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

                                    OR

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

       QUARTER ENDED MARCH 28, 1997    COMMISSION FILE NO. 1-14040

                      HOST MARRIOTT SERVICES CORPORATION


              DELAWARE                               52-1938672
     ------------------------        ---------------------------------------
     (State of Incorporation)        (I.R.S. Employer Identification Number)


                             6600 ROCKLEDGE DRIVE
                           BETHESDA, MARYLAND 20817
                                (301) 380-7000

         SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT

     TITLE OF EACH CLASS          NAME OF EACH  EXCHANGE  ON WHICH  REGISTERED
------------------------------    --------------------------------------------
Common Stock,  no par value              Chicago Stock Exchange  
(34,637,149 shares outstanding           New York Stock Exchange 
as of March 28, 1997)                    Pacific Stock Exchange
                                         Philadelphia Stock Exchange

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,  and (2) has been subject to such filing  requirements
for the past 90 days. Yes X No __

The total number of shares of common stock outstanding as of April 18, 1997, was
34,645,824.




<PAGE>


             HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES


                                    INDEX

                                                                        PAGE NO.
PART I. FINANCIAL INFORMATION (UNAUDITED):

         Condensed Consolidated Statements of Operations - 
           For the Twelve Weeks Ended March 28, 1997 and March 22, 1996        2

         Condensed Consolidated Balance Sheets -
           As of March 28, 1997 and January 3, 1997                            3

         Condensed Consolidated Statements of Cash Flows -
           For the Twelve Weeks Ended March 28, 1997 and March 22, 1996        4

         Condensed Consolidated Statement of Shareholders' Deficit -
           For the Twelve Weeks Ended March 28, 1997                           5

         Notes to Condensed Consolidated Financial Statements                6-7

         Management's Discussion and Analysis of  Financial Condition
           and Results of Operations                                        8-13

PART II. OTHER INFORMATION AND SIGNATURE:

         Legal Proceedings                                                    14

         Changes in Securities                                                14

         Defaults Upon Senior Securities                                      14

         Submission of Matters to a Vote of Security Holders                  14

         Other Information                                                    14

         Exhibits and Reports on Form 8-K                                     14

         Signature                                                            15

         Computations of Loss Per Common Share                                16


                                   1

<PAGE>


HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                                                   TWELVE WEEKS ENDED
                                                                              -------------------------------
                                                                                  MARCH 28,       MARCH 22,
                                                                                    1997             1996
-------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>             <C> 

REVENUES                                                                            $263.1          $259.8 
-------------------------------------------------------------------------------------------------------------

OPERATING COSTS AND EXPENSES
    Cost of sales                                                                     77.2            78.0 
    Payroll and benefits                                                              83.9            82.7 
    Occupancy costs                                                                   61.3            59.3 
    General and administrative                                                        12.5            12.2 
    Other                                                                             26.9            27.2 
-------------------------------------------------------------------------------------------------------------

       Total operating costs and expenses                                            261.8           259.4 
-------------------------------------------------------------------------------------------------------------

OPERATING PROFIT                                                                       1.3             0.4 

    Interest expense                                                                  (9.2)           (9.2)
    Interest income                                                                    0.8             0.2 
-------------------------------------------------------------------------------------------------------------

LOSS BEFORE INCOME TAXES                                                              (7.1)           (8.6)
 Benefit for income taxes                                                             (2.8)           (3.7)
-------------------------------------------------------------------------------------------------------------

NET LOSS                                                                            $ (4.3)         $ (4.9)
-------------------------------------------------------------------------------------------------------------

LOSS PER COMMON SHARE                                                               $(0.12)         $(0.15)

Weighted Average Common Shares Outstanding                                            34.6            32.7
</TABLE>





      See  notes  to  condensed   consolidated  financial statements.

                                   2



<PAGE>

HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN MILLIONS)

<TABLE>
<CAPTION>

                                                                                    MARCH 28,           JANUARY 3,
                                                                                      1997                1997
------------------------------------------------------------------------------ ----------------- -- ----------------
<S>                                                                                     <C>               <C> 

                                   ASSETS

Current assets:
   Cash and cash equivalents                                                           $  85.0           $  104.2 
   Accounts receivable, net                                                               31.8               27.4 
   Inventories                                                                            41.6               43.3 
   Deferred income taxes                                                                  24.6               25.4 
   Prepaid rent                                                                            6.4                5.9 
   Other current assets                                                                    4.5                3.3 
------------------------------------------------------------------------------ ----------------- -- ----------------

   Total current assets                                                                  193.9              209.5 

Property and equipment, net                                                              277.3              274.2 
Intangible assets                                                                         24.7               23.4 
Deferred income taxes                                                                     54.8               53.3 
Other assets                                                                              19.9               20.1 
------------------------------------------------------------------------------ ----------------- -- ----------------

   Total assets                                                                        $ 570.6            $ 580.5 
------------------------------------------------------------------------------ ----------------- -- ----------------


                    LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
   Accounts payable                                                                    $  77.4            $  97.3 
   Accrued payroll and benefits                                                           43.4               45.7 
   Accrued interest payable                                                               13.5                4.8 
   Current portion of long-term debt                                                       0.8                0.8 
   Other current liabilities                                                              65.9               62.7 
------------------------------------------------------------------------------ ----------------- -- ----------------

