UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)



|/ X / | QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
|----- | ------------------------------------------
|      | OF THE SECURITIES EXCHANGE ACT OF 1934    

For the quarterly period ended March 31, 2001

OR



|/    / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
|------ | -------------------------------------------------
|       | OF THE SECURITIES EXCHANGE ACT OF 1934           

For the transition period from __________ to __________

Commission File Number: 0-28108

Suburban Lodges of America, Inc.

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|Georgia                  | 58-1781184         
|------------------------ | -------------------
|(State of incorporation) | (IRS Employer      
|                         | Identification No.)



300 Galleria Parkway
Suite 1200
Atlanta, Georgia 30339
(Address of principal executive office, including zip code)

770-799-5000
(Registrants telephone number, including area code)



Indicate by check mark whether the registrant has (1) filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES / X / NO / /



Number of shares of Common Stock, $.01 par value, outstanding as of
May 9, 2001:

11,973,570



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Suburban Lodges of
America, Inc.Consolidated Balance
Sheets(dollar amounts in
thousands)(Unaudited)March 31,
 2001

December 31,
 2000AssetsCurrent assets:Cash and cash equivalents

$
7,345
$
10,856Accounts receivable, net of reserves of$437 (2001) and $327 (2000)

1,758

1,520Hotel inventory and supplies

2,538

2,538Prepaid and refundable income taxes



260Deferred income taxes

469

469Prepaid expenses and other current assets

2,175

2,081Total current assets

14,285

17,724Assets held for sale

9,553Property and equipment, net of accumulated depreciation andamortization of $30,302 (2001) and $27,863 (2000)

283,569

299,392Notes receivable from HotelTools, Inc.

10,192

7,997Other notes receivable

4,556

4,508Acquired intangible assets - net

3,428

3,515Deferred loan costs

1,999

2,097Other assets

2,646

2,393Total assets
$
330,228
$
337,626Liabilities and shareholders' equityCurrent liabilities:Current portion of long-term debt
$
1,668
$
1,547Construction accounts payable

1,402

1,314Trade accounts payable

1,641

3,161Accrued property taxes

1,106

720Accrued wages and benefits

1,214

703Other accrued liabilities

2,594

1,504Other current liabilities

726

648Total current liabilities

10,351

9,597Long-term debt, excluding current portion

117,702

119,574Deferred income taxes

1,529

3,958Other liabilities

172

167Total liabilities

129,754

133,296Shareholders' equity:Common stock

157

157Additional paid-in capital

202,280

202,280Retained earnings

20,752

24,608223,189

227,045Less treasury stock, at cost

22,715

22,715Shareholders' equity, net

200,474

204,330Total liabilities and shareholders' equity

$
330,228
$
337,626


See accompanying notes
to consolidated financial statements.

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Suburban Lodges of America, Inc.Consolidates Statements of Operations(in thousands, except per share amounts)(Unaudited)Three Months EndedMarch 31, 2001

March 31, 2000Revenue:Hotel revenues
$
17,477
$
15,959Franchising revenue

1,023

781Management and other revenue

175

355Total revenue

18,675

17,095Operating costs and expenses:Hotel operating expenses

9,785

9,115Corporate operating expenses

2,999

2,859Expenses incurred in conjunction withreview of strategic alternatives

475Undeveloped site carrying costs

47

44Depreciation and amortization

2,526

2,398Impairment of long-lived assets

6,687Operating costs and expenses - net

22,519

14,416Income (loss) from operations

(3,844)

2,679Other income (expense):Interest income

234

245Interest expense

(2,430)

(2,046)Other

1

10Income (loss) before income taxes

(6,039)

888Provision (credit) for income taxes

(2,183)

333Net income (loss)
$
(3,856)
$
555Earnings (loss) per common share:Basic
$
(0.32)
$
0.04Diluted
$
(0.32)
$
0.04Weighted average number of commonshares outstanding:Basic

12,004

13,870Diluted

12,004

13,870




See accompanying notes
to consolidated financial statements.

