<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                ______________

                                   FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the Quarterly Period Ended March 31, 2000

                                      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 0-27360

                                 _____________

                          EXTENDED STAY AMERICA, INC.
            (Exact name of Registrant as specified in its charter)

                    Delaware                                36-3996573
         (State or other jurisdiction of               (I.R.S. Employer
          incorporation or organization)             Identification Number)


           450 EAST LAS OLAS BOULEVARD, FORT LAUDERDALE, FL     33301
             (Address of Principal Executive Offices)        (Zip Code)


      Registrant's telephone number, including area code:  (954) 713-1600

                                 _____________

  Indicate by check mark whether the registrant:  (1) has filed all reports
required to be filed by Section 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 _____

  At May 1, 2000, the registrant had issued and outstanding an aggregate of
95,263,984 shares of Common Stock.


<PAGE>

                                    PART I

                             FINANCIAL INFORMATION

Item 1.  Financial Statements

                          EXTENDED STAY AMERICA, INC.

               Condensed Consolidated Balance Sheets (Unaudited)
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                            ASSETS
                                            ------

                                                                                          March 31,    December 31,
                                                                                            2000         1999(1)
                                                                                         -----------   ------------
<S>                                                                                      <C>           <C>
Current assets:
 Cash and cash equivalents............................................................   $    5,451    $    6,449
 Accounts receivable..................................................................        6,054         6,094
 Prepaid expenses.....................................................................        3,386         2,810
 Deferred income taxes................................................................       38,482        39,053
 Other current assets.................................................................           27            27
                                                                                         ----------    ----------
   Total current assets...............................................................       53,400        54,433
Property and equipment, net...........................................................    1,889,298     1,856,517
Deferred loan costs, net..............................................................       14,797        15,746
Other assets..........................................................................          714           553
                                                                                         ----------    ----------
                                                                                         $1,958,209    $1,927,249
                                                                                         ==========    ==========
                        LIABILITIES AND STOCKHOLDERS' EQUITY
                        ------------------------------------

Current liabilities:
 Accounts payable.....................................................................   $   27,274    $   34,020
 Income taxes payable.................................................................                      2,888
 Accrued retainage....................................................................        7,455         8,834
 Accrued property taxes...............................................................       11,053         8,871
 Accrued salaries and related expenses................................................        2,225         2,633
 Accrued interest.....................................................................        2,432         7,059
 Other accrued expenses...............................................................       16,146        14,187
 Current portion of long-term debt....................................................        3,000         3,000
                                                                                         ----------    ----------
   Total current liabilities..........................................................       69,585        81,492
                                                                                         ----------    ----------
Deferred income taxes.................................................................       83,778        77,167
                                                                                         ----------    ----------
Long-term debt........................................................................      882,000       853,000
                                                                                         ----------    ----------
Commitments

Stockholders' equity:
 Preferred stock, $.01 par value, 10,000,000 shares authorized, no shares issued and
   outstanding........................................................................
 Common stock, $.01 par value, 500,000,000 shares authorized, 95,429,084 and
   95,996,884 shares issued and outstanding, respectively.............................          954           960
 Additional paid-in capital...........................................................      824,704       828,724
 Retained earnings....................................................................       97,188        85,906
                                                                                         ----------    ----------
Total stockholders' equity............................................................      922,846       915,590
                                                                                         ----------    ----------
                                                                                         $1,958,209    $1,927,249
                                                                                         ==========    ==========
</TABLE>

(1)  Derived from audited financial statements

    See notes to the unaudited condensed consolidated financial statements

                                       1
<PAGE>

                          EXTENDED STAY AMERICA, INC.

