##### Table of Contents



UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


|           |  |                                                                                                 
|---------- |  | ------------------------------------------------------------------------------------------------
|(Mark One)
|x          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|           |  | For the fiscal
    year ended December 31, 2003                                                 
|           |  | OR                                                                                              
|o          |  | 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 001-11975

Boykin Lodging Company

(Exact Name of Registrant as Specified in Its
Charter)


|                                                                                                                      |  |                                               
|--------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|Ohio(State or Other Jurisdiction of
    Incorporation or Organization)                                                |  | 34-1824586(I.R.S. Employer Identification No.)
|                                                                                                                     
|Guildhall Building, Suite 1500,
    45 W. Prospect Avenue,
    Cleveland, Ohio(Address of Principal Executive Office) |  | 44115(Zip Code)                               
|                                                                                                                     
|(216) 430-1200(Registrants telephone number,
    including area code)                                               

Securities registered pursuant to
Section 12(b) of the Act:

|                                                                                                                                               |  |                                     
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------
|Title of Class                                                                                                                                 |  | Name of Exchange on Which Registered
|                                                                                                                                               |  |                                     
|Common Shares, without par value                                                                                                               |  | New York Stock Exchange             
|Depositary Shares, each representing  1/10
    of a share of 10 1/2% Class A Cumulative Preferred
    Shares, Series 2002-A, without par value |  | New York Stock Exchange             

Securities registered pursuant to
Section 12(g) of the Act: None

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 o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K.  o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Exchange
Act).  Yes x  No o

The aggregate market value of the voting shares
held by non-affiliates of the registrant, as of March 23,
2004, and June 30, 2003 was approximately $159 million and
$134 million, respectively. The aggregate market value was
calculated by using the closing price of the shares as of the
respective dates, or the immediate preceding business day, on
the New York Stock Exchange.

As of March 23, 2004, the registrant had
17,396,744 common shares issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Definitive Proxy Statement for
the Annual Meeting of Shareholders to be held May 20, 2004
are incorporated by reference into Part III, Items 10,
11, 12, 13 and 14 of this report.



---

TABLE OF CONTENTS



|                                                  |                                                                               |  |  |  |  |  |  | 
|------------------------------------------------- | ----------------------------------------------------------------------------- |  |  |  |  |  |  | 
|FORWARD LOOKING STATEMENTS                       
|PART I                                           
|                                                  | Item 2. Properties                                                           
|                                                  | Item 3. Legal Proceedings                                                    
|                                                  | Item 4. Submission of Matters to a Vote of Security Holders                  
|PART II                                          
|                                                  | Item 5. Market for Registrants Common Shares and Related Shareholder Matters
|                                                  | Item 6. Selected Financial Data                                              
|PART III                                         
|PART IV                                          
|SIGNATURES                                       
|EXHIBIT INDEX                                    
|Exhibit 12 Statement Re: Computation of Ratios   
|Exhibit 21 Subsidiaries of the Registrant        
|Exhibit 23.1 Independent Auditors' Consent       
|Exhibit 31.1 Certification Purs to Rule 13A-14(A)
|Exhibit 31.2 Certification Purs to Rule 13A-14(A)
|Exhibit 32.1 Certification Purs to 18 U.S.C. 1350
|Exhibit 32.2 Certification Purs to 18 U.S.C. 1350



---



##### Table of Contents






FORWARD LOOKING STATEMENTS

This Form 10-K and the documents
incorporated by reference herein contain statements that
constitute forward-looking statements. Those statements appear
in a number of places in this Form 10-K and the documents
incorporated by reference herein and include statements
regarding our intent, belief or current expectations or those of
our directors or officers with respect to:



| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | Leasing, management or performance of the hotels;                                                                                          
|
| |  | Our plans for expansion, conversion or renovation
    of the hotels;                                                                       
|
| |  | Adequacy of reserves for renovation and
    refurbishment;                                                                                 
|
| |  | Our financing plans;                                                                                                                       
|
| |  | Our continued qualification as a REIT under
    applicable tax laws;                                                                       
|
| |  | Our policies and activities regarding
    investments, acquisitions, dispositions, financings, conflicts
    of interest and other matters;
|
| |  | National and international economic, political or
    market conditions; and                                                               
|
| |  | Trends affecting us or any hotels financial
    condition or results of operations.                                                       

You can identify the forward-looking statements
by their use of forward-looking words, such as
believes, expects, may,
will, should, seeks,
intends, plans, estimates,
or anticipates, or the negative of those words or
similar words. You are cautioned that any such forward-looking
statement is not a guarantee of future performance and involves
risks and uncertainties, and that actual results may differ
materially from those in the forward-looking statement as a
result of various factors. The factors that could cause actual
results to differ materially from those expressed in a
forward-looking statement include, among other factors,
financial performance, real estate conditions, execution of
hotel acquisition or disposition programs, changes in local or
national economic conditions and their impact on the occupancy
of our hotels, military action, terrorism, hurricanes, changes
in interest rates, changes in local or national supply and
construction of new hotels, changes in profitability and margins
and the financial condition of our operators and lessee and
other similar variables.

The information contained in this Form 10-K,
in the documents incorporated by reference herein and in
Boykins periodic filings with the Securities and Exchange
Commission also identifies important factors that could cause
such differences.

With respect to any such forward-looking
statement that includes a statement of its underlying
assumptions or bases, we caution that, while we believe such
assumptions or bases to be reasonable and have formed them in
good faith, assumed facts or bases almost always vary from
actual results, and the differences between assumed facts or
bases and actual results can be material depending on the
circumstances. When, in any forward-looking statement, we or our
management express an expectation or belief as to future
results, that expectation or belief is expressed in good faith
and is believed to have a reasonable basis, but there can be no
assurance that the stated expectation or belief will result or
be achieved or accomplished.

1



---



##### Table of Contents






PART I



|        |         
|------- | --------
|Item 1. | Business

(a) General Development of
Business



| |                             
| | ----------------------------
| | About Boykin Lodging Company

Boykin Lodging Company (Boykin), an
Ohio corporation, is a real estate investment trust
(REIT) that as of March 23, 2004 owned
interests in 28 hotels located throughout the United States.
Boykin was formed and completed an initial public offering in
1996 to continue and expand the nearly 40-year history of hotel
ownership, acquisition, redevelopment and repositioning
activities of its predecessors, Boykin Management Company and
its affiliates (the Boykin Group). Boykin Hotel
Properties, L.P., an Ohio limited partnership (the
Partnership), is the operating partnership that
transacts business and holds the direct and indirect ownership
interests in our hotels. As of December 31, 2003, Boykin
had an 85.2% ownership interest in, is the sole general partner
of and conducts all of its business through the Partnership.



| |                             
| | ----------------------------
| | Business and Growth Strategy

Our primary business objectives are to maximize
current returns to our shareholders by increasing cash flow
available for distribution and long-term total returns to
shareholders through appreciation in value of our common shares.
We seek to achieve these objectives through the following key
business strategies relating to the ownership and operation of
our hotels:



| |   |                                                           
| | - | ----------------------------------------------------------
| |  | Maximizing operating cash flows of our hotels
    through:

| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | Aggressive asset management to maximize revenue
    and control expenses;
| |  | Reinvestment in our hotels; and                                          
| |  | Strategic brand positioning.                                             



| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | Identifying opportunities to enhance returns on
    our hotels by investing in new initiatives such as:

| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Developing ancillary conference centers meeting
    International Association of Conference Centers
    (IACC) standards within certain of our existing
    hotels and in newly acquired properties; and
| |  | Expanding and redeveloping our properties to
    improve asset performance.                                                                                                                               



| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Managing our hotel portfolio mix to enhance its
    potential for growth in RevPAR, meaning room revenue per
    available room, and operating income by:

| |   |                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | Identifying key markets with high barriers to
    entry for future acquisitions;                                                          
| |  | Acquiring upscale commercial and resort hotels
    located in these key markets;                                                          
| |  | Acquiring assets with repositioning and
    rebranding opportunities; and                                                                 
| |  | Selling assets that we believe have lower
    long-term growth prospects because of their physical
    characteristics or market location.



| |   |                                                                                 
| | - | --------------------------------------------------------------------------------
| |  | Optimizing our capital structure and improving
    our financial flexibility by:

| |   |                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------
| |  | Managing our leverage and debt service coverage
    ratios;                                               
| |  | Expanding the nature and sources of our capital;
    and                                                  
| |  | Using joint ventures when appropriate to maximize
    return on invested capital and manage risk exposure.

Our management has substantial hotel operating,
development, acquisition and transactional experience. Our
executives have over 100 years of combined experience in
the hotel industry and have directly overseen the acquisition,
disposition, recapitalization, development and repositioning of
billions of dollars of hotel assets throughout the United States.



| |                                                 
| | ------------------------------------------------
| | Highlights from 2003 and Recent
    Developments



| |   |                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In February 2003, we sold our hotel located in
    Knoxville, Tennessee, for a price of $11.5 million and our
    hotel located in Charlotte, North Carolina, for a price of
    $3.7 million. In June 2003, we sold another hotel

2



---



##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | in Charlotte, North Carolina, for a price of
    $2.55 million. Proceeds from these three sales were used to
    pay down outstanding debt.                                                                                                                                                                                                     
|
| |  | On April 30, 2003, we entered into an
    agreement (the Modification Agreement) with a
    subsidiary of Hilton Hotels Corporation (Hilton) to
    terminate the long-term management agreement related to the ten
    Doubletree hotels then managed by Hilton. Significant events
    resulting from the Modification Agreement included:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Six of the hotels, the Doubletree Sacramento, the
    Doubletree Omaha, the Doubletree Colorado Springs, the
    Doubletree Portland Lloyd Center, the Doubletree Boise, and the
    Doubletree Portland Downtown, continued to be Doubletree hotels
    under license agreements which became effective in May. On the
    effective date of the license agreements, Hilton ceased managing
    the properties and we engaged Boykin Management Company Limited
    Liability Company (BMC) to manage the properties.
    The management agreements have initial terms of ten years and
    are cancelable by us without penalty upon 90 days notice.
| |  | In July, Hilton ceased management of the hotel in
    Bellevue, Washington, and we entered into an agreement with BMC
    to begin managing the property. Simultaneously, the Doubletree
    brand was removed from the property and was replaced by a
    franchise agreement with Ramada Franchise Systems, Inc.                                                                                                                                                                                                                                                                                                                                      
| |  | Two of the hotels, those in Springfield and
    Spokane, were sold, as discussed below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | We converted the Berkeley Marina Radisson to a
    Doubletree Hotel under a 15-year license agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  | The hotel formerly known as the Doubletree Yakima
    Valley continued to be managed by Hilton through February 2004,
    at which time Hilton was replaced as manager by a regional
    management company, The Chambers Group, Inc. (Chambers
    Group) and the hotel was rebranded as a Clarion.                                                                                                                                                                                                                                                                                                                                                  



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In July 2003, we sold our hotel located in
    Springfield, Oregon, for a price of $6.5 million. The net
    proceeds of the sale were used to pay off the $4.0 million
    then outstanding on our credit facility, to settle
    $0.7 million of a termination fee payable to Hilton, and
    for general corporate purposes. In August 2003, we sold our
    Doubletree Spokane Valley for a price of $5.4 million. The
    proceeds were used for general corporate purposes and to settle
    a $0.7 million termination fee payable to Hilton. Both
    hotels were previously used as security for a term loan;
    however, in July, the collateral was released in connection with
    the substitution of another of our properties to secure the
    loan, and therefore, no payment on the term loan was required in
    connection with the sales.
|
| |  | In July 2003, BMC commenced management of the
    Holiday Inn Minneapolis West, replacing Interstate Hotels and
    Resorts (Interstate). The management agreement is
    for a term of five years and is cancelable by us without penalty
    upon 90 days notice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | In August 2003, we purchased the Radisson
    Suite Beach Resort on Marco Island, Florida, for a purchase
    price of $27.25 million, utilizing availability under our
    previous secured credit facility. The beachfront resort is
    situated along the Gulf of Mexico on Floridas Marco
    Island, just south of Naples. The resort comprises 233 deluxe
    one- and two-bedroom suites, all with screened balconies and
    views of the Gulf.                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | In October 2003, we entered into a new
    $78.0 million revolving line of credit. The new facility is
    secured by seven of the Companys properties and has a term
    of three years. The facility has a floating interest rate which
    is initially set at LIBOR plus 3.75 percent. Initially, we
    drew $71.9 million under the new line of credit. The
    proceeds were used to repay the Companys senior secured
    line of credit, repay the remaining balance of the
    $45.0 million term loan and for general corporate purposes.
    Non-use fees are assessed on any unfunded portion of the
    facility amount.                                                                                                                                                                                                                       
|
| |  | The Governor of Indiana signed into law a bill
    which allowed the residents of Orange County, Indiana to decide
    whether to permit a riverboat casino to open in the county. Our
    French Lick Springs Resort and Spa is located in Orange County.
    The bill required that casino gambling be approved in a
    countywide referendum, which was subsequently held on
    November 4, 2003. The results of the vote reflected a
    majority vote to approve riverboat gaming within the county. The
    bill, as approved, provides that the riverboat casino would be
    located in the town of French Lick or nearby West Baden. The
    Indiana Gaming Commission has begun soliciting proposals from
    interested parties to develop and operate the casino. We                                                                             

3



---



##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | anticipate that a casino opening in Orange County
    would increase tourism in the county, leading to greater demand
    for rooms at our French Lick Springs Resort and Spa. The opening
    of a casino remains subject to many contingencies including
    identification of a suitable operator, approval of the operator
    by the Indiana Gaming Commission and such operators
    ability to raise financing to fund construction of a riverboat
    casino.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Two ancillary conference centers, the projects in
    Berkeley and in Omaha, were completed in 2003. The physical
    characteristics and the service standards at both facilities
    were designed to meet criteria established by IACC. Upon
    completion of the concepts, both facilities were inspected by,
    and were awarded membership to IACC. A third project at our
    Portland Lloyd Center property is underway and anticipated to
    become operational during the second quarter of 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | We continued to make progress on the
    redevelopment of our Pink Shell Beach Resort. The 92-unit White
    Sand Villas hotel condominium tower is scheduled to hold its
    grand opening celebration on March 20, 2004. We are in the
    final stage of the architecture and design of the final
    component of the redevelopment, in which we expect to replace
    two low-rise buildings with a new 43-unit building, Captiva
    Villas. Similar to White Sand Villas, the units in the new
    building will be sold as condominiums, with the prospect that
    the owners would put their unused room nights back to the resort
    by contract. The new building will contain a full-service fine
    dining restaurant with a view of the Gulf of Mexico. We are
    currently marketing the units for sale and expect to commence
    construction during the second or third quarters of 2004,
    subject to obtaining financing for the project and a sufficient
    level of pre-sales of the condominium units.                                                         
|
| |  | On March 2, 2004, the City of Portland,
    through the Portland Development Commission (PDC),
    acquired our Doubletree Portland Downtown Hotel in Portland,
    Oregon, through its power of eminent domain. We have been
    notified that the property is to be developed for the purpose of
    student housing, academic, retail and conference uses for
    Portland State University. The PDC acquired the property for its
    fair market value of $19.7 million. Approximately
    $16.9 million of the proceeds from the condemnation were
    applied to the outstanding balance of our $130.0 million
    term loan. The remaining net proceeds were used for general
    corporate purposes. Additionally, we sold the related furniture,
    fixtures and equipment contained within the property to Portland
    State University for approximately $2.3 million and the
    proceeds were deposited into the furniture, fixtures and
    equipment reserve fund of the loan. We anticipate these
    transfers will result in a gain of approximately
    $1.5 million.
|
| |  | Our operations during 2003 were negatively
    impacted by the commencement of the war with Iraq, as well as
    the continuing softness in the economy, the continued warnings
    regarding the threat of terrorist attacks and travel related
    fears concerning the SARS virus.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

(b) Financial Information About Industry
Segments

All of Boykin Lodging Companys operations
are in the hotel industry.

(c) Narrative Description of
Business



| |                                             
| | --------------------------------------------
| | Boykin Lodging Companys Hotel
    Portfolio

As of March 23, 2004, our hotel portfolio
included 27 full-service and one limited-service hotel, all of
which compete in the upscale to moderate price segment of the
hospitality market. All but one of our properties are operated
by taxable REIT subsidiaries of Boykin. Refer to Item 2(a)
Hotel Properties for a current listing of our
hotels. Also refer to Item 7 Managements
Discussion and Analysis of Financial Condition and Results of
Operations for discussion surrounding the results of the
hotels operations.

4



---



##### Table of Contents





| |                                       
| | --------------------------------------
| | Application of Business
    Strategies

Maximizing Operating Cash Flow

Aggressive
Asset Management

We closely monitor revenue generation, including
rates, group pacing and yield management, and suggest
improvements to managers initiatives to improve hotel
performance. We also utilize the Smith Travel Research reports
to evaluate the performance of each of our hotels relative to
their competitive set (the hotels in their market that compete
for the same business). We work closely with all of the
respective management companies to manage and improve cost
control initiatives.

Reinvestment
in Hotel Properties

We believe that our regular program of capital
improvements at our hotels, including replacement and
refurbishment of furniture, fixtures, and equipment, helps
maintain and enhance their competitiveness and maximizes their
profitability. Consistent with this strategy, we have made
significant renovations at several of our hotels in recent
years. In 2003, 2002 and 2001 we spent $25.8 million,
$13.5 million and $23.0 million, respectively, on
renovations, excluding the redevelopment of our Pink Shell Beach
Resort and the major renovation projects at the Chicago,
Illinois and Lyndhurst, New Jersey hotels which are owned by
unconsolidated joint ventures. This represented 11%, 5% and 9%
of 2003, 2002 and 2001 consolidated hotel revenues, respectively.

Strategic
Brand Positioning

We maximize our market share and revenue by
taking advantage of our sales and marketing orientation to
identify the most effective branding strategy for each hotel and
to further leverage the selected brands with effective direct
sales strategies. Factors we consider in determining the most
effective branding strategy are:



| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | Brand strengths and their current presence in the
    specific market;   
|
| |  | Expected contribution to revenues;                                       
|
| |  | Expected capital requirements and ongoing costs
    of the franchise; and
|
| |  | Strengthening strategic franchisor relationships.                        

In certain circumstances, we have concluded that
operating a hotel independent of a franchise affiliation is the
best branding strategy. Such is the case with the French Lick
Springs Resort and Spa in French Lick, Indiana, Hotel 71 in
Chicago, Illinois, and our Pink Shell Beach Resort in Ft. Myers
Beach, Florida, which became an independent property late in
2003.

The remainder of our portfolio contains
properties that are currently operated under franchise license
agreements with premier nationally-recognized hotel chains
including, but not limited to, Doubletree®, Marriott®,
Radisson®, Hilton®, Embassy Suites®, Holiday
Inn®, Hampton Inn® and Quality Suites®.

Initiatives to Enhance Returns on
Hotels

IACC
Ancillary Conference Centers

We have identified a strategic opportunity to
enhance the revenue streams from certain of our existing hotels
by developing ancillary conference centers meeting IACC
standards within those hotels. Each conference center is a
business unit inside an existing full-service hotel, designed to
complement the existing transient and group business.

The conference center strategy is attractive to
us because it creates demand for our guest and meeting rooms
from a new client base, those who prefer to hold meetings at
conference centers that meet IACC standards or who otherwise
need the types of services provided at IACC conference centers.
IACC requires facilities to meet certain technical standards
regarding technology, telecommunications, lighting, sound
transmission and other items, which standards appeal
particularly to corporate and institutional training programs.
Further, the

5



---



##### Table of Contents



conference center services and pricing are
designed on a complete meeting package basis, meaning that the
users pay a fixed daily price per person on an all-inclusive
basis (rooms, meals, breaks, telephone services, etc.),
regardless of utilization, thus making the cost of the services
predictable for the planner and the hotel.


The benefit of this pricing structure to us is
that we anticipate a higher RevPOR, meaning revenue per occupied
room, because these guests purchase meals and other services at
the hotel as a part of their packages. Additionally, we expect
higher operating margins from this business because predictable
utilization of these services results in the achievement of
greater operational efficiency.

During 2003, we completed such centers at our
Berkeley and Omaha properties and construction is underway at
our third target property, our Portland Lloyd Center hotel.

Property
Redevelopment and Expansion

We are undertaking a series of projects at our
Pink Shell Beach Resort in Ft. Myers Beach, Florida to elevate
this resorts position to a four-star level and to take
advantage of the opportunity to sell portions of the property
while retaining long term cash flow. In 2001, we completed a
$2.7 million renovation of the Sanibel View Villas, a
60-unit tower, which we sold as condominium units. The units
were sold with the prospect that the owners would put their
unused room nights back to the resort by contract. Each buyer of
a unit in the Sanibel View building put their unit back to us
for use as a hotel room. Therefore, in addition to the cash flow
generated from selling the units, we receive continuing income
from the units placed in the rental program. During 2002, we
demolished and removed cottages to commence construction of a
new 92-unit tower, the White Sand Villas. The units within the
new tower are also being sold as condominium units with the
prospect that the owners will also put their unit back to us for
use as hotel rooms. The tower is scheduled to open in March
2004, and similar to Sanibel View, all prospective buyers have
signed agreements to allow us to use their units as hotel rooms.
The final stage of the redevelopment of the property, the
Captiva Villas, is currently in the design and marketing phase.
Two low-rise buildings at the property are currently scheduled
for demolition after the 2004 Florida peak season and will be
replaced with a new 43-unit tower called Captiva Villas. Again,
the new building will be sold as condominium units.

During 2002, we also completed the guestroom
renovation of Hotel 71 in downtown Chicago converting it into a
four-star independent hotel and the renovation and conversion of
the Lyndhurst, New Jersey property to a Courtyard by Marriott.

Managing Our Hotel Portfolio Mix

Acquiring
Upscale Commercial and Resort Hotels in Key Markets

Our acquisition criteria focuses on hotels in the
upper upscale and upscale segments located in major metropolitan
markets and destination beach markets. These markets have
historically outperformed other markets because of their high
barriers to entry and diversified demand generators. Our current
major metropolitan targets include San Francisco, Boston, New
York, Washington, D.C. and Los Angeles. Our success in
implementing this strategy is illustrated by our most recent
acquisition, the Radisson Suite Beach Resort on Marco Island,
Florida. Prior to Marco Island, our other recent acquisitions
consisted of the Meadowlands-Lyndhurst Courtyard by Marriott in
the New York City metropolitan area and Hotel 71 in Chicago.

Funds for future acquisitions or development of
hotels are expected to be derived, in whole or in part, from
capital obtained from borrowings, from the proceeds of the sale
of non-strategic hotels, from additional issuances of common
shares, preferred shares, or other securities, from potential
joint venture partners and from cash flows from operations.

Disposing
of Assets to Provide Capital for Better Investment
Opportunities

We intend to sell assets that we believe have
lower long-term growth prospects because of physical
characteristics or market location. Due to our efforts in
marketing certain of the properties and modifying our loans, in
2003 we were able to complete the sale of five assets which we
defined as suburban hotels that are not located within our
target markets. Those properties included the Knoxville Hilton,
the Hampton Inn Lake

6



---



##### Table of Contents



Norman, the Holiday Inn Lake Norman, and our
Doubletree hotels in Springfield, Oregon and Spokane,
Washington. Gross proceeds from the sale of these assets totaled
approximately $29.7 million.


We intend to maintain a geographically
diversified hotel portfolio and may also cluster hotels within
certain primary markets in order to take advantage of
operational and managerial economies of scale. We will acquire
or develop additional hotel properties only as suitable
opportunities arise, and will not undertake acquisition or
development of properties unless adequate sources of capital and
financing are available and the properties are priced
attractively.

Optimizing Our Capital Structure and Improving
Financial Flexibility

Managing
Our Leverage and Debt Service Coverage Ratios

Our goal is to maximize shareholder value by
strategically using debt and other fixed income instruments,
such as preferred equity, to enhance return on common equity
while appropriately managing financial risk. We successfully
completed a $45.3 million offering of preferred depositary
shares in October 2002, the net proceeds of which were used to
pay down our indebtedness.

Expanding
Our Capital Sources

We are focused on enhancing our capital structure
by diversifying our capital sources. Traditionally, we have
utilized secured debt, common equity and joint venture equity to
finance our capital needs. We intend to broaden our sources of
capital through increasing our use of alternative sources of
debt and equity. For example, we are financing the construction
of White Sand Villas through a construction loan and we issued
preferred stock in 2002 for which the proceeds were used to
repay outstanding amounts of the previously existing secured
credit facility and portions of term notes. We will continue to
evaluate the use of other financing structures, such as
unsecured debt and convertible securities, relative to our goal
of improving financial flexibility and achieving an attractive
cost of capital. When using secured debt which minimizes
financing costs, we will seek enhanced flexibility in terms of
refinancing options and the ability to allow for substitutions
of collateral to facilitate sales of properties.

Strategically
Utilizing Joint Venture Equity

The use of joint ventures allows us to further
leverage our capital. We will use joint ventures in instances in
which it is strategically advantageous, or to invest in hotels
larger than we would consider appropriate for us to acquire
without a co-venturer in light of the size of our capital base
and leverage ratios. We currently own five hotels in joint
venture structures. Our joint venture partners manage three of
the hotels and two are managed by BMC.

Hotel Managers

In selecting operators, we seek hotel managers
with demonstrated full-service hotel expertise, a stable
operating and financial performance history and an excellent
reputation in the hospitality industry.

As of March 23, 2004, the hotels in our
portfolio were managed by the following entities:

|                                                |  |           |    | 
|----------------------------------------------- |  | --------- | -- | 
|                                                |  | Number   
|Manager                                         |  | of Hotels
|                                                |  |          
|BMC                                             |  |           | 24 | 
|Concord Hospitality Enterprises
    (Concord) |  |           | 1  | 
|Davidson Hotel Company (Davidson)             |  |           | 1  | 
|Chambers Group                                  |  |           | 1  | 
|Outrigger Lodging Services (Outrigger)        |  |           | 1  | 
|                                                |  |           | 28 | 

BMC.Robert W.
Boykin (our Chairman of the Board and Chief Executive Officer)
and his brother, John E. Boykin, control BMC. BMC has continued
the over 40-year hotel operation and management business of the

7



---



##### Table of Contents



Boykin Group. The Boykin Group has capabilities
in all phases of development and management of hotel and resort
properties. BMC currently manages 30 hotel properties located
throughout the United States, including 24 hotels owned by us.
BMCs subsidiaries include an award-winning hotel interior
design business and a hotel and restaurant food, beverage,
supply and equipment purchasing business.