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Suburban
Lodges of America, Inc.Consolidated
Statements of Cash Flows(in
thousands)(Unaudited)Three Months EndedMarch 31, 2001

March 31, 2000Operating activities:Net income (loss)
$
(3,856)
$
555Adjustments to reconcile net income (loss) tonet cash provided by operating activities:Depreciation and amortization

2,526

2,398Deferred income taxes

(2,429)Impairment of long-lived assets

6,687Changes in operating assets and liabilities - net of the effectsof acquisitions:Accounts receivable

(238)

(76)Other current assets

166

92Other assets

(253)

(176)Trade accounts payable

(1,520)

(1,726)Other current liabilities

2,065

891Other liabilities

5Net cash provided by operating activities

3,153

1,958Investing activities:Additions to property and equipment

(2,856)

(3,502)Increase in construction accounts payable

88

243Acquisitions, net of cash acquired



(641)Loans made to HotelTools, Inc.

(2,195)

(675)Other loans made

(55)Payments received on other loans

7Net cash used by investing activities

(5,011)

(4,575)Financing activities:Proceeds from issuance of long-term debt

1,642

3,560Principal payments on long-term debt

(393)

(2,931)Amounts borrowed under line of credit



5,000Repayment of line of credit borrowings

(3,000)

(5,000)Purchase of treasury stock



(1,336)Net decrease (increase)  in deferred loan costs

98

(465)Net cash used by financing activities

(1,653)

(1,172)Net decrease in cash and cash equivalents

(3,511)

(3,789)Cash and cash equivalents at beginning of period

10,856

9,862Cash and cash equivalents at end of period
$
7,345
$
6,073Supplemental information:Interest paid net of interest capitalized
$
2,561
$
2,106Income taxes paid
$
51
$
62




See accompanying notes
to consolidated financial statements.

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Suburban Lodges of America, Inc.
Notes to Consolidated Financial Statements
(Unaudited)





1. BASIS OF PRESENTATION
2. ASSETS HELD FOR SALE
3. LONG-TERM DEBT
4. ACQUISITION
5. EARNINGS PER COMMON SHARE
6. CONTINGENCIES
7. SEGMENT AND RELATED INFORMATION



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1. RECENT ACCOUNTING PRONOUNCEMENTS
2. RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year presentation.



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PART I,   ITEM 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations



Comparison of the quarter ended March 31, 2001 to the quarter ended March 31, 2000

Hotel revenues increased by $1.5 million, or 10%, from $16.0 million in 2000 to $17.5 million in 2001. Sixty-two hotels that operated for the full quarter in both 2000 and 2001 accounted for
$0.8 million of the increase in hotel revenues and three hotels opened by the Company during 2000 and operated for the full quarter ended March 31, 2001 accounted for $0.7 million of the increase. For all Company-owned hotels, AWR increased to $200.19 in
2001 from $196.80 in 2000, occupancy increased to 77.7% in 2001 compared to 73.8% in 2000, and weekly RevPAR increased to $154.52 in 2001 from $144.44 in 2000.

Franchising revenue increased by $0.2 million, or 31%, to $1.0 million in 2001. The Suburban Lodge brand and the GuestHouse International brand each contributed $0.1 million of the increase due to the larger
number of franchised locations of each brand open during the first quarter of 2001. At March 31, 2001, 57 franchised Suburban Lodge hotels were operating as compared with 49 at March 31, 2000. There were 71 GuestHouse International franchised hotels
operating at March 31, 2001 compared to 50 at March 31, 2000.

Management and other revenue declined by $0.2 million from $0.4 million in 2000 to $0.2 million in 2001 due to a decrease in the number of hotels being managed. The Company was managing ten Suburban Lodge hotels
for franchisees at March 31, 2001 compared to 20 hotels at March 31, 2000. The decline in the number of managed hotels was due to a decision by one franchise group to start a management company to manage its four Suburban Lodge hotels and other
properties. In addition, two franchisees moved the management of three Suburban Lodge hotels to independent management companies and one franchise group elected to manage their two Suburban Lodge hotels themselves. One of the hotels managed by the Company
at December 31, 1999, was purchased by the Company in January 2000.