            Condensed Consolidated Statements of Income (Unaudited)
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                               Three Months Ended
                                                                              ---------------------
                                                                              March 31,  March 31,
                                                                                 2000       1999
                                                                              ---------  ---------
<S>                                                                           <C>        <C>
Revenue.....................................................................   $113,940    $89,419

Property operating expenses.................................................     50,931     40,994
Corporate operating and property
  management expenses.......................................................     10,913     10,298
Depreciation and amortization...............................................     16,149     13,924
                                                                               --------    -------
      Total costs and expenses..............................................     77,993     65,216
                                                                               --------    -------
Income from operations before interest, income taxes and cumulative effect
  of accounting change......................................................     35,947     24,203

Interest expense, net.......................................................     17,144     11,450
                                                                               --------    -------
Income before income taxes and cumulative effect of accounting change.......     18,803     12,753

Provision for income taxes..................................................      7,521      5,101
                                                                               --------    -------
Net income before cumulative effect of accounting change....................     11,282      7,652

Cumulative effect of change in accounting for start-up
  activities, net of income tax benefit of $520.............................                  (779)
                                                                               --------    -------
Net income..................................................................   $ 11,282    $ 6,873
                                                                               ========    =======
Net income per common share -- Basic and Diluted:
    Net income before cumulative effect of accounting change................   $   0.12    $  0.08
    Cumulative effect of accounting change..................................                 (0.01)
                                                                               --------    -------
Net income..................................................................   $   0.12    $  0.07
                                                                               ========    =======

Weighted average shares:
  Basic.....................................................................     95,632     95,974
  Effect of dilutive options................................................        446        643
                                                                               --------    -------
  Diluted...................................................................     96,078     96,617
                                                                               ========    =======
 </TABLE>


    See notes to the unaudited condensed consolidated financial statements

                                       2
<PAGE>

                          EXTENDED STAY AMERICA, INC.

          Condensed Consolidated Statements of Cash Flows (Unaudited)
                                (In thousands)

<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                                          ----------------------
                                                                          March 31,   March 31,
                                                                             2000        1999
                                                                          ---------   ---------
<S>                                                                       <C>         <C>
Cash flows from operating activities:
 Net income.............................................................   $ 11,282    $  6,873
 Adjustments to reconcile net income to net cash provided by operating
  activities:
   Depreciation and amortization........................................     16,149      13,924
   Amortization of deferred loan costs in interest expense..............        965         965
   Deferred income taxes................................................      7,182       3,541
   Cumulative effect of accounting change...............................                    779
   Changes in operating assets and liabilities..........................     (4,971)    (17,965)
                                                                           --------    --------
      Net cash provided by operating activities.........................     30,607       8,117
                                                                           --------    --------
Cash flows from investing activities:
 Additions to property and equipment....................................    (56,402)    (93,364)
 Other assets...........................................................       (161)         53
                                                                           --------    --------
     Net cash used in investing activities..............................    (56,563)    (93,311)
                                                                           --------    --------
Cash flows from financing activities:
 Proceeds from long-term debt...........................................     29,000      90,000
 Proceeds from issuance of common stock.................................                     16
 Repurchases of Company common stock....................................     (4,026)
 Additions to deferred loan costs.......................................        (16)        (21)
                                                                           --------    --------
     Net cash provided by financing activities..........................     24,958      89,995
                                                                           --------    --------
Increase (decrease) in cash and cash equivalents........................       (998)      4,801
Cash and cash equivalents at beginning of period........................      6,449         623
                                                                           --------    --------
Cash and cash equivalents at end of period..............................   $  5,451    $  5,424
                                                                           ========    ========

Noncash investing and financing transactions:
 Capitalized or deferred items included in accounts payable
   and accrued liabilities..............................................   $ 20,752    $ 47,259
                                                                           ========    ========
Supplemental cash flow disclosures:
 Cash paid for:
  Income taxes..........................................................   $  3,935    $  9,792
                                                                           ========    ========
  Interest expense, net of amounts capitalized..........................   $ 21,968    $ 15,736
                                                                           ========    ========
</TABLE>

    See notes to the unaudited condensed consolidated financial statements

                                       3
<PAGE>

                          EXTENDED STAY AMERICA, INC.

        NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                March 31, 2000


NOTE 1 -- BASIS OF PRESENTATION

  The accompanying condensed consolidated financial statements are unaudited and
include the accounts of Extended Stay America, Inc. and subsidiaries (the
"Company").  All significant intercompany accounts and transactions have been
eliminated in consolidation.

  These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.

  The condensed consolidated balance sheet data at December 31, 1999 was derived
from audited financial statements of the Company but does not include all
disclosures required by generally accepted accounting principles.

  Operating results for the three-month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000. For further information, refer to the financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.

  Pursuant to the Statement of Position 98-5, "Reporting on the Costs of Start-
up Activities" issued by the Accounting Standards Executive Committee, effective
January 1, 1999, the Company changed its method of accounting for start-up
activities, including pre-opening and organizational costs, to expense them as
they are incurred.  Accordingly, the Company recorded an expense of $779,000,
net of income tax benefit of $520,000, as the cumulative effect of this change
in accounting.

  For the three months ended March 31, 2000 and 1999, the computation of diluted
earnings per share does not include approximately 13,065,000 and 11,811,000
weighted average shares, respectively, of common stock represented by
outstanding options because the exercise price of the options was greater than
the average market price of common stock during the period.

  Certain previously reported amounts have been reclassified to conform with the
current period's presentation.

                                       4
<PAGE>

NOTE 2 -- PROPERTY AND EQUIPMENT

  Property and equipment consist of the following:
<TABLE>
<CAPTION>
                                                                             (000's Omitted)
                                                                         March 31,    December 31,
                                                                           2000           1999
                                                                        ----------    ------------
<S>                                                                     <C>           <C>
     Operating Facilities:
       Land and improvements........................................    $  442,571     $  425,098
       Buildings and improvements...................................     1,237,252      1,194,789
       Furniture, fixtures, equipment and supplies..................       243,576        237,218
                                                                        ----------     ----------
         Total Operating Facilities.................................     1,923,399      1,857,105
     Office furniture, fixtures and equipment.......................         8,313          8,270
     Facilities under development, including land and improvements..       105,166        122,611
                                                                        ----------     ----------
                                                                         2,036,878      1,987,986
     Less:  Accumulated depreciation................................      (147,580)      (131,469)
                                                                        ----------     ----------
     Total property and equipment...................................    $1,889,298     $1,856,517
                                                                        ==========     ==========

</TABLE>
Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations

General

  We own and operate three brands in the extended stay lodging market--
StudioPLUS(TM) Deluxe Studios ("StudioPLUS"), EXTENDED STAYAMERICA Efficiency
Studios ("EXTENDED STAY"), and Crossland Economy StudiosSM ("Crossland"). Each
brand is designed to appeal to different price points below $500 per week. All
three brands offer the same core components: a living/sleeping area; a fully-
equipped kitchen or kitchenette; and a bathroom. StudioPLUS facilities serve the
mid-price category and generally feature guest rooms that are larger than those
in our other brands, an exercise facility, and a swimming pool. EXTENDED STAY
rooms are designed to compete in the economy category. Crossland rooms are
typically smaller than EXTENDED STAY rooms and are targeted for the budget
category. In this Quarterly Report on Form 10-Q, the words "Extended Stay
America", "Company", "we", "our", "ours", and "us" refer to Extended Stay
America, Inc. and its subsidiaries unless the context suggests otherwise.

  During the quarter ended June 30, 1999, we repositioned 14 StudioPLUS
properties as EXTENDED STAY properties.  All operating statistics reflect the
repositioning of these properties as EXTENDED STAY properties for the entire
periods presented.  The table below provides a summary of our selected
development and operational results for the three months ended March 31, 2000
and 1999.