   Total current liabilities                                                             201.0              211.3 

Long-term debt                                                                           407.3              407.4 
Other liabilities                                                                         60.7               57.3 
------------------------------------------------------------------------------ ----------------- -- ----------------

   Total liabilities                                                                     669.0              676.0 

Common stock, no par value,  100 million shares  authorized,  34,637,149  shares
   issued and outstanding as of March 28, 1997 and
   34,445,197 shares issued and outstanding as of January 3, 1997                         ---                 --- 
Contributed deficit                                                                    (108.4)             (109.8)
Retained earnings                                                                        10.0                14.3 
--------------------------------------------------------------------------------------------------- ----------------

   Total shareholders' deficit                                                          (98.4)              (95.5)
------------------------------------------------------------------------------ ----------------- -- ----------------

   Total liabilities and shareholders' deficit                                        $ 570.6             $ 580.5 
------------------------------------------------------------------------------ ----------------- -- ----------------
</TABLE>




       See  notes  to  condensed   consolidated  financial statements.

                                   3


<PAGE>


HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN MILLIONS)

<TABLE>
<CAPTION>
                                                                                        TWELVE WEEKS ENDED
                                                                               --------------------------------------
                                                                                  MARCH 28,            MARCH 22,
                                                                                    1997                 1996
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                 <C> 

OPERATING ACTIVITIES
   Net loss                                                                            $ (4.3)              $ (4.9)

   Adjustments to reconcile net income to cash from operations:
     Depreciation and amortization                                                       12.5                 11.7 
     Amortization of deferred financing costs                                             0.2                  0.2 
     Income taxes                                                                        (0.7)                (3.7)
     Other                                                                                1.0                  0.3 
     Working capital changes:
       (Increase) decrease in accounts receivable                                        (4.4)                 1.1 
       Decrease in inventories                                                            1.5                  0.8 
       Increase in other current assets                                                  (1.7)                (0.1)
       Increase (decrease) in accounts payable and accruals                             (13.2)                 9.2 
------------------------------------------------------------------------------ ----------------- -- -----------------

   Cash provided by (used in) operations                                                 (9.1)                14.6 

INVESTING ACTIVITIES
   Capital expenditures                                                                 (13.1)               (12.1)
   Other, net                                                                             1.4                 (0.8)
------------------------------------------------------------------------------ ----------------- -- -----------------

   Cash used in investing activities                                                    (11.7)               (12.9)

FINANCING ACTIVITIES
   Repayments of long-term debt                                                          (0.2)                (0.4)
   Proceeds from stock issuances                                                          1.9                  --- 
   Foreign exchange translation adjustments                                              (0.1)                 --- 
------------------------------------------------------------------------------ ----------------- -- -----------------

   Cash provided by (used in) financing activities                                        1.6                 (0.4)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                        (19.2)                 1.3 
CASH AND CASH EQUIVALENTS, BEGINNING OF QUARTER                                         104.2                 47.2 
------------------------------------------------------------------------------ ----------------- -- -----------------

CASH AND CASH EQUIVALENTS, END OF QUARTER                                              $ 85.0               $ 48.5 
------------------------------------------------------------------------------ ----------------- -- -----------------
</TABLE>



        See  notes  to  condensed   consolidated  financial statements.

                                   4


<PAGE>

HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT (UNAUDITED)
TWELVE WEEKS ENDED MARCH 28, 1997
(IN MILLIONS)

<TABLE>
<CAPTION>

                                                     COMMON         CONTRIBUTED        RETAINED
                                                     STOCK            DEFICIT          EARNINGS           TOTAL
-------------------------------------------- ----------------- ---------------- ----------------- -----------------
<S>                                                  <C>              <C>                <C>              <C>

Balance, January 3, 1997                           $    ---          $(109.8)          $  14.3           $ (95.5)
   Common stock issued for employee
     stock plans                                        ---              1.9               ---               1.9 
   Deferred compensation and other                      ---             (0.5)              ---              (0.5)
   Net loss                                             ---              ---              (4.3)             (4.3)
-------------------------------------------- ----------------- ---------------- ----------------- -----------------

BALANCE, MARCH 28, 1997                            $    ---          $(108.4)          $  10.0           $ (98.4)
-------------------------------------------- ----------------- ---------------- ----------------- -----------------

</TABLE>



        See  notes  to  condensed   consolidated  financial statements.

                                        5



<PAGE>


HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   The  accompanying  condensed  consolidated  financial  statements of Host 
     Marriott  Services  Corporation and subsidiaries  (the "Company") have been
     prepared  without  audit.  Certain  information  and  footnote  disclosures
     normally  included in financial  statements  presented in  accordance  with
     generally  accepted  accounting  principles have been condensed or omitted.
     The  Company  believes  the  disclosures  made  are  adequate  to make  the
     information presented not misleading.  However, the condensed  consolidated
     financial  statements  should be read in conjunction  with the consolidated
     financial  statements  and notes thereto  included in the Company's  Annual
     Report on Form 10-K for the fiscal year ended January 3, 1997.  Capitalized
     terms not  otherwise  defined  herein have the  meanings  specified  in the
     Annual Report on Form 10-K.