Hotel operating expenses increased approximately $0.7 million, or 7%, from $9.1 million in 2000 to $9.8 million in 2001. The sixty-two hotels that operated the full quarter in both 2000 and 2001 accounted for $0.3
million of the increase. The three hotels opened by the Company during 2000 and operated for the full quarter ended March 31, 2001 accounted for $0.4 million of the increase.

Corporate operating expenses increased $0.1 million, or 5%, from $2.9 million in 2000 to $3.0 million in 2001. This increase is attributable to a decrease of $0.1 million in the amount of project related corporate
overhead capitalized as land-acquisition or hotel-construction cost. Excluding the incremental impact on reported operating expenses of lower capitalization of project-related expenses, corporate operating expenses in the quarter ended March 31, 2001 were
flat compared with the 2000 quarter. Corporate operating expenses attributable to the growing franchising business increased $0.2 million in the 2001 quarter while other corporate operating expenses declined by $0.2 million in the quarter.

Expenses of $475,000 were incurred during the first quarter of 2001 in conjunction with the Companys review of strategic alternatives to enhance shareholder value. As a result of this review and the
continued poor capital market environment for hotel development by public companies, the Company has decided to actively dispose of eleven sites that it had been holding for future hotel development. As a result of this decision, the Company recorded an
impairment reserve of $6.7 million before reduction for income tax savings in the first quarter of 2001. The majority of the impairment reserve represents amounts spent before the end of 1998 when the Company was actively developing its own Suburban Lodge
hotels. Development expenditures such as architectural and engineering fees, interest and, in several cases, initial construction activities that were incurred at that time represent the largest portion of the write-down. The Company expects to realize
approximately $10.0 million upon the ultimate sale of these sites.





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Depreciation and amortization increased by $0.1 million, or 5%, from $2.4 million in 2000 to $2.5 million in 2001. The three hotels opened by the Company during 2000 and operated for the full quarter ended March
31, 2001 accounted for this increase.

Interest expense, net of interest capitalized of $0.1 million and $0.2 million in 2001 and 2000 respectively, was $2.4 million in 2001 and $2.0 million in 2000. The increase in total interest charges incurred was
due to higher levels of debt outstanding.

The effective income tax rate for the quarter ended March 31, 2001 was 36.1% compared to 37.5% for the 2000 quarter. The decrease in 2001 was due to lower effective state income tax rates.

Seasonality

Following their initial ramp-up, the Companys hotels typically experience lower average occupancy rates and total revenues in the first and fourth calendar quarters of each year. The Company believes
that this seasonal trend mirrors seasonal trends experienced by the lodging industry as a whole.

Liquidity and Capital Resources

From May 29, 1996, the date of the Companys initial public offering (the IPO), through December 31, 1998, the Company pursued a strategy of growing principally through hotel development.
Accordingly, the number of Company-owned hotels grew from eight at May 29, 1996, to 53 at December 31, 1998. Capital spending during this period exceeded $200 million and the principal sources of capital included the proceeds from the 1996 IPO and two
subsequent public equity offerings during 1997, borrowings under a bank credit facility and operating cash flow.

During the latter portion of 1998, the Company revised its financing strategy to emphasize traditional longer-term mortgages to fund the construction of hotels rather than relying on bank lines of credit with
shorter final maturities. The Company plans to use its current bank revolving credit facility to fund special projects, including possible repurchases of its outstanding common stock, and meet operating cash needs as necessary.

At March 31, 2001, the Company had approximately $119.4 million outstanding under long-term mortgage loan arrangements, including amounts classified as current maturities of long-term debt at that date. In the
aggregate, these loans require monthly principal and interest payments of $1,019,000. The final maturity dates for these loans range from February 1, 2005 to July 1, 2009.