<TABLE>
<CAPTION>
                                            Three Months
                                           Ended March 31,
                                          -----------------
                                            2000     1999
                                          ------    -------
<S>                                       <C>       <C>
Total Facilities Open (at period end)..      372      334
Total Facilities Opened................       10       29
Average Occupancy Rate.................       73%      71%
Average Weekly Room Rate...............    $ 299    $ 284
</TABLE>

  Average occupancy rates are determined by dividing the rooms occupied on a
daily basis by the total number of rooms.  Due to our rapid expansion, our
overall average occupancy rate has been negatively impacted by the lower
occupancy typically experienced during the pre-stabilization period for newly-
opened facilities.  We expect the negative impact on overall average occupancy
to decline as the ratio of newly-opened properties to total properties in
operation declines.  Average weekly room rates are determined by dividing room
revenue by the number of rooms occupied on a daily basis for the applicable
period and multiplying by seven.  The average weekly room rates generally will
be greater than standard room rates because of (i) stays of less than one week,
which are charged at a higher nightly rate, (ii) higher weekly rates for rooms
that are larger than the standard rooms, and (iii) additional charges for more
than one person per room.  We expect that our future occupancy and room rates
will be impacted by a number of factors, including the number and geographic
location of new facilities as well as the season in which we open those
facilities.  We also cannot assure you that we can maintain our occupancy and
room rates.

                                       5
<PAGE>

  At March 31, 2000, we had 372 operating facilities (39 Crossland, 242 EXTENDED
STAY, and 91 StudioPLUS) and had 20 facilities under construction (18 EXTENDED
STAY and 2 StudioPLUS).  We expect to complete the construction of the
facilities currently under construction generally within the next twelve months,
however, we cannot assure you that we will complete construction within the time
periods we have historically experienced.  Our ability to complete construction
may be materially impacted by various factors including final permitting and
obtaining certificates of occupancy, as well as weather-induced construction
delays.


Results of Operations

 Property Operations

  The following is a summary of the number of properties in operation at the end
of each period along with the related average occupancy rates and average weekly
room rates during each period:

<TABLE>
<CAPTION>
                                             For the Three Months Ended
                 ----------------------------------------------------------------------------------
                             March 31, 2000                            March 31, 1999
                 ----------------------------------------  ----------------------------------------
                                 Average        Average                    Average        Average
                 Facilities     Occupancy     Weekly Room  Facilities     Occupancy     Weekly Room
                    Open          Rate           Rate         Open          Rate           Rate
                 ----------  ---------------  -----------  ----------  ---------------  -----------
<S>              <C>         <C>              <C>          <C>         <C>              <C>
Crossland......          39              74%         $213          39              61%         $203
EXTENDED STAY..         242              73           305         213              73           288
StudioPLUS.....          91              73           340          82              71           324
                        ---              --          ----         ---              --          ----
  Total........         372              73%         $299         334              71%         $284
                        ===              ==          ====         ===              ==          ====
</TABLE>

  Because newly opened properties typically experience lower occupancies during
their pre-stabilization period, average occupancy rates are impacted by the
ratio of newly opened properties to total properties. The average occupancy rate
in the first quarter of 2000 for the 305 properties we owned and operated as of
December 31, 1998 was 74%. Similarly, the average occupancy rate in the first
quarter of 1999 for the 185 properties we owned and operated as of December 31,
1997 was 75%. We believe that the decline in the average occupancy rate for
properties open for at least one year at the beginning of the quarter of each
year reflects general changes in the overall supply and demand for lodging
products in various markets in which we operate. We expect that these factors
will continue to impact our occupancies until incremental demand is sufficient
to compensate for the supply of available rooms in these markets. The impact of
these factors was offset by the impact of a decline in the ratio of newly opened
properties to total properties for each of our brands, resulting in overall
average occupancy rates of 73% for the first quarter of 2000 compared to 71% for
the first quarter of 1999.

