  federal
securities  laws  associated  with the Offering of the Common  Shares unless (i)
there has been a successful  adjudication  on the merits of each count involving
alleged securities laws violations as to the particular indemnitee, or (ii) such
claims have been  dismissed with prejudice on the merits by a court of competent
jurisdiction  as to the  particular  indemnitee  or (iii) a court  of  competent
jurisdiction   approves  a  settlement  of  the  claims   against  a  particular
indemnitee.

Transactions  between the Advisor and the Company.  All transactions between the
Advisor  and the  Company  shall  require  the  approval  by a  majority  of the
Directors  (including  a  majority  of  the  Independent  Directors)  and  shall
otherwise comply with the conflict of interest provisions of the Bylaws.

Relationship  of Advisor  and  Company.  The  Company  and the  Advisor  are not
partners  or joint  ventures  with  each  other,  and  nothing  herein  shall be
construed to make them such  partners or joint  ventures or impose any liability
as such on either of them.

Other  Activities.  Except  as  otherwise  expressly  provided  herein,  nothing
contained  herein  shall limit the right of the Advisor or any of its  officers,
directors or  employees,  whether or not a Director,  officer or employee of the
Company,  to engage in other  business  activities or to render  services of any
kind to any other Person even if such other business  activities or services may
be in direct competition with the Company.

Term; Termination of Agreement.

This Agreement  shall have an initial term ending five years after  ___________,
2001,  and thereafter  shall be renewed for  additional  two-year terms upon the
consent of the Directors.

Prior to any renewal of this Agreement,  the Independent  Directors shall review
(i) the  performance of the Advisor  hereunder to determine its compliance  with
the  provisions  of this  Agreement,  and (ii) the fees  payable to the  Advisor
hereunder to determine whether they are reasonable in relation to the nature and
quality of services performed.  The findings of the Independent  Directors shall
be recorded in the minutes of the Directors.

<PAGE>

This  Agreement  shall be  terminable  (i) without  cause by the Advisor or (ii)
without cause by a majority of the Independent  Directors,  in each case upon 60
days' prior written notice to the non-terminating party.

In the event of the termination of the Advisor,  the Advisor will cooperate with
the Company and take all reasonable  steps  requested to assist the Directors in
making an orderly transition of the advisory function to another Person.

At the sole option of a majority of the  Independent  Directors,  this Agreement
may be terminated for cause by written notice of termination from the Company to
the Advisor if any of the following events occur:

if the  Advisor  shall  violate or default in the  performance  of any  material
provision of this  Agreement  and,  after  written  notice of such  violation or
default, shall not cure such violation or default within 30 days;

if the Advisor  shall be adjudged  bankrupt or insolvent by a court of competent
jurisdiction, or an order shall be made by a court of competent jurisdiction for
the appointment of a receiver,  liquidator or trustee of the Advisor,  or of all
or  substantially  all of its property by reason of the foregoing,  or approving
any petition filed against the Advisor for reorganization, and such adjudication
or order shall remain in force or unstayed for a period of 30 days; or

if the Advisor shall  institute  proceedings  for voluntary  bankruptcy or shall
file a petition seeking reorganization under the federal bankruptcy laws, or for
relief under any law for relief of debtors,  or shall consent to the appointment
of a receiver for itself or for all or  substantially  all of its  property,  or
shall make a general assignment for the benefit of its creditors, or shall admit
in writing its inability to pay its debts, generally, as they become due.

Any notice of  termination  under this Section  shall (except to the extent this
Section  requires a different  notice period) be effective on the date specified
in such  notice,  which may be the day on which such notice is given or any date
thereafter.  The  Advisor  agrees  that  if  any  of  the  events  specified  in
subparagraph  (ii) or (iii) of Section 22(e) shall occur,  it shall give written
notice  thereof to the Board of Directors  within 5 days after the occurrence of
such event.

Action Upon Termination.

From and after the effective date of  termination of this Agreement  pursuant to
Section 22 hereof, the Advisor shall not be entitled to compensation for further
services rendered  hereunder,  but shall be entitled to receive from the Company
within 30 days after the effective date of such  termination,  an amount in cash
equal to all earned but unpaid  Asset  Management  Fees  payable to the  Advisor
prior to the termination of this Agreement.

Within a reasonable period of time, but in no event later than 30 days after the
termination of this Agreement, the Advisor shall:

pay over to the  Company  all money  collected  and held for the  account of the
Company pursuant to this Agreement, after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled;

<PAGE>

deliver to the Board of  Directors  a full  accounting,  including  a  statement
showing all  payments  collected  by it and a statement of all money held by it,
covering the period  following the date of the last accounting  furnished to the
Board of Directors; and

deliver to the Board of Directors all property and documents of the Company then
in the custody of the Advisor.

