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                                                                    EXHIBIT 10.2

                     THIRD AMENDMENT TO EMPLOYMENT AGREEMENT

         This Third Amendment to Employment Agreement (the "Amendment") is made
and entered into as of the 2nd day of February 2005 by and between Arlington
Hospitality Inc. (the "Company") and Stephen K. Miller ("Employee").

                                    RECITALS

         WHEREAS, the Company and Employee entered into that certain Employment
Agreement dated July 25, 2003 by and between the Company and Employee, as
amended by the First Amendment dated September 10, 2003 and the Second Amendment
dated October 31, 2003 (collectively, the "Agreement");

         WHEREAS, pursuant to the Agreement, Employee is currently employed by
the Company as its Senior Vice President - Real Estate and Business Development;
and

         WHEREAS, the Company and Employee have agreed to modify the Agreement
as provided herein;

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

All capitalized terms used but not defined herein shall have the meaning
ascribed to such term in the Agreement.

1.       Amendment to Section 1.1. Section 1.1 of the Agreement is amended by
         deleting it in its entirety and replacing it with the following:

         1.1      Employment. The Company hereby employs, engages and hires
                  Employee and Employee hereby accepts employment with the
                  Company for the Position, upon the responsibilities as
                  allocated from time to time by the Company's President or such
                  other person(s) or entity directing the business affairs of
                  the company. Employee's title shall be Senior Vice President -
                  Real Estate and Business Development; provided, however,
                  effective January 1, 2005, Employee shall serve as the Interim
                  Chief Executive Officer of the Company and shall serve in such
                  capacity until the earlier of April 30, 2005 or until a
                  successor Chief Executive Officer (a "New CEO") is duly
                  appointed by the Company's Board of Directors. During the
                  period Employee serves as Interim Chief Executive Officer (the
                  "Interim Period"), Employee shall perform those
                  responsibilities as allocated from time to time by the
                  Company's Board of Directors. After expiration of the Interim
                  Period, Employee shall serve as the Company's Senior Vice
                  President - Real Estate and Business Development.

         2. Amendment to Section 2.1. Section 2.1 of the Agreement is amended by
deleting it in its entirety and replacing it with the following:


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         2.1      Term. The term of employment under this Agreement shall be for
                  the period commencing effective as of August 19, 2003 and
                  ending April 30, 2006. The period of Employee's employment
                  hereunder is referred to as the "Employment Term".

3.       Amendment to Section 2.4. Section 2.4 of the Agreement is amended by
         deleting it in its entirety and replacing it with the following:

         2.4 Severance Upon Termination Without Cause. If the Company terminates
         Employee's employment without Cause and such termination is effective
         as of a date that is: (a) three (3) months or more prior to the end of
         the expiration of the Employment Term, Employee shall be entitled to
         receive (i) his then-current Base Salary, expense reimbursement,
         vacation pay, benefits and bonuses, each to the extent earned, accrued
         and unpaid through the date of termination, plus (ii) the Usual Salary
         Amount (as defined in Exhibit A) for a period ending on the lesser of
         six (6) months after the termination or the end of the Employment Term,
         which amounts shall be payable in intervals in accordance with the
         general payroll payment practice of the Company; or (b) less than three
         (3) months prior to the end of the Employment Term, Employee shall be
         entitled to receive (i) his then-current Base Salary, expense
         reimbursement, vacation pay, benefits and bonuses, each to the extent
         earned, accrued and unpaid through the date of termination, plus (ii)
         the Usual Salary Amount (as defined in Exhibit A) for a period of three
         (3) months, which amounts shall be payable in intervals in accordance
         with the general payroll payment practice of the Company.
         Notwithstanding the foregoing, if Employee is terminated without Cause
         at any time within twelve (12) months of the Company's appointment of a
         New CEO ("CEO Termination Date"), Employee shall be entitled to
         receive, in lieu of the severance payments described in (a) and (b)
         above: (i) his then-current Base Salary, expense reimbursement,
         vacation pay, benefits and bonuses, each to the extent earned, accrued
         and unpaid through the CEO Termination Date, plus (ii) the Usual Salary
         Amount (as defined in Exhibit A) for a period of six (6) months after
         the CEO Termination Date, which amounts shall be payable in intervals
         in accordance with the general payroll payment practice of the Company.

4.       Amendment to Section 1 of Exhibit A. Section 1 of Exhibit A of the
         Agreement is amended by deleting it in its entirety and replacing it
         with the following:

         1. Base Salary. The Company shall pay Employee a base salary ("Base
         Salary") equal to: (a) for the period commencing on July 31, 2004 and
         continuing through and including December 31, 2004, One Hundred
         Eighty-Five Thousand Dollars ($185,000) per year (the "Usual Salary
         Amount"); (b) for the period commencing on January 1, 2005 and
         continuing to the earlier of April 30, 2005 or the date a New CEO is
         appointed (the "Appointment Date"), Two Hundred Thousand Dollars
         ($200,000) per year; and (c) commencing on the earlier of April 30,
         2005 or the Appointment Date and continuing for the remaining
         Employment Term, the Usual Salary Amount. In each case, the Base Salary
         shall be payable in increments as is customarily paid by the Company
         and shall be subject to increase from time to time as determined in the
         sole discretion of the Company's Board of Directors. To compensate
         Employee for the Usual Salary Amount which should



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         have been paid for the period from July 31, 2004 to the date of this
         Amendment (the "Past Period"), the Company shall provide Employee a
         lump sum payment, subject to applicable withholding and other taxes, in
         the amount necessary to compensate Employee at the Usual Salary Amount
         for the Past Period. The Company shall review the Base Salary annually
         in conjunction with the annual reviews conducted for corporate office
         personnel.

5.       Amendment to Section 2(h) of Exhibit A. Section 2(h) of Exhibit A is
         hereby amended by deleting it in its entirety and replacing it with the
         following:

         (h) 2005 Incentive Bonus. Commencing on January 1, 2005 and continuing
         through the Employment Term, Employee shall be eligible to participate
         in those bonus and incentive plans and other programs as determined
         from time to time in the sole discretion of the Company's Board of
         Directors.

6.       Amendment to Section 2 of Exhibit A. The following Section shall be
         inserted as subsection (j) of Section 2 of Exhibit A:

         (j) Transition, Performance and Retention Bonus. In addition to the
         bonuses otherwise provided herein, on December 31, 2005, so long as
         Employee is employed by the Company on such date, or, if not employed
         by the Company on such date the reason for such unemployment is a
         termination by the Company without Cause, Employee shall receive a
         bonus equal to Twenty Thousand Dollars ($20,000) if, on or before June
         30, 2005, the Company successfully secures, on behalf of itself or its
         Affiliate or venture partner, all debt and equity funding necessary for
         the Company or its Affiliate or venture partner to develop five (5)
         hotels, each hotel having at least seventy (70) rooms. For purposes of
         this Section, the Company shall be deemed to have "secured" the
         required funding, if the funding for at least four (4) hotels has been
         completed and fully funded, and a firm commitment has been obtained for
         the funding of the fifth hotel.

7.       No Other Amendment. The Employment Agreement has not been amended in
         any other way other than as set forth in this Amendment.

8.       Counterparts. This Amendment may be executed in separate counterparts,
         each of which when so executed and delivered shall be deemed an
         original, but all of which together shall constitute one and the same
         instrument.

         IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year specified at the beginning hereof.


THE COMPANY:                                          THE EMPLOYEE:


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ARLINGTON HOSPITALITY, INC.                           STEPHEN K. MILLER

By:
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