  The increase in overall average weekly room rates for the first quarter of
2000 compared to the first quarter of 1999 reflects the geographic dispersion of
properties opened since March 31, 1999 and the higher standard weekly room rates
in certain of those markets. The increase also is due in part to increases in
rates charged in previously opened properties. The average weekly room rate for
the 305 properties that we owned and operated throughout both periods increased
by 3% in the first quarter of 2000.

  We recognized total revenue of $113.9 million for the first quarter of 2000
and $89.4 million for the first quarter of 1999. This is an increase of $24.5
million, or 27%. Approximately $18.7 million of the increased revenue was
attributable to properties opened subsequent to December 31, 1998 and
approximately $5.8 million was attributable to an increase in revenue for the
305 properties that we owned and operated throughout both periods.

  Property operating expenses, consisting of all expenses directly allocable to
the operation of the facilities but excluding any allocation of corporate
operating and property management expenses, depreciation, or interest were $50.9
million (45% of total revenue) for the first quarter of 2000, compared to $41.0
million (46% of total revenue) for the first quarter of 1999. We expect the
ratio of property operating expenses to total revenue to generally fluctuate
inversely relative to occupancy rate increases or decreases because the majority
of these expenses do not vary based on occupancy. Our overall occupancy rates
were 73% for the first quarter of 2000 and 71% for the first quarter of 1999 and
our property operating margins were 55% for the first quarter of 2000 and 54%
for the first quarter of 1999.

                                       6
<PAGE>

  The provisions for depreciation and amortization for our lodging facilities
were $15.8 million and $13.6 million for the first quarter of 2000 and 1999,
respectively. These provisions were computed using the straight-line method over
the estimated useful lives of the assets. These provisions reflect a pro rata
allocation of the annual depreciation and amortization charge for the periods
for which the facilities were in operation. Depreciation and amortization for
the first quarter of 2000 increased as compared to the first quarter of 1999
because we operated 38 additional facilities in 2000 and we operated for a full
quarter the 29 properties that were opened in the first quarter of 1999.

 Corporate Operations

  Corporate operating and property management expenses include all expenses not
directly related to the development or operation of lodging facilities. These
expenses consist primarily of personnel and certain marketing costs, as well as
development costs that are not directly related to a site that we will develop.
We incurred corporate operating and property management expenses of $10.9
million (10% of total revenue) in the first quarter of 2000 and $10.3 million
(12% of total revenue) in the first quarter of 1999. The increase in the amount
of these expenses for the first quarter of 2000 as compared to the same period
in 1999 reflects the impact of additional personnel and related expenses in
connection with the increased number of facilities we operated. We expect these
expenses will continue to increase in total amount but decline moderately as a
percentage of revenue as we develop and operate additional facilities in the
future.

  Depreciation and amortization was $326,000 for the quarter ended March 31,
2000 and $305,000 for the comparable period in 1999. These provisions were
computed using the straight-line method over the estimated useful lives of the
assets for assets not directly related to the operation of our facilities. These
assets were primarily office furniture and equipment.

  We realized $197,000 of interest income in the first quarter of 2000 and
$179,000 in the first quarter of 1999. This interest income was primarily
attributable to the temporary investment of funds drawn under our credit
facilities. We incurred interest charges of $19.5 million during the first
quarter of 2000 and $15.1 million during the first quarter of 1999. Of these
amounts, $2.2 million in the first quarter of 2000 and $3.4 million in the first
quarter of 1999 were capitalized and included in the cost of buildings and
improvements.

  We recognized income tax expense of $7.5 million and $5.1 million (40% of
income before income taxes and the cumulative effect of an accounting change, in
both periods) for the first quarter of 2000 and 1999, respectively.  Our income
tax expense differs from the federal income tax rate of 35% primarily due to
state and local income taxes.  We expect our annualized effective income tax
rate for 2000 will be approximately 40%.