In the fall of 1999, the Company licensed to HotelTools, Inc. the use of its proprietary hotel management and reservation systems, and at that time HotelTools assumed the costs of the continued maintenance and
development of these systems. HotelTools intends to market the fully developed systems to hotel owners and operators, including Suburban Lodges. The Chief Executive Officer and sole shareholder of HotelTools, Inc. is Seth Christian, the former Vice
President of Operations of Suburban Lodges of America, Inc.

To date, all funding for HotelTools operations has been provided, in the form of secured loans, by the Company and from the proceeds of an equipment sale-lease back transaction. During the first quarter of
2001, the Company made loans of $2.2 million to HotelTools, Inc. As of March 31, 2001, the Company had outstanding loans to HotelTools, Inc. of approximately $10.2 million. The Company anticipates that, in the absence of funding from third parties, it
will continue to make loans to HotelTools. Based on HotelTools operating forecasts, which have been reviewed with the Company, the total loans made during 2001 could be as much as $7.0 million. The loans are payable on demand, and bear interest at
an annual rate of 7.0%. At the present time, HotelTools does not have the cash available to pay interest or repay any portion of the loans; therefore, the loans are accounted for on a cost recovery basis and interest income is not recognized on such
loans. In exchange for its financial support, the Company received from HotelTools, Inc., a stock purchase warrant to purchase up to 20 million shares of the common stock of



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HotelTools at a nominal cost. Although such shares would constitute in excess of 99% of the equity of HotelTools based on its present capitalization, HotelTools is actively seeking equity investors, and it is
expected that the Companys potential ownership through the exercise of its warrant will be reduced if such additional equity funding can be secured.
The Company has been informed by HotelTools that it is in active discussions
with several third parties for the sale of HotelTools, Inc.  The Company is
unable to predict at this time whether a sale of HotelTools can be completed or
the terms of any such sale.

The Company has been authorized by its Board of Directors to repurchase up to 4,500,000 shares of its outstanding common stock. As of March 31, 2001, the Company had purchased a total of 3,735,398 shares at a cost
of $22,715,000.

At March 31, 2001, the Company had one hotel under construction which is expected to open during the second quarter of 2001. As discussed under Comparison of the quarter ended March 31, 2001 to the quarter
ended March 31, 2000, the Company has decided not to build any more hotels at this time and is actively trying to sell eleven sites it had been holding for future hotel development.

In the future, the Company expects its cash requirements to be met by funds generated from operations, sales of undeveloped sites, occasional sales of its hotel properties and borrowings under its bank line of
credit. The Companys net cash flow from operating activities increased from $2.0 million in the first quarter of 2000 to $3.2 million in the first quarter of 2001.

Certain Risk Factors

In evaluating the Company and its prospects, certain risks, including those described in this section and those listed under Forward Looking Statements, should be considered. Such risks are not the
only ones the Company faces. Additionally, some risks that are not currently known and others that the Company does not consider material could later turn out to be so.

During 1999, in the face of substantial tightening of public and private sources of funding for hotel construction, the Company determined that it would focus its growth plans on franchising. Prior to that time,
the Company had focused on developing and operating its own Suburban Lodge extended stay hotels. Because the operating characteristics of these hotels were so strong, several third-party developers and operators had also opened a total of 30 Suburban
Lodge extended stay hotels through December 31, 1998.

In order to enhance its franchising strategy, the Company acquired a nightly-stay hotel brand (GuestHouse International) and increased its sales force from one franchise sales
person at May 31, 1999, to nineteen by May 11, 2001. The Company intends to increase its franchise sales staff to 22 sales
persons by the end of 2001.

The franchise business is highly competitive and, particularly with respect to the Suburban Lodge brand which consists almost entirely of newly-constructed hotels, is subject to the availability of substantial
bank credit in the form of construction loans that convert to permanent financing.