BMC and its owners, who have a substantial
interest in the Partnership, have interests that conflict with
our interests in connection with the structuring and enforcement
of the management agreements and other agreements between us and
BMC and in connection with activities that may maximize profits
for BMC without necessarily benefiting us. The following factors
align the interests of BMC and its owners with our interests to
address these conflicts of interest:



| |   |                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | BMCs owners have retained their equity
    interests in the Partnership;                                                                                                                                                                                                                                          
|
| |  | Our corporate charter documents require that our
    independent directors shall make all determinations to be made
    on behalf of Boykin Lodging Company with respect to the
    relationships or opportunities that represent a conflict of
    interest for any officer or director of Boykin Lodging Company;
|
| |  | Any affiliate of the Boykin Group, including
    Robert W. Boykin and John E. Boykin, will conduct all hotel
    acquisition, development and ownership activities only through
    Boykin Lodging Company;                                                                                                        
|
| |  | BMC is entitled to receive incentive management
    fees with respect to certain hotels it manages for us if the
    hotel operating performance exceeds benchmarks set forth in the
    terms of each management agreement;                                                                                       
|
| |  | A portion of BMCs corporate-level senior
    executive teams compensation is based upon the performance
    of our hotels; and                                                                                                                                                                                   
|
| |  | BMC has a deferred compensation plan for its
    corporate-level senior executives under which the value of each
    award is based on, and fluctuates with, the value of our common
    shares.                                                                                                                   

Concord.Concord is
a privately owned hotel investment and management company based
in Raleigh, North Carolina. Concord was formed to acquire,
develop and manage both full and limited-service hotel
properties. Concord owns and operates hotels under franchise
agreements with such franchisors as Marriott®,
Radisson®, Hilton®, Residence Inn® and Hampton
Inn®.

Davidson.Davidson
is a privately held national hotel management company located in
Memphis, Tennessee. Davidson provides management, development,
consulting and accounting expertise for the hospitality
industry. Davidson operates hotels under franchise agreements
with such franchisors as Marriott®, Embassy Suites®,
Hilton®, Crowne Plaza®, Omni® and Holiday
Inn®.

Chambers Group.Chambers Group is a privately held
regional hotel management company based in Seattle, Washington.
The Company provides consulting services to the hospitality
industry in all aspects of development, financial analysis, and
operations. Chambers Group has operated a variety of mid-market
hotels in the Northwestern United States.

Outrigger.Outrigger
is a privately held hotel management company based in Encino,
California. Outrigger has operated or currently operates a full
range of hotel products, including Marriott®,
Sheraton®, Hilton®, Residence Inn®, Holiday
Inn®, Radisson®, and many limited service products. In
addition to branded hotels, Outrigger operates upscale boutique
hotels.



| |                                       
| | --------------------------------------
| | Terms of the Management
    Agreements

BMC manages 24 of the 28 hotels that we currently
have an ownership interest in. The following is a summary of the
material terms of the BMC management agreements (the
Management Agreements) and is qualified in its
entirety by reference to the Form of Management Agreement, which
was filed as an exhibit to our Current Report on Form 8-K,
filed on January 14, 2002.

8



---



##### Table of Contents



The Management Agreements have the material terms
described below:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Duration/ Termination.As of December 31, 2003, the
    Management Agreements have remaining terms ranging from three
    months to nine years. We have the right to terminate 22 of the
    BMC agreements upon 90 days advance written notice without
    having to pay any damages or a termination fee or penalty.                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Management Fees.Most of the Management Agreements
    provide for base and incentive management fees. The Management
    Agreements have base fees which range from 1.5% to 3% of total
    revenues. All but one of the Management Agreements have
    incentive management fees payable to BMC based upon each hotel
    reaching specified financial performance standards.                                                                                                                                                                                                                                                                                          
|
| |  | Operating and Other Expenses.All of the Management Agreements
    provide that we are responsible for all operating expenses
    associated with the hotels. In addition, we are responsible to
    either pay directly or reimburse the operator for all other
    expenses relating to the hotel including, without limitation,
    real estate taxes, insurance premiums and debt service.                                                                                                                                                                                                                                                                           
|
| |  | Indemnification.All
    of the Management Agreements provide that we will hold the
    operator harmless from and against all liabilities, losses,
    claims, damages, costs and expenses that arise from or in
    connection with (a) the performance of the operators
    services under the agreement, (b) any act or omission
    (whether or not willful, tortious, or negligent) of us or any
    third party, or (c) any other occurrence related to the
    hotel, except for events that result from (i) the fraud,
    willful misconduct or gross negligence of the operator or
    (ii) the breach by the operator of any provision of the
    agreement.
|
| |  | Events of Default.Events of default include
    (a) failure to make any payment required by the agreement,
    (b) failure to observe or perform any term or provision
    after 30 days notice to cure, and (c) failure of
    either party to perform in accordance with an applicable
    franchise agreement.                                                                                                                                                                                                                                                                                                                                                      



| |                                                    
| | ---------------------------------------------------
| | Joint Ventures with Third Party Hotel
    Operators

We have formed joint ventures with third party
operators to align the hotel operators economic interests
with our economic interests. In certain of these joint ventures,
the joint venture partners right to receive cash flow and
equity capital distributions is subordinated to our receipt of
specified minimum distributions. In one of the joint ventures,
the operator leases the hotel from the joint venture and must
maintain a specified net worth to support its lease payment
obligations and has pledged its joint venture interest as
security for the lease payment obligations. We are permitted to
subject any majority-owned joint ventures hotel to a
mortgage or to sell the hotel or its interest in the joint
venture without obtaining the affected joint venture
partners consent.

As of December 31, 2003, we had joint
ventures formed with the following companies or their affiliates
who operated and/or leased the following hotels:

|                                      |  |            |            |            |  |            |    |                                 |  |  |    |   |  |                                             |                              | 
|------------------------------------- |  | ---------- | ---------- | ---------- |  | ---------- | -- | ------------------------------- |  |  | -- | - |  | ------------------------------------------- | ---------------------------- | 
|                                      |  |            |            | Boykin     |  | JV         |    |                                
|                                      |  |            |            | Ownership  |  | Ownership  |    |                                
|Name of Joint Venture                 |  | JV Partner |            | Percentage |  | Percentage |    | Hotel Owned Under Joint Venture
|                                      |  |            |            |            |  |            |    |                                
|BoyStar Ventures, L.P.                |  |            | Interstate | (a)        |  |            | 91 | %                               |  |  | 9  | % |  |                                             | Holiday Inn Minneapolis West | 
|Shawan Road Hotel Limited Partnership |  |            | Davidson   |            |  |            | 91 | %                               |  |  | 9  | % |  |                                             | Marriotts Hunt Valley Inn   | 
|Boykin San Diego, L.L.C.              |  |            | Outrigger  | (b)        |  |            | 91 | %                               |  |  | 9  | % |  | Hampton Inn San Diego Airport/ Sea World   
|BoyCon, L.L.C.                        |  |            | Concord    |            |  |            | 50 | %                               |  |  | 50 | % |  | Meadowlands-Lyndhurst Courtyard by Marriott



---



|    |                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------
|(a) | During 2003, Interstates management
    agreement was terminated and BMC assumed management of the hotel.



|    |                                                          
|--- | ---------------------------------------------------------
|(b) | Outrigger leases the property from the joint
    venture.

9



---



##### Table of Contents





| |             
| | ------------
| | Risk Factors

If any of the following risks occur, our
business, financial condition, operating results and cash flows
could be materially adversely affected. Additional risks and
uncertainties not discussed herein may also impair our
operations.

Risks Related to
the Hotel Industry

Public reaction to acts of terrorism or
military action could affect our cash flow.We are subject to disruptions in the
lodging industry that would likely result from terrorist attacks
(actual or threatened) or military action affecting the United
States. The uncertainty that would result from these events
would likely increase the publics reluctance to travel,
which could adversely affect our operations.

Competition, economic conditions and similar
factors affecting us and the hotel industry generally could
affect our performance.Our hotels are
subject to all operating risks common to the hotel industry.
These risks include:



| |   |                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Competition for guests from other hotels based
    upon brand affiliations, room rates offered including those via
    internet wholesalers and distributors, customer service,
    location and the condition and upkeep of each hotel in general
    and in relation to other hotels in their local market;
|
| |  | Adverse effects of general and local economic
    conditions;                                                                                                                                                                                                                                                
|
| |  | Dependence on demand from business and leisure
    travelers, which may fluctuate and be seasonal;                                                                                                                                                                                                           
|
| |  | Increases in energy costs, airline fares, and
    other expenses related to travel, which may deter travel;                                                                                                                                                                                                  
|
| |  | Impact of financial difficulties of the airline
    industry and potential reduction in service on the demand for
    our hotel rooms and the collectibility of our outstanding
    receivables from the airlines;                                                                                           
|
| |  | Increases in operating costs attributable to
    inflation and other factors; and                                                                                                                                                                                                                            
|
| |  | Overbuilding in the hotel industry, especially in
    individual markets.                                                                                                                                                                                                                                    

The need to make unexpected capital
expenditures could adversely affect our cash flow.Hotels require ongoing renovations and
other capital improvements, including periodic replacement or
refurbishment of furniture, fixtures and equipment. If necessary
capital expenditures exceed expectations, there can be no
assurance that sufficient sources of financing will be available
to fund such expenditures. We may also acquire hotels in the
future that require significant renovation.

Hotel investments are generally illiquid, and
we may not be able to sell our hotels when it is economically
advantageous to do so.Hotel
investments generally cannot be sold quickly. We may not be able
to vary our portfolio promptly in accordance with our strategies
or in response to economic or other conditions. In addition,
provisions of the Internal Revenue Code of 1986, as amended,
limit a REITs ability to sell its properties in some
situations when it may be economically advantageous to do so.

Risks Related to
Our Operations

The profitability of our hotels depends on the
performance of the hotel management companies.The profitability of our hotels
depends largely upon the ability of the management companies to
generate revenues at our hotels in excess of their operating
expenses. The failure of the management companies to manage the
hotels effectively would adversely affect our cash flow received
from hotel operations. Before January 1, 2002, our cash
flow consisted primarily of lease payments from lessees. Our
lessees were legally bound to make minimum lease payments even
when such payments exceeded the cash flow from the hotel. Since
implementing our taxable REIT subsidiary (TRS)
structure on January 1, 2002, the responsibility and risks
associated with making the minimum lease payments has shifted to
lessees owned by the Partnership. Therefore, we have effectively
assumed the risks associated with operating shortfalls at our
hotels operating under the TRS structure.

Our performance is dependent upon the
performance of BMC.BMC currently
manages 24 of our hotels. We are therefore dependent to a large
degree on the operating performance of BMC. BMC has expanded in
the past

10



---



##### Table of Contents



12 months, with the total number of hotels
under its management increasing from 24 to 30 during that
period. We cannot provide assurance that BMC will successfully
manage the increasing demands that its growth imposes on its
management, administrative, operating and financial resources.
Changes in management at these hotels or at other hotels in the
future could result in temporary service disruptions at the
affected hotels, which could in turn affect their operating and
financial performance.


We are subject to conflicts of interest
involving our Chairman and Chief Executive Officer.Our Chairman and Chief Executive
Officer, Robert W. Boykin, and his brother, John E. Boykin, own
BMC and therefore derive benefits from BMCs management of
24 of our hotels. Accordingly, Mr. Boykin has and will
continue to have conflicts of interest with us. He had conflicts
of interest in connection with our January 2002 TRS transaction
and in connection with the structuring of the management
agreements for the hotels currently managed by BMC. He will have
similar conflicts on renewal of those agreements and in
connection with future management agreements and other
transactions that we may enter into with BMC. Conflicts of
interest may also arise in connection with BMCs management
of our hotels. Under certain circumstances, actions taken and
decisions made by BMC to maximize its profits will not
necessarily benefit us. Additionally, a subsidiary of BMC
provides design services to us for a fee and also receives a
portion of the fees we pay to an independent purchasing agent.
Mr. Boykin may have conflicts of interest with respect to
our procurement of design services and capital goods.
Additionally, the sale of certain of our hotels may result in
different and more adverse tax consequences to Mr. Boykin
than would be experienced by Boykin and our public shareholders,
and he could seek to influence us not to sell a hotel even
though that sale might otherwise be financially advantageous to
us and our public shareholders. Our articles of incorporation
provide that our independent directors are to make all
determinations to be made on our behalf with respect to the
relationships or opportunities that represent a conflict of
interest for any of our officers or directors.

The covenants in our credit agreements may
restrict our range of operating activities, and we are subject
to refinancing risks.We have a senior
secured credit facility that enables us to borrow up to
$78.0 million based upon borrowing base availability and
term loans with original balances of $130.0 million and
$108.0 million, respectively, each of which is secured by
certain of our hotel properties. Our secured credit facility
requires us, among other things, to maintain a minimum net
worth, a coverage ratio of EBITDA to debt service, a coverage
ratio of EBITDA to debt service and fixed charges, and a maximum
leverage ratio, and places limitations on our common share
distributions and acquisitions. In addition, our secured loans
limit our ability to sell certain hotel properties. These credit
arrangements may limit our ability to sell certain hotels whose
disposition might be desirable for strategic or financial
purposes. The initial term of the $108.0 million term loan
expired in July 2003; however, management utilized the first of
the two one-year extension options available under the terms of
the agreement, therefore the current maturity date is July 2004.
The only other debt maturities scheduled for 2004 are the
mortgages related the hotels owned by our two unconsolidated
joint ventures. A one-year extension option related to one of
the mortgages has already been utilized and management intends
to refinance the other mortgage upon its maturity.

There can be no assurance that we will be able to
renew our credit arrangements upon maturity on favorable terms
or at all. Further, if we are unable to make payments on or to
refinance indebtedness secured by our properties, the properties
could be foreclosed upon with a consequent loss to us of income
and asset value.

A portion of our borrowings bear interest at a
variable rate, as may other indebtedness we incur in the future.
Accordingly, increases in market interest rates could increase
our debt service requirements, which could adversely affect our
cash flow.

We are subject to risks associated with
development, redevelopment and acquisitions of hotels.New and continued development projects
and hotel acquisitions are subject to a number of risks,
including:



| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | the availability of acceptable financing;                                 
|
| |  | competition with other entities for investment
    opportunities;         
|
| |  | acquired properties failure to achieve
    anticipated operating results;
|
| |  | construction costs of a property exceeding
    original estimates;        

11



---



##### Table of Contents





| |   |                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------
| |  | delays in construction and renovation projects;                                                                     
|
| |  | overruns with respect to the cost of improvements
    to bring acquired properties to the requisite standards; and  
|
| |  | the expenditure of funds on, and the devotion of
    management time to, transactions that may not come to fruition.

We are subject to the risks associated with
investments through joint ventures.Three of our consolidated hotels are owned by joint ventures in
which we have controlling interests. We may enter into similar
joint ventures in the future. Any joint venture investment
involves risks such as the possibility that the co-venturer may
seek relief under federal or state insolvency laws, or have
economic or business interests or goals that are inconsistent
with our business interests or goals. While the bankruptcy or
insolvency of our co-venturer generally should not disrupt the
operations of the joint venture, we could be forced to purchase
the co-venturers interest in the joint venture or the
interest could be sold to a third party. Additionally, we have
joint ventures in which we have non-controlling interests and we
may enter into similar joint ventures in the future. If we do
not have control over a joint venture, the value of our
investment may be affected adversely by a third party that may
have different goals and capabilities than ours. It may also be
difficult for us to exit a joint venture that we do not control
after an impasse. In addition, a joint venture partner may be
unable to meet its economic or other obligations and we may be
required to or find it necessary to fulfill those obligations.

Obligations imposed by our franchise
agreements could affect us adversely.Most of our hotels are subject to franchise or license
agreements. The continuation of a franchise or license agreement
is generally subject to specified operating standards. Action or
inaction on our part or by any of our hotel managers could
result in our failure to meet those standards, which could
result in the loss of the franchise. A franchisor also could
condition the continuation of a franchise on the completion of
capital improvements that we determine are too expensive or
otherwise unwarranted in light of general economic conditions or
the operating results or prospects of the affected hotel. In
that event, we may elect to allow the franchise agreement to
lapse. In any case, the loss of a franchise agreement could have
a material adverse effect upon the operations or the underlying
value of the hotel covered by the agreement because of the loss
of associated name recognition, marketing support and
centralized reservation systems provided by the franchisor, or
because of penalties payable upon early termination of the
agreement. Additionally, the franchise agreements may place
restrictions on the transfer or sale of assets or make such
transfers or sales economically infeasible.

Our insurance may not be adequate to cover
certain risks.We continue to carry
comprehensive liability, fire, flood, earthquake, terrorism and
business interruption policies that insure us against losses
within policy specification and insurance limits that we believe
are reasonable. There are certain types of risks, generally of a
catastrophic nature, that may be uninsurable or are not
economically insurable or certain coverages that we currently
carry may become uneconomical or unavailable in the future.
Should an uninsured loss or a loss in excess of insured limits
occur, we could lose our investment in the affected hotel as
well as the anticipated future cash flow from that hotel, while
remaining obligated for any mortgage indebtedness or other
financial obligations related to that hotel.

The costs of complying with laws and
regulations could adversely affect our cash flow.Our hotels must comply with Title III
of the Americans with Disabilities Act (the ADA) to
the extent that they are public accommodations or
commercial facilities as defined in the ADA.
Noncompliance with the ADA could result in the imposition of
fines or an award of damages to private litigants. If changes in
these laws involve substantial expenditures or must be made on
an accelerated basis, our cash flow could be adversely affected.

Under various federal, state and local laws, an
owner or operator of real estate may be liable for the costs of
removal or remediation of certain hazardous or toxic substances
on, under, or in the property. This liability may be imposed
without regard to whether the owner or operator knew of, or was
responsible for, the presence of the substances. Other laws
impose on owners and operators certain requirements regarding
conditions and activities that may affect human health or the
environment. Failure to comply with applicable requirements
could complicate our ability to operate or sell an affected
property and could subject us to monetary penalties, costs
required to achieve compliance and potential liability to third
parties. We may be potentially liable for such costs

12



---



##### Table of Contents



or claims in connection with the ownership and
operation of our current hotels and hotels we may acquire in the
future. We have not been notified by any governmental authority
of, nor are we aware of, any material noncompliance, liability
or claim relating to hazardous or toxic substances or other
environmental matters in connection with any of our hotels.
Nonetheless, it is possible that material environmental
contamination or conditions exist, or could arise in the future,
in the hotels or on the land upon which they are located.


We anticipate that we will incur additional costs
for systems, staffing and third party services in maintaining
compliance with new federal laws and regulations addressing
corporate governance issues and with the new listing
requirements of the New York Stock Exchange.

We bear the risk factors common to real estate
development as a result of our projects at the Pink Shell Beach
Resort.Common risk factors related to
development include, but are not limited to competition from
other condominium projects, construction delays due to weather,
reliance on contractors and subcontractors, construction cost
overruns, the ability of condominium purchasers to secure
financing and completion of the development in accordance with
our agreements.

Employees

As of March 23, 2004, we had 18 employees.
These employees perform, directly or through the Partnership,
various acquisition, development, redevelopment and corporate
management functions. All persons employed in the daily
operations of the hotels are employees of the management
companies that the lessees have contracted with to operate the
hotels.

Executive
Officers of the Registrant

Our executive officers are elected and serve at
the discretion of the Board of Directors until their successors
are duly chosen and qualified, and are as follows:

|                    |  |     |    |          |  |                                                                     
|------------------- |  | --- | -- | -------- |  | --------------------------------------------------------------------
|Name                |  | Age |    | Position
|                    |  |     |    |         
|Robert W. Boykin    |  |     | 54 |          |  | Chairman of the Board and Chief Executive Officer                   
|Richard C. Conti    |  |     | 54 |          |  | President and Chief Operating Officer                               
|Shereen P. Jones    |  |     | 42 |          |  | Executive Vice President, Chief Financial and
    Investment Officer
|Russ C. Valentine   |  |     | 59 |          |  | Senior Vice President, Acquisitions                                 
|Andrew C. Alexander |  |     | 40 |          |  | Senior Vice President and General Counsel                           

The following is a biographical summary of the
business experience of our executive officers.

Robert W. Boykin has served as our Chief
Executive Officer since our formation. He served as the
President and Chief Executive Officer of Boykin Management
Company from 1985 until November 1996. He served as Boykin
Management Companys Executive Vice President from 1981
until 1985.

Richard C. Conti has served as our Chief
Operating Officer since May 1998. In January 2001,
Mr. Conti was promoted to President and Chief Operating
Officer. Prior to joining us, Mr. Conti was a Principal and
Director with Coopers & Lybrand L.L.P. Mr. Conti was
responsible for Coopers & Lybrand L.L.P.s hospitality
consulting practice in the Midwest and has been involved in the
hospitality industry for over 25 years. Mr. Conti has
worked closely with many of the leaders in the industry and
brings significant industry knowledge and contacts.

Shereen P. Jones has served as our Executive Vice
President, Chief Financial and Investment Officer since February
2002. She also serves as our Treasurer. Prior to joining Boykin,
she was with Credit Suisse First Boston in New York where she
was Director and Global Head of Hospitality Investment Banking,
spearheading the development of its lodging investment banking
practice. Previously, she spent seven years with Lehman
Brothers, serving most recently as Senior Vice President and
head of its Real Estate, Lodging and Gaming Mergers &
Acquisitions practice. Prior to joining Lehman, she was Vice
President, Corporate Finance, for Oppenheimer & Co. and
Kidder, Peabody & Co.

Russ C. Valentine joined us in June 1999 as our
Senior Vice President, Acquisitions. Prior to joining us,
Mr. Valentine served as Senior Vice President of
Acquisitions for American General Hospitality, a real estate

13



---



##### Table of Contents



investment trust that was based in Dallas, Texas.
Mr. Valentine played a significant role in American
Generals successful acquisition program from 1990 to 1998.
Over the past 25 years, Mr. Valentine has worked for
major consulting, investment banking, and hotel organizations.


Andrew C. Alexander became our Vice
President-Corporate Counsel in July 1997 and was promoted to
Senior Vice President and General Counsel in June 1999. From
July 1995 until July 1997, Mr. Alexander served as Vice
President-Corporate Counsel of Renaissance Hotel Group, N.V., a
publicly traded hotel company. From September 1989 until July
1995, Mr. Alexander was an attorney at the law firm of
Calfee, Halter & Griswold, LLP.

There are no arrangements or understandings known
to us between any executive officer and any other person
pursuant to which any executive officer was elected to office.
There is no family relationship between any of our directors or
executive officers and any other director or executive officer.

Corporate
Governance

We believe that the composition, structure and
performance of our Board of Directors provide us a strong
corporate governance function and the partnership interest and
share ownership of our officers and directors serve to align the
interests of our management with our shareholders
interests. In addition, the terms of our arrangements with BMC
serve to minimize conflicts of interest and to align the
interests of BMC with the interests of Boykin and its
shareholders.

Our articles of incorporation and corporate
governance guidelines require that a majority of our directors
be independent. Under the New York Stock Exchanges listing
standards, a majority of our Board qualifies as independent. Our
articles of incorporation also require that any determination to
be made by our Board in connection with any matter presenting a
conflict of interest for any officer of Boykin, or for any
Boykin director who is not an independent director, be made by
our independent directors.

We have made available on our website at
www.boykinlodging.com copies of the charters of the audit,
compensation and corporate governance and nominating committees
of the Board of Directors, our code of ethics and our corporate
governance guidelines. Copies of these documents are available
in print to any shareholder who requests them. Requests should
be sent to Boykin Lodging Company, Guildhall Building,
Suite 1500, 45 W. Prospect Avenue, Cleveland, Ohio, 44115,
Attn: Investor Relations.

(d) Financial Information About Foreign
and Domestic Operations and Export Sales

All of our operations are conducted in the United
States.

(e) Available Information

We maintain a website at www.boykinlodging.com.
We make available free of charge on our website our filings with
the Securities and Exchange Commission, including our annual
reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of
the Securities and Exchange Act of 1934, as amended, as soon as
reasonably practicable after we electronically file such
material with the Securities and Exchange Commission.

14



---



##### Table of Contents






Item 2. Properties



| |                     
| | --------------------
| | (a) Hotel Properties

As of March 23, 2004, we own interests in
the following 28 hotel properties:

|                                                                  |  |          |       |          |  |                     
|----------------------------------------------------------------- |  | -------- | ----- | -------- |  | --------------------
|                                                                  |  | Number   |       |         
|Property                                                          |  | of Rooms |       | Location
|                                                                  |  |          |       |         
|Doubletree Portland, Lloyd Center                                 |  |          | 476   |          |  | Portland, OR        
|Doubletree Sacramento                                             |  |          | 448   |          |  | Sacramento, CA      
|Doubletree Omaha Downtown                                         |  |          | 414   |          |  | Omaha, NE           
|Doubletree Kansas City                                            |  |          | 388   |          |  | Kansas City, MO     
|Doubletree Boise Riverside                                        |  |          | 304   |          |  | Boise, ID           
|Doubletree Colorado Springs                                       |  |          | 299   |          |  | Colorado Springs, CO
|Doubletree San Antonio                                            |  |          | 290   |          |  | San Antonio, TX     
|Doubletree Hotel & Executive Meeting Center
     Berkeley Marina |  |          | 369   |          |  | Berkeley, CA        
|Marriotts Hunt Valley Inn                                        |  |          | 392   |          |  | Baltimore, MD       
|Cleveland Airport Marriott                                        |  |          | 375   |          |  | Cleveland, OH       
|Buffalo Marriott                                                  |  |          | 356   |          |  | Buffalo, NY         
|Columbus North Marriott                                           |  |          | 300   |          |  | Columbus, OH        
|Meadowlands-Lyndhurst Courtyard by Marriott                       |  |          | 227   |          |  | Lyndhurst, NJ       
|Radisson Suite Beach Resort 
    Marco Island                    |  |          | 233   |          |  | Marco Island, FL    
|Radisson Hotel Mount Laurel                                       |  |          | 283   |          |  | Mount Laurel, NJ    
|High Point Radisson                                               |  |          | 251   |          |  | High Point, NC      
|Holiday Inn Minneapolis West                                      |  |          | 196   |          |  | Minneapolis, MN     
|Holiday Inn Crabtree                                              |  |          | 176   |          |  | Raleigh, NC         
|Melbourne Hilton Oceanfront                                       |  |          | 118   |          |  | Melbourne, FL       
|Hampton Inn San Diego Airport/ Sea World                          |  |          | 199   |          |  | San Diego, CA       
|Embassy Suites Southfield                                         |  |          | 239   |          |  | Southfield, MI      
|Clarion Hotel & Conference Center                                 |  |          | 208   |          |  | Yakima, WA          
|Melbourne Quality Suites                                          |  |          | 208   |          |  | Melbourne, FL       
|Best Western Fort Myers Island Gateway Hotel                      |  |          | 157   |          |  | Fort Myers, FL      
|Ramada Inn Bellevue Center                                        |  |          | 208   |          |  | Bellevue, WA        
|Pink Shell Beach Resort                                           |  |          | 227   |          |  | Fort Myers, FL      
|French Lick Springs Resort and Spa                                |  |          | 485   |          |  | French Lick, IN     
|Hotel 71                                                          |  |          | 454   |          |  | Chicago, IL         
|                                                                  |  |          |       |          |  |                     
|                                                                  |  |          | 8,280 |          |  |                     
|                                                                  |  |          |       |          |  |                     

(b) Office Space

Pursuant to a shared services and office space
agreement, we were reimbursed approximately $12,200 per month in
2003 from BMC and its subsidiaries for the right to use certain
office space located in Cleveland, Ohio and receive certain
related services.