 Cumulative Effect of a Change in Accounting

  Pursuant to the Statement of Position 98-5, "Reporting on the Costs of Start-
up Activities" issued by the Accounting Standards Executive Committee, effective
January 1, 1999, we changed our method of accounting for start-up activities,
including pre-opening and organizational costs, to expense them as they are
incurred.  Accordingly, we recorded an expense of $779,000, net of income tax
benefit of $520,000, as the cumulative effect of this change in accounting.

Liquidity and Capital Resources

  We had net cash and cash equivalents of $5.5 million as of March 31, 2000 and
$6.4 million as of December 31, 1999. At March 31, 2000 we had approximately
$5.7 million invested and at December 31, 1999 we had approximately $45,000
invested in short-term demand notes having credit ratings of A1/P1 or the
equivalent using domestic commercial banks and other financial institutions. We
also deposited excess funds during these periods in an overnight sweep account
with a commercial bank which in turn invested these funds in short-term,
interest-bearing reverse repurchase agreements. Due to the short-term nature of
these investments, we did not take possession of the securities, which were
instead held by the financial institutions. The market value of the securities
held pursuant to these arrangements approximates the carrying amount. Deposits
in excess of $100,000 are not insured by the Federal Deposit Insurance
Corporation.

                                       7
<PAGE>

  Our operating activities generated cash of $30.6 million during the three
months ended March 31, 2000 and $8.1 million during the three months ended March
31, 1999.

  We used $56.4 million to acquire land and develop and furnish a total of 30
sites opened or under construction in the three months ended March 31, 2000 and
$93.4 million for 58 sites in the three months ended March 31, 1999.

  Our cost to develop a property varies significantly by brand and by geographic
location due to differences in land and labor costs. Similarly, the average
weekly rate charged and the resultant cash flow from these properties will vary
significantly but generally are expected to be in proportion to the development
costs. For the 329 properties we opened from January 1, 1996 through December
31, 1999, the average development cost was approximately $5.3 million with an
average of 107 rooms. In 2000, we expect to open a number of properties in the
Northeast and West where average development costs are higher. Accordingly, we
expect our average development cost for 2000 to increase to approximately $8.3
million per property.

  We made open market repurchases of 567,800 shares of common stock for
approximately $4.0 million in the three months ended March 31, 2000.

  In addition to our $200 million 9.15% Senior Subordinated Notes due 2008 (the
"Notes"), we have an $800 million credit facility (the "Credit Facility") which
provides for a $350 million revolving loan facility (the "Revolving Facility"),
a $150 million term loan facility (the "Tranche A Facility"), a $198 million
(net of scheduled principal repayments of $2 million in 1999) term loan facility
(the "Tranche B Facility"), and a $100 million term loan facility (the "Tranche
C Facility"). Loans under the Credit Facility bear interest, at our option, at
either a variable prime-based rate or a variable LIBOR-based rate, plus an
applicable margin. As of March 31, 2000, we had outstanding loans of $237
million under the Revolving Facility and $448 million under the term loans,
leaving $113 million available and committed under the Credit Facility.
Availability of the Revolving Facility is dependent, however, upon us satisfying
certain financial ratios of debt and interest compared to earnings before
interest, taxes, depreciation, and amortization, with these amounts being
calculated pursuant to definitions contained in the Credit Facility.

  Our primary market risk exposures result from the variable nature of the
interest rates on borrowings under the Credit Facility. We entered into the
Credit Facility for purposes other than trading. We do not own derivative
financial instruments or derivative commodity instruments. Based on the levels
of borrowings under the Credit Facility at March 31, 2000, if interest rates
changed by 1.0%, our annual cash flow and net income would change by $4.1
million. We manage our market risk exposures by periodic evaluation of such
exposures relative to the costs of reducing the exposures by entering into
interest rate swaps or by refinancing the underlying obligations with longer
term fixed rate debt obligations.