     In the  opinion  of  the  Company,  the  accompanying  unaudited  condensed
     consolidated  financial  statements  reflect all adjustments (which include
     only  normal  recurring   adjustments)  necessary  to  present  fairly  the
     consolidated  financial  position  of the  Company as of March 28, 1997 and
     January  3,  1997 and the  results  of  operations  and cash  flows for the
     interim periods presented.  Interim results are not necessarily  indicative
     of fiscal year performance because of the impact of seasonal and short-term
     variations.

     The consolidated  financial  statements include the accounts of the Company
     and its subsidiaries and controlled affiliates.  Investments in 50% or less
     owned  affiliates  over  which the  Company  has the  ability  to  exercise
     significant  influence  are  accounted  for using the  equity  method.  All
     material intercompany transactions and balances between the Company and its
     subsidiaries have been eliminated.  Certain  reclassifications were made to
     the prior year financial statements to conform to the 1997 presentation.

2.   Loss per common  share for the twelve  weeks ended March 28, 1997 and March
     22, 1996 was computed by dividing net income by the weighted average number
     of  outstanding   common  shares.   Common   equivalent  shares  and  other
     potentially    dilutive    securities   have   been   excluded   from   the
     weighted-average  number of outstanding shares in both the first quarter of
     1997 and 1996 because they were antidilutive.

3.   Restricted shares are issued to certain  officers and key  executives.  All
     current  restricted  share  awards  expire at the end of fiscal  year 1998.
     Compensation  expense is  recognized  over the award period and consists of
     time and performance based components. The time-based expense is calculated
     using  the  fair  value  of the  shares  on the  date  of  issuance  and is
     contingent  on  continued  employment.  The  performance-based  expense  is
     calculated  using the fair value of the  Company's  common stock during the
     award  period  and is  contingent  on  attainment  of  certain  performance
     criteria.  During  the first  twelve  weeks of 1996,  all of the  Company's
     executive officers who held restricted shares of Host Marriott  Corporation
     stock elected to convert those restricted  shares into restricted shares of
     the Company's  stock in a manner that preserved the intrinsic  value of the
     restricted  shares to their  holders,  except that the intrinsic  value was
     adjusted to provide a 15% conversion incentive. The Company awarded 445,362
     of new  restricted  stock to key  executives  of the  Company  in the first
     quarter of 1996.

4.   The  Company is  required  to adopt SFAS No.  128,  "Earnings  Per Share" 
     and SFAS No. 129,  "Disclosure of Information about Capital  Structure," no
     later than its fiscal year ending January 2, 1998. The adoption of SFAS No.
     128 and SFAS No.  129 will not  have a  material  effect  on the  Company's
     consolidated financial statements.  As a result of the adoption of SFAS No.
     128, the  Company's  reported  earnings per share for prior periods will be
     restated.  The Company adopted the  disclosure-only  provisions of SFAS No.
     123, "Accounting for Stock-Based Compensation," during 1996.

5.   Management  approved a formal  restructuring  plan in October  1995 and the
     Company recorded a pretax restructuring charge to earnings of $14.5 million
     in the  fourth  quarter of 1995.  The  restructuring  charge was  primarily
     comprised of  involuntary  employee  termination  benefits  (related to its
     realignment of operational responsibilities) and lease cancellation penalty
     fees and related costs  resulting  from the Company's  plan to exit certain
     activities in its entertainment venues.

     The employee  termination  benefits  included in the  restructuring  charge
     reflect the immediate  elimination of approximately 100 corporate and field
     operations  positions and the elimination of  approximately  200 additional


                                        6

<PAGE>


HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued


     field operations  positions,  all of which were specifically  identified in
     the restructuring  plan. Certain initiatives of the restructuring plan were
     scheduled to be implemented  throughout the duration of the plan, resulting
     in an  extended  period  over  which the 200  additional  field  operations
     positions would be eliminated.  The Company expects to complete its plan to
     involuntarily terminate employees by the end of the second quarter of 1997,
     although  severance payments are expected to continue beyond the end of the
     second  quarter of 1997 due to the provisions of the program that allow for
     extended  severance  payments.  As of the end of the first quarter of 1997,
     the  Company  had   terminated   202  positions  in  connection   with  the
     restructuring plan.

     Also as a part of the restructuring,  the Company committed to exit certain
     operating   units  in   entertainment   venues  which  were  deemed  to  be
     inconsistent with the Company's core operating strategies. As of the end of
     the first  quarter  of 1997,  this  portion of the  restructuring  plan was
     essentially complete.

     The  following  table  sets forth the  restructuring  reserve  and  related
     activity as of March 28, 1997:


<TABLE>
<CAPTION>

-------------------------------------- --------------- -- -------------------------------------- -- -----------------

                                                                    ACTIVITY TO DATE
                                                          --------------------------------------
                                                                                   CHANGES              RESERVE
                                         PROVISION             COSTS                  IN                 AS OF
(IN MILLIONS)                             RECORDED            INCURRED             ESTIMATE             3/28/97
-------------------------------------- --------------- -- ----------------- -- ----------------- -- -----------------
<S>                                            <C>                  <C>                <C>                  <C> 

Employee termination benefits                   $11.6                $ 6.3              $ ---                  $ 5.3
Asset write-downs                                 0.5                  0.8                0.3                    ---
Lease cancellation penalty fees
    and related costs                             2.4                  1.9               (0.3)                   0.2
-------------------------------------- --------------- -- ----------------- -- ----------------- -- -----------------

Total                                           $14.5                $ 9.0              $ ---                  $ 5.5
-------------------------------------- --------------- -- ----------------- -- ----------------- -- -----------------
</TABLE>


6.   Cash and cash equivalents  generally include all highly liquid  investments
     with a  maturity  of three  months or less at the date of  purchase.  These
     investments include money market assets and commercial paper used as a part
     of the Company's cash management activities.