Item 3. Legal Proceedings

We are subject to various legal proceedings and
claims that arise in the ordinary course of business. In our
opinion, the amount of any ultimate liability with respect to
these actions will not materially affect our financial
statements.

15



---



##### Table of Contents






Item 4. Submission of Matters to a Vote
of Security Holders

There were no matters submitted to a vote of
security holders during the fourth quarter of the fiscal year
covered by this Annual Report on Form 10-K.




PART II




Item 5. Market for Registrants
Common Shares and Related Shareholder Matters

(a) Market Information

Our common shares are traded on the New York
Stock Exchange under the symbol BOY. The following
table sets forth for the indicated periods the high and low
sales prices for the common shares and the cash distributions
declared per share:

|                              |                |             |   |                    |  |       |   |      |  |  |   |     | 
|----------------------------- | -------------- | ----------- | - | ------------------ |  | ----- | - | ---- |  |  | - | --- | 
|                              |                |             |   |                   
|                              |                | Price Range |   | Cash Distributions
|                              |                |             |   | Declared Per      
|                              |                | High        |   | Low                |  | Share
|                              |                |             |   |                    |  |      
|Year Ended December 31, 2002: |                |             |   |                    |  |       |   |      |  |  |   |    
|                              | First Quarter  |             | $ | 9.65               |  |       | $ | 7.95 |  |  |   |    | 
|                              | Second Quarter |             | $ | 10.93              |  |       | $ | 8.87 |  |  |   |    | 
|                              | Third Quarter  |             | $ | 10.66              |  |       | $ | 7.00 |  |  | $ | .18 | 
|                              | Fourth Quarter |             | $ | 9.74               |  |       | $ | 7.40 |  |  | $ | .18 | 
|Year Ended December 31, 2003: |                |             |   |                    |  |       |   |      |  |  |   |    
|                              | First Quarter  |             | $ | 9.42               |  |       | $ | 6.65 |  |  | $ | .18 | 
|                              | Second Quarter |             | $ | 8.58               |  |       | $ | 7.03 |  |  |   |    | 
|                              | Third Quarter  |             | $ | 8.47               |  |       | $ | 7.44 |  |  |   |    | 
|                              | Fourth Quarter |             | $ | 9.53               |  |       | $ | 7.82 |  |  |   |    | 

(b) Shareholder Information

As of March 23, 2004, there were 930 record
holders of our common shares, including shares held in
street name by nominees who are record holders, and
approximately 11,500 beneficial owners.

In order to comply with certain requirements
related to our qualification as a REIT, our charter limits the
number of common shares that may be owned by any single person
or affiliated group to 9% of the outstanding common shares.

(c) Dividend and Distribution
Information

The declaration and payment of future dividends
related to our common shares is at the discretion of our Board
of Directors and depends on, among other things, our receipt of
cash distributions from the Partnership, our results of
operations, level of indebtedness and restrictions imposed by
our lenders, any contractual restrictions, the annual dividend
requirements under the REIT provisions of the Internal Revenue
Code, economic conditions and other factors considered relevant
by our Board. The level of our cash dividends is determined by
us in light of our cash needs, including our requirements for
investing and financing activities and other anticipated cash
needs.

As a result of the economic downturn in the hotel
industry that was exacerbated by the terrorist attacks on
September 11, 2001, and its adverse impact on our cash flow
from operations, our Board of Directors suspended our
fourth-quarter 2001 and first and second-quarter 2002 dividends.
In August 2002, our Board of Directors reinstated a dividend on
our common shares by declaring a dividend of $0.18 per common
share for the third quarter of 2002. Dividends were also
declared for the fourth quarter of 2002 and first quarter of
2003 at the same level. The fourth quarter dividend was paid in
January and the first quarter dividend was paid in May 2003. No
further common share dividends were declared or paid for the
remainder of 2003. While we are committed to a

16



---



##### Table of Contents



philosophy of regular quarterly dividends, the
current economic and geopolitical environment make it advisable
to retain cash in order to enhance our liquidity going forward.
Thus, the resumption of the common dividend will depend upon our
performance, which will be impacted by the economy and
geopolitical events.


(d) Securities Authorized for Issuance
Under Equity Compensation Plans

The following sets forth the securities
authorized for issuance under our equity compensation plans as
of December 31, 2003:

|                                                               |       |                      |         |                   |  |                          |       |       |  |  |         |         | 
|-------------------------------------------------------------- | ----- | -------------------- | ------- | ----------------- |  | ------------------------ | ----- | ----- |  |  | ------- | ------- | 
|                                                               |       |                      |         |                   |  | Number of securities    
|                                                               |       |                      |         |                   |  | remaining available for 
|                                                               |       | Number of securities |         | Weighted-average  |  | future issuance under   
|                                                               |       | to be issued upon    |         | exercise price of |  | equity compensation     
|                                                               |       | exercise of          |         | outstanding       |  | plans                   
|                                                               |       | outstanding options, |         | options, warrants |  | (excluding securities   
|Plan category                                                  |       | warrants and rights  |         | and rights        |  | reflected in column (a))
|                                                               |       |                      |         |                   |  |                         
|                                                               |       | (a)                  |         | (b)               |  | (c)                     
|Equity compensation plans approved by security
    holders     |       |                      | 839,139 | *                 |  | $                        | 11.24 | **    |  |  | 370,938 |        
|Equity compensation plans not approved by
    security holders |       |                      | None    |                   |  |                          | None  |       |  |  | None    |        
|                                                               |       |                      |         |                   |  |                          |       |       |  |  |         |        
|                                                               | Total |                      |         | 839,139           |  |                          | $     | 11.24 |  |  |         | 370,938 | 
|                                                               |       |                      |         |                   |  |                          |       |       |  |  |         |        



---



|   |                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------
|*  | Includes 518,539 options which are exercisable as
    of December 31, 2003.                                      
|  
|** | The weighted-average exercise price of the
    518,539 exercisable options as of December 31, 2003 is
    $12.87.

(e) Sales of Unregistered
Securities

Not applicable.

(f) Use of Proceeds from Sales of
Registered Securities

Not applicable.




Item 6. Selected Financial Data

The following tables set forth selected
historical operating and financial data for Boykin Lodging
Company.

The following selected financial data should be
read in conjunction with Managements Discussion and
Analysis of Financial Condition and Results of Operations
and all of the financial statements and notes thereto included
elsewhere in this Form 10-K. The financial data related to
2003 and 2002 is not directly comparable to the prior years as a
result of our implementation of TRS structures in 2002 as
discussed in Item 7. Subsequent to the transactions, our
financial results include the operating results of the hotels
under the TRS structure whereas in prior years, only lease
revenue was recorded for the properties.

17



---



##### Table of Contents



BOYKIN LODGING COMPANY

SELECTED HISTORICAL OPERATING AND FINANCIAL
DATA

(amounts in thousands, except for per share
data)

|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |         |        | 
|------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------- | - | ------- | ------ | ---- | - | ------- | ------ | ---- | - | ------- | ------ | - | - | ------- | ------ | - | - | ------- | ------ | 
|                    |                                                                                                                                                       |                        
|                    |                                                                                                                                                       | Year Ended December 31,
|                    |                                                                                                                                                       |                        
|                    |                                                                                                                                                       | 2003                    |   | 2002    |        | 2001 |   | 2000    |        | 1999
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |     
|OPERATING DATA:     |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Hotel and lease revenue                                                                                                                               |                         | $ | 232,279 |        |      | $ | 236,794 |        |      | $ | 72,781  |        |   | $ | 86,079  |        |   | $ | 78,401  |       
|                    | Revenues from condominium development and unit
    sales                                                                                              |                         |   | 36,883  |        |      |   | 8,715   |        |      |   |        |        |   |   |        |        |   |   |        |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Total revenues                                                                                                                                        |                         |   | 269,162 |        |      |   | 245,509 |        |      |   | 72,781  |        |   |   | 86,079  |        |   |   | 78,401  |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Property taxes, insurance, hotel operations,
    general and other                                                                                    |                         |   | 199,199 |        |      |   | 189,610 |        |      |   | 21,731  |        |   |   | 21,174  |        |   |   | 15,340  |       
|                    | Cost of condominium development and unit sales                                                                                                        |                         |   | 24,645  |        |      |   | 6,474   |        |      |   |        |        |   |   |        |        |   |   |        |       
|                    | Real estate related depreciation and amortization                                                                                                     |                         |   | 31,090  |        |      |   | 28,318  |        |      |   | 26,714  |        |   |   | 27,813  |        |   |   | 26,690  |       
|                    | Impairment of real estate                                                                                                                             |                         |   | 2,800   |        |      |   |        |        |      |   | 17,898  |        |   |   | 3,600   |        |   |   |        |       
|                    | Costs associated with termination of leases                                                                                                           |                         |   |        |        |      |   |        |        |      |   | 15,000  |        |   |   |        |        |   |   |        |       
|                    | Gain on property insurance recovery                                                                                                                   |                         |   |        |        |      |   |        |        |      |   |        |        |   |   | (407    | )      |   |   |        |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Operating income (loss)                                                                                                                               |                         |   | 11,428  |        |      |   | 21,107  |        |      |   | (8,562  | )      |   |   | 33,899  |        |   |   | 36,371  |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Other income                                                                                                                                          |                         |   | 392     |        |      |   | 966     |        |      |   | 869     |        |   |   | 624     |        |   |   | 492     |       
|                    | Interest income                                                                                                                                       |                         |   | 226     |        |      |   | 357     |        |      |   | 409     |        |   |   | 531     |        |   |   | 365     |       
|                    | Interest expense                                                                                                                                      |                         |   | (16,089 | )      |      |   | (19,296 | )      |      |   | (20,805 | )      |   |   | (23,546 | )      |   |   | (19,534 | )     
|                    | Amortization of deferred financing costs                                                                                                              |                         |   | (1,927  | )      |      |   | (2,125  | )      |      |   | (1,149  | )      |   |   | (1,166  | )      |   |   | (738    | )     
|                    | Minority interest in (earnings) loss of
    joint ventures and operating partnership                                                                  |                         |   | 3,107   |        |      |   | 533     |        |      |   | 2,702   |        |   |   | (1,003  | )      |   |   | (1,406  | )     
|                    | Equity in income (loss) of unconsolidated
    joint ventures                                                                                          |                         |   | (870    | )      |      |   | (2,040  | )      |      |   | 589     |        |   |   | 68      |        |   |   | 23      |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Income (loss) before gain (loss) on
    sale/disposal of assets, discontinued operations and cumulative
    effect of change in accounting principle  |                         |   | (3,733  | )      |      |   | (498    | )      |      |   | (25,947 | )      |   |   | 9,407   |        |   |   | 15,573  |       
|                    | Gain (loss) on sale/disposal of assets                                                                                                                |                         |   | 1,504   |        |      |   | (18     | )      |      |   | 240     |        |   |   |        |        |   |   |        |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Income (loss) before discontinued operations
    and cumulative effect of change in accounting principle                                              |                         |   | (2,229  | )      |      |   | (516    | )      |      |   | (25,707 | )      |   |   | 9,407   |        |   |   | 15,573  |       
|                    | Discontinued operations, net of minority interest                                                                                                     |                         |   | (1,197  | )      |      |   | 145     |        |      |   | (3,490  | )      |   |   | (1,677  | )      |   |   | 2,549   |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Income (loss) before cumulative effect of
    change in accounting principle                                                                          |                         |   | (3,426  | )      |      |   | (371    | )      |      |   | (29,197 | )      |   |   | 7,730   |        |   |   | 18,122  |       
|                    | Cumulative effect of change in accounting
    principle, net of minority interest                                                                     |                         |   |        |        |      |   |        |        |      |   | (373    | )      |   |   |        |        |   |   |        |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Net income (loss)                                                                                                                                     |                         |   | (3,426  | )      |      |   | (371    | )      |      |   | (29,570 | )      |   |   | 7,730   |        |   |   | 18,122  |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Preferred dividends                                                                                                                                   |                         |   | (4,751  | )      |      |   | (1,109  | )      |      |   |        |        |   |   |        |        |   |   |        |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Net income (loss) attributable to common
    shareholders                                                                                             |                         | $ | (8,177  | )      |      | $ | (1,480  | )      |      | $ | (29,570 | )      |   | $ | 7,730   |        |   | $ | 18,122  |       
|                    |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|EARNINGS PER SHARE: |                                                                                                                                                       |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |        
|                    | Net income (loss) attributable to common
    shareholders before discontinued operations and cumulative
    effect of change in accounting principle: |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |         |       
|                    |                                                                                                                                                       | Basic                   |   | $       | (0.40  | )    |   | $       | (0.09  | )    |   | $       | (1.50  | ) |   | $       | 0.55   |   |   | $       | 0.91   | 
|                    |                                                                                                                                                       | Diluted                 |   | $       | (0.40  | )    |   | $       | (0.09  | )    |   | $       | (1.50  | ) |   | $       | 0.54   |   |   | $       | 0.91   | 
|                    | Discontinued operations:                                                                                                                              |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |         |       
|                    |                                                                                                                                                       | Basic                   |   | $       | (0.07  | )    |   | $       | 0.01   |      |   | $       | (0.20  | ) |   | $       | (0.10  | ) |   | $       | 0.15   | 
|                    |                                                                                                                                                       | Diluted                 |   | $       | (0.07  | )    |   | $       | 0.01   |      |   | $       | (0.20  | ) |   | $       | (0.10  | ) |   | $       | 0.15   | 
|                    | Net income (loss) attributable to common
    shareholders before cumulative effect of change in accounting
    principle:                             |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |         |       
|                    |                                                                                                                                                       | Basic                   |   | $       | (0.47  | )    |   | $       | (0.09  | )    |   | $       | (1.70  | ) |   | $       | 0.45   |   |   | $       | 1.06   | 
|                    |                                                                                                                                                       | Diluted                 |   | $       | (0.47  | )    |   | $       | (0.09  | )    |   | $       | (1.70  | ) |   | $       | 0.45   |   |   | $       | 1.06   | 
|                    | Net income (loss) attributable to common
    shareholders:                                                                                            |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |         |       
|                    |                                                                                                                                                       | Basic                   |   | $       | (0.47  | )    |   | $       | (0.09  | )    |   | $       | (1.72  | ) |   | $       | 0.45   |   |   | $       | 1.06   | 
|                    |                                                                                                                                                       | Diluted                 |   | $       | (0.47  | )    |   | $       | (0.09  | )    |   | $       | (1.72  | ) |   | $       | 0.45   |   |   | $       | 1.06   | 
|                    | Weighted average number of common shares
    outstanding:                                                                                             |                         |   |         |        |      |   |         |        |      |   |         |        |   |   |         |        |   |   |         |       
|                    |                                                                                                                                                       | Basic                   |   |         | 17,336 |      |   |         | 17,248 |      |   |         | 17,176 |   |   |         | 17,137 |   |   |         | 17,063 | 
|                    |                                                                                                                                                       | Diluted                 |   |         | 17,470 |      |   |         | 17,383 |      |   |         | 17,281 |   |   |         | 17,305 |   |   |         | 17,127 | 

18



---



##### Table of Contents



|                               |                                                                                     |                         |   |         |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |        | 
|------------------------------ | ----------------------------------------------------------------------------------- | ----------------------- | - | ------- | ------ | ---- | - | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------ | 
|                               |                                                                                     |                        
|                               |                                                                                     | Year Ended December 31,
|                               |                                                                                     |                        
|                               |                                                                                     | 2003                    |   | 2002    |        | 2001 |   | 2000    |        | 1999
|                               |                                                                                     |                         |   |         |        |      |   |         |        |     
|HISTORICAL BALANCE SHEET DATA: |                                                                                     |                         |   |         |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |        
|                               | Investment in hotel properties, net                                                 |                         | $ | 490,725 |        |      | $ | 463,442 |        |      | $ | 491,302 |        |  | $ | 529,432 |        |  | $ | 543,914 |       
|                               | Assets of discontinued operations, net                                              |                         |   |        |        |      |   | 29,433  |        |      |   | 29,679  |        |  |   | 36,364  |        |  |   | 41,480  |       
|                               | Total assets                                                                        |                         |   | 591,292 |        |      |   | 575,531 |        |      |   | 559,218 |        |  |   | 600,593 |        |  |   | 606,103 |       
|                               | Total debt                                                                          |                         |   | 298,889 |        |      |   | 257,952 |        |      |   | 302,096 |        |  |   | 294,566 |        |  |   | 282,314 |       
|                               | Liabilities of discontinued operations                                              |                         |   |        |        |      |   | 18,863  |        |      |   | 17,189  |        |  |   | 17,281  |        |  |   | 12,229  |       
|                               | Minority interest                                                                   |                         |   | 12,672  |        |      |   | 16,621  |        |      |   | 18,351  |        |  |   | 16,750  |        |  |   | 18,263  |       
|                               | Shareholders equity                                                                |                         |   | 231,541 |        |      |   | 240,291 |        |      |   | 202,646 |        |  |   | 253,266 |        |  |   | 273,730 |       
|OTHER DATA:                    |                                                                                     |                         |   |         |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |        
|                               | Funds from operations attributable to common
    shareholders (FFO)(a) (c)          |                         | $ | 18,275  |        |      | $ | 25,391  |        |      | $ | (2,635  | )      |  | $ | 35,712  |        |  | $ | 44,799  |       
|                               | Earnings before interest, taxes, depreciation and
    amortization (EBITDA) (b) (c) |                         | $ | 45,629  |        |      | $ | 54,099  |        |      | $ | 27,741  |        |  | $ | 69,237  |        |  | $ | 69,785  |       
|                               | Net cash provided by operating activities                                           |                         | $ | 2,173   |        |      | $ | 39,188  |        |      | $ | 34,043  |        |  | $ | 43,400  |        |  | $ | 51,795  |       
|                               | Net cash used in investing activities                                               |                         | $ | (23,783 | )      |      | $ | (11,985 | )      |      | $ | (14,798 | )      |  | $ | (23,109 | )      |  | $ | (26,480 | )     
|                               | Net cash provided by (used in) financing
    activities                             |                         | $ | 10,170  |        |      | $ | (5,360  | )      |      | $ | (19,810 | )      |  | $ | (20,087 | )      |  | $ | (26,987 | )     
|                               | Cash dividends declared  common shares                                             |                         | $ | 3,174   |        |      | $ | 6,297   |        |      | $ | 19,030  |        |  | $ | 28,889  |        |  | $ | 32,260  |       
|                               | Weighted average number of common shares and
    units outstanding:                 |                         |   |         |        |      |   |         |        |      |   |         |        |  |   |         |        |  |   |         |       
|                               |                                                                                     | Basic                   |   |         | 20,055 |      |   |         | 19,966 |      |   |         | 18,467 |  |   |         | 18,428 |  |   |         | 18,354 | 
|                               |                                                                                     | Diluted                 |   |         | 20,188 |      |   |         | 20,101 |      |   |         | 18,572 |  |   |         | 18,596 |  |   |         | 18,418 | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The White Paper on Funds From Operations approved
    by the Board of Governors of the National Association of Real
    Estate Investment Trusts (NAREIT) in April 2002
    defines FFO as net income (loss) (computed in accordance with
    GAAP), excluding gains (or losses) from sales of properties,
    plus real estate related depreciation and amortization, and
    after comparable adjustments for our portion of these items
    related to unconsolidated entities and joint ventures. We
    believe that FFO is helpful as a measure of the performance of
    an equity REIT because it provides investors and management with
    another indication of the Companys performance prior to
    deduction of real estate related depreciation and amortization.
|   
|    | We compute FFO in accordance with our
    interpretation of standards established by NAREIT which may not
    be comparable to FFO reported by other REITs that do not define
    the term in accordance with the current NAREIT definition or
    that interpret the NAREIT definition differently than us. FFO
    does not represent cash generated from operating activities as
    determined by GAAP and should not be considered as an
    alternative to GAAP net income as an indication of our financial
    performance or to cash flow from operating activities as
    determined by GAAP as a measure of our liquidity, nor is it
    indicative of funds available to fund our cash needs, including
    our ability to make cash distributions.                    
|   
|    | We have made revisions to our calculation of FFO
    as a result of new Securities and Exchange Commission guidance
    regarding the reporting of non-GAAP financial information.
    Historically, we reversed the impact of impairment on real
    estate and costs associated with the termination of leases.
    Effective in 2003 and forward, this adjustment will no longer be
    made and any prior period amounts disclosed will have been
    recalculated using our new method.                                                                                                                                                                                                                                                                                       

19



---



##### Table of Contents





| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | The following is a reconciliation between net
    income (loss) and FFO (in thousands):

|                                                                                          |  |      |        |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------- | - |  | - | ------ | - |  | - | ------ | -
|                                                                                          |  | 2003 |        | 2002 |  | 2001 |        | 2000 |  | 1999
|                                                                                          |  |      |        |      |  |      |        |      |  |     
|Net income (loss)                                                                         |  | $    | (3,426 | )    |  | $    | (371   | )    |  | $    | (29,570 | ) |  | $ | 7,730  |   |  | $ | 18,122 |  
|Minority interest                                                                         |  |      | (3,319 | )    |  |      | (507   | )    |  |      | (2,999  | ) |  |   | 1,003  |   |  |   | 1,625  |  
|Real estate related depreciation and amortization                                         |  |      | 31,090 |      |  |      | 28,318 |      |  |      | 26,714  |   |  |   | 27,813 |   |  |   | 26,690 |  
|Real estate related depreciation and amortization
    included in discontinued operations |  |      | 627    |      |  |      | 1,856  |      |  |      | 1,760   |   |  |   | 2,561  |   |  |   | 2,188  |  
|(Gain) loss on sale/disposal of assets                                                    |  |      | (2,274 | )    |  |      | 18     |      |  |      | (240    | ) |  |   |       |   |  |   |       |  
|Cumulative effect of change in accounting
    principle                                   |  |      |       |      |  |      |       |      |  |      | 373     |   |  |   |       |   |  |   |       |  
|Gain on property insurance recovery                                                       |  |      |       |      |  |      |       |      |  |      |        |   |  |   | (407   | ) |  |   |       |  
|Equity in (income) loss of unconsolidated
    joint ventures                              |  |      | 870    |      |  |      | 2,040  |      |  |      | (589    | ) |  |   | (68    | ) |  |   | (23    | )
|FFO adjustment related to joint ventures                                                  |  |      | 2,324  |      |  |      | (852   | )    |  |      | 1,718   |   |  |   | (229   | ) |  |   | (413   | )
|Preferred dividends declared                                                              |  |      | (4,751 | )    |  |      | (1,109 | )    |  |      |        |   |  |   |       |   |  |   |       |  
|                                                                                          |  |      |        |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        |  
|Funds from operations after preferred dividends                                           |  |      | 21,141 |      |  |      | 29,393 |      |  |      | (2,833  | ) |  |   | 38,403 |   |  |   | 48,189 |  
|                                                                                          |  |      |        |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        |  
|Less: Funds from operations related to minority
    interest                              |  |      | 2,866  |      |  |      | 4,002  |      |  |      | (198    | ) |  |   | 2,691  |   |  |   | 3,390  |  
|                                                                                          |  |      |        |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        |  
|Funds from operations attributable to common
    shareholders                             |  | $    | 18,275 |      |  | $    | 25,391 |      |  | $    | (2,635  | ) |  | $ | 35,712 |   |  | $ | 44,799 |  
|                                                                                          |  |      |        |      |  |      |        |      |  |      |         |   |  |   |        |   |  |   |        |  



|    |                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | We believe that EBITDA is helpful to investors
    and management as a measure of the performance of the Company
    because it provides an indication of the operating performance
    of the properties within the portfolio and is not impacted by
    the capital structure of the REIT.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have made revisions to our calculation of
    EBITDA as a result of new Securities and Exchange Commission
    guidance regarding the reporting of non-GAAP financial
    information. Historically, we reversed the impact of impairment
    on real estate and costs associated with the termination of
    leases. Effective in 2003 and forward, this adjustment will no
    longer be made and any prior period amounts disclosed will have
    been recalculated using our new method.
|
| | The following is a reconciliation between
    operating income (loss) and EBITDA (in thousands):                                                                                                                                                                                                                                                                                                                                                                                               

|                        |                                                                |        |        |        |        |      |        |        |        |      |        |        |        |   |        |        |        |   |        |        |        | 
|----------------------- | -------------------------------------------------------------- | ------ | ------ | ------ | ------ | ---- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                        |                                                                | 2003   |        | 2002   |        | 2001 |        | 2000   |        | 1999
|                        |                                                                |        |        |        |        |      |        |        |        |     
|Operating income (loss) |                                                                | $      | 11,428 |        |        | $    | 21,107 |        |        | $    | (8,562 | )      |        | $ | 33,899 |        |        | $ | 36,371 |       
|                        | Other income                                                   |        |        | 392    |        |      |        | 966    |        |      |        | 869    |        |   |        | 624    |        |   |        | 492    |       
|                        | Interest income                                                |        |        | 226    |        |      |        | 357    |        |      |        | 409    |        |   |        | 531    |        |   |        | 365    |       
|                        | Real estate related depreciation and amortization              |        |        | 31,090 |        |      |        | 28,318 |        |      |        | 26,714 |        |   |        | 27,813 |        |   |        | 26,690 |       
|                        | EBITDA attributable to discontinued operations                 |        |        | (1,232 | )      |      |        | 2,799  |        |      |        | 5,242  |        |   |        | 5,707  |        |   |        | 6,092  |       
|                        | Companys share of EBITDA of unconsolidated
    joint ventures |        |        | 2,667  |        |      |        | 724    |        |      |        | 2,784  |        |   |        | 1,428  |        |   |        | 317    |       
|                        | EBITDA applicable to joint venture minority
    interest       |        |        | 1,058  |        |      |        | (172   | )      |      |        | 285    |        |   |        | (765   | )      |   |        | (542   | )     
|                        |                                                                |        |        |        |        |      |        |        |        |      |        |        |        |   |        |        |        |   |        |       
|                        |                                                                | EBITDA |        | $      | 45,629 |      |        | $      | 54,099 |      |        | $      | 27,741 |   |        | $      | 69,237 |   |        | $      | 69,785 | 
|                        |                                                                |        |        |        |        |      |        |        |        |      |        |        |        |   |        |        |        |   |        |       



|    |                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) | Neither FFO nor EBITDA represent cash generated
    from operating activities as determined by GAAP and neither
    should be considered as an alternative to GAAP net income as an
    indication of the Companys

20



---



##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | financial performance or to cash flow from
    operating activities as determined by GAAP as a measure of
    liquidity, nor is either indicative of funds available to fund
    cash needs, including the ability to make cash distributions.
    FFO and EBITDA may include funds that may not be available for
    the Companys discretionary use due to functional
    requirements to conserve funds for capital expenditures and
    property acquisitions, and other commitments and uncertainties.



|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of
    Financial Condition and Results of Operations



| |         
| | --------
| | Overview

Boykin Lodging Company (Boykin), an
Ohio corporation, is a real estate investment trust
(REIT) that was formed and completed an initial
public offering in 1996 to continue and expand the nearly
40-year history of hotel ownership, acquisition, redevelopment
and repositioning activities of its predecessors, Boykin
Management Company and its affiliates. Boykin Hotel Properties,
L.P., an Ohio limited partnership (the Partnership),
is the operating partnership that transacts business and holds
the direct and indirect ownership interests in Boykins
hotels. As of March 23, 2004, Boykin has an 85.3% ownership
interest in, is the sole general partner of and does all its
business through the Partnership.