During 2000, nine Suburban Lodge hotels were opened by franchisees and three were opened by the Company. Twenty-five GuestHouse International hotels were opened by franchisees in 2000. This was the Companys
best year with respect to franchise openings. The Company opened ten franchised hotels during the first quarter of 2001, three Suburban Lodge extended stay hotels and seven GuestHouse International hotels. The Company
had expected to open approximately 41 additional franchised hotels during the remaining nine months of 2001, three Suburban Lodge extended stay hotels and 38 GuestHouse International hotels. 
However, due to the proxy contest the Company is currently involved in, some
prospective franchisees have informed the Company that they are waiting to see
the outcome of the contest before they commit to the brands.  This has
hampered the Companys continuing efforts to grow the brands and may delay the
achievement of these objectives for 2001 until early next year.The Company also expects to open one Company-owned Suburban Lodge extended stay hotel in the second quarter of 2001.

The Company has determined that, when its franchising revenues have grown to a more significant level, it will become more aggressive in its efforts to sell its own operating hotels. The Companys ultimate
objective is to own no real estate, although this objective may take several years to accomplish. The



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Companys present intent is to sell its hotels only to parties who are interested in entering into a franchise agreement and operating the hotels under the Suburban Lodge brand. Thirty-two of the Company
s hotels have been grouped into mortgage pools of five or six hotels each. The Company believes that these hotels may be difficult to sell since, essentially, the pools must remain intact and the debt must remain in place until December 31, 2008, or June
30, 2009, depending on the pool. While the geographic dispersion of the hotels in each group might make these pools unattractive to some franchisees, the Company believes that the debt terms would be attractive to such franchisees.

To date, one sale of a Company-developed hotel has occurred. This was in February 1999 and it resulted in a gain of $1.1 million dollars. Many factors influence the selling price of real estate assets, the most
important of which are operating results for the most recent twelve-month period prior to the sale and the current interest rate environment for hotel loans. Accordingly, the Company cannot predict its ability to sell its hotels nor can it be assured that
future hotel sales will result in gains.

From time to time, the Company studies business and strategic opportunities to determine if specific transactions would have the potential of enhancing shareholder value. These activities have included the review
of possible acquisitions or other business combinations, some of which, if consummated, could result in the discontinuance of the Companys loans to HotelTools. In such event, unless other funding was available, HotelTools could cease operating and
be unable to repay its loans from the Company. In the event HotelTools is unable to repay its loans from the Company, the Company could recognize a loss up to the full amount of its loans; however, the Company would seek to minimize any such loss by
exercising its security rights against HotelTools developed software and its owned hardware. There can be no assurance that HotelTools assets would have a substantial value to the Company if such events were to transpire. 
The software is currently in beta test and has been installed in four Suburban Lodge hotels. 
It is expected that the software will be installed in a total of ten
Company-owned Suburban Lodge hotels and two franchised Suburban Lodge hotels by
the end of the second quarter of 2001 and that all Company-owned and franchised
Suburban Lodge hotels will be using the software by the end of 2001, regardless
of whether HotelTools is sold to a third party.

The Company is also a guarantor on the equipment financing lease for HotelTools. The total amount of the lease obligation at March 31, 2001 is approximately $1.3 million.

Recent Accounting Pronouncements

As of January 1, 2001, the Company adopted the Statement of Financial Accounting Standards No. 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities as amended in June 2000
by Statement of Financial Accounting Standards No. 138 (SFAS 138), Accounting for Certain Derivative Instruments and Certain Hedging Activities (an amendment of FASB Statement No. 133). SFAS 133, as amended by SFAS 138, requires companies to
recognize all derivatives as either assets or liabilities in the balance sheet and measure such instruments at fair value. The adoption of these statements had no impact on the Companys consolidated financial statements.

Forward Looking Statements

This Quarterly Report on Form 10Q contains statements concerning the Companys plans, beliefs and expectations for future periods. The statements include, without
limitation, statements regarding amounts expected to be realized from the sale of undeveloped
sites; the number of franchised hotels to be opened by the end of 2001;  the
Companys plans and objectives with respect to the sale of Company-owned hotels; the source of funding to meet future cash
needs; the amount of additional funding to be provided to HotelTools by the
Company; and HotelTools efforts to attract equity investors, to market a fully developed software system and to repay its loans from the Company. These forward-looking statements involve known and unknown risks and uncertainties that could cause
actual results to differ materially from the expectations expressed or implied in such statements.