7.   In March 1993,  Host  Marriott  settled a class  action  lawsuit  involving
     certain  bondholders by originally  issuing to the bondholders  warrants to
     purchase  up  to  7.7  million  shares  of  Host  Marriott   common  stock,
     approximately  7.3 million of which were  unissued  as of the  Distribution
     Date. As a result of the  Distribution,  such warrants are  exercisable for
     one share of Host Marriott's common stock and one fifth of one share of the
     Company's common stock.

     As of March 28, 1997, the Company had issued 1,370,421 common shares of the
     Company resulting from the exercise of Host Marriott Corporation  warrants.
     Proceeds  received  from the  issuance  of these  common  shares  were $5.8
     million.  As of March 28,  1997,  the Company  remains  obligated  to issue
     67,764 shares of common stock for the remaining  unexercised  Host Marriott
     Corporation  warrants at a price of $5.33 per Company  share.  The warrants
     expire on October 8, 1998.


                                   7


<PAGE>

HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

REVENUES.  Revenues  for the  twelve  weeks  ("quarter")  ended  March 28,  1997
increased by $3.3 million,  or 1.3%, to $263.1 million compared with revenues of
$259.8  million in the first quarter of 1996.  This increase was driven by solid
performance  in  comparable  domestic  airport  concessions  operations,   minor
increases in customer  traffic on tollroads and the opening of the Ontario Mills
food court in the fourth quarter of 1996.

AIRPORTS
Airport concession revenues were up $1.6 million, or 0.8%, to $197.9 million for
the first quarter of 1997  compared  with $196.3  million for the same period in
1996.  Domestic airport concession  revenues increased by $0.6 million, or 0.3%,
to $184.9  million for the first quarter of 1997 compared to $184.3  million for
the same period in 1996.  International  airport revenues were $13.0 million for
the first  quarter of 1997  compared with $12.0 million for the first quarter of
last year,  an increase of $1.0  million,  or 8.3%.  Revenue  growth in domestic
airport  concessions  can be  attributed to strong  fundamentals  in the airport
business,  with passenger  enplanements  at comparable  airports up an estimated
4.3% over last year's first quarter.  Comparable  contracts exclude the negative
impact of contracts with significant changes in scope of operation and contracts
undergoing  significant  construction  of  new  facilities.  Revenue  growth  at
comparable  domestic airport  locations grew a solid 7.0%.  Revenue per enplaned
passenger ("RPE") grew 2.7% at the Company's comparable airport locations in the
first  quarter  of  1997.  The  FAA  forecast  has  projected  annual  passenger
enplanement  growth of 4.1%  through  the year  2008.  The  growth in RPE can be
attributed to the continued addition of branded locations, moderate increases in
menu prices,  various real estate  maximization  efforts and benefits from other
operational initiatives. Airport revenue growth in the first quarter of 1997 was
achieved  despite the benefit of severe winter  weather in 1996 which caused air
traffic  delays;  and the calendar  shift (first  quarter 1997 began  January 4,
after the holiday  travel  season,  while first quarter 1996 began  December 30,
1995).

TRAVEL PLAZAS
Travel  plaza  concession  revenues  for the first  quarter  of 1997 were  $52.7
million,  an increase of $0.8  million or 1.5%,  compared to the same  quarter a
year ago.  This growth was the result of minimal  increases in tollroad  traffic
and moderate price  increases.  The calendar shift referred to above  negatively
impacted quarter-over-quarter sales.

SHOPPING MALLS AND ENTERTAINMENT
Shopping malls and entertainment  concession  revenues,  primarily consisting of
merchandise, food and beverage sales at food courts in shopping malls, stadiums,
arenas,  and other  tourist  attractions,  increased by $0.9 million or 7.8%, to
$12.5  million for the first  quarter of 1997,  from $11.6  million for the same
period in 1996.  The increase in shopping  malls and  entertainment  concessions
revenues was  primarily  attributable  to the opening of the Ontario  Mills Mall
food court in the fourth quarter of 1996. The strong performance of the shopping
mall  facilities  was offset by the Company's  planned exit from certain  retail
operations  in the business  line that were deemed to be  inconsistent  with the
Company's core strategies.

The Company announced in the second quarter of 1996 a definitive  agreement on a
second mall project with The Mills  Corporation to operate the food and beverage
locations at the Grapevine Mills Outlet Mall outside of Dallas,  Texas. The mall
is expected to open in the Fall of 1997,  and the  Company's  food and  beverage
operations  will be similar in size and scope to the Ontario  Mills  Outlet Mall
project.