Since our initial public offering, we have
expanded our portfolio by using capital raised through a
combination of common share issuances, various debt financings,
capital from strategic joint venture partners and cash flow
generated from operations.

At the end of 2003, we owned interests in 29
hotels containing a total of 8,430 guestrooms located in 18
different states. During March 2004, our Doubletree Portland
Downtown property was acquired by the City of Portland through
its powers of eminent domain. Therefore, as of March 23,
2004, we own interests in 28 hotels containing 8,280 guestrooms.

Critical Accounting Policies

The critical accounting policies which we believe
are the most significant to fully understand and evaluate our
reported financial results include the following:



| |   |                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Investment in Hotel Properties Hotel properties are
    stated at cost, net of any impairment charges, and are
    depreciated using the straight-line method over estimated useful
    lives ranging from ten to 35 years for buildings and
    improvements and three to 20 years for furniture and
    equipment.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We review our hotel properties for impairment
    whenever events or changes in circumstances indicate the
    carrying value of the hotel properties may not be recoverable.
    Events or circumstances that may cause a review include, but are
    not limited to, adverse changes in the demand for lodging at the
    properties due to declining national or local economic
    conditions, new hotel construction in markets where the hotels
    are located or changes in the expected holding period of the
    property. When such conditions exist, management performs an
    analysis to determine if the estimated undiscounted future cash
    flows from operations and the proceeds from the ultimate
    disposition of a hotel property are equal to or exceed its
    carrying value. If the estimated undiscounted future cash flows
    are less than the carrying amount of the asset, an adjustment to
    reduce the carrying amount to the related hotel propertys
    estimated fair market value is recorded and an impairment loss
    recognized.
|
| | In 2003, we recorded a charge of
    $2.8 million for impairment of real estate on one hotel,
    our Holiday Inn Minneapolis West, as a result of a change in
    managements intended holding period of the property.
    Pursuant to the terms of the joint venture which owns the
    property, over 40% of this charge was allocable to the joint
    ventures minority interest partner. There were no charges
    recorded for impairment of real estate in 2002. In 2001 we
    recorded charges of $24.0 million for impairment of real
    estate on the carrying value of several hotels due to their book
    value exceeding their fair value. Approximately
    $6.1 million of these charges related to four properties
    which we sold during 2003. As of December 31, 2003, we did
    not believe that there were any factors or circumstances
    indicating impairment of any other of our investments in hotel
    properties.                                                                                                                           

21



---



##### Table of Contents



We estimate the fair market values of our
properties through a combination of comparable property sales,
replacement cost and cash flow analysis taking into account each
propertys expected cash flow generated from operations,
holding period and ultimate proceeds from disposition. In
projecting the expected cash flows from operations of the asset,
we base our estimates on future projected earnings before
interest expense, income taxes, depreciation and amortization,
or EBITDA, and deduct expected capital expenditure requirements.
We then apply growth assumptions to project these amounts over
the expected holding period of the asset. Our growth assumptions
are based on estimated changes in room rates and expenses and
the demand for lodging at our properties, as impacted by local
and national economic conditions and estimated or known future
new hotel supply. The estimated proceeds from disposition are
judgmentally determined based on a combination of anticipated
cash flow in the year of disposition, terminal capitalization
rate, ratio of selling price to gross hotel revenues and selling
price per room.

If actual conditions differ from those in our
assumptions, the actual results of each assets future
operations and fair market value could be significantly
different from the estimated results and value used in our
analysis. Our operating results are also subject to the risks
set forth under Items 1(c) and 7 of this Form 10-K.



| |   |                    
| | - | -------------------
| |  | Revenue recognition

Hotel revenues Hotel
revenues, including room, food, beverage and other hotel
revenues, are recognized as the related services are delivered.
Ongoing credit evaluations are performed and an allowance for
potential credit losses is provided against the portion of
accounts receivable that is estimated to be uncollectible.

Lease revenue Through
December 31, 2001, our principal source of revenue was
lease payments from lessees pursuant to percentage lease
agreements. Percentage lease revenue is based upon the room,
food and beverage and other revenues of our hotels.

Percentage of completion In
2003, we began recognizing revenue related to the White Sand
Villas project under the percentage of completion method.
Condominium project revenues and expenses are recognized on the
percentage of completion method upon satisfaction of the
following criteria: (a) construction is determined to be
beyond a preliminary stage, (b) the buyer is not entitled
to a refund except for nondelivery of the unit,
(c) sufficient units are under binding contract to assure
the entire property will not revert to rental property,
(d) sales prices have been determined to be collectible,
and (e) aggregate sales proceeds and costs can be
reasonably estimated. In 2003, revenue was recognized under
percentage of completion accounting as the project had satisfied
the criteria outlined above. Percentage of completion accounting
involves the use of estimates for the relation of revenues on
sold units to total revenues of the project and for total cost
of the project. The profit realized on the White Sand Villas
could change if actual sales prices differ from current
estimates and if estimated costs change due to a change in scope
or scheduling of the project or other factors.

Sales of condominium units During 2001, we completed a renovation of a 60-unit tower at
the Pink Shell Beach Resort. These renovated units were sold as
Sanibel View Villas Condominiums; the revenue related to the
sales was recorded upon closing of the sale. As of
December 31, 2003, we had closed on the sale of all 59 of
the available units within the tower and all of the unit owners
have contracted with us to allow their unused room nights to be
rented out as hotel rooms. The related gross rental income
generated by these units is recorded by the resort and included
in hotel revenues within the consolidated financial statements.
Under the terms of their contracts, a percentage of the gross
rental income of each unit is to be remitted to the respective
unit owner. The remitted amounts are recorded as expenses within
the property taxes, insurance and other line of the consolidated
financial statements.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Income Tax Valuation Allowance.Upon the effective date of the
    establishment of Boykins taxable REIT subsidiaries
    (TRSs), the subsidiaries became subject to federal
    and state income taxes. Boykins TRSs account for income
    taxes in accordance with the provisions of SFAS No. 109,
    Accounting for Income Taxes. As of December 31,
    2003, Boykins TRSs have a deferred tax asset of
    approximately $5.7 million, prior to any valuation
    allowance, related to the assumption of the retained deficit of
    Westboy

22



---



##### Table of Contents



| |  |                                                                                                                                                                                                                                                                                                                                                         
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | as well as the operating losses of the TRSs and
    their subsidiaries. Boykins TRSs have recorded a 100%
    valuation allowance against this asset due to the uncertainty of
    realization of the deferred tax asset thus no provision or
    benefit from income taxes is reflected in the accompanying
    consolidated statements of operations.

Our significant accounting policies are more
fully described in Note 2 to Boykin Lodging Companys
Notes to Consolidated Financial Statements included within this
Annual Report on Form 10-K.

Results of Operations

We are reporting the hotel operating revenues and
expenses with respect to the hotels included within the TRS
transactions discussed above beginning with their respective
effective dates, whereas prior to those dates, we reported
percentage lease revenue. As a result, the results of operations
for 2003 and 2002 are not directly comparable to the actual
results for the same periods in 2001.

During 2003 we sold five hotels and the operating
results of those properties are reflected in the financial
statements as discontinued operations for all periods presented.
Additionally, in August 2003, we acquired the Radisson
Suite Beach Resort on Marco Island, Florida; therefore, the
results of operations from the acquisition date forward are
included within the consolidated financial statements.

Results
of Operations Year Ended December 31, 2003 Compared to
2002

Total revenues from continuing operations
increased to $269.2 million in 2003 from
$245.5 million in 2002.



| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | Hotel revenues decreased $1.7 million from
    $232.1 million in 2002 to $230.3 million in 2003 as a
    result of the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increase of $9.9 million as a result of the
    hotel revenue of Marriotts Hunt Valley Inn being included
    in the financial statements for the full year 2003 versus the
    four months in 2002 subsequent to its TRS transaction;                                                                                                                                                                                    
|
| |  | Increase of $2.7 million related to the
    inclusion of the hotel revenue of the Marco Island property
    subsequent to its acquisition in August 2003; offset by                                                                                                                                                                                                                                                        
|
| |  | An approximate 6.0% decrease in revenue per
    available room (RevPAR) from 2002 for the 24
    consolidated hotels which were operated under the TRS structure
    for both full years of 2003 and 2002. Comprising the decline in
    RevPAR was a drop in occupancy levels of 2.3 points combined
    with a decrease in the average daily rate of approximately 2.4%,
    primarily as a result of the weak economy.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Lease revenues of $2.0 million in 2003
    represent a $2.7 million decrease from 2002 as a result of
    the loss of $2.8 million of lease revenue in 2002 related
    to the conversion of Marriotts Hunt Valley Inn to the TRS
    structure offset by a $0.1 million increase in lease
    revenue related to the Hampton Inn San Diego Airport/ Sea World,
    which continued to operate under a traditional lease structure.                                                                                                                                                                                                                                                   
|
| |  | Revenues from condominium development and unit
    sales increased to $36.9 million in 2003 versus
    $8.7 million in 2002 as we started recognizing revenue
    under the percentage of completion method in 2003 related to the
    White Sand Villas project as certain thresholds regarding number
    of pre-sales and progress on construction were met. Total
    revenue recognized in 2003 totaled $32.1 million.
    Additionally, 2003 revenues include $4.8 million related to
    the sales of the remaining 19 Sanibel View Villas units whereas
    in 2002 there were revenues of approximately $8.7 million
    related to the sales of 40 Sanibel View Villas units.

Hotel operating expenses



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In 2003, we incurred total hotel operating
    expenses, which include hotel departmental expenses, indirect
    expenses and management fees, of $175.7 million. This is
    related to the costs associated with operating the 25 hotels
    under the TRS structure for the full year 2003 as well as the
    expenses related to the Marco Island property subsequent to
    acquisition. The gross operating profit of these hotels for the
    periods owned and operated under a TRS totaled 23.7% for 2003
    versus 27.6% in 2002. The main drivers for the loss of

23



---



##### Table of Contents



| |  |                                                                                                                               
| |  | ------------------------------------------------------------------------------------------------------------------------------
| |  | gross profit margins include increases in payroll
    and related employee costs and benefits, insurance, food and
    energy.

Property Taxes, Insurance and Other



| |   |                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Total expenses related to property taxes,
    insurance and other of $15.8 million recorded for 2003
    increased $0.9 million over 2002. The addition of Marco
    Island accounted for $0.3 million of this increase.
    Additionally, the portfolio experienced an increase in insurance
    costs.

Corporate general and administrative



| |   |                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Total expenses recorded for 2003 were
    $7.8 million compared with 2002 expenses of
    $6.7 million as a result of increased legal and
    professional fees, costs related to the exchange of collateral
    for the $130.0 million loan and increased directors and
    officers insurance costs.

Cost of condominium development and unit sales



| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | Total expenses recorded for 2003 were
    $24.6 million compared with $6.5 million in 2002.



| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Due to progress made on the White Sand Villas,
    amounts expensed under the percentage of completion method of
    accounting totaled $21.3 million.                                                                          
|
| |  | 2003 costs include $3.3 million related to
    the sale of 19 Sanibel View Villas units where in 2002 costs
    totaled $6.5 million. The decline in cost per unit was due to
    depreciation taken on the units prior to sale.

Real estate related depreciation and amortization



| |   |                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Depreciation and amortization in 2003 of
    $31.1 million included $3.4 million of accelerated
    depreciation related to pending demolition and removal of two
    existing buildings at the Pink Shell to make way for the new
    Captiva Villas.
|
| |  | Depreciation and amortization in 2002 of
    $28.3 million included $1.7 million of accelerated
    depreciation related to the demolition and removal of the
    cottages at the Pink Shell to make way for the new White Sand
    Villas building.  
|
| |  | Disregarding these events, the depreciation and
    amortization for 2003 increased approximately $1.1 million
    as a result of recent capital expenditures and the acquisition
    of the Marco Island property in August 2003.                    

Impairment of real estate



| |   |                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In 2003, management identified changes in
    circumstances, namely the intended holding period of the
    property, which indicated that the carrying value of one of our
    properties, the Holiday Inn Minneapolis West, was impaired and
    accordingly we recorded an impairment charge of
    $2.8 million.

Interest expense



| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | Interest expense decreased approximately
    $3.2 million in 2003 from 2002 as a result of:



| |   |                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A significant decrease in the weighted average
    outstanding balance on our applicable secured credit facilities;                                                                                                                                                              
|
| |  | Approximately $42.0 million on the
    previously existing $45.0 million term note was outstanding
    for just over 9 months during 2003 versus being outstanding
    at $45.0 million for the first nine months of 2002 and
    $42.0 million for the remaining months of 2002;
|
| |  | An average interest rate decline on the
    outstanding balance of our $108.0 million term loan of
    approximately 60 basis points; and                                                                                                                                        
|
| |  | A declining outstanding principal balance on our
    $130.0 million term loan as a result of the loans
    amortization schedule.                                                                                                                                               

24



---



##### Table of Contents



Minority interest in (earnings) loss of
joint ventures



| |   |                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In 2003, we allocated $1.1 million of losses
    to minority interest holders compared with a $0.1 million
    allocation of income in the prior year as a result of a portion
    of the 2003 impairment charge, approximately $1.2 million,
    related to the Holiday Inn Minneapolis West being allocated to
    the joint venture partner.

Equity in income (loss) of unconsolidated
joint ventures



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our share of loss related to our unconsolidated
    joint ventures totaled $0.9 million in 2003 versus
    $2.0 million in 2002 as both of the hotels we owned and
    accounted for as unconsolidated joint ventures were in their
    ramp up periods after major guestroom renovations. The primary
    driver behind this change relates to our share of the joint
    venture which owns Hotel 71. The hotel experienced a significant
    number of room nights out of service related to its renovation
    in 2002; subsequent to completion, these rooms were back in
    service and due to the upgrade of the hotel, the property
    experienced higher average daily room rates. Similarly, the
    total operating costs of the property increased as a result of
    the increased number of rooms occupied in 2003 compared with
    2002. The depreciation related to Hotel 71 in 2003 increased
    significantly over 2002 levels due to the costs related to the
    renovation, which were in excess of $20.0 million, began
    depreciating in late 2002 in conjunction with the completion of
    the renovation.

Discontinued operations



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Please refer to Note 4 of Boykin Lodging
    Companys Notes to Consolidated Financial Statements
    included within this Annual Report on Form 10-K for a
    summary of discontinued operations. Discontinued operations
    reflect the operations of the properties we sold during 2003
    prior to their sale. Also included in 2003 discontinued
    operations is the net gain on sale of the five properties of
    $0.7 million.

Distribution to preferred shareholders



| |   |                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Approximately $4.8 million of dividends
    related to the outstanding preferred depositary shares were
    declared in 2003; those dividends reduced net income
    attributable to common shareholders. The preferred shares were
    issued during the fourth quarter of 2002 and there was
    approximately one quarter of this amount declared for 2002.

Based upon the above, 2003 had a net loss
attributable to common shareholders of $8.2 million
compared to the $1.5 million loss for 2002.

Our FFO for 2003 was $18.3 million compared
to $25.4 million in 2002. For a detailed definition of FFO,
a reconciliation of net loss to FFO and a discussion of why we
believe FFO is a useful measure of a REITs financial
performance, please see Item 6 Selected Financial
Data.

Results
of Operations Year Ended December 31, 2002 Compared to
2001

Total revenues from continuing operations
increased to $245.5 million in 2002 from $72.8 million
in 2001.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Hotel revenues of $232.1 million in 2002
    represented a significant increase from $6.7 million in
    2001 as 2002 reflected the results of operations of 24 hotels,
    including the Radisson Hotel Mount Laurel (see discussion
    below), which under the terms of the REIT Modernization Act were
    leased to a TRS commencing January 1, 2002. As such, the
    results of operations from 23 of those properties were included
    in the consolidated financial statements commencing
    January 1, 2002. In 2001, the Company received lease
    revenue from those hotels. An additional TRS transaction
    occurred September 1, 2002, related to the Marriotts
    Hunt Valley Inn. As such, hotel revenues in 2002 include four
    months of hotel revenues generated at that property. Hotel
    revenues of $6.7 million in 2001 related to the results of
    operations of our Radisson Hotel Mount Laurel that we operated
    during the year as allowed under the REIT tax regulations
    related to foreclosure properties.
|
| |  | Lease revenues of $4.7 million in 2002
    represented a significant decrease from $66.1 million in
    2001 as 2002 amounts related to the first eight months of the
    year where Marriotts Hunt Valley Inn was not under the TRS
    structure and therefore generating lease revenue
    ($2.8 million) as well as a full year of lease                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

25



---



##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | revenue related to the Hampton Inn San Diego
    Airport/ Sea World ($1.9 million) which as of
    December 31, 2003 is still owned by Boykin and is
    consolidated within the financial statements yet is not operated
    under the TRS structure. Lease revenues of $66.1 million in
    2001 related to the amounts due subject to the terms of the
    percentage lease agreements for the 23 hotels, excluding
    Radisson Hotel Mount Laurel, which were subsequently leased to
    TRSs of Boykin for a full or partial year during 2002, the lease
    revenue generated by the Daytona Radisson hotel prior to its
    sale in January 2001, and the lease revenues generated by the
    Hampton Inn San Diego Airport/ Sea World ($2.1 million).
|
| |  | In 2002 there were revenues from condominium
    development and unit sales of approximately $8.7 million
    related to the sales of 40 Sanibel View Villas units at our Pink
    Shell Beach Resort throughout the year. No sales had occurred
    prior to 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Hotel operating expenses



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In 2002, we incurred total hotel operating
    expenses, which include hotel departmental expenses, indirect
    expenses and management fees, of $168.1 million. These
    expenses are related to the costs associated with operating the
    24 hotels under the TRS structure for the full year 2002 as well
    as the four months of operating costs of Marriotts Hunt
    Valley Inn subsequent to its TRS transaction on
    September 1, 2002.
|
| |  | In 2001, hotel operating expenses of
    $5.4 million related to the operating costs of the Radisson
    Hotel Mount Laurel.                                                                                                                                                                                                                                                                                                                            

Property Taxes, Insurance and Other



| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Total expenses related to property taxes,
    insurance and other of $14.9 million recorded for 2002
    increased $4.7 million over 2001 primarily due to:



| |   |                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a $2.5 million increase related to the
    inclusion of general liability insurance for all properties now
    included in the consolidated financial statements as a result of
    the TRS transactions, and property taxes and property insurance
    related to those properties under a triple-net lease with the
    TRS;
|
| |  | a $2.0 million increase related to other
    operating expenses related to the hotels operations, primarily
    payments to condominium unit owners for their share of the
    revenue generated by their units at the Pink Shell; and                                                                                        
|
| |  | the remainder of the change was related to
    increases in property insurance rates and partially offsetting
    decreases in certain property taxes as a result of favorable
    real estate tax appeals.                                                                                                                   

Cost of condominium development and unit sales



| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The related costs of the 40 Sanibel View Villas
    units sold during 2002 totaled $6.5 million and are
    recorded as such within the financial statements.

Real estate related depreciation and amortization



| |   |                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Depreciation and amortization increased
    $1.6 million in 2002 over 2001 primarily as a result of a
    $1.7 million acceleration of depreciation expense recorded
    during 2002 related to the cottages at the Pink Shell which were
    to be removed to make way for the new White Sand Villas building.

Impairment of real estate



| |   |                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | During 2001, management identified changes in
    circumstances which indicated that the carrying values of seven
    properties were impaired and as such, recorded non-cash charges
    related to them. No impairment charges occurred in 2002.

Costs associated with termination of leases



| |   |                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We incurred charges of $15.0 million,
    $11.4 million being non-cash, during 2001 relating to the
    acquisition and termination of the percentage leases and related
    transaction costs to implement the TRS structure. Approximately
    $13.0 million of the charges resulted from transactions
    with BMC.

26



---



##### Table of Contents



Interest expense



| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | Interest expense decreased approximately
    $1.5 million in 2002 from 2001 as a result of:



| |   |                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a significant decrease in the weighted average
    interest rate on our outstanding debt; and                                                                                                                                                                      
|
| |  | proceeds from our preferred share offering in
    October 2002 being used to repay the outstanding balances drawn
    on our pre-existing secured credit facility as well as
    approximately $3.0 million on our previously existing
    $45.0 million term note.

Amortization of deferred financing costs



| |   |                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Amortization expense increased approximately
    $1.0 million in 2002 over 2001 primarily as a result of the
    additional financing costs incurred for the 2002 amendments of
    our previously existing secured credit facilities and
    $45.0 million term loan.

Equity in income (loss) of unconsolidated
joint ventures



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our share of loss related to our unconsolidated
    joint ventures totaled $2.0 million in 2002 versus income
    of $0.6 million in 2001 as both of the hotels we owned and
    accounted for as an unconsolidated joint venture were undergoing
    significant renovations during 2002. Similar to the comparison
    of 2003 results to 2002, the largest contributor to this loss
    and change from 2001 was our share of the joint venture which
    owns Hotel 71. The hotel underwent a significant renovation
    during 2002 which resulted in lower occupancies and lower
    average daily rates for the property during 2002. As a result of
    the TRS transaction in July 2001 and going forward the operating
    results of the property were reflected in the financial
    statements of the joint venture as opposed to the joint venture
    receiving lease revenue.

Discontinued operations



| |   |                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Please refer to Note 4 of Boykin Lodging
    Companys Notes to Consolidated Financial Statements
    included within this Annual Report on Form 10-K for a
    summary of such operations.

Distribution to preferred shareholders



| |   |                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Approximately $1.1 million of dividends
    related to the outstanding preferred depositary shares were
    declared in 2002; those dividends reduced net income
    attributable to common shareholders. As the preferred shares
    were issued during 2002, there was no similar deduction for the
    year earlier period.

Based upon the above, 2002 had a net loss
attributable to common shareholders of $1.5 million
compared to the $29.6 million loss for 2001.

Our FFO for 2002 was $25.4 million compared
to $(2.6) million in 2001. For a detailed definition of FFO, a
reconciliation of net loss to FFO and a discussion of why we
believe FFO is a useful measure of a REITs financial
performance, please see Item 6 Selected Financial
Data.

Liquidity and Capital Resources

Our principal source of cash to meet our cash
requirements, including dividends to shareholders, is our share
of the Partnerships cash flow from the operations of the
hotels and condominium sales. Cash flow from hotel operations is
subject to all operating risks common to the hotel industry,
including:



| |   |                                                              
| | - | -------------------------------------------------------------
| |  | Competition for guests from other hotels;                    
|
| |  | Adverse effects of general and local economic
    conditions;

27



---



##### Table of Contents





| |   |                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Dependence on demand from business and leisure
    travelers, which may be seasonal and which may be adversely
    impacted by health and safety-related concerns;
|
| |  | Increases in energy costs, airline fares, and
    other expenses related to travel, which may deter traveling;                                                    
|
| |  | Impact of the financial difficulties of the
    airline industry;                                                                                                 
|
| |  | Increases in operating costs related to inflation
    and other factors, including wages, benefits, insurance and
    energy;                                     
|
| |  | Overbuilding in the hotel industry, especially in
    particular markets; and                                                                                     
|
| |  | Actual or threatened acts of terrorism and
    actions taken against terrorists that cause public concern about
    travel safety.                                

The cash flow from condominium development is
subject to risk factors common to real estate sales and
development, including, but not limited to:



| |   |                                                                   
| | - | ------------------------------------------------------------------
| |  | Competition from other condominium projects;                      
|
| |  | Construction delays;                                              
|
| |  | Reliance on contractors and subcontractors;                       
|
| |  | Construction cost overruns; and                                   
|
| |  | The ability of the condominium purchasers to
    secure financing.

As of December 31, 2003, we had
$14.0 million of unrestricted cash and cash equivalents and
$15.4 million of restricted cash for the payment of capital
expenditures, real estate taxes, interest and insurance, and
deposits received on pre-sales of White Sand Villas condominium
units. There were outstanding borrowings at year end totaling
$213.7 million against our two term notes payable. In March
2004, the balance of the $130.0 million term loan was
reduced by approximately $16.9 million with proceeds from
the disposition of the Doubletree Portland Downtown.