The Advisor  shall be entitled to receive,  promptly  after such 30-day  period,
reimbursement for any additional expenses to which it is entitled (and for which
it has not been reimbursed under clause (i) of Section 23(b)).

Assignment  Prohibition.  This  Agreement  may not be  assigned  by the  Advisor
without the approval of a majority of the Board of Directors; provided, however,
that such  approval  shall not be  required  in the case of an  assignment  to a
corporation,  association,  trust or organization which may take over the assets
and  carry on the  affairs  of the  Advisor,  provided  that at the time of such
assignment,  such successor  organization  shall be owned  substantially  by the
Advisor or its  Affiliates  and that an officer of the Advisor  shall deliver to
the Board of Directors a statement in writing indicating the ownership structure
of the  successor  organization.  Such an  assignment  shall bind the  assignees
hereunder in the same manner as the Advisor is bound  hereunder.  This Agreement
shall not be assigned by the Company without the consent of the Advisor,  except
in  the  case  of an  assignment  by  the  Company  to a  corporation  or  other
organization  which is a successor to the Company,  in which case such successor
organization shall be bound hereunder and by the terms of said assignment in the
same manner as the Company is bound hereunder.

Bylaws. The execution and performance of this Agreement hereby is expressly made
subject to Article VIII of the Bylaws of the Company.

Notices. Any notice,  report or other communication  required or permitted to be
given  hereunder  shall be in writing  unless  some other  method of giving such
notice,  report or other  communication  is  accepted by the party to whom it is
given, and shall be given by being delivered to the addresses set forth herein:

<PAGE>

To the Board of
  Directors or
  to the Company:          Apple Hospitality Two, Inc.
                           306 E. Main Street
                           Richmond, Virginia 23219
                           Attn: Board of Directors

To the Advisor:            Apple Suites Advisors, Inc.
                           306 E. Main Street
                           Richmond, Virginia 23219
                           Attn: Glade M. Knight

Either  party may at any time give  notice in  writing  to the other  party of a
change in its address for the purposes of this Section.

Modification. This Agreement shall not be changed, modified, amended, terminated
or discharged, in whole or in part, except by an instrument in writing signed by
both parties hereto, or their respective successors or assigns.

Shareholder Liability.  No Shareholder of the Company shall be personally liable
for any of the obligations of the Company under this Agreement.

Severability.  The provisions of this Agreement are independent of and severable
from each other,  and no  provision  shall be  affected  or rendered  invalid or
unenforceable  by virtue of the fact that for any  reason any other or others of
them may be invalid or unenforceable in whole or in part.

Binding.  This Agreement  shall bind any successors or permitted  assigns of the
parties hereto as herein provided.

Construction.   The  provisions  of  this  Agreement   shall  be  construed  and
interpreted in accordance with the laws of the Commonwealth of Virginia.

Entire Agreement. This Agreement contains the entire agreement and understanding
among the  parties  hereto  with  respect  to the  subject  matter  hereof,  and
supersedes all prior and contemporaneous agreements, understandings, inducements
and conditions,  express or implied,  oral or written,  of any nature whatsoever
with respect to the subject matter hereof.  The express terms hereof control and
supersede any course of performance  and/or usage of the trade inconsistent with
any of the terms hereof.

Indulgences,  Not  Waivers.  Neither  the failure nor any delay on the part of a
party to exercise any right,  remedy,  power or privilege  under this  Agreement
shall operate as a waiver thereof,  nor shall any single or partial  exercise of
any right,  remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any waiver
of any right,  remedy,  power or  privilege  with respect to any  occurrence  be
construed as a waiver of such right,  remedy, power or privilege with respect to
any other  occurrence.  No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.

Gender. Words used herein regardless of the number and gender specifically used,
shall be deemed and construed to include any other  number,  singular or plural,
and any other gender, masculine, feminine or neuter, as the context requires.

<PAGE>

Titles Not to Affect  Interpretation.  The titles of  sections  and  subsections
contained in this  Agreement are for  convenience  only, and they neither form a
part  of  this  Agreement  nor  are  they  to be  used  in the  construction  or
interpretation hereof.

Execution  in  Counterparts.  This  Agreement  may be  executed in any number of
counterparts,  each of which  shall be deemed to be an  original  as against any
party  whose  signature  appears  thereon,  and  all  of  which  shall  together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof,  individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.


<PAGE>



         IN WITNESS  WHEREOF,  the parties  hereto have  executed  this Restated
Agreement by their duly authorized officers as of the date first written above.



                                            APPLE HOSPITALITY TWO, INC.
                                              a Virginia corporation

                                            By:
                                                --------------------------------

                                            Title:   President
                                                  ------------------------------



                                            APPLE SUITES ADVISORS, INC.,
                                              a Virginia corporation

                                            By:
                                                --------------------------------

                                            Title:   President
                                                  ------------------------------