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These risks and uncertainties include, but are not limited to: (i) changes in economic conditions, (ii) reduced demand for and increased supply of extended stay and other forms of lodging, and increased
competition at all levels in the hotel industry, (iii) the ability of the Company to achieve desired growth in the number of franchised Suburban Lodge and GuestHouse International hotels, (iv) various factors affecting the ability of the Companys
franchisees to acquire existing Suburban Lodge hotels which the Company may desire to sell or to build or renovate additional hotels, including the availability of adequate financing on commercially acceptable terms, development risks and inefficiencies,
weather delays, zoning and other governmental and environmental approvals, (v) the ability of the Companys operating and financial system to effectively manage growth, (vi) dependence on senior management, and (vii) the Companys financial
condition. Forward-looking statements concerning HotelTools are subject to the foregoing risks and uncertainties and to additional risks and uncertainties including, but not limited to:

(i) uncertainty as to the demand for its products and services, (ii) the ability of HotelTools to complete market- ready and viable products, (iii) the risk that competitors will be able to develop and market
products and services that produce results similar to those produced by HotelTools products, (iv) its ability to obtain sufficient capital to complete the development of its products and services and to successfully market them to the hotel
industry, and (v) its future profitability.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to changes in interest rates primarily as a result of its borrowing activities.

At March 31, 2001, the Company had debt outstanding totaling $119.4 million. Approximately $99.4 million of this amount was represented by fixed rate mortgage loans. The interest rate on approximately $9.8 million
of these mortgage loans will adjust on April 1, 2002 and again on April 1, 2005 for $6.7 million of the loans. One loan of approximately $3.1 million matures on April 1, 2005. The interest rate on approximately $2.6 million of the loans is adjustable
every year on April 1.

Outstanding borrowings on three construction loans totaled $10.0 million at March 31, 2001. The company expects to draw an additional
$2.4 million on these loans by the end of the second quarter of 2001. One of the construction loans with a balance of $3.1million at March 31, 2001 has a fixed interest rate that is adjustable on October 1, 2002, and again on October 1, 2005. The other
two loans are at variable interest rates. The remaining $10.0 million of debt outstanding at March 31, 2001 consisted of a variable rate term loan with SouthTrust Bank.

The total amount of variable rate debt and fixed rate debt adjustable within one year outstanding at March 31, 2001, plus the additional draws expected to be made on these loans through the end of the second
quarter of 2001, is approximately $18.0 million. Accordingly, each one percent change in market interest rates will change interest expense by approximately $180,000 on an annual basis.

The Companys cash and cash equivalents are short-term and highly-liquid investments with original maturities of three months or less. Accordingly, a change in market interest rates has a nearly immediate
effect on interest earned by the Company on its invested cash. For the foreseeable future, the Company reasonably expects that its average invested cash balance will approximate $4.0 million. Accordingly, each one percent change in market interest rates
will change interest income by approximately $40,000 on an annual basis.





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PART II.          OTHER INFORMATION AND SIGNATURES

|Item 1. | Legal Proceedings               
|------- | --------------------------------
|        | None                            
|Item 6. | Exhibits and Reports on Form 8-K

| | (a) | Exhibits                                                                      
| | --- | ------------------------------------------------------------------------------
| |     | 3.2 Amended and Restated Bylaws of the Company, amended as of October 24, 2000
| | (b) | Reports on Form 8-K                                                           
| |     | None                                                                          



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Signatures



Pursuant to the requirements 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.







|                   | Suburban Lodges of America, Inc.                                                                                      
|------------------ | ----------------------------------------------------------------------------------------------------------------------
|                   |                                                                                                                       
|Date: May 15, 2001 | By:     /s/ PAUL A. CRISCILLIS, JR.Paul A.
Criscillis, Jr. 
           Vice President and Chief Financial Officer     
|                   |                                                                                                                       
|Date: May 15, 2001 | By:      /s/ ROBERT E. SCHNELLE

Robert E. Schnelle Vice President and
Treasurer (Chief
           Accounting Officer)









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