As of December 31, 2003, we had
$13.2 million outstanding against our $23.3 million
construction loan related to White Sand Villas. Proceeds from
the sales of the individual units will be applied to the
outstanding balance. Based upon pre-sales, we are anticipating
net proceeds after sales commissions to be in excess of
$37.5 million, less repayment of the construction loan.

We currently have a $78.0 million credit
facility ($71.9 million outstanding as of December 31,
2003) to fund acquisitions of additional hotels, renovations and
capital expenditures, and for our working capital needs, subject
to limitations contained in the credit agreement. Using proceeds
from this new facility, we repaid the outstanding balances on
our previously existing facility and a term note secured by
three hotels. The various transactions resulted in removing
encumbrances from two additional properties.

For information relating to the terms of our
credit facility, our term notes and our construction loan,
please see Notes 5 and 6, respectively, of the Notes to
Consolidated Financial Statements of Boykin Lodging Company
included in this Annual Report on Form 10-K.

Our $130.0 million and $108.0 million
term notes payable and the construction loan are
property-specific mortgages and have only financial reporting
covenants. The credit facility contains covenants regarding
overall leverage and debt service coverage. As of
December 31, 2003, we are in compliance with such covenants.

In October 2002, we completed an underwritten
public offering of 1,800,000 depositary shares, each share
representing 1/10 of a share of our 10  1/2% Class A
Cumulative Preferred Shares, Series 2002-A (Liquidation
Preference $25 per depositary share). An additional 10,000
depositary shares were issued to cover over-allotments. Net
proceeds after underwriting discounts and commissions were used
to repay the entire outstanding balance on our then existing
credit facility and reduce the outstanding balance on the
previously existing $45.0 million term loan to just under
$42.0 million. Annual dividends of $2.625 per depositary
share are payable quarterly upon the authorization of the Board
of Directors. The shares are listed on the New York Stock

28



---



##### Table of Contents



Exchange. We own a corresponding Series A
Preferred equity interest in the Partnership that entitles us to
income and distributions in amounts equal to the dividends
payable on the Companys Series A Preferred shares.


We may seek to negotiate additional credit
facilities, replacement credit facilities, or we may issue debt
instruments. Any debt incurred or issued by us may be secured or
unsecured, long-term, medium-term or short-term, bear interest
at a fixed or variable rate, and be subject to such other terms
as the Board of Directors considers prudent. The availability of
borrowings under the credit facility is restrained by borrowing
base and loan-to-value limits, as well as other financial
performance covenants contained in the agreement. There can be
no assurance that funds will be available in anticipated amounts
from the credit facility.

Due to our desire to maintain liquidity in the
challenging hotel environment following September 2001, our
Board of Directors suspended the regular quarterly dividend in
the fourth quarter of 2001. In August 2002, the Board of
Directors reinstated a regular quarterly dividend on our common
shares by declaring a dividend of $0.18 per common share for the
third quarter. Dividends were also declared and paid for the
fourth quarter 2002 and first quarter 2003 at the same level to
ensure that we distributed enough to maintain our REIT status.
While we are committed to a philosophy of regular quarterly
dividends, the current economic and geopolitical environment
make it advisable to retain cash in order to enhance our
liquidity going forward. Pursuant to the terms of our credit
facility, we are limited to distributing not more than 75% of
FFO attributable to common shareholders and only if the
outstanding balance has been reduced to $60.0 million. The
credit facility does not limit distributions to preferred
shareholders or distributions required for us to maintain our
REIT status.

Currently, we expect to continue to pay a regular
quarterly dividend on our preferred shares. The resumption of a
common dividend will depend upon the improving performance of
our hotels and other factors that our Board of Directors
considers relevant.

In 2004, we expect to spend approximately
$17.0 million related to capital expenditures at our
consolidated hotels, excluding the Pink Shell Beach Resort
projects discussed below. This amount includes planned
refurbishments and replacements at selected existing hotels as
well as revenue generating projects, such as the development of
ancillary conference centers within certain properties. We
expect to use cash available from operations and restricted
capital expenditure reserves, as well as borrowings under our
line of credit, to fund our 2004 renovations.

With regard to the planned Captiva Villas
project, similar to Sanibel View Villas and White Sand Villas,
the units in the tower will be sold as condominiums, with the
prospect that the owners would put their unused room nights back
to the resort by contract, which will provide us with continuing
income. The Captiva Villas tower is scheduled for completion
during 2005. We are currently talking to various lenders
regarding our financing options for the construction of Captiva
Villas.

We have considered our short-term (defined as
one-year or less) liquidity needs and the adequacy of our
estimated cash flow from operations and other expected liquidity
sources to meet these needs. We expect our principal short-term
liquidity needs will be to fund normal recurring expenses, debt
service requirements, distributions on the preferred shares and
any minimum distribution required to maintain our REIT status.
We anticipate that these needs will be met with cash flows
provided by operating activities, using availability under the
credit facility, proceeds from sales of condominium units,
proceeds from dispositions of non-core assets and proceeds from
potential additional financings. We also consider capital
improvements and property acquisitions as short-term needs that
can be funded either with cash flows provided by operating
activities, by utilizing availability under our credit facility,
or from proceeds from additional financings.

We expect to meet long-term (defined as greater
than one year) liquidity requirements such as property
acquisitions, scheduled debt maturities, major renovations,
development projects and other nonrecurring capital improvements
utilizing cash flow from operations, proceeds from dispositions
of non-core assets, additional debt financings and preferred or
common equity offerings. We expect to acquire or develop
additional hotel properties only as suitable opportunities
arise, and we will not undertake acquisition or development of
properties unless stringent criteria have been met.

29



---



##### Table of Contents



Off Balance Sheet Arrangements

We believe that neither Boykin nor its
unconsolidated entities have entered into any off balance sheet
arrangements which would have a current or future impact on our
financial condition, changes in financial condition, results of
operations, liquidity or capital resources in ways which would
be considered material to our investors.

Tabular Disclosure of Contractual
Obligations

The following is a summary of Boykins
obligations and commitments as of December 31, 2003,
excluding unconsolidated joint ventures (in thousands):

|                                                                                       |  |       |         |                        |  |           |         |           |  |         |        |  |  |   |       |  |  |   |         | 
|-------------------------------------------------------------------------------------- |  | ----- | ------- | ---------------------- |  | --------- | ------- | --------- |  | ------- | ------ |  |  | - | ----- |  |  | - | ------- | 
|                                                                                       |  |       |         |                       
|                                                                                       |  |       |         | Payments due by period
|                                                                                       |  |       |         |                       
|                                                                                       |  |       |         | Less than              |  |           |         | More than
|Contractual Obligations                                                                |  | Total |         | 1 year                 |  | 1-3 years |         | 3-5 years |  | 5 years
|                                                                                       |  |       |         |                        |  |           |         |           |  |        
|Long-Term Debt Obligations                                                             |  | $     | 226,944 |                        |  | $         | 93,527  |           |  | $       | 18,612 |  |  | $ | 6,194 |  |  | $ | 108,611 | 
|Capital Lease Obligations                                                              |  | $     | 0       |                        |  | $         | 0       |           |  | $       | 0      |  |  | $ | 0     |  |  | $ | 0       | 
|Operating Lease Obligations                                                            |  | $     | 27,636  |                        |  | $         | 1,149   |           |  | $       | 1,986  |  |  | $ | 1,411 |  |  | $ | 23,090  | 
|Purchase Obligations                                                                   |  | $     | 10,505  |                        |  | $         | 9,080   |           |  | $       | 561    |  |  | $ | 236   |  |  | $ | 628     | 
|Other Long-Term Liabilities Reflected on the
    Registrants Balance Sheet under GAAP |  | $     | 7,141   |                        |  | $         | 123     |           |  | $       | 306    |  |  | $ | 399   |  |  | $ | 6,313   | 
|                                                                                       |  |       |         |                        |  |           |         |           |  |         |        |  |  |   |       |  |  |   |         | 
|Total                                                                                  |  | $     | 272,226 |                        |  | $         | 103,879 |           |  | $       | 21,465 |  |  | $ | 8,240 |  |  | $ | 138,642 | 
|                                                                                       |  |       |         |                        |  |           |         |           |  |         |        |  |  |   |       |  |  |   |         | 

In addition to the amounts disclosed above,
Boykin and its subsidiaries are subject to various franchise,
management, lease and other agreements with parties that have
ongoing fees that are contingent upon future results of
operations of the hotels in its portfolio as well as a potential
for termination fees dependent upon the timing and method of
termination of such agreements. Additionally, Boykin has
outstanding cumulative preferred shares which accrue dividends
at an annual amount of approximately $4.8 million, but are
subject to payment only upon declaration by the Board of
Directors.

Included in long-term liabilities above is
approximately $6.1 million of liabilities relating to
Boykin Kansas City, LLC. These liabilities were assumed in
connection with the acquisition of the Doubletree Kansas City in
November of 1997. At December 31, 2003, we recorded these
liabilities and a corresponding increase in the cost basis of
land and buildings and improvements. The adjustment had no
effect on net income or cash flows.

Inflation

Operators of hotels in general can change room
rates quickly, but competitive pressures may limit
operators ability to raise rates to keep pace with
inflation.

Our general and administrative costs as well as
real estate and personal property taxes, property and casualty
insurance and ground rent are subject to inflation.

Seasonality

Our hotels operations historically have
been seasonal. The five hotels located in Florida experience
their highest occupancy in the first quarter, while the
remaining hotels maintain high occupancy rates during the second
and third quarters. This seasonality pattern can be expected to
cause fluctuations in our quarterly operating results and cash
flow received from hotel operations.

Competition and Other Economic
Factors

Our hotels are located in developed areas that
contain other hotel properties. The future occupancy, average
daily rate and RevPAR of any hotel could be materially and
adversely affected by an increase in the number of or quality of
the competitive hotel properties in its market area. Competition
could also affect the quality and quantity of future investment
opportunities, or our ability to sell existing properties.

30



---



##### Table of Contents



As a portion of the lodging industrys sales
are based upon business, commercial and leisure travel, changes
in general economic conditions, demographics, or changes in
local business economics, could affect these and other travel
segments. This may affect demand for rooms, which would affect
hotel revenues.

Please refer to Item 1(c) of this
Form 10-K for further discussion regarding Competition.

New Accounting Pronouncements

In August 2001, the Financial Accounting
Standards Board (FASB) issued
SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. The provisions of Statement
144 were effective beginning in the fiscal year ended
December 31, 2002. SFAS No. 144 supersedes
SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of. SFAS No. 144 also requires that one
accounting model be used for long-lived assets to be disposed of
by sale. As we disposed of hotel properties via sale in 2003,
the properties results of operations are retroactively
disclosed separately as discontinued operations in our financial
statements. Properties that were disposed of prior to the
effective date of Statement 144 have not been separately
disclosed as discontinued operations in historical financial
statements.

In April 2002, the FASB issued
SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13,
and Technical Corrections. Included in
SFAS No. 145 is a requirement that all gains and
losses related to extinguishments of debt (other than
extinguishments of debt items meeting the criteria in APB
Opinion No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions (APB
Opinion 30)) not be treated as extraordinary items. The
provisions of this statement were effective on January 1,
2003. Any gains or losses on extinguishments of debt formerly
classified as extraordinary and not meeting the criteria for
extraordinary classification as defined in APB Opinion 30 were
reclassified. Adoption of this statement did not have a material
effect on our financial position or results of operations for
the periods presented.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, which addresses the disclosure to
be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees.
Interpretation No. 45 also requires the recognition of a
liability by a guarantor at the inception of certain guarantees.
Interpretation No. 45 requires the guarantor to recognize a
liability for the non-contingent component of the guarantee,
this is the obligation to stand ready to perform in the event
that specified triggering events or conditions occur. The
initial measurement of this liability is the fair value of the
guarantee at inception. The recognition of the liability is
required even if it is not probable that payments will be
required under the guarantee or if the guarantee was issued with
a premium payment or as part of a transaction with multiple
elements. We have adopted the disclosure requirements of
Interpretation No. 45 and will apply the recognition and
measurement provisions for all guarantees entered into prior to
January 1, 2003. There are no guarantees which require
recognition under this Interpretation as of December 31,
2003.

In December 2002, the FASB issued Statement
No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure  an amendment
of FASB Statement No. 123. Statement No. 148
amends FASB Statement No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods
of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In
addition, Statement No. 148 amends the disclosure
requirements of Statement No. 123 to require prominent
disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results. Adoption did not have a material effect on the
financial condition or results of operations of Boykin.

As of December 31, 2003, Boykin had a
Long-Term Incentive Plan (LTIP). Boykin has adopted
the disclosure only provisions of SFAS No. 123,
Accounting for Stock-Based Compensation, and applies
Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its employee share option
plan. If Boykin had elected to recognize compensation costs for
the LTIP based on the fair value at the

31



---



##### Table of Contents



grant dates for option awards consistent with the
method prescribed by SFAS No. 123, reported amounts of
net loss and net loss per share would have been changed to the
pro forma amounts indicated below.


|                                                                     |         |                   |        |                   |   |   |        |       |  
|-------------------------------------------------------------------- | ------- | ----------------- | ------ | ----------------- | - | - | ------ | ----- | -
|                                                                     |         |                  
|                                                                     |         | Year Ended       
|                                                                     |         |                  
|                                                                     |         | December 31, 2003 |        | December 31, 2002
|                                                                     |         |                   |        |                  
|                                                                     |         | Pro Forma         |        | Pro Forma        
|                                                                     |         |                   |        |                  
|Net loss attributable to common shareholders                         |         | $                 | (8,177 | )                 |   | $ | (1,480 | )    
|Stock-based employee compensation expense                            |         |                   | (126   | )                 |   |   | (151   | )    
|                                                                     |         |                   |        |                   |   |   |        |      
|Proforma net loss attributable to common
    shareholders            |         |                   | (8,303 | )                 |   |   | (1,631 | )    
|Proforma net loss attributable to common
    shareholders per share: |         |                   |        |                   |   |   |        |      
|                                                                     | Basic   |                   | $      | (0.48             | ) |   | $      | (0.09 | )
|                                                                     | Diluted |                   | $      | (0.48             | ) |   | $      | (0.09 | )

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest
Entities, which addresses consolidation by business
enterprises of variable interest entities. In general, a
variable interest entity is a corporation, partnership, trust,
or any other legal structure used for business purposes that
either (a) does not have equity investors with voting
rights or (b) has equity investors that do not provide
sufficient financial resources for the entity to support its
activities. Interpretation No. 46 requires a variable
interest entity to be consolidated by a company if that company
is subject to a majority of the risk of loss from the
entitys activities or is entitled to receive a majority of
the entitys residual returns or both. The consolidation
requirements of Interpretation No. 46 apply immediately to
variable interest entities created after January 31, 2003
and apply to older entities in the fourth quarter of 2003. In
December 2003, the FASB issued a revised Interpretation which
modifies and clarifies various aspects of the original
Interpretation. We do not believe that we have any
unconsolidated variable interest entities as of
December 31, 2003.

On April 30, 2003 the FASB issued Statement
No. 149 (SFAS 149), Amendment of
Statement 133 on Derivative Instruments and Hedging
Activities. SFAS 149 amends and clarifies accounting
for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging
activities under Statement 133. In particular, this Statement
clarifies under what circumstances a contract with an initial
net investment meets the characteristic of a derivative as
discussed in Statement 133 and it clarifies when a derivative
contains a financing component that warrants special reporting
in the statement of cash flows. SFAS 149 is effective for
contracts entered into or modified after June 30, 2003 and
for hedging relationships designated after June 30, 2003
and is to be applied prospectively. This statement has not had
and is not expected to have a material impact on our financial
position or results of operations.

In May 2003, the FASB issued Statements
No. 150 (SFAS 150), Accounting for
Certain Financial Instruments with Characteristics of Both
Liabilities and Equity, which establishes standards for
how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity.
It requires that an issuer classify a financial instrument that
is within its scope as a liability. The effective date of a
portion of the Statement has been indefinitely postponed by the
FASB. We did not enter into new financial instruments subsequent
to May 2003 which would fall within the scope of this statement.
We have identified a consolidated joint venture which has
minority interest amounts totaling $0.2 million at
December 31, 2003 that appears to meet the criteria for
liability recognition in accordance with paragraphs 9 and
10 under SFAS 150 due to the finite life of the joint
venture arrangements. Accordingly, if and when the measurements
and classification provision of these paragraphs are adopted, we
may be required to reclassify the liquidation amounts of such
minority interests to liabilities with the resulting income
statement effect being classified as a cumulative effect of an
accounting change and subsequent fluctuations in current
liquidation amounts recorded through interest expense. We will
evaluate the impact that this statement would have if and when
these paragraphs are adopted.

Item 7A.     Quantitative
and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our primary market risk exposure consists of
changes in interest rates on borrowings under our debt
instruments that bear interest at variable rates that fluctuate
with market interest rates. These debt instruments

32



---



##### Table of Contents



include the $78.0 million secured credit
facility, the $108.0 million secured term loan, the
$23.3 million construction loan related to the White Sand
Villas and our share of floating rate debt under our
unconsolidated joint ventures of $24.7 million at year end.


We have entered into both variable and fixed rate
debt arrangements to allow us to optimize the balance of using
variable rate debt versus fixed rate debt. Our variable rate
debt allows us to maximize financial flexibility when selling
properties and minimize potential prepayment penalties typical
of fixed rate loans. Our $130.0 million, 6.9% fixed rate
term note allows us to minimize our interest rate risk exposure.
Approximately 41% of our outstanding debt at December 31,
2003 was fixed-rate in nature, compared with 76% at the end of
2002, as a result of the July 2003 expiration of the previously
existing interest rate protection which historically fixed
$83.0 million of the $108.0 million term loan at 7.3%. The
weighted average interest rate of our variable rate debt and
total debt as of December 31, 2003 was 4.1% and 5.2%,
respectively. The weighted average interest rate of our variable
rate debt and total debt as of December 31, 2002 was 4.5%
and 6.4%, respectively.

We review interest rate exposure continuously in
an effort to minimize the risk of interest rate fluctuations. It
is our policy to manage our exposure to fluctuations in market
interest rates on our borrowings through the use of fixed rate
debt instruments, to the extent that reasonably favorable rates
are obtainable with such arrangements, and after considering the
need for financial flexibility related to our debt arrangements.
We may enter into forward interest rate agreements, or similar
agreements, to hedge our variable rate debt instruments where we
believe the risk of adverse changes in market rates is
significant. Under a forward interest rate agreement, if the
referenced interest rate increases, we would be entitled to a
receipt in settlement of the agreement that economically would
offset the higher financing cost of the debt issued. If the
referenced interest rate decreases, we would make payments in
settlement of the agreement, creating an expense that
economically would offset the reduced financing cost of the debt
issued. As of December 31, 2003, we do not have any
material market-sensitive financial instruments.

We do not believe that changes in market interest
rates will have a material impact on the performance or fair
value of our hotel portfolio as the value of our hotel portfolio
is based primarily on the operating cash flow of the hotels,
before interest expense charges. However, a change of 1/4% in
the index rate to which our variable rate debt is tied would
change our annual interest incurred by $0.4 million, based
upon the balances outstanding on our variable rate instruments
at December 31, 2003.

Using sensitivity analysis to measure the
potential change in fair value of financial instruments based on
changes in interest rates, we have determined that a
hypothetical increase of 1% in the interest rates for
instruments with similar maturities would decrease the fair
market value of our fixed rate debt by $4.4 million as
compared with the fair market value at December 31, 2003,
which approximated the carrying value.



|        |                                                            
|------- | -----------------------------------------------------------
|Item 8. | Consolidated Financial Statements and
    Supplemental Data

See Index to the Financial Statements on page F-1.



|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants
    on Accounting and Financial Disclosure

Effective April 17, 2002, the Board of
Directors dismissed Arthur Andersen, LLP (Andersen)
as the Companys independent accountant. The Audit
Committee of the Board of Directors did not consider the
recommendation to change accountants because the change was
considered and approved by the entire Board of Directors. On
April 17, 2002, Deloitte & Touche LLP
(Deloitte) was engaged as the Companys new
independent accountant.

The reports of Andersen on the Companys
financial statements for the two fiscal years ended
December 31, 2001 and 2000 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope, or accounting
principles.

In connection with the audits of the
Companys financial statements for each of the two fiscal
years ended December 31, 2001, there were no disagreements
with Andersen on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope and
procedures which, if not resolved to the satisfaction of
Andersen would have caused Andersen to make reference to the
matter in its report; and there were

33



---



##### Table of Contents



no reportable events as defined in
Item 304(a)(1)(v) of Securities and Exchange Commission
Regulation S-K. Attached as Exhibit 16.1 to the
Companys Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 22, 2002 is a copy
of Andersens letter, dated April 19, 2002, stating
that it agrees with the above statements.


During the two fiscal years ended
December 31, 2001 and their subsequent interim period
through April 22, 2002, neither the Company nor anyone on
behalf of the Company consulted with Deloitte regarding either
the application of accounting principles to a specified
transaction, either completed or proposed; or the type of audit
opinion that might be rendered on the Companys financial
statements; or on any matter considered important by the Company
in reaching a decision as to any accounting, auditing or
financial reporting issue or any matter that was either the
subject of a disagreement as defined in
Item 304(a)(1)(v)(iv) of Regulation S-K, or any
reportable event, as defined in Item 304(a)(1)(v) of
Regulation S-K.

Item 9A.     Controls
and Procedures

(a) Evaluation
of Disclosure Controls and Procedures

An evaluation was performed under the supervision
and with the participation of the principal executive and
financial officers with regard to the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14(c) and 15d-14). Based upon their evaluation as
of a date within 90 days of the filing date of this annual
report, they have concluded that our disclosure controls and
procedures were adequate and effective.

(b) Changes
in Internal Controls

There have not been any significant changes
within our internal controls or in other factors that could
significantly affect the controls subsequent to the date of
their evaluation.




PART III



|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | Directors and Executive Officers of the
    Registrant

The information required by this Item 10 is
incorporated by reference to the information under the headings
Election of Directors and Section 16(a)
Beneficial Ownership Reporting Compliance contained in
Boykins Proxy Statement in connection with its Annual
Meeting of Shareholders to be held on May 20, 2004, and the
information under the headings Executive Officers
and Corporate Governance in Part I of this Annual
Report on Form 10-K.



|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

The information required by this Item 11 is
incorporated by reference to the information under the heading
Executive Compensation contained in Boykins
Proxy Statement in connection with its Annual Meeting of
Shareholders to be held on May 20, 2004.



|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management

The information required by this Item 12,
other than the information required by Item 201(d) of
Regulation S-K is incorporated by reference to the
information under the heading Security Ownership of
Certain Beneficial Owners and Management contained in
Boykins Proxy Statement in connection with its Annual
Meeting of Shareholders to be held on May 20, 2004. The
information required by Item 201(d) of Regulation S-K
is set forth in section (d) of Item 5 of this Annual
Report on Form 10-K.

34



---



##### Table of Contents





|         |                                                   
|-------- | --------------------------------------------------
|Item 13. | Certain Relationships and Related
    Transactions

The information required by this Item 13 is
incorporated by reference to the information under the heading
Certain Relationships and Related Transactions
contained in Boykins Proxy Statement in connection with
its Annual Meeting of Shareholders to be held on May 20,
2004.



|         |                                           
|-------- | ------------------------------------------
|Item 14. | Principal Accountant Fees and
    Services

The information required by this Item 14 is
incorporated by reference to the information under the heading
Principal Accountant Fees and Services contained in
Boykins Proxy Statement in connection with its Annual
Meeting of Shareholders to be held on May 20, 2004.