OPERATING  COSTS AND EXPENSES.  The Company's total operating costs and expenses
were $261.8  million for the first quarter of 1997, or 99.5% of total  revenues,
compared  with $259.4  million for the first  quarter of 1996, or 99.8% of total
revenues.  The  improved  operating  profit  margin  quarter-to-quarter  of 0.3%
reflects  operating  leverage  benefits  derived  from  revenue  growth  and  an
improvement in the  cost-of-sales  margin resulting from the  implementation  of
several operating initiatives.

Cost of sales for the first  quarter of 1997 was $77.2  million,  a decrease  of
$0.8 million,  or 1.0%, below the first quarter of last year. Cost of sales as a
percentage of total revenues  decreased 70 basis points during the first quarter


                                   8


<PAGE>


HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     RESULTS OF OPERATIONS, continued



of 1997, most notably due to various cost  controlling  initiatives  implemented
during the year.  These  initiatives  include the roll out of the Store  Manager
concept  intended to move management  closer to the customer to improve customer
satisfaction;   the  renegotiation  of  distributor  agreements  for  books  and
magazines  in the  Company's  airports  and travel  plazas to  improve  service,
in-stock  availability  and cost margins as well as a program  under which brand
experts  ("Brand  Champions")  are assigned to certain of the Company's  largest
selling  branded  concepts.   The  Brand  Champions'   function  is  to  promote
operational  excellence  and  create  operating  efficiencies  across all of the
Company's locations of a particular brand.

Payroll and benefits  totaled $83.9 million  during the first quarter of 1997, a
1.5%,  or $1.2 million,  increase  over the first  quarter of 1996.  Payroll and
benefits  as a  percentage  of total  revenues  for the  first  quarter  of 1997
increased slightly to 31.9% from the 31.8% reported for the same period in 1996.

Occupancy costs consist of rent,  royalties and  depreciation  and  amortization
expenses.  Occupancy  costs were $61.3 million for the first quarter of 1997, up
$2.0 million or 3.4%  compared to the first  quarter of 1996. As a percentage of
total revenues, occupancy costs increased to 23.3% for the first quarter of 1997
compared to 22.8% for the first quarter of 1996.

Rent expense totaled $43.9 million for the first quarter of 1997, an increase of
$0.7 million, or 1.6%, over the first quarter of 1996. The majority of increased
rent expense is  attributable to equipment  rentals,  which are related to a new
point of sale and back office computer system that the Company is rolling out to
each of its operating  units.  The remainder of increased rent expense is due to
increased  revenues on contracts  with  rentals  determined  as a percentage  of
revenues.

Royalties  expense  for the first  quarter  of 1997  increased  by 15.2% to $5.3
million from $4.6 million for the first quarter of last year. As a percentage of
total  revenues,  royalties  expense  increased to 2.0% for the first quarter of
1997 compared to 1.8% for the first quarter of 1996. These increases reflect the
Company's continued  introduction of branded concepts to its airport concessions
operations.  Royalties  expense as a percentage of branded sales totaled 6.5% in
the first  quarter of 1997,  down from the 6.8%  reported for the same period in
1996. This margin  decrease is attributable to the addition of branded  concepts
with lower-than-average royalty percentages.  Branded facilities generate higher
sales per square foot and contribute  toward increased RPE, which offset royalty
payments  required  to operate  the  concepts.  Branded  concepts  in all of the
Company's  venues have grown at a compound  annual growth rate of 12.2% over the
last five fiscal years. No single branded concept  accounts for more than 10% of
total revenues.  Branded revenues  increased 16.1% for the first quarter of 1997
when  compared  with the same period in 1996,  the majority of which  related to
branded sales at airports.

Branded  revenues in airports have increased  22.6% in the first quarter of 1997
compared to the same period in 1996.  This  increase can be  attributed to large
new branded concept developments in Dulles  International  Airport (just outside
of Washington, D.C.), San Diego International Airport, Los Angeles International
Airport and Hartsfield Atlanta  International  Airport.  Airport branded product
sales in the first quarter increased to $53.1 million, or 26.8% of total airport
revenues,  compared with $43.3 million,  or 22.1% of total airport revenues,  in
the first quarter of 1996.

Depreciation  and  amortization  expense,  excluding  $0.4  million of corporate
depreciation  on property  and  equipment  which is  included as a component  of
general and administrative  expenses, was $12.1 million for the first quarter of
1997,  up 5.2%  compared  to $11.5  million for the first  quarter of 1996.  The
increase in  depreciation  was largely due to  developments at the Ontario Mills
Mall food court and Los Angeles International Airport.

General and administrative  expenses were $12.5 million for the first quarter of
1997, an increase of $0.3 million, or 2.5%, over the $12.2 million for the first
quarter of 1996.  This increase is primarily  attributable  to higher  corporate
depreciation  expense associated with the new headquarters and financial system,
which was  partially  offset by a decrease in  corporate  payroll  and  benefits
expense.


                                     9

<PAGE>


HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     RESULTS OF OPERATIONS, continued



Other  operating  expenses,   which  includes  utilities,   casualty  insurance,
equipment  maintenance,  trash removal and other  miscellaneous  expenses,  were
$26.9 million for the first  quarter of 1997, a $0.3  million,  or 1.1% decrease
from the $27.2 million reported in the first quarter of 1996. As a percentage of
total revenues, other operating expenses decreased 20 basis points for the first
quarter of 1997 when compared with the same period in 1996.