  We plan to develop approximately 30 properties with total costs of
approximately $250 million in 2000. We had commitments not reflected in our
financial statements at March 31, 2000 totaling approximately $100 million to
complete construction of those properties. We believe that the remaining
availability under the Credit Facility, together with cash on hand and cash
flows from operations, will provide sufficient funds to continue our expansion
as presently planned and to fund our operating expenses through 2000. We may
need additional capital depending on a number of factors, including the number
of properties we construct or acquire, the timing of that development, and the
cash flow generated by our properties. Also, if capital markets provide
favorable opportunities, our plans or assumptions change or prove to be
inaccurate, our existing sources of funds prove to be insufficient to fund our
growth and operations, or if we consummate acquisitions, we may seek additional
capital sooner than currently anticipated. In the event we obtain additional
capital, we may seek to increase property openings in future years. Sources of
capital may include public or private debt or equity financing. We cannot assure
you that we will be able to obtain additional financing on acceptable terms, if
at all. Our failure to raise additional capital could result in the delay or
abandonment of some or all of our development and expansion plans, and could
have a material adverse effect on us.

                                       8
<PAGE>

Seasonality and Inflation

  Based upon the operating history of our facilities, we believe that extended
stay lodging facilities are not as seasonal in nature as the overall lodging
industry. We do expect, however, that our occupancy rates and revenues will be
lower than average during the first and fourth quarters of each calendar year.
Because many of our expenses do not fluctuate with changes in occupancy rates,
declines in occupancy rates may cause fluctuations or decreases in our quarterly
earnings.

  The rate of inflation as measured by changes in the average consumer price
index has not had a material effect on our revenue or operating results during
any of the periods presented. We cannot assure you, however, that inflation will
not affect our future operating or construction costs.

Special Note on Forward-Looking Statements

  This Quarterly Report on Form 10-Q includes forward-looking statements. Words
such as "expects", "intends", "plans", "projects", "believes", "estimates", and
similar expressions are used to identify these forward-looking statements. We
have based these forward-looking statements on our current expectations and
projections about future events. However, these forward-looking statements are
subject to risks, uncertainties, assumptions, and other factors which may cause
our actual results, performance, or achievements to be materially different.
These factors include, among other things:

     .  our limited operating history and uncertainty as to our future
        profitability;

     .  our ability to meet construction and development schedules and budgets;

     .  our ability to develop and implement the operational and financial
        systems needed to manage rapidly growing operations;

     .  uncertainty as to the consumer demand for extended stay lodging;

     .  increasing competition in the extended stay lodging market;

     .  our ability to integrate and successfully operate acquired properties
        and the risks associated with such properties;

     .  our ability to obtain financing on acceptable terms to finance our
        growth; and

     .  our ability to operate within the limitations imposed by financing
        arrangements.

  Other matters set forth in this Quarterly Report may also cause our actual
future results to differ materially from these forward-looking statements. We
cannot assure you that our expectations will prove to be correct. In addition,
all subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements mentioned above. You should not place undue reliance on
these forward-looking statements. All of these forward-looking statements are
based on our expectations as of the date of this Quarterly Report. We do not
intend to update or revise any forward-looking statements, whether as a result
of new information, future events, or otherwise.

Item 3.  Quantitative and qualitative disclosures about market risk

  See Item 2. "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

                                       9
<PAGE>

                                    PART II

                               OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-k

(a)      Exhibits

       Exhibit
       Number                    Description of Exhibit
       ------                    ----------------------
       27.1          Financial Data Schedule (for EDGAR filings only)


(b)    Reports on Form 8-K

       None

                                       10
<PAGE>

                                  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, on May 9, 2000.


                                   EXTENDED STAY AMERICA, INC.

                                     /s/ Gregory R. Moxley
                                   --------------------------------------------
                                          Gregory R. Moxley
                                          Chief Financial Officer
                                          (Principal Financial Officer)

                                     /s/ Patricia K. Tatham
                                   --------------------------------------------
                                          Patricia K. Tatham
                                          Vice President - Corporate Controller
                                          (Principal Accounting Officer)

                                       11