PART IV



|         |                                                                     
|-------- | --------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules, and
    Reports on Form 8-K

(a) See page F-1 for an index to financial
statements and required schedules. All other financial statement
schedules within the provisions of Regulation S-X that are
not listed in the index are either not required to be included
under the related instructions or are not applicable or the
appropriate information is included in the notes to the
consolidated financial statements and therefore, have been
omitted.

|         |       |     |  |                                                                                                                                                                   
|-------- | ----- | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |       |    
|         |       |    
|         | 3.1   | (a) |  | Amended and Restated Articles of Incorporation,
    as amended                                                                                                    
|         | 3.2   | (b) |  | Code of Regulations                                                                                                                                               
|         | 4.1   | (b) |  | Specimen Share Certificate                                                                                                                                        
|         | 4.2   | (a) |  | Dividend Reinvestment and Optional Share Purchase
    Plan                                                                                                        
|         | 4.3   | (d) |  | Shareholder Rights Agreement, dated as of
    May 25, 1999 between Boykin Lodging Company and National
    City Bank as rights agent                              
|         | 4.3a  | (g) |  | Amendment to Shareholder Rights Agreement, dated
    as of December 31, 2001                                                                                      
|         | 10.1  | (i) |  | Third Amended and Restated Agreement of Limited
    Partnership of Boykin Hotel Properties, L.P.                                                                  
|         | 10.2  | (b) |  | Form of Registration Rights Agreement                                                                                                                             
|         | 10.3  | (b) |  | Long-Term Incentive Plan*                                                                                                                                         
|         | 10.4  | (b) |  | Directors Deferred Compensation Plan*                                                                                                                            
|         | 10.5  | (b) |  | Employment Agreement between the Company and
    Robert W. Boykin*                                                                                                
|         | 10.6  | (b) |  | Form of Percentage Lease                                                                                                                                          
|         | 10.7  | (b) |  | Intercompany Convertible Note                                                                                                                                     
|         | 10.8  | (b) |  | Agreements with General Partners of the
    Contributed Partnerships                                                                                              
|         | 10.9  | (b) |  | Form of Noncompetition Agreement                                                                                                                                  
|         | 10.10 | (b) |  | Alignment of Interests Agreement                                                                                                                                  
|         | 10.11 | (c) |  | Description of Employment Arrangement between the
    Company and Richard C. Conti*                                                                               
|         | 10.12 | (d) |  | Limited Liability Company Agreement of Boykin/
    AEW LLC dated as of February 1, 1999                                                                           
|         | 10.13 | (e) |  | Stock Purchase Option Agreement by and among
    Boykin Lodging Company, Boykin Hotel Properties, L.P. and AEW
    Partners III, L.P. dated as of February 1, 1999
|         | 10.14 | (e) |  | Warrant to Purchase Class A Cumulative
    Preferred Stock, Series 1999-A of Boykin Lodging Company
    dated as of February 1, 1999                              
|         | 10.15 | (e) |  | Registration Rights Agreement by and among Boykin
    Lodging Company and AEW Partners III, L.P. dated as of
    February 1, 1999                                 
|         | 10.16 | (f) |  | Key Employee Severance Plan*                                                                                                                                      
|         | 10.17 | (f) |  | Form of Severance Agreement*                                                                                                                                      

35



---



##### Table of Contents



|         |       |     |  |                                                                                                                               
|-------- | ----- | --- |  | ------------------------------------------------------------------------------------------------------------------------------
|Exhibits |       |    
|         |       |    
|         | 10.18 | (g) |  | Master Contribution Agreement between BMC, JABO
    LLC, the Company and the Partnership dated as of
    December 31, 2001    
|         | 10.19 | (g) |  | Form of Hotel Management Agreement*                                                                                           
|         | 10.20 | (g) |  | Registration Rights Agreement between the Company
    and JABO LLC dated January 1, 2002                                      
|         | 10.21 | (j) |  | Description of Employment Arrangement between the
    Company and Shereen P. Jones*                                           
|         | 12    |     |  | Statement re Computation of Ratios                                                                                            
|         | 16.1  | (h) |  | Letter of Arthur Andersen LLP required by
    Item 304 of Regulation S-K                                                      
|         | 21    |     |  | Subsidiaries of the Registrant                                                                                                
|         | 23.1  |     |  | Independent Auditors Consent                                                                                                 
|         | 31.1  |     |  | Certification pursuant to Rule 13a-14(a)                                                                                      
|         | 31.2  |     |  | Certification pursuant to Rule 13a-14(a)                                                                                      
|         | 32.1  |     |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002
|         | 32.2  |     |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002



|    |                                                                                           
|--- | ------------------------------------------------------------------------------------------
|(a) | Incorporated by reference from Boykins
    Form 10-Q for the quarter ended June 30, 1999.



|    |                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Incorporated by reference from Amendment
    No. 3 to Boykins Registration Statement on
    Form S-11 (Registration No. 333-6341) (the
    Form S-11) filed on October 24, 1996. Each
    of the above exhibits has the same exhibit number in the
    Form S-11.



|    |                                                                                           
|--- | ------------------------------------------------------------------------------------------
|(c) | Incorporated by reference from Boykins
    Form 10-Q for the quarter ended June 30, 1998.



|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|(d) | Incorporated by reference from Boykins
    Form 10-Q for the quarter ended March 31, 1999.



|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|(e) | Incorporated by reference from Boykins
    Form 10-Q for the quarter ended March 31, 1999.



|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|(f) | Incorporated by reference from Boykins
    Form 10-K for the year ended December 31, 1999.



|    |                                                                                
|--- | -------------------------------------------------------------------------------
|(g) | Incorporated by reference from Boykins
    Form 8-K filed on January 14, 2002.
|   
|(h) | Incorporated by reference from Boykins
    Form 8-K filed on April 22, 2002.  



|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|(i) | Incorporated by reference from Boykins
    Form 8-K filed on October 4, 2002.             
|   
|(j) | Incorporated by reference from Boykins
    Form 10-K for the year ended December 31, 2002.



|  |                                                             
|- | ------------------------------------------------------------
|* | Management contract or compensatory plan or
    arrangement.

(b) Reports on Form 8-K

During the quarter ended December 31, 2003,
Boykin filed the following reports on Form 8-K:

|                  |  |       |  |                                                                                        
|----------------- |  | ----- |  | ---------------------------------------------------------------------------------------
|Date              |  | Form  |  | Items Reported On                                                                      
|                  |  |       |  |                                                                                        
|November 7, 2003  |  | 8-K/A |  | Item 2  Acquisition or
    Disposition of Assets                                      
|                  |  |       |  | Item 7  Financial Statements,
    Proforma Financial Information and Exhibits         
|                  |  |       |  | Furnished required information regarding
    acquisition of Radisson Suite Beach Resort
|November 10, 2003 |  | 8-K   |  | Item 7  Financial Statement and
    Exhibits                                          
|                  |  |       |  | Item 12  Results of Operations
    and Financial Condition                            
|                  |  |       |  | Furnished the Companys third quarter 2003
    earnings release                        

36



---



##### Table of Contents



INDEX TO FINANCIAL STATEMENTS

|                                                                                                                                             |  |  |      | 
|-------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|BOYKIN LODGING COMPANY:                                                                                                                      |  |  |      | 
|Independent Auditors Report                                                                                                                 |  |  | F-2  | 
|Consolidated Balance Sheets as of
    December 31, 2003 and 2002                                                                             |  |  | F-3  | 
|Consolidated Statements of Operations for the
    Years Ended December 31, 2003, 2002 and 2001                                               |  |  | F-4  | 
|Consolidated Statements of Shareholders
    Equity and Comprehensive Income (Loss) for the Years Ended
    December 31, 2003, 2002 and 2001 |  |  | F-5  | 
|Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2003, 2002 and 2001                                               |  |  | F-6  | 
|Notes to Consolidated Financial Statements                                                                                                   |  |  | F-7  | 
|Schedule III  Real Estate and
    Accumulated Depreciation as of December 31, 2003                                                          |  |  | F-32 | 
|                                                                                                                                            
|BOYKIN/ AEW, LLC AND SUBSIDIARIES:                                                                                                           |  |  |      | 
|Independent Auditors Report                                                                                                                 |  |  | F-34 | 
|Consolidated Balance Sheets as of
    December 31, 2003 and 2002                                                                             |  |  | F-35 | 
|Consolidated Statements of Operations for the
    Years Ended December 31, 2003, 2002 and 2001 (unaudited)                                   |  |  | F-36 | 
|Consolidated Statements of Members Equity
    for the Years Ended December 31, 2003, 2002 and 2001
    (unaudited)                          |  |  | F-37 | 
|Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2003, 2002 and 2001 (unaudited)                                   |  |  | F-38 | 
|Notes to Consolidated Financial Statements                                                                                                   |  |  | F-39 | 
|Schedule III  Real Estate and
    Accumulated Depreciation as of December 31, 2003                                                          |  |  | F-44 | 

F-1



---



##### Table of Contents



INDEPENDENT AUDITORS REPORT

We have audited the accompanying consolidated
balance sheets of Boykin Lodging Company (an Ohio corporation)
and subsidiaries (the Company) as of December 31,
2003 and 2002 and the related consolidated statements of
operations, shareholders equity and cash flows for each of
the three years in the period ended December 31, 2003. Our
audits also included the financial statement schedule listed in
the Index to the financial statements. These financial
statements and financial statement schedule are the
responsibility of the Companys management. Our
responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such consolidated financial
statements present fairly, in all material respects, the
financial position of Boykin Lodging Company and subsidiaries as
of December 31, 2003 and 2002 and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2003, in conformity with
accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

As discussed in Note 2 to the consolidated
financial statements, effective January 1, 2001, the
Company changed its method of accounting for derivative
financial statements. As discussed in Note 2 to the consolidated
financial statements, effective January 1, 2002, the
Company adopted Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.

/s/ Deloitte & Touche LLP

Cleveland, Ohio


March 25, 2004


F-2



---



##### Table of Contents



BOYKIN LODGING COMPANY

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2003 AND 2002

(dollar amounts in thousands)

|                                                                                                                                    |                                                                                                                                                                                           |                            |         |          |         |   |         |          |         | 
|----------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | -------- | ------- | - | ------- | -------- | ------- | 
|                                                                                                                                    |                                                                                                                                                                                           | 2003                       |         | 2002    
|                                                                                                                                    |                                                                                                                                                                                           |                            |         |         
|ASSETS                                                                                                                              |                                                                                                                                                                                           |                            |         |          |         |   |         |         
|Investment in hotel properties                                                                                                      |                                                                                                                                                                                           | $                          | 642,440 |          |         | $ | 588,432 |         
|                                                                                                                                    | Accumulated depreciation                                                                                                                                                                  |                            |         | (151,715 | )       |   |         | (124,990 | )      
|                                                                                                                                    |                                                                                                                                                                                           |                            |         |          |         |   |         |         
|Investment in hotel properties, net                                                                                                 |                                                                                                                                                                                           |                            | 490,725 |          |         |   | 463,442 |         
|Cash and cash equivalents                                                                                                           |                                                                                                                                                                                           |                            | 14,013  |          |         |   | 25,453  |         
|Restricted cash                                                                                                                     |                                                                                                                                                                                           |                            | 15,365  |          |         |   | 13,514  |         
|Accounts receivable, net of allowance for
    doubtful accounts of $152 and $406 as of December 31, 2003
    and 2002, respectively |                                                                                                                                                                                           |                            | 40,867  |          |         |   | 8,757   |         
|Receivable from related party related to lease
    terminations                                                                     |                                                                                                                                                                                           |                            |        |          |         |   | 6       |         
|Rent receivable from lessees                                                                                                        |                                                                                                                                                                                           |                            | 254     |          |         |   | 154     |         
|Inventories                                                                                                                         |                                                                                                                                                                                           |                            | 1,820   |          |         |   | 1,990   |         
|Deferred financing costs and other, net                                                                                             |                                                                                                                                                                                           |                            | 3,106   |          |         |   | 2,919   |         
|Investment in unconsolidated joint ventures                                                                                         |                                                                                                                                                                                           |                            | 16,158  |          |         |   | 17,156  |         
|Other assets                                                                                                                        |                                                                                                                                                                                           |                            | 8,984   |          |         |   | 12,707  |         
|Assets related to discontinued operations, net                                                                                      |                                                                                                                                                                                           |                            |        |          |         |   | 29,433  |         
|                                                                                                                                    |                                                                                                                                                                                           |                            |         |          |         |   |         |         
|                                                                                                                                    |                                                                                                                                                                                           | $                          | 591,292 |          |         | $ | 575,531 |         
|                                                                                                                                    |                                                                                                                                                                                           |                            |         |          |         |   |         |         
|LIABILITIES AND SHAREHOLDERS
    EQUITY                                                                                            |                                                                                                                                                                                           |                            |         |          |         |   |         |         
|Borrowings against credit facility                                                                                                  |                                                                                                                                                                                           | $                          | 71,945  |          |         | $ |        |         
|Term notes payable                                                                                                                  |                                                                                                                                                                                           |                            | 226,944 |          |         |   | 257,952 |         
|Accounts payable and accrued expenses                                                                                               |                                                                                                                                                                                           |                            | 45,847  |          |         |   | 36,098  |         
|Accounts payable to related party                                                                                                   |                                                                                                                                                                                           |                            | 991     |          |         |   | 678     |         
|Dividends/distributions payable                                                                                                     |                                                                                                                                                                                           |                            | 1,188   |          |         |   | 4,747   |         
|Due to lessees                                                                                                                      |                                                                                                                                                                                           |                            | 164     |          |         |   | 281     |         
|Minority interest in joint ventures                                                                                                 |                                                                                                                                                                                           |                            | 1,177   |          |         |   | 2,419   |         
|Minority interest in operating partnership                                                                                          |                                                                                                                                                                                           |                            | 11,495  |          |         |   | 14,202  |         
|Liabilities related to discontinued operations                                                                                      |                                                                                                                                                                                           |                            |        |          |         |   | 18,863  |         
|                                                                                                                                   
|SHAREHOLDERS EQUITY:                                                                                                               |                                                                                                                                                                                           |                            |         |          |         |   |         |         
|                                                                                                                                    | Preferred shares, without par value; 10,000,000
    shares authorized; 181,000 shares issued and outstanding as of
    December 31, 2003 and 2002 (liquidation preference of
    $45,250) |                            |         |         |         |   |         |         |        
|                                                                                                                                    | Common shares, without par value; 40,000,000
    shares authorized; 17,344,380 and 17,276,407 shares outstanding
    at December 31, 2003 and 2002, respectively                          |                            |         |         |         |   |         |         |        
|                                                                                                                                    | Additional paid-in capital                                                                                                                                                                |                            |         | 357,290  |         |   |         | 356,228  |        
|                                                                                                                                    | Distributions in excess of income                                                                                                                                                         |                            |         | (124,321 | )       |   |         | (112,970 | )      
|                                                                                                                                    | Other comprehensive loss                                                                                                                                                                  |                            |         |         |         |   |         | (1,773   | )      
|                                                                                                                                    | Unearned compensation  restricted
    shares                                                                                                                                             |                            |         | (1,428   | )       |   |         | (1,194   | )      
|                                                                                                                                    |                                                                                                                                                                                           |                            |         |          |         |   |         |         
|                                                                                                                                    |                                                                                                                                                                                           | Total shareholders equity |         |          | 231,541 |   |         |          | 240,291 | 
|                                                                                                                                    |                                                                                                                                                                                           |                            |         |          |         |   |         |         
|                                                                                                                                    |                                                                                                                                                                                           | $                          | 591,292 |          |         | $ | 575,531 |         
|                                                                                                                                    |                                                                                                                                                                                           |                            |         |          |         |   |         |         

See notes to consolidated financial statements.

F-3



---



##### Table of Contents



BOYKIN LODGING COMPANY

CONSOLIDATED STATEMENTS OF
OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002
AND 2001

(amounts in thousands, except for per share
data)

|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |         |        |  
|----------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | ------ | ------- | ------- | ---- | ------ | ------- | ------- | - | ------- | ------- | ------ | -
|                                                                                                                                                      |                                                                                                                                                                                                         | 2003                             |        | 2002    |         | 2001
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |     
|Revenues:                                                                                                                                             |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Hotel revenues:                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |         |       
|                                                                                                                                                      |                                                                                                                                                                                                         | Rooms                            |        | $       | 145,820 |      |        | $       | 148,043 |   |         | $       | 4,315  |  
|                                                                                                                                                      |                                                                                                                                                                                                         | Food and beverage                |        |         | 71,665  |      |        |         | 71,114  |   |         |         | 2,051  |  
|                                                                                                                                                      |                                                                                                                                                                                                         | Other                            |        |         | 12,836  |      |        |         | 12,907  |   |         |         | 297    |  
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Total hotel revenues                                                                                                                                                                                    |                                  |        | 230,321 |         |      |        | 232,064 |         |   |         | 6,663   |       
|                                                                                                                                                      | Lease revenue from related party                                                                                                                                                                        |                                  |        |        |         |      |        |        |         |   |         | 54,371  |       
|                                                                                                                                                      | Other lease revenue                                                                                                                                                                                     |                                  |        | 1,958   |         |      |        | 4,730   |         |   |         | 11,747  |       
|                                                                                                                                                      | Revenues from condominium development and unit
    sales                                                                                                                                                |                                  |        | 36,883  |         |      |        | 8,715   |         |   |         |        |       
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      |                                                                                                                                                                                                         | Total revenues                   |        |         | 269,162 |      |        |         | 245,509 |   |         |         | 72,781 |  
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|Expenses:                                                                                                                                             |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Hotel operating expenses:                                                                                                                                                                               |                                  |        |         |         |      |        |         |         |   |         |         |       
|                                                                                                                                                      |                                                                                                                                                                                                         | Rooms                            |        |         | 37,133  |      |        |         | 36,350  |   |         |         | 1,121  |  
|                                                                                                                                                      |                                                                                                                                                                                                         | Food and beverage                |        |         | 50,268  |      |        |         | 49,476  |   |         |         | 1,422  |  
|                                                                                                                                                      |                                                                                                                                                                                                         | Other direct                     |        |         | 8,201   |      |        |         | 8,120   |   |         |         | 157    |  
|                                                                                                                                                      |                                                                                                                                                                                                         | Indirect                         |        |         | 73,960  |      |        |         | 67,399  |   |         |         | 2,511  |  
|                                                                                                                                                      |                                                                                                                                                                                                         | Management fees to related party |        |         | 4,746   |      |        |         | 3,973   |   |         |         | 200    |  
|                                                                                                                                                      |                                                                                                                                                                                                         | Management fees  other          |        |         | 1,364   |      |        |         | 2,770   |   |         |         |       |  
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Total hotel operating expenses                                                                                                                                                                          |                                  |        | 175,672 |         |      |        | 168,088 |         |   |         | 5,411   |       
|                                                                                                                                                      | Property taxes, insurance and other                                                                                                                                                                     |                                  |        | 15,758  |         |      |        | 14,853  |         |   |         | 10,137  |       
|                                                                                                                                                      | Cost of condominium development and unit sales                                                                                                                                                          |                                  |        | 24,645  |         |      |        | 6,474   |         |   |         |        |       
|                                                                                                                                                      | Real estate related depreciation and amortization                                                                                                                                                       |                                  |        | 31,090  |         |      |        | 28,318  |         |   |         | 26,714  |       
|                                                                                                                                                      | Corporate general and administrative                                                                                                                                                                    |                                  |        | 7,769   |         |      |        | 6,669   |         |   |         | 6,183   |       
|                                                                                                                                                      | Impairment of real estate                                                                                                                                                                               |                                  |        | 2,800   |         |      |        |        |         |   |         | 17,898  |       
|                                                                                                                                                      | Costs associated with termination of leases                                                                                                                                                             |                                  |        |        |         |      |        |        |         |   |         | 2,006   |       
|                                                                                                                                                      | Related party costs associated with termination
    of leases                                                                                                                                           |                                  |        |        |         |      |        |        |         |   |         | 12,994  |       
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      |                                                                                                                                                                                                         | Total operating expenses         |        |         | 257,734 |      |        |         | 224,402 |   |         |         | 81,343 |  
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      |                                                                                                                                                                                                         | Operating income (loss)          |        |         | 11,428  |      |        |         | 21,107  |   |         |         | (8,562 | )
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Interest income                                                                                                                                                                                         |                                  |        | 226     |         |      |        | 357     |         |   |         | 409     |       
|                                                                                                                                                      | Other income                                                                                                                                                                                            |                                  |        | 392     |         |      |        | 966     |         |   |         | 869     |       
|                                                                                                                                                      | Interest expense                                                                                                                                                                                        |                                  |        | (16,089 | )       |      |        | (19,296 | )       |   |         | (20,805 | )     
|                                                                                                                                                      | Amortization of deferred financing costs                                                                                                                                                                |                                  |        | (1,927  | )       |      |        | (2,125  | )       |   |         | (1,149  | )     
|                                                                                                                                                      | Minority interest in (earnings) loss of
    joint ventures                                                                                                                                              |                                  |        | 1,102   |         |      |        | (133    | )       |   |         | 193     |       
|                                                                                                                                                      | Minority interest in loss of operating partnership                                                                                                                                                      |                                  |        | 2,005   |         |      |        | 666     |         |   |         | 2,509   |       
|                                                                                                                                                      | Equity in income (loss) of unconsolidated
    joint ventures                                                                                                                                            |                                  |        | (870    | )       |      |        | (2,040  | )       |   |         | 589     |       
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|Loss before gain (loss) on sale/disposal of
    assets, discontinued operations and cumulative effect of change
    in accounting principle           |                                                                                                                                                                                                         |                                  | (3,733 | )       |         |      | (498   | )       |         |   | (25,947 | )      
|                                                                                                                                                      | Gain (loss) on sale/disposal of assets                                                                                                                                                                  |                                  |        | 1,504   |         |      |        | (18     | )       |   |         | 240     |       
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|Loss before discontinued operations and
    cumulative effect of change in accounting principle                                                       |                                                                                                                                                                                                         |                                  | (2,229 | )       |         |      | (516   | )       |         |   | (25,707 | )      
|                                                                                                                                                      | Discontinued operations:                                                                                                                                                                                |                                  |        |         |         |      |        |         |         |   |         |         |       
|                                                                                                                                                      | Operating income (loss) from discontinued
    operations, net of minority interest income (expense) of
    $328, $(26) and $297, for the years ended December 31,
    2003, 2002 and 2001, respectively |                                  |        | (1,851  | )       |      |        | 145     |         |   |         | (3,490  | )     
|                                                                                                                                                      | Gain on sale of assets, net of minority interest
    expense of $116 for the year ended December 31, 2003                                                                                               |                                  |        | 654     |         |      |        |        |         |   |         |        |       
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|Loss before cumulative effect of change in
    accounting principle                                                                                   |                                                                                                                                                                                                         |                                  | (3,426 | )       |         |      | (371   | )       |         |   | (29,197 | )      
|                                                                                                                                                      | Cumulative effect of change in accounting
    principle, net of minority interest of $32                                                                                                                |                                  |        |        |         |      |        |        |         |   |         | (373    | )     
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|Net loss                                                                                                                                              |                                                                                                                                                                                                         | $                                | (3,426 | )       |         | $    | (371   | )       |         | $ | (29,570 | )      
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Preferred dividends                                                                                                                                                                                     |                                  |        | (4,751  | )       |      |        | (1,109  | )       |   |         |        |       
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|Net loss attributable to common shareholders                                                                                                          |                                                                                                                                                                                                         | $                                | (8,177 | )       |         | $    | (1,480 | )       |         | $ | (29,570 | )      
|                                                                                                                                                      |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|Net loss per share attributable to common
    shareholders before discontinued operations and cumulative
    effect of change in accounting principle |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Basic                                                                                                                                                                                                   |                                  | $      | (0.40   | )       |      | $      | (0.09   | )       |   | $       | (1.50   | )     
|                                                                                                                                                      | Diluted                                                                                                                                                                                                 |                                  | $      | (0.40   | )       |      | $      | (0.09   | )       |   | $       | (1.50   | )     
|Discontinued operations per share                                                                                                                     |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Basic                                                                                                                                                                                                   |                                  | $      | (0.07   | )       |      | $      | 0.01    |         |   | $       | (0.20   | )     
|                                                                                                                                                      | Diluted                                                                                                                                                                                                 |                                  | $      | (0.07   | )       |      | $      | 0.01    |         |   | $       | (0.20   | )     
|Net loss per share attributable to common
    shareholders before cumulative effect of change in
    accounting principle(a)                          |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Basic                                                                                                                                                                                                   |                                  | $      | (0.47   | )       |      | $      | (0.09   | )       |   | $       | (1.70   | )     
|                                                                                                                                                      | Diluted                                                                                                                                                                                                 |                                  | $      | (0.47   | )       |      | $      | (0.09   | )       |   | $       | (1.70   | )     
|Net loss per share attributable to common
    shareholders                                                                                            |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Basic                                                                                                                                                                                                   |                                  | $      | (0.47   | )       |      | $      | (0.09   | )       |   | $       | (1.72   | )     
|                                                                                                                                                      | Diluted                                                                                                                                                                                                 |                                  | $      | (0.47   | )       |      | $      | (0.09   | )       |   | $       | (1.72   | )     
|Weighted average number of common shares
    outstanding                                                                                              |                                                                                                                                                                                                         |                                  |        |         |         |      |        |         |         |   |         |        
|                                                                                                                                                      | Basic                                                                                                                                                                                                   |                                  |        | 17,336  |         |      |        | 17,248  |         |   |         | 17,176  |       
|                                                                                                                                                      | Diluted                                                                                                                                                                                                 |                                  |        | 17,470  |         |      |        | 17,383  |         |   |         | 17,281  |       



---

|    |                                              
|--- | ---------------------------------------------
|(a) | Per share amounts may not add due to rounding

See notes to consolidated financial statements.