OPERATING PROFIT. As a result of the changes in revenues and operating costs and
expenses discussed above, operating profit increased to $1.3 million, or 0.5% of
revenues, for the first quarter of 1997, from $0.4 million, or 0.2% of revenues,
for the first quarter of 1996. The first quarter of 1997 was the Company's fifth
consecutive  quarter  since it  became a  publicly  traded  corporation  with an
increase in the  year-over-year  operating  profit margin.  Operating profit for
airports,  prior to the  allocation  of  corporate  general  and  administrative
expenses, was $16.8 million for the first quarter of 1997 as compared with $15.6
million  for the first  quarter of 1996.  Operating  loss for the  travel  plaza
business line,  excluding general and  administrative  expenses,  increased $0.2
million to $3.6  million  for the first  quarter of 1997.  Operating  profit for
shopping malls and entertainment, excluding general and administrative expenses,
totaled $0.6  million and $0.4  million for the first  quarter of 1997 and 1996,
respectively.  The operating profit (loss) margins totaled 8.5%, (6.8)% and 4.8%
for airports, travel plazas and shopping malls and entertainment,  respectively,
in the first quarter of 1997.  During the first  quarter of 1996,  the operating
profit (loss) margins totaled 7.9%, (6.6)% and 3.4% for airports,  travel plazas
and  shopping  malls  and   entertainment,   respectively.   Several   strategic
initiatives,  including the Store Manager concept and the Brand Champion program
in the  Company's  largest  selling  branded  concepts have  contributed  toward
improved cost management.

INTEREST  EXPENSE.  Interest expense was unchanged at $9.2 million for the first
quarter of 1997  compared  with the same quarter in 1996,  reflecting  the fixed
rate of 9.5% on the Company's $400.0 million of Senior Notes.

INTEREST  INCOME.  Interest income totaled $0.8 million for the first quarter of
1997, a $0.6 million  increase when compared with the $0.2 million  reported for
the same period in 1996.  The  Company's  acceleration  of the  transfer of cash
balances  from  local   depository   accounts  to  corporate   interest  bearing
consolidation accounts contributed to the increase in interest income during the
quarter.  The Company's strong financial  performance  during the quarter and in
1996  contributed  significantly  to increases in cash  balances.  Cash balances
during the quarter were also  temporarily  higher due to a  transition  to a new
financial  system at year-end 1996. This  transition  resulted in beginning cash
balances being higher than the Company's normal seasonal level.

INCOME  TAXES.  The  benefit  for  income  taxes for the first  quarter of 1997 
and 1996 was $2.8  million  and $3.7 million, respectively.

NET LOSS AND LOSS PER COMMON SHARE. The Company's net loss for the first quarter
of 1997 was $4.3 million, or $0.12 per common share, compared with a net loss of
$4.9 million for the first quarter of 1996, or $0.15 per common share.

WEIGHTED  AVERAGE  SHARES  OUTSTANDING.  The weighted  average  number of common
shares  outstanding  for the first  quarters of 1997 and 1996 used to  calculate
loss per common share was 34.6 million and 32.7  million,  respectively.  During
the first quarter of 1997,  common shares  outstanding  increased by 0.2 million
and totaled 34.6 million as of March 28, 1997, reflecting the issuance of shares
under the Company's  Employee Stock Purchase Plan. Common stock equivalents were
excluded from the earnings per share  calculations for the first quarter of 1997
and 1996 because they were antidilutive.

                                   10



<PAGE>


HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     RESULTS OF OPERATIONS, continued



LIQUIDITY AND CAPITAL RESOURCES

The Company funds its capital  requirements  with a combination of existing cash
balances,  operating  cash  flow and  debt and  equity  financing.  The  Company
believes that cash flow generated from ongoing operations, current cash balances
and funds  available from existing  credit  facilities are more than adequate to
finance   ongoing   capital   expenditures,   as  well  as,  meet  debt  service
requirements.  The  Company  also has the  ability  to fund its  planned  growth
initiatives  from the sources  identified  above;  however,  should  significant
growth   opportunities   arise,  such  as  business   combinations  or  contract
acquisitions,   alternative   financing   arrangements  will  be  evaluated  and
considered.

The Company is required to make semi-annual cash interest payments on the Senior
Notes at a fixed  interest  rate of 9.5%.  The  Company is not  required to make
principal payments on the Senior Notes until maturity except in the event of (i)
certain changes in control or (ii) certain asset sales in which the proceeds are
not invested in other properties  within a specified period of time.  Management
does  not  expect  either  of  these  events  to occur  and  therefore  does not
anticipate  that the  principal  payments on the Senior Notes will be due before
maturity.

The Senior Notes mature in 2005 and are fully and unconditionally  guaranteed on
a joint and several basis by certain  subsidiaries  (the  "Guarantors")  of Host
International, Inc. ("Host International"). The Senior Notes are also secured by
a pledge of the capital stock of the  Guarantors.  The  indenture  governing the
Senior Notes (the  "Indenture")  contains  covenants  that,  among other things,
limit the ability of Host International and certain of its subsidiaries to incur
additional  indebtedness  and issue preferred stock, pay dividends or make other
distributions,  repurchase  capital stock or subordinated  indebtedness,  create
certain liens,  enter into certain  transactions  with affiliates,  sell certain
assets,  issue or sell capital stock of the  Guarantors,  and enter into certain
mergers and consolidations.