F-4



---



##### Table of Contents



BOYKIN LODGING COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY

AND COMPREHENSIVE INCOME (LOSS)


FOR THE YEARS ENDED DECEMBER 31, 2003, 2002,
AND 2001

(dollar amounts in thousands)

|                             |                                                                      |                                                                            |         |         |   |            |            |               |   |               |         |              |   |       |          |         |        |   |        |   |        |   |        |      |   |   |         |         |        |  
|---------------------------- | -------------------------------------------------------------------- | -------------------------------------------------------------------------- | ------- | ------- | - | ---------- | ---------- | ------------- | - | ------------- | ------- | ------------ | - | ----- | -------- | ------- | ------ | - | ------ | - | ------ | - | ------ | ---- | - | - | ------- | ------- | ------ | -
|                             |                                                                      |                                                                            |         |         |   | Additional |            | Distributions |   | Other         |         |              |   |      
|                             |                                                                      | Preferred                                                                  |         | Common  |   | Paid-In    |            | In Excess of  |   | Comprehensive |         | Unearned     |   |      
|                             |                                                                      | Shares                                                                     |         | Shares  |   | Capital    |            | Income        |   | Gain/(Loss)   |         | Compensation |   | Total
|                             |                                                                      |                                                                            |         |         |   |            |            |               |   |               |         |              |   |      
|Balance at January 1, 2001   |                                                                      |                                                                            |        |         |   |            | 17,146,938 |               |   | $             | 311,493 |              |   | $     | (56,593  | )       |        | $ |       |   |        | $ | (1,634 | )    |   | $ | 253,266 |        
|                             | Issuance of common shares, net of offering
    expenses of $6        |                                                                            |         |        |   |            |            | 45,016        |   |               |         | 678          |   |       |          |        |        |   |        |  |        |   |        | (449 | ) |   |         | 229     |       
|                             | Dividends declared  $1.10 per
    common share                      |                                                                            |         |        |   |            |            |              |   |               |         |             |   |       |          | (19,030 | )      |   |        |  |        |   |        |     |   |   |         | (19,030 | )     
|                             | Amortization of unearned compensation                                |                                                                            |         |        |   |            |            |              |   |               |         |             |   |       |          |        |        |   |        |  |        |   |        | 589  |   |   |         | 589     |       
|                             | Net loss                                                             |                                                                            |         |        |   |            |            |              |   |               |         |             |   |       |          | (29,570 | )      |   |        |  |        |   |        |     |   |   |         | (29,570 | )     
|                             |                                                                      | Other comprehensive loss  net
    unrealized loss on interest rate swap   |         |         |  |            |            |               |  |               |         |              |  |       |          |         |       |   |        |   | (2,838 | ) |        |      |  |   |         |         | (2,838 | )
|                             |                                                                      |                                                                            |         |         |   |            |            |               |   |               |         |              |   |       |          |         |        |   |        |   |        |   |        |      |   |   |         |        
|Total comprehensive loss     |                                                                      |                                                                            |        |         |   |            |           |               |   |               |        |              |   |       |         |         |        |   |       |   |        |   |       |      |   |   | (32,408 | )      
|                             |                                                                      |                                                                            |         |         |   |            |            |               |   |               |         |              |   |       |          |         |        |   |        |   |        |   |        |      |   |   |         |        
|Balance at December 31, 2001 |                                                                      |                                                                            |        |         |   |            | 17,191,954 |               |   |               | 312,171 |              |   |       | (105,193 | )       |        |   | (2,838 | ) |        |   | (1,494 | )    |   |   | 202,646 |        
|                             | Issuance of common shares, net of offering
    expenses of $3        |                                                                            |         |        |   |            |            | 104,461       |   |               |         | 1,126        |   |       |          |        |        |   |        |  |        |   |        | (692 | ) |   |         | 434     |       
|                             | Issuance of preferred shares, net of offering
    expenses of $2,016 |                                                                            |         | 181,000 |   |            |            |              |   |               |         | 43,234       |   |       |          |        |        |   |        |  |        |   |        |     |   |   |         | 43,234  |       
|                             | Common share purchases for treasury                                  |                                                                            |         |        |   |            |            | (20,008       | ) |               |         | (303         | ) |       |          |        |        |   |        |  |        |   |        |     |   |   |         | (303    | )     
|                             | Dividends declared                                                   |                                                                            |         |         |   |            |            |               |   |               |         |              |   |       |          |         |        |   |        |   |        |   |        |      |   |   |         |         |       
|                             |                                                                      |  $0.36 per common share                                                   |         |         |  |            |            |               |  |               |         |              |  |       |          |         | (6,297 | ) |        |   |       |   |        |      |  |   |         |         | (6,297 | )
|                             |                                                                      |  $6.125 per Class A preferred
    share                                   |         |         |  |            |            |               |  |               |         |              |  |       |          |         | (1,109 | ) |        |   |       |   |        |      |  |   |         |         | (1,109 | )
|                             | Amortization of unearned compensation                                |                                                                            |         |        |   |            |            |              |   |               |         |             |   |       |          |        |        |   |        |  |        |   |        | 992  |   |   |         | 992     |       
|                             | Net loss                                                             |                                                                            |         |        |   |            |            |              |   |               |         |             |   |       |          | (371    | )      |   |        |  |        |   |        |     |   |   |         | (371    | )     
|                             |                                                                      | Other comprehensive income  net
    unrealized gain on interest rate swap |         |         |  |            |            |               |  |               |         |              |  |       |          |         |       |   |        |   | 1,065  |   |        |      |  |   |         |         | 1,065  |  
|                             |                                                                      |                                                                            |         |         |   |            |            |               |   |               |         |              |   |       |          |         |        |   |        |   |        |   |        |      |   |   |         |        
|                             | Total comprehensive income                                           |                                                                            |         |        |   |            |            |              |   |               |         |             |   |       |          |        |        |   |        |  |        |   |        |     |   |   |         | 694     |       
|                             |                                                                      |                                                                            |         |         |   |            |            |               |   |               |         |              |   |       |          |         |        |   |        |   |        |   |        |      |   |   |         |        
|Balance at December 31, 2002 |                                                                      |                                                                            | 181,000 |         |   |            | 17,276,407 |               |   |               | 356,228 |              |   |       | (112,970 | )       |        |   | (1,773 | ) |        |   | (1,194 | )    |   |   | 240,291 |        
|                             | Issuance of common shares, net of offering
    expenses of $4        |                                                                            |         |        |   |            |            | 77,528        |   |               |         | 1,143        |   |       |          |        |        |   |        |  |        |   |        | (990 | ) |   |         | 153     |       
|                             | Common share purchases for treasury                                  |                                                                            |         |        |   |            |            | (9,555        | ) |               |         | (81          | ) |       |          |        |        |   |        |  |        |   |        |     |   |   |         | (81     | )     
|                             | Dividends declared                                                   |                                                                            |         |         |   |            |            |               |   |               |         |              |   |       |          |         |        |   |        |   |        |   |        |      |   |   |         |         |       
|                             |                                                                      |  $0.18 per common share                                                   |         |         |  |            |            |               |  |               |         |              |  |       |          |         | (3,174 | ) |        |   |       |   |        |      |  |   |         |         | (3,174 | )
|                             |                                                                      |  $26.25 per Class A preferred
    share                                   |         |         |  |            |            |               |  |               |         |              |  |       |          |         | (4,751 | ) |        |   |       |   |        |      |  |   |         |         | (4,751 | )
|                             | Amortization of unearned compensation                                |                                                                            |         |        |   |            |            |              |   |               |         |             |   |       |          |        |        |   |        |  |        |   |        | 756  |   |   |         | 756     |       
|                             | Net loss                                                             |                                                                            |         |        |   |            |            |              |   |               |         |             |   |       |          | (3,426  | )      |   |        |  |        |   |        |     |   |   |         | (3,426  | )     
|                             |                                                                      | Other comprehensive income  net
    unrealized gain on interest rate swap |         |         |  |            |            |               |  |               |         |              |  |       |          |         |       |   |        |   | 1,773  |   |        |      |  |   |         |         | 1,773  |  
|                             |                                                                      |                                                                            |         |         |   |            |            |               |   |               |         |              |   |       |          |         |        |   |        |   |        |   |        |      |   |   |         |        
|                             | Total comprehensive loss                                             |                                                                            |         |        |   |            |            |              |   |               |         |             |   |       |          |        |        |   |        |  |        |   |        |     |   |   |         | (1,653  | )     
|                             |                                                                      |                                                                            |         |         |   |            |            |               |   |               |         |              |   |       |          |         |        |   |        |   |        |   |        |      |   |   |         |        
|Balance at December 31, 2003 |                                                                      |                                                                            | 181,000 |         |   |            | 17,344,380 |               |   | $             | 357,290 |              |   | $     | (124,321 | )       |        | $ |       |   |        | $ | (1,428 | )    |   | $ | 231,541 |        
|                             |                                                                      |                                                                            |         |         |   |            |            |               |   |               |         |              |   |       |          |         |        |   |        |   |        |   |        |      |   |   |         |        

See notes to consolidated financial statements.

F-5



---



##### Table of Contents



BOYKIN LODGING COMPANY

CONSOLIDATED STATEMENTS OF CASH
FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002
AND 2001

(dollar amounts in thousands)

|                                                             |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |         |        |        |  
|------------------------------------------------------------ | ----------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------------------------------------- | ------- | ------ | ------- | ------- | ------- | ------ | ------ | ------- | ------- | ------ | ------ | -
|                                                             |                                                                                           | 2003                                                         |                                       | 2002    |        | 2001   
|                                                             |                                                                                           |                                                              |                                       |         |        |        
|Cash flows from operating activities:                        |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        
|                                                             | Net loss                                                                                  |                                                              | $                                     | (3,426  | )      |         | $       | (371    | )      |        | $       | (29,570 | )     
|                                                             | Adjustments to reconcile net loss to net cash
    flow provided by operating activities  |                                                              |                                       |         |        |         |         |         |        |        |         |         |       
|                                                             |                                                                                           | Cumulative effect of change in accounting
    principle      |                                       |         |       |         |         |         |       |        |         |         | 373    |       
|                                                             |                                                                                           | (Gain) loss on sale/disposal of assets                       |                                       |         | (2,274 | )       |         |         | 18     |        |         |         | (240   | )     
|                                                             |                                                                                           | Non-cash charges associated with termination of
    leases   |                                       |         |       |         |         |         |       |        |         |         | 11,394 |       
|                                                             |                                                                                           | Impairment of real estate                                    |                                       |         | 2,800  |         |         |         |       |        |         |         | 24,000 |       
|                                                             |                                                                                           | Depreciation and amortization                                |                                       |         | 33,822 |         |         |         | 32,356 |        |         |         | 29,679 |       
|                                                             |                                                                                           | Amortization of unearned compensation                        |                                       |         | 756    |         |         |         | 992    |        |         |         | 589    |       
|                                                             |                                                                                           | Equity in (income) loss of unconsolidated
    joint ventures |                                       |         | 870    |         |         |         | 2,040  |        |         |         | (589   | )     
|                                                             |                                                                                           | Minority interests                                           |                                       |         | (3,319 | )       |         |         | (507   | )      |         |         | (2,999 | )     
|                                                             |                                                                                           | Changes in assets and liabilities                           |                                       |         |        |         |         |         |        |        |         |         |        |       
|                                                             |                                                                                           |                                                              | Accounts receivable and inventories   |         |        | (31,083 | )       |         |        | 266    |         |         |        |       |  
|                                                             |                                                                                           |                                                              | Restricted cash                       |         |        | (1,851  | )       |         |        | (4,069 | )       |         |        | (2,389 | )
|                                                             |                                                                                           |                                                              | Accounts payable and accrued expenses |         |        | 1,902   |         |         |        | 1,321  |         |         |        | 2,868  |  
|                                                             |                                                                                           |                                                              | Amounts due to/from lessees           |         |        | (217    | )       |         |        | 3,092  |         |         |        | 1,415  |  
|                                                             |                                                                                           |                                                              | Other                                 |         |        | 4,193   |         |         |        | 4,050  |         |         |        | (488   | )
|                                                             |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        
|Net cash flow provided by operating activities               |                                                                                           |                                                              | 2,173                                 |         |        |         | 39,188  |         |        |        | 34,043  |        
|                                                             |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        
|Cash flows from investing activities:                        |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        
|                                                             | Cash assumed in connection with termination of
    leases                                 |                                                              |                                       |        |        |         |         | 5,765   |        |        |         |        |       
|                                                             | Investment in unconsolidated joint ventures                                               |                                                              |                                       | (481    | )      |         |         | (4,408  | )      |        |         | (5,510  | )     
|                                                             | Distributions received from unconsolidated
    joint ventures                             |                                                              |                                       | 572     |        |         |         | 148     |        |        |         | 1,380   |       
|                                                             | Improvements and additions to hotel properties,
    net                                   |                                                              |                                       | (54,210 | )      |         |         | (13,490 | )      |        |         | (23,042 | )     
|                                                             | Net proceeds from sale of assets                                                          |                                                              |                                       | 30,336  |        |         |         |        |        |        |         | 12,374  |       
|                                                             |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        
|Net cash flow used in investing activities                   |                                                                                           |                                                              | (23,783                               | )       |        |         | (11,985 | )       |        |        | (14,798 | )      
|                                                             |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        
|Cash flows from financing activities:                        |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        
|                                                             | Payments of dividends and distributions                                                   |                                                              |                                       | (11,485 | )      |         |         | (3,638  | )      |        |         | (27,234 | )     
|                                                             | Net borrowings (repayments) against credit
    facilities                                 |                                                              |                                       | 71,946  |        |         |         | (39,000 | )      |        |         | 9,500   |       
|                                                             | Term note borrowings                                                                      |                                                              |                                       | 13,222  |        |         |         |        |        |        |         |        |       
|                                                             | Repayment of term notes                                                                   |                                                              |                                       | (61,106 | )      |         |         | (5,144  | )      |        |         | (1,969  | )     
|                                                             | Payment of deferred financing costs                                                       |                                                              |                                       | (2,339  | )      |         |         | (830    | )      |        |         |        |       
|                                                             | Net proceeds from issuance of preferred shares                                            |                                                              |                                       |        |        |         |         | 43,234  |        |        |         |        |       
|                                                             | Net proceeds from issuance of common shares                                               |                                                              |                                       | 153     |        |         |         | 434     |        |        |         | 229     |       
|                                                             | Cash payment for common share purchases                                                   |                                                              |                                       | (81     | )      |         |         | (172    | )      |        |         |        |       
|                                                             | Distributions to joint venture minority interest
    partners, net                        |                                                              |                                       | (140    | )      |         |         | (244    | )      |        |         | (336    | )     
|                                                             |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        
|Net cash flow provided by (used in)
    financing activities |                                                                                           |                                                              | 10,170                                |         |        |         | (5,360  | )       |        |        | (19,810 | )      
|                                                             |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        
|Net change in cash and cash equivalents                      |                                                                                           | $                                                            | (11,440                               | )       |        | $       | 21,843  |         |        | $      | (565    | )      
|Cash and cash equivalents, beginning of year                 |                                                                                           |                                                              | 25,453                                |         |        |         | 3,610   |         |        |        | 4,175   |        
|                                                             |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        
|Cash and cash equivalents, end of year                       |                                                                                           | $                                                            | 14,013                                |         |        | $       | 25,453  |         |        | $      | 3,610   |        
|                                                             |                                                                                           |                                                              |                                       |         |        |         |         |         |        |        |         |        

See notes to consolidated financial statements.

F-6



---



##### Table of Contents



BOYKIN LODGING COMPANY

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002
AND 2001

(dollar amounts in thousands except per share
data)



|   |            
|-- | -----------
|1. | Background:

Boykin Lodging Company, an Ohio Corporation
(together with its subsidiaries Boykin), is a real
estate investment trust (REIT) that owns hotels
throughout the United States of America. As of December 31,
2003, Boykin owned interests in 29 hotels containing a total of
8,430 guestrooms located in 18 states, 26 of which
were affiliated with nationally-recognized franchisors.
Boykins largest franchise affiliation is with
Doubletree®. As of December 31, 2003, Boykin owned
10 Doubletree hotels in eight states, which accounted for
roughly 40% of the total rooms in Boykins portfolio. Other
brands that Boykin is affiliated with include Hilton®,
Marriott® and Radisson®.

The operations of the hotels have historically
been seasonal. The five hotels located in Florida have
historically experienced their highest occupancy in the first
quarter, while the remaining hotels have historically maintained
higher occupancy rates during the second and third quarters.



| |          
| | ---------
| | Formation

Boykin was formed and completed an initial public
offering (the IPO) in 1996 to continue and expand
the nearly 40-year history of hotel ownership, acquisition,
redevelopment and repositioning activities of its predecessors,
Boykin Management Company and its affiliates. Boykin Hotel
Properties, L.P., an Ohio limited partnership (the
Partnership), is the operating partnership that
transacts business and holds the direct and indirect ownership
interest in Boykins hotels. As of December 31, 2003,
Boykin had an 85.2% ownership interest in and is the sole
general partner of the Partnership.

Since the IPO, Boykin has expanded its hotel
portfolio by using capital raised through a combination of
common share issuances, various debt financings, capital from
strategic joint venture partners and cash flow generated from
operations.

As of December 31, 2003, Boykin Management
Company Limited Liability Company (BMC) and certain
of its subsidiaries managed 25 of the 29 hotels in which Boykin
had ownership interests. BMC is owned by Robert W. Boykin,
Chairman and Chief Executive Officer of Boykin (53.8%) and his
brother, John E. Boykin (46.2%).



| |                            
| | ---------------------------
| | Consolidated Joint Ventures

As of December 31, 2003, Boykin owned three
hotels through joint venture structures with hotel operators.
The following table sets forth these joint ventures:

|                       |  |                               |  |            |    |            |  |                     |   |         |  |                                          |  |  |           |  |  |  |               |  |  |  |  | 
|---------------------- |  | ----------------------------- |  | ---------- | -- | ---------- |  | ------------------- | - | ------- |  | ---------------------------------------- |  |  | --------- |  |  |  | ------------- |  |  |  |  | 
|                       |  |                               |  | Boykin     |    | JV         |  |                     |   |         |  |                                         
|                       |  | JV                            |  | Ownership  |    | Ownership  |  | Hotel Owned         |   | Hotel   |  | Date of Hotel                           
|Name of Joint Venture  |  | Partner                       |  | Percentage |    | Percentage |  | Under Joint Venture |   | Manager |  | Purchase                                
|                       |  |                               |  |            |    |            |  |                     |   |         |  |                                         
|BoyStar Ventures, L.P. |  | Interstate Hotels and Resorts |  |            | 91 | %          |  |                     | 9 | %       |  | Holiday Inn Minneapolis West             |  |  | BMC       |  |  |  | July 1997     | 
|Shawan Road Hotel L.P. |  | Davidson Hotel Company        |  |            | 91 | %          |  |                     | 9 | %       |  | Marriotts Hunt Valley Inn               |  |  | Davidson  |  |  |  | July 1997     | 
|Boykin San Diego LLC   |  | Outrigger Lodging Services    |  |            | 91 | %          |  |                     | 9 | %       |  | Hampton Inn San Diego Airport/ Sea World |  |  | Outrigger |  |  |  | November 1997 | 

F-7



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





In 2001, Interstate assigned a 20% ownership
interest in Boykin Kansas City LLC, which owns the Doubletree
Kansas City hotel, to Boykin. The elimination of
Interstates minority interest in the hotel was accounted
for as a $5,029 reduction in the value of the building as of the
date of assignment. After the transfer, Boykin owned 100% of
Boykin Kansas City LLC.



| |                              
| | -----------------------------
| | Unconsolidated Joint Ventures

In 1999, Boykin formed a joint venture with AEW
Partners III, L.P. (AEW), an investment
partnership managed by AEW Capital Management, L.P., a
Boston-based real estate investment firm. Boykin has a 25%
ownership interest in the joint venture. In the same year, the
Boykin/ AEW venture formed and acquired a 75% ownership interest
in Boykin Chicago, L.L.C., which purchased a hotel in downtown
Chicago. In 2000, Boykin purchased the remaining 25% ownership
interest in Boykin Chicago, L.L.C. from a private investor
thereby increasing Boykins total ownership percentage in
the hotel to 43.75%.

In July 2001, Boykin formed a joint venture with
Concord Hospitality Enterprises (Concord), a
privately owned hotel investment and management company based in
Raleigh, North Carolina. Boykin has a 50% ownership interest in
the joint venture, which acquired a full-service hotel in
Lyndhurst, New Jersey.

Because of the non-controlling nature of
Boykins ownership interests in these joint ventures,
Boykin accounts for these investments using the equity method.
Refer to Note 9 for further discussions of the
aforementioned joint venture with AEW.

Boykins carrying value of its investments
in these joint ventures differs from its share of the
partnership equity reported in the balance sheets of the
unconsolidated joint ventures due to Boykins cost of its
investment in excess of the historical net book values related
to the direct investment in Boykin Chicago, L.L.C. Boykins
additional basis is allocated to depreciable assets and is
recognized on a straight line basis over 30 years.

The following table sets forth the total assets,
liabilities, revenues and net income (loss), including
Boykins share, related to the unconsolidated joint
ventures discussed above as of December 31, 2003 and 2002
and for each of the three years in the period ended
December 31, 2003:

|                                                        |  |              |        |                |  |      |        |      |  |   |        |  |  |   |        | 
|------------------------------------------------------- |  | ------------ | ------ | -------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                                        |  |              |        |               
|                                                        |  | Boykin/AEW   |        | Boykin/Concord
|                                                        |  | December 31, |        | December 31,  
|                                                        |  |              |        |               
|                                                        |  | 2003         |        | 2002           |  | 2003 |        | 2002
|                                                        |  |              |        |                |  |      |        |     
|Total assets                                            |  | $            | 68,601 |                |  | $    | 69,245 |      |  | $ | 22,272 |  |  | $ | 23,762 | 
|                                                        |  |              |        |                |  |      |        |      |  |   |        |  |  |   |        | 
|Accrued expenses                                        |  |              | 2,884  |                |  |      | 3,285  |      |  |   | 469    |  |  |   | 356    | 
|Outstanding debt                                        |  |              | 37,236 |                |  |      | 36,656 |      |  |   | 16,728 |  |  |   | 17,138 | 
|                                                        |  |              |        |                |  |      |        |      |  |   |        |  |  |   |        | 
|Total liabilities                                       |  |              | 40,120 |                |  |      | 39,941 |      |  |   | 17,197 |  |  |   | 17,494 | 
|Minority interest                                       |  |              | 7,081  |                |  |      | 7,283  |      |  |   |       |  |  |   |       | 
|Equity                                                  |  |              | 21,400 |                |  |      | 22,021 |      |  |   | 5,075  |  |  |   | 6,268  | 
|Boykins share of equity and minority
    interest      |  |              | 12,627 |                |  |      | 12,992 |      |  |   | 2,537  |  |  |   | 3,134  | 
|Boykins additional basis in Boykin Chicago,
    L.L.C. |  |              | 994    |                |  |      | 1,030  |      |  |   |       |  |  |   |       | 
|                                                        |  |              |        |                |  |      |        |      |  |   |        |  |  |   |        | 
|Investment in unconsolidated joint venture              |  | $            | 13,621 |                |  | $    | 14,022 |      |  | $ | 2,537  |  |  | $ | 3,134  | 
|                                                        |  |              |        |                |  |      |        |      |  |   |        |  |  |   |        | 

F-8



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





|                                           |  |              |         |                |  |      |        |      |  |      |        |      |  |   |        |   |  |   |        |   |  |   |        |  
|------------------------------------------ |  | ------------ | ------- | -------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                           |  |              |         |               
|                                           |  | Boykin/AEW   |         | Boykin/Concord
|                                           |  | December 31, |         | December 31,  
|                                           |  |              |         |               
|                                           |  | 2003         |         | 2002           |  | 2001 |        | 2003 |  | 2002 |        | 2001
|                                           |  |              |         |                |  |      |        |      |  |      |        |     
|Revenues                                   |  | $            | 14,942  |                |  | $    | 10,049 |      |  | $    | 10,884 |      |  | $ | 6,709  |   |  | $ | 5,529  |   |  | $ | 1,505  |  
|Hotel operating expenses                   |  |              | (10,282 | )              |  |      | (8,827 | )    |  |      | (3,767 | )    |  |   | (3,856 | ) |  |   | (3,495 | ) |  |   | (1,008 | )
|Real estate related depreciation           |  |              | (3,099  | )              |  |      | (1,938 | )    |  |      | (1,658 | )    |  |   | (1,139 | ) |  |   | (1,011 | ) |  |   | (224   | )
|Property taxes, insurance and other        |  |              | (1,245  | )              |  |      | (1,360 | )    |  |      | (1,315 | )    |  |   | (537   | ) |  |   | (493   | ) |  |   | (194   | )
|                                           |  |              |         |                |  |      |        |      |  |      |        |      |  |   |        |   |  |   |        |   |  |   |        |  
|Operating income (loss)                    |  |              | 316     |                |  |      | (2,076 | )    |  |      | 4,144  |      |  |   | 1,177  |   |  |   | 530    |   |  |   | 79     |  
|Interest and other income                  |  |              | 14      |                |  |      | 26     |      |  |      | 194    |      |  |   | 13     |   |  |   | 2      |   |  |   | 8      |  
|Amortization                               |  |              | (282    | )              |  |      | (334   | )    |  |      | (361   | )    |  |   | (88    | ) |  |   | (87    | ) |  |   | (35    | )
|Interest expense                           |  |              | (1,716  | )              |  |      | (1,648 | )    |  |      | (2,296 | )    |  |   | (792   | ) |  |   | (799   | ) |  |   | (299   | )
|Other                                      |  |              | (5      | )              |  |      | (107   | )    |  |      | (7     | )    |  |   | (578   | ) |  |   | (94    | ) |  |   | (38    | )
|                                           |  |              |         |                |  |      |        |      |  |      |        |      |  |   |        |   |  |   |        |   |  |   |        |  
|Net income (loss) before minority interest |  |              | (1,673  | )              |  |      | (4,139 | )    |  |      | 1,674  |      |  |   | (268   | ) |  |   | (448   | ) |  |   | (285   | )
|Boykins share of net income (loss)        |  |              | (736    | )              |  |      | (1,816 | )    |  |      | 731    |      |  |   | (134   | ) |  |   | (224   | ) |  |   | (142   | )



| |                                     
| | ------------------------------------
| | Taxable REIT Subsidiary Transactions

The Work Incentives Improvement Act of 1999
(REIT Modernization Act) amended the tax laws to
permit REITs, like Boykin, to lease hotels to a subsidiary that
qualifies as a taxable REIT subsidiary (TRS) as long
as the TRS engages an independent hotel management company to
operate those hotels under a management contract. Boykin
implemented this structure for certain properties previously
leased to the hotel management companies effective
January 1, 2002.

In conjunction with the transaction, the
Partnership acquired 16 subsidiaries of BMC for consideration
comprised of limited partnership units (see Note 8) and the
assumption of working capital liabilities in excess of assets
relating to Westboy LLC (Westboy), one of the
subsidiaries (see Note 14).

The Partnership then contributed the acquired
subsidiaries to Bellboy, Inc. (Bellboy), a wholly
owned subsidiary of the Partnership, or terminated the existing
lease agreement with the hotel managers and re-leased the
properties to subsidiaries of Bellboy. Bellboy has elected to be
treated as a TRS.

Boykin recorded a charge to earnings of $15,000
for the year ended December 31, 2001 relating to the
acquisition and termination of the percentage leases and the
related transaction costs.

Effective September 1, 2002, the joint
venture with Davidson Hotel Company (Davidson)
formed a TRS, Hunt Valley Leasing, Inc. (Hunt
Valley), to lease the Marriotts Hunt Valley Inn.
Davidson continues to manage the hotel under a new management
agreement, which was also effective September 1, 2002.

As Boykin Chicago, L.L.C. and the Boykin/ Concord
joint venture each also have TRS entities which lease their
properties, 71 E. Wacker Leasing, Inc. and BoyCon Leasing, Inc.,
respectively, as of December 31, 2003, all hotels Boykin
had an ownership interest in, other than the Hampton Inn San
Diego Airport/ Sea World, were operated under the TRS structure.

As a result of the TRS transactions discussed
above, from the effective date of each transaction going
forward, the consolidated financial statements of Boykin include
the operating results of the consolidated hotels under the TRS
structure. Previously, revenues recorded on the consolidated
financial statements were derived primarily from lease payment
obligations which were made out of the net operating income of
the properties; now reported revenues reflect total operating
revenues from the properties with the related operating expenses
also being reported.

F-9



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued







| |                              
| | -----------------------------
| | Hilton Modification Agreement

Westboy, a subsidiary of Bellboy subsequent to
the TRS transaction, historically leased from Boykin ten
Doubletree branded hotels which were managed by a subsidiary of
Hilton Hotels Corporation (Hilton) under a long-term
management agreement. On April 30, 2003, Boykin entered
into an agreement (the Modification Agreement) with
Hilton to terminate the long-term management agreement. Six of
the hotels, the Doubletree Sacramento, the Doubletree Omaha, the
Doubletree Colorado Springs, the Doubletree Portland Lloyd
Center, the Doubletree Boise, and the Doubletree Portland
Downtown, continued to be Doubletree hotels under license
agreements which became effective in May. On the effective date
of the license agreements, Hilton ceased managing the properties
and Boykin engaged BMC to manage the properties. In July, Hilton
ceased management of the hotel in Bellevue, Washington, and
Boykin entered into an agreement with BMC to begin managing the
property. Simultaneously, the Doubletree franchise was removed
from the property and was replaced by a franchise agreement with
Ramada Franchise Systems, Inc. Boykin sold two of the hotels,
the property located in Springfield, Oregon and the Doubletree
Spokane Valley, in July and August, respectively. The Doubletree
Yakima Valley, the only property which remained under Hilton
management as of December 31, 2003, changed franchise
affiliation and management in February 2004. Lastly, as part of
the Modification Agreement, in 2003 Boykin converted the
Berkeley Marina Radisson to a Doubletree Hotel under a 15-year
license agreement.