The  First  National  Bank of  Chicago,  as agent  for a group of  participating
lenders,   has  provided   credit   facilities   (the   "Facilities")   to  Host
International.  During the first quarter of 1997 the Company  negotiated several
enhancements  to  the  Facilities.  The  enhancements  increased  the  aggregate
principal  amount of the  Facilities  from $75.0 million  through 2001 to $100.0
million  through  April  2002 (the  "Total  Commitment").  The Total  Commitment
consists of (i) a letter of credit  facility in the amount of $25.0  million for
the  issuance  of  financial  and  non-financial  letters  of credit  and (ii) a
revolving  credit  facility  in the  amount  of  $75.0  million  (the  "Revolver
Facility") for working capital and general corporate purposes other than hostile
acquisitions. All borrowings under the Facilities are senior obligations of Host
International  and are secured by the Company's pledge of, and a first perfected
security interest in, all of the capital stock of Host International and certain
of its subsidiaries.

The loan  agreements  relating  to the  Facilities  contain  dividend  and stock
retirement  covenants that are  substantially  similar to those set forth in the
Indenture,  provided that dividends payable to the Company are limited to 25% of
Host  International's  consolidated  net income and provided,  further,  that no
dividends can be declared by Host International prior to June 20, 1997. The loan
agreements  also  contain  certain  financial  ratio  and  capital   expenditure
covenants.  The  enhancements  to the Facility  during the first quarter of 1997
eliminated  the Revolver  Facility's  annual  30-day  repayment  provision.  Any
indebtedness  outstanding  under the  Facilities may be declared due and payable
upon the  occurrence  of certain  events of  default,  including  the  Company's
failure to comply with the several  covenants  noted above, or the occurrence of
certain  events  of  default  under  the  Indenture.  As of March  28,  1997 and
throughout  the twelve  weeks ended  March 28,  1997,  there was no  outstanding
indebtedness  under the Revolver Facility and the Company was in compliance with
the covenants described above.

The Company's cash flows from operating  activities are affected by seasonality.
Cash from  operations  generally is the strongest in the summer  months  between
Memorial  Day and Labor Day.  Cash  provided by  operations,  before  changes in
working capital,  totaled $8.7 million for the first quarter of 1997 as compared
with cash provided by operations of $3.6 million for the same period in 1996.

The primary uses of cash in investing activities consist of capital expenditures
and  acquisitions.  The Company  incurs  capital  expenditures  to build out new
facilities,  expand or  re-concept  existing  facilities,  and to  maintain  the
quality and improve  operations of existing  facilities.  The Company's  capital
expenditures  in the first  quarter of 1997 and 1996,  


                                   11


<PAGE>

HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     RESULTS OF OPERATIONS, continued


totaled $13.1  million and $12.1  million,  respectively.  For the entire fiscal
year of 1997,  the Company  expects to make capital  expenditure  investments of
approximately  $60.0  million in its core  domestic  airport  and  travel  plaza
business   lines  and   approximately   $20.0  million  in  growth   markets  in
international airports and food courts in domestic shopping malls. The timing of
actual  capital  expenditures  can vary  from  expected  timing  due to  project
scheduling and delays inherent in the  construction  and approval  process.  The
Company expects to fund these 1997 expenditures with its operating cash flow.

The Company's cash provided by financing activities in the first quarter of 1997
was $1.6  million,  compared  with cash  used in  financing  activities  of $0.4
million for the same period in 1996. The increase reflects the proceeds from the
issuance of common shares relating to the Company's Employee Stock Purchase Plan
in the first quarter of 1997.

Working  capital is managed  throughout  the year to  effectively  maximize  the
financial  returns  to the  Company.  As a cash  driven  business,  the  Company
benefits from  maintaining  negative  working  capital.  At March 28, 1997,  the
Company's  working  capital  resulted in its current  liabilities  exceeding its
current  assets by $9.0  million.  If needed,  the Company's  Revolver  Facility
provides  funds for  liquidity,  seasonal  borrowing  needs  and  other  general
corporate purposes. In the fourth quarter of 1996, the Company transitioned to a
new financial system,  which included the centralization of the accounts payable
function. As a result of the transition,  the Company experienced unusually high
balances in cash and cash equivalents and current liabilities.

The  Company's   consolidated   earnings   before   interest   expense,   taxes,
depreciation,  amortization and other non-cash items  ("EBITDA")  increased $2.3
million,  or 18.3%,  to $14.9 million in the first quarter of 1997. The increase
in EBITDA reflects the impact of improved operating results in 1997. The Company
believes that EBITDA is one meaningful measure of its operating  performance and
is used by certain  investors  to estimate  the  Company's  ability to meet debt
service requirements and fund capital investments. EBITDA information should not
be considered an alternative to net income,  operating  profit,  cash flows from
operations,  or any other operating or liquidity  performance measure recognized
by Generally Accepted Accounting Principles ("GAAP").  The calculation of EBITDA
for the Company may not be comparable to the same calculation by other companies
because the definition of EBITDA varies throughout the industry.

The following is a reconciliation of EBITDA to net income (loss):

<TABLE>
<CAPTION>

                                                                                         TWELVE WEEKS ENDED
                                                                                   --------------------------------
                                                                                     MARCH 28,        MARCH 22,
(IN MILLIONS)                                                                           1997            1996
------------------------------------------- ----------------- ---------------- --- --------------- ----------------
<S>                                                                                      <C>              <C>  

EBITDA                                                                                   $ 14.9           $ 12.6 
Interest expense (1)                                                                       (9.2)            (9.2)
Benefit for income taxes                                                                    2.8              3.7 
Depreciation and amortization (1)                                                         (12.5)           (11.7)
Other non-cash items                                                                       (0.3)            (0.3)
------------------------------------------- ----------------- ---------------- --- --------------- ----------------

NET LOSS                                                                                 $ (4.3)          $ (4.9)
------------------------------------------- ----------------- ---------------- --- --------------- ----------------

<FN>

(1)  Amortization  of deferred  financing  costs of $0.2  million  for both the
first  quarters of 1997 and 1996 is included as a component of interest expense.
</FN>
</TABLE>


IMPAIRMENTS OF LONG-LIVED ASSETS

Effective  September 9, 1995,  the Company  adopted SFAS No. 121, which requires
that an  impairment  loss be  recognized  when the  carrying  amount of an asset
exceeds the sum of the estimated undiscounted future cash flows of the asset. In
adopting SFAS No. 121 (and thereby  changing its method of measuring  long-lived
asset  impairments  from 

                                   12

<PAGE>


HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     RESULTS OF OPERATIONS, continued



a business-line basis to an individual  operating-unit basis), the Company wrote
down  the  assets  (primarily  leasehold   improvements  and  equipment)  of  15
individual  operating  units to the  extent  the  carrying  value of the  assets
exceeded the fair value of the assets in 1995.  Twelve of the fifteen  units had
projected cash flow deficits,  and,  accordingly  the assets of these units were
written off in their entirety.  The remaining three units had projected positive
cash flows and the assets were  partially  written down to their  estimated fair
values.

During 1996, 5 of the original 15 impaired units were either  disposed of or the
lease term expired. As of March 28, 1997, the total cash flow deficit (including
operating cash flows and necessary capital  expenditures)  from the remaining 10
operating  units was  projected to be  approximately  $26.7  million  during the
remaining  terms of the lease  agreements.  Substantially  all of the  remaining
deficit is  attributable  to three  operating  units,  which include two airport
units and one tollroad unit.


DEFERRED INCOME TAXES

Realization  of the net deferred tax assets  totaling  $79.4 million as of March
28, 1997,  is  dependent on the  Company's  ability to generate  future  taxable
income.  Management believes that it is more likely than not that future taxable
income will be  sufficient  to realize the net deferred  tax assets  recorded at
March 28, 1997.  Management  anticipates  that  increases in taxable income will
arise in future periods primarily as a result of business strategies and reduced
operating  costs  resulting  from the  ongoing  restructuring  of the  Company's
business processes. The anticipated improvement in operating results is expected
to increase the taxable income base to a level which would allow  realization of
the existing net deferred tax assets within nine to twelve years.

Future levels of operating  income and other  taxable  gains are dependent  upon
general  economic  and  industry  conditions,  including  airport  and  tollroad
traffic,  inflation,  competition,  demand for development of concepts and other
factors  beyond  the  Company's  control,  and no  assurance  can be given  that
sufficient  taxable  income will be generated  for full  utilization  of the tax
credits and deductible temporary  differences giving use to the net deferred tax
credits. Management has considered these factors in reaching its conclusion that
it is more likely than not that  operating  income will be sufficient to utilize
these tax credits and temporary deferred deductions fully. The amount of the net
deferred  tax  assets  considered  realizable,  however,  could  be  reduced  if
estimates of future taxable income are not achieved.


                                   13


<PAGE>


HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
PART II.  OTHER INFORMATION AND SIGNATURE



ITEM 1.  LEGAL PROCEEDINGS

LITIGATION

     The Company and its subsidiaries  are involved in litigation  incidental to
     their  businesses.  Such  litigation is not  considered by management to be
     significant and its resolution  would not have a material adverse effect on
     the  financial  condition  or results of  operations  of the Company or its
     subsidiaries.

ITEM 2.  CHANGES IN SECURITIES

     None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

ITEM 5.  OTHER INFORMATION

     None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

     EXHIBIT NO.  DESCRIPTION
         11       Computations of Loss Per Common Share
         27       Financial Data Schedule (EDGAR Filing Only)

(b)  Reports on Form 8-K:

     News  Release  dated April 22, 1997  announcing  first quarter 1997 results
     and  containing  forward-looking statements.


                                   14


<PAGE>

HOST MARRIOTT SERVICES CORPORATION AND SUBSIDIARIES
PART II.  OTHER INFORMATION AND SIGNATURE, continued



                             SIGNATURE

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.



                                             HOST MARRIOTT SERVICES CORPORATION



       MAY 9, 1997                                 /S/  BRIAN W. BETHERS
-----------------------                      -----------------------------------
          Date                                       Brian W. Bethers
                                               Senior  Vice   President  and  
                                                 Chief   Financial Officer






                                   15