The terms of the Modification Agreement included
a discounted payoff of $3,600 on a $6,000 deferred incentive
management fee which had been expensed by Boykin but was not yet
payable to Hilton, a $2,100 termination fee and other
professional fees related to the transaction. The approximate
gain of $150 recorded on the transaction is reflected in
property taxes, insurance and other expenses.



|   |                                                
|-- | -----------------------------------------------
|2. | Summary of Significant Accounting
    Policies:



| |                      
| | ---------------------
| | Basis of Presentation

The separate financial statements of Boykin, the
Partnership, Bellboy, Hunt Valley and the consolidated joint
ventures discussed above are consolidated because Boykin
exercises unilateral control over these entities. All
significant intercompany transactions and balances have been
eliminated. Boykin believes that the results of operations
contained within the consolidated financial statements reflect
all costs of Boykin doing business.



| |                               
| | ------------------------------
| | Investment in Hotel Properties

Hotel properties are stated at cost, net of any
impairment charges, and are depreciated using the straight-line
method over estimated useful lives ranging from ten to
35 years for buildings and improvements and three to 20
years for furniture and equipment.

Investment in hotel properties as of
December 31, 2003 and 2002 consisted of the following:

|                                |  |      |          |      |  |   |          |  
|------------------------------- |  | ---- | -------- | ---- |  | - | -------- | -
|                                |  | 2003 |          | 2002
|                                |  |      |          |     
|Land                            |  | $    | 65,099   |      |  | $ | 47,765   |  
|Buildings and improvements      |  |      | 492,937  |      |  |   | 470,007  |  
|Furniture and equipment         |  |      | 78,988   |      |  |   | 70,405   |  
|Construction in progress        |  |      | 5,416    |      |  |   | 255      |  
|                                |  |      |          |      |  |   |          |  
|                                |  |      | 642,440  |      |  |   | 588,432  |  
|Less  Accumulated depreciation |  |      | (151,715 | )    |  |   | (124,990 | )
|                                |  |      |          |      |  |   |          |  
|                                |  | $    | 490,725  |      |  | $ | 463,442  |  
|                                |  |      |          |      |  |   |          |  

Boykin reviews the hotel properties for
impairment whenever events or changes in circumstances indicate
the carrying value of the hotel properties may not be
recoverable. Events or circumstances that may cause a

F-10



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





review include, but are not limited to, adverse
changes in the demand for lodging at the properties due to
declining national or local economic conditions, new hotel
construction in markets where the hotels are located or changes
in the expected holding period of the property. When such
conditions exist, management performs an analysis to determine
if the estimated undiscounted future cash flows from operations
and the proceeds from the ultimate disposition of a hotel
property exceed its carrying value. If the estimated
undiscounted future cash flows are less than the carrying amount
of the asset, an adjustment to reduce the carrying amount to the
related hotel propertys estimated fair market value is
recorded and an impairment loss recognized.


In 2003, management identified changes in
circumstances, namely the intended holding period of the
property, which indicated that the carrying value of one of its
properties, the Holiday Inn Minneapolis West, was impaired and
accordingly recorded an impairment charge of $2,800. Boykin
noted no such circumstances in 2002. In 2001, management
identified changes in circumstances which indicated the carrying
value of certain properties were impaired, and recorded charges
of $24,000. A portion of these charges for 2001, approximately
$6,102, related to four properties sold during 2003, namely the
Hampton Inn Lake Norman, the Holiday Inn Lake Norman, a hotel in
Springfield, Oregon and the Doubletree Spokane Valley (see
Note 4). The remaining portion of impairment charge related
to properties that Boykin continued to own as of
December 31, 2003, but in 2001 were identified as being
impaired as the local economic conditions and the impact that
the events of September 11th, 2001 had on the hospitality
and travel industries significantly reduced future expected cash
flows from the operations and eventual disposition of the
related properties. Properties that are still owned by Boykin as
of December 31, 2003 which had impairment charges recorded
in 2001 include French Lick Springs Resort and Spa, High Point
Radisson, Kansas City Doubletree, Radisson Hotel Mount Laurel,
Holiday Inn Crabtree, Ramada Inn Bellevue Center and the hotel
in Yakima. Boykin does not believe that there are any factors or
circumstances indicating impairment of any other investments in
hotel properties at this time.

Fair market values of hotel properties are
estimated through a combination of comparable property sales,
replacement cost and a discounted cash flow analysis taking into
account each propertys expected cash flow generated from
operations, holding period and ultimate proceeds from
disposition. In projecting the expected cash flows from
operations of the asset, the estimates are based on future
projected earnings before interest expense, income taxes,
depreciation and amortization, or EBITDA, and deduct expected
capital expenditure requirements. Growth assumptions are applied
to project these amounts over the expected holding period of the
asset. The growth assumptions are based on estimated
inflationary increases in room rates and expenses and the demand
for lodging at the properties, as impacted by local and national
economic conditions and estimated or known future new hotel
supply. The estimated proceeds from disposition are judgmentally
determined based on a combination of anticipated cash flow in
the year of disposition, capitalization rate, ratio of selling
price to gross hotel revenues and selling price per room.

If actual conditions differ from the assumptions,
the actual results of each assets future operations and
fair market value could be significantly different from the
estimated results and value used in the analysis.

There were no properties held for sale as of
December 31, 2003 and 2002, as defined within the
provisions of Statement of Financial Accounting Standards
(SFAS) No. 144 Accounting for the
Impairment or Disposal of Long-Lived Assets. Boykin
considers assets to be held for sale when they are
under contract, significant non-refundable deposits have been
made by the potential buyer and the assets are immediately
available to be sold.



| |                          
| | -------------------------
| | Cash and Cash Equivalents

Cash and cash equivalents are defined as cash on
hand and in banks plus short-term investments with an original
maturity of three months or less.

F-11



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued







| |                
| | ---------------
| | Restricted Cash

Restricted cash consists of cash held in escrow
reserves under the terms of the term notes payable discussed in
Note 6 and deposits on the White Sand Villas condominium
sales as discussed further below. The escrow reserves relate to
the payment of capital expenditures, real estate taxes, interest
and insurance as well as reserves relating to the financing of
Boykin Chicago L.L.C.



| |                    
| | -------------------
| | Accounts Receivable

Accounts receivable, consisting primarily of
recognition of revenue related to projects accounted for under
the percentage of completion method and hotel guest receivables,
is stated at fair value. Bad debt expense for the hotels owned
as of December 31, 2003 was $113 and $743 for 2003 and
2002, respectively.



| |            
| | -----------
| | Inventories

Inventories consisting primarily of food and
beverages and gift store merchandise are stated at the lower of
first-in, first-out cost or market.



| |                                            
| | -------------------------------------------
| | Deferred Financing Costs and Other,
    net

Included in deferred financing costs and other at
December 31, 2003 and 2002 were the following:

|                         |  |      |        |      |  |   |        |  
|------------------------ |  | ---- | ------ | ---- |  | - | ------ | -
|                         |  | 2003 |        | 2002
|                         |  |      |        |     
|Financing costs          |  | $    | 5,290  |      |  | $ | 6,956  |  
|Franchise fees           |  |      | 471    |      |  |   | 459    |  
|                         |  |      |        |      |  |   |        |  
|                         |  |      | 5,761  |      |  |   | 7,415  |  
|Accumulated amortization |  |      | (2,655 | )    |  |   | (4,496 | )
|                         |  |      |        |      |  |   |        |  
|                         |  | $    | 3,106  |      |  | $ | 2,919  |  
|                         |  |      |        |      |  |   |        |  

Deferred financing costs are being amortized
using the straight-line method over the terms of the related
financing agreements, including extension options where it is
the intent of Boykin to exercise such options. In 2003,
additional financing costs amounted to $2,339 and write offs due
to repayments or maturities of underlying agreements amounted to
$4,005. Additionally, financing costs for 2002 have been
restated to reflect removal of costs related to the debt
collateralized by the properties sold during 2003 of $283.
Accumulated amortization at December 31, 2003 and 2002 was
$2,435 and $4,308, respectively.

Deferred franchise fees are being amortized on a
straight-line basis over the terms of the related franchise
agreements. In 2003, additional franchise fees amounted to $35
with write offs of $23. Franchise fees for 2002 have been
restated to reflect amounts related to properties sold during
2003 of $152. Accumulated amortization at December 31, 2003
and 2002 was $220 and $188, respectively.



| |                        
| | -----------------------
| | Officers Life Insurance

Boykin maintains two life insurance policies on
its Chairman and Chief Executive Officer which contain split
dollar arrangements. The policies are recorded at the lesser of
their cash surrender value or the premiums paid. Amounts
recorded for the two policies totaled $478 and $352 as of
December 31, 2003 and 2002 and are reflected in the
consolidated balance sheets as other assets. As of
December 31, 2003, there were loans against the cash
surrender value of the policies related to the 2003 premiums
totaling $121 which are reflected in the consolidated balance
sheets as accounts payable and accrued expenses.

F-12



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued







| |                            
| | ---------------------------
| | Deferred Compensation Plans

Boykin has nonqualified deferred compensation
programs which permit certain employees to annually elect (via
individual contracts) to defer a portion of their compensation
on a pre-tax basis. To assist in the funding of these programs,
Boykin has purchased shares of mutual funds as directed by the
participants, and placed them in rabbi trusts. The market value
of the mutual fund shares included in other assets totaled
$1,858 and $763 at December 31, 2003 and 2002, respectively.



| |          
| | ---------
| | Dividends

Boykin pays dividends on common shares which are
dependent upon the receipt of distributions from the
Partnership. The declaration of a common dividend and at what
rate is subject to the discretion of Boykins Board of
Directors.

Dividends on the preferred shares (Note 7)
are cumulative from the date of issue at the rate of
10 1/2% of the liquidation preference per year and are
payable quarterly in arrears based upon authorization of the
Board of Directors. Dividends will accrue whether or not Boykin
has earnings, whether or not there are funds legally available
for the payment of such dividends and whether or not such
dividends are declared.



| |                    
| | -------------------
| | Revenue Recognition



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Hotel revenues Hotel
    revenues, including room, food, beverage and other hotel
    revenues, are recognized as the related services are delivered.
    Ongoing credit evaluations are performed and an allowance for
    potential credit losses is provided against the portion of
    accounts receivable that is estimated to be uncollectible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Lease revenue Boykin
    recognizes lease revenue for interim and annual reporting
    purposes on an accrual basis pursuant to the terms of the
    respective percentage leases once all terms have been satisfied
    and certain thresholds have been met. Boykin recognizes the
    revenue in accordance with Securities and Exchange Commission
    (SEC) Staff Accounting Bulletin (SAB)
    No. 101 Revenue Recognition in Financial
    Statements. The adoption of SAB No. 101 impacts the
    interim reporting of revenues related to Boykins leases
    for properties not operated under the TRS structure, but has no
    impact on its interim cash flow or year-end results of
    operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | Percentage of Completion The
    revenue and expenses of condominium projects under construction
    are recognized on the percentage of completion method upon
    satisfaction of the following criteria: (a) construction is
    determined to be beyond a preliminary stage, (b) the buyer
    is not entitled to a refund except for nondelivery of the unit,
    (c) sufficient units are under binding contract to assure
    the entire property will not revert to rental property,
    (d) sales prices have been determined to be collectible,
    and (e) aggregate sales proceeds and costs can be
    reasonably estimated. In 2003, Boykin recognized revenue under
    percentage of completion accounting as the White Sand Villas
    project had satisfied the criteria outlined above. Percentage of
    completion accounting involves the use of estimates for the
    relation of revenues on sold units to total revenues of the
    project and for total cost of the project. The profit realized
    on the White Sand Villas could change if actual sales prices
    differ from current estimates and if estimated costs change due
    to a change in scope or scheduling of the project or other
    factors.



| |                  
| | -----------------
| | Condominium Units

White
Sand Villas

During 2002, Boykin began construction of a new
92-unit tower at the Pink Shell Beach Resort. In order to
prepare the site for construction of the tower, Boykin paid for
the removal of cottages occupying the space. Depreciation of the
cottages was accelerated through the period of disposal
resulting in an additional $1,700

F-13



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





charge in 2002, recorded in accordance with the
provisions of SFAS No. 144 as it relates to asset
abandonment. The costs of removing the cottages and preparing
the site for construction of the new building have been
capitalized to the extent that total expected costs do not
exceed the expected net realizable value for the project.


Deposits totaling $7,864 and $4,943 at
December 31, 2003 and 2002, respectively, received for the
purchase of units in the White Sand Villas are included in
accounts payable and accrued expenses on the balance sheet. A
portion of the deposits was available for use as payment of
construction costs. The portion that is not available is
reflected in restricted cash.

Boykin reported $32,173 in revenues and $21,629
in costs under the percentage of completion method of accounting
for the year ended December 31, 2003.

The amount of costs in excess of the revenue
recognized on the White Sand Villas project is $518 and is
reflected in other assets within the consolidated balance sheet.
The outstanding accounts receivable related to the recognition
of revenue for the White Sand Villas units totaled $32,173 as of
December 31, 2003.

Sanibel
View Villas

During 2001, Boykin completed a $2,700 renovation
of a 60-unit tower at the Pink Shell Beach Resort. These
renovated studio units were sold as Sanibel View Villas
Condominiums. The revenue related to the sale of the units is
recorded upon closing of the sale. Through December 31,
2002, 40 of these units were sold, generating revenues of $8,715
and costs of $6,474. The depreciated cost basis of the unsold
units as of December 31, 2002 of $2,895 is reflected in the
consolidated balance sheets as other assets.

As of December 31, 2003, all of the 59
available units were sold. Revenues from condominium development
and unit sales for 2003 include $4,710 of revenue related to the
sale of 19 Sanibel View Villas condominium units. The revenue
related to the sale of the units was recorded upon satisfaction
of the following two criteria: (a) the profit is
determinable and (b) the earnings process is virtually
complete. These criteria are generally met at the closing of the
sale. Costs of the Sanibel View unit sales totaled $3,016 during
2003.

All of the Sanibel View unit owners have
contracted with the resort to allow their unused room nights to
be rented out as hotel rooms. The related gross rental income
generated by these units and the unit owned by Boykin is
recorded by the resort and included in hotel revenues within the
consolidated financial statements. Under the terms of the
contract, a percentage of the gross rental income of each unit
is to be remitted to the respective unit owner. For the years
ended December 31, 2003 and 2002, $923 and $402 was
remitted to third party unit owners and is included within
property taxes, insurance and other in the consolidated
financial statements.

Captiva
Villas

During 2003, Boykin made the decision to move
forward with the plans for the final phase of redevelopment of
the Pink Shell Beach Resort; which includes the eventual
demolition of two existing low-rise buildings and the
construction of a new 43-unit building. Similar to the other
projects at the resort, the units in the new building will be
sold as condominiums with the prospect that the owners will put
their unused room nights back to the resort by contract for use
as hotel rooms. In conjunction with the pending demolition of
the existing buildings, in accordance with the provisions of
SFAS No. 144 as it relates to asset abandonment,
depreciation on the existing buildings was accelerated,
resulting in an additional $3,456 of depreciation in 2003.
Through December 31, 2003, costs incurred in preparing for
the construction totaled $554 and the original $900 basis in
land which the new building will be constructed on are reflected
in the consolidated balance sheets as other assets.

F-14



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued







| |                              
| | -----------------------------
| | Property Insurance Recoveries

In 2003, Boykin disposed of certain assets due to
environmental remediation activities. Insurance proceeds
received in excess of the net book value of the disposed assets
were $913 and are recorded within the gain (loss) on
sale/disposal of assets within the consolidated financial
statements.



| |                   
| | ------------------
| | Minority Interests

Minority interest in the Partnership represents
the limited partners proportionate share of the equity in
the Partnership. Income is allocated to minority interest based
on the weighted average limited partnership percentage ownership
throughout the period.

Minority interest in joint ventures represents
the joint venture partners proportionate share of the
equity in the joint ventures. Income and losses are allocated to
minority interest based on the joint venture partners
percentage ownership throughout the period and flow of cash
distributions, subject to minimum returns to the Partnership, as
defined in the joint venture agreements.



| |             
| | ------------
| | Income Taxes

Boykin qualifies as a REIT under
Sections 856-860 of the Internal Revenue Code. As a REIT,
Boykin generally will not be subject to federal corporate income
tax on that portion of its net income that relates to non-TRS
subsidiaries. Accordingly, no provision for income taxes has
been reflected in the accompanying consolidated financial
statements for the corporate level entities.

Upon the effective date of the establishment of
Boykins TRSs, Bellboy and Hunt Valley, the subsidiaries
became subject to federal and state income taxes. Boykins
TRSs account for income taxes in accordance with the provisions
of SFAS No. 109, Accounting for Income Taxes.
As of December 31, 2003, Boykins TRSs have a deferred
tax asset of $5,735, prior to any valuation allowance, related
to the assumption of the retained deficit of Westboy as well as
the net operating losses of the TRSs and their subsidiaries.
Boykins TRSs have recorded a 100% valuation allowance
against this asset due to the uncertainty of realization of the
deferred tax asset and therefore, no provision or benefit from
income taxes is reflected in the accompanying consolidated
statements of operations. As of December 31, 2003, the net
operating loss carryforwards have remaining lives of 18 to
19 years.

Boykins earnings and profits, as defined by
federal income tax law, will determine the taxability of
distributions to shareholders. Earnings and profits will differ
from income reported for financial reporting purposes primarily
due to the differences in the estimated useful lives and methods
used to compute depreciation, differences in timing of certain
revenue recognition, and differences in the timing of when
certain expenses are deductible for tax purposes. For federal
income tax purposes, dividends to shareholders applicable to
2003, 2002 and 2001 operating results represented the following
allocations of ordinary taxable income, return of capital, and
20% capital gain:

|              |      |                 |  |                   |      |                  |  |       |       |   |  |  |     |   |  |  |       |  
|------------- | ---- | --------------- |  | ----------------- | ---- | ---------------- |  | ----- | ----- | - |  |  | --- | - |  |  | ----- | -
|             
|Common Shares
|             
|Year          |      | Ordinary Income |  | Return of Capital |      | 20% Capital Gain |  | Total
|              |      |                 |  |                   |      |                  |  |      
|              | 2003 |                 |  |                   |     |                  |  |       | 100.0 | % |  |  |    |   |  |  | 100.0 | %
|              | 2002 |                 |  |                   | 90.8 | %                |  |       |      |   |  |  | 9.2 | % |  |  | 100.0 | %
|              | 2001 |                 |  |                   | 49.1 | %                |  |       | 50.9  | % |  |  |    |   |  |  | 100.0 | %

|                 |      |                 |  |                   |      |                  |  |       |     |   |  |  |     |   |  |  |       |  
|---------------- | ---- | --------------- |  | ----------------- | ---- | ---------------- |  | ----- | --- | - |  |  | --- | - |  |  | ----- | -
|                
|Preferred Shares
|                
|Year             |      | Ordinary Income |  | Return of Capital |      | 20% Capital Gain |  | Total
|                 |      |                 |  |                   |      |                  |  |      
|                 | 2003 |                 |  |                   | 92.9 | %                |  |       | 7.1 | % |  |  |    |   |  |  | 100.0 | %
|                 | 2002 |                 |  |                   | 90.8 | %                |  |       |    |   |  |  | 9.2 | % |  |  | 100.0 | %

F-15



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued







| |                   
| | ------------------
| | Earnings Per Share

Basic earnings per share is based on the weighted
average number of common shares outstanding during the period
whereas diluted earnings per share adjusts the weighted average
shares outstanding for the effect of all dilutive securities.
For the years ended December 31, 2003, 2002 and 2001, the
weighted average basic and diluted common shares outstanding
were as follows:

|                               |                         |                         |            |         |  |      |            |        |  |  |            |        | 
|------------------------------ | ----------------------- | ----------------------- | ---------- | ------- |  | ---- | ---------- | ------ |  |  | ---------- | ------ | 
|                               |                         |                        
|                               |                         | Year Ended December 31,
|                               |                         |                        
|                               |                         | 2003                    |            | 2002    |  | 2001
|                               |                         |                         |            |         |  |     
|Basic                          |                         |                         | 17,336,258 |         |  |      | 17,248,173 |        |  |  | 17,175,552 |       
|Effect of dilutive securities: |                         |                         |            |         |  |      |            |        |  |  |            |       
|                               | Common stock options    |                         |            | 18,332  |  |      |            | 51,523 |  |  |            | 49,859 | 
|                               | Restricted share grants |                         |            | 115,062 |  |      |            | 83,063 |  |  |            | 55,117 | 
|                               |                         |                         |            |         |  |      |            |        |  |  |            |       
|Diluted                        |                         |                         | 17,469,652 |         |  |      | 17,382,759 |        |  |  | 17,280,528 |       

There are no adjustments to the reported amounts
of income in computing diluted per share amounts.



| |                                          
| | -----------------------------------------
| | Partnership Units/ Minority
    Interests

A total of 2,718,256 limited partnership units
(Note 7) were issued and outstanding at December 31,
2003 and 2002. The weighted average number of limited
partnership units outstanding for each of the periods ended
December 31, 2003 and 2002 was also 2,718,256.

Effective January 1, 2002, an additional
1,427,142 limited partnership units were issued as consideration
for the acquisition of leasehold interests in conjunction with
the TRS transactions discussed in Note 1.



| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments

Fair values are determined by using available
market information and appropriate valuation methodologies.
Boykins principal financial instruments are cash, cash
equivalents, restricted cash, accounts receivable, borrowings
against the credit facility, the term notes payable and interest
rate protection instruments.

Cash, cash equivalents, restricted cash and
accounts receivable, due to their short maturities, are carried
at amounts which reasonably approximate fair value. As
borrowings against the credit facility (Note 5) and the
construction loan (Note 6) bear interest at variable market
rates, their carrying value approximates market value at
December 31, 2003.

At December 31, 2003, the fair value of the
$130,000 term note payable (Note 6) approximates carrying
value as the interest rate associated with the note approximates
market rates currently offered for debt with similar risk
factors, terms and maturities.

At December 31, 2003, the fair value of the
$91,125 remaining balance of the $108,000 term loan approximated
$85,500 based upon the expected market rate spreads currently
offered exceeding the interest rate spread on the loan.

Effective January 1, 2001, Boykin adopted
the provisions of SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. This
statement requires companies to carry all derivative
instruments, including embedded derivatives, in the balance
sheet at fair value. The accounting for changes in the fair
value of a derivative instrument depends on whether it has been
designated and qualifies as part of a hedging relationship and,
if so, on the reason for holding it. For financial reporting
purposes, the change in market value of the effective portion of
an instrument defined as a cash flow hedge flows through the
other comprehensive income component of equity. All other
changes will flow through earnings.

F-16



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





The adoption of SFAS No. 133 resulted in
Boykin recording an unrealized loss of $373, net of minority
interest of $32, related to its previously existing interest
rate cap, which is reflected as a cumulative effect of a change
in accounting principle in Boykins 2001 statement of
operations. The initial cap matured in July 2003, at which time
Boykin purchased interest rate protection on the remaining
balance of the $108,000 term loan. Changes in the fair value of
the interest rate cap are recorded through the statement of
operations. The new interest rate cap is with a third party and
had no value at December 31, 2003 based upon estimated
market valuations.

In March 2001, Boykin entered into an interest
rate swap, which fixed the overall interest rate at 7.32% on
$83,000 of Boykins $108,000 term note. The estimated fair
market value of the swap as of December 31, 2002 is
reflected as other comprehensive loss of $1,773 in
shareholders equity, with a corresponding liability in the
accompanying consolidated balance sheet. In connection with the
execution of this swap contract, Boykin wrote an option contract
(reverse cap contract) with a notional balance of $83,000 and a
LIBOR based strike price of 7.90%, obligating Boykin as the
floating rate counterparty. This contract was with a third party
and had no value at December 31, 2002. Changes in the
contracts fair value are recorded through the statement of
operations. The swap expired in July 2003, and Boykin did not
renew the swap or purchase a replacement instrument.



| |                     
| | --------------------
| | Comprehensive Income

Comprehensive income is defined as changes in
shareholders equity from non-owner sources, which for
Boykin consist of the difference between the cost basis and fair
market value of its interest rate swap. For the years ended
December 31, 2003, 2002 and 2001, the difference between
net income (loss) and comprehensive income (loss) was
due to the change in the market value of the swap.



| |                              
| | -----------------------------
| | New Accounting Pronouncements

In August 2001, the Financial Accounting
Standards Board (FASB) issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. The provisions of Statement 144 were effective for
Boykin beginning in the fiscal year ended December 31,
2002. SFAS No. 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. SFAS No. 144
also requires that one accounting model be used for long-lived
assets to be disposed of by sale. The Statement did not have a
material effect on the financial condition or results of
operations of Boykin for 2002; however, as Boykin disposed of
hotel properties via sale in 2003, the properties results
of operations are retroactively disclosed separately as
discontinued operations in Boykins financial statements.
Properties that were disposed of prior to the effective date of
Statement 144 have not been separately disclosed as discontinued
operations in historical financial statements.

In April 2002, the FASB issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections. Included in SFAS No. 145 is a
requirement that all gains and losses related to extinguishments
of debt (other than extinguishments of debt items meeting the
criteria in APB Opinion No. 30, Reporting the Results
of Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions (APB
Opinion 30)) not be treated as extraordinary items. The
provisions of this statement were effective for Boykin on
January 1, 2003. Any gains or losses on extinguishments of
debt formerly classified as extraordinary and not meeting the
criteria for extraordinary classification as defined in APB
Opinion 30 were reclassified. Adoption of this statement did not
have a material effect on the financial position or results of
operations of Boykin for the periods presented.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, which addresses the disclosure to
be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees.
Interpretation No. 45 also requires the recognition of a
liability by a guarantor at the inception of

F-17



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





certain guarantees. Interpretation No. 45
requires the guarantor to recognize a liability for the
non-contingent component of the guarantee, this is the
obligation to stand ready to perform in the event that specified
triggering events or conditions occur. The initial measurement
of this liability is the fair value of the guarantee at
inception. The recognition of the liability is required even if
it is not probable that payments will be required under the
guarantee or if the guarantee was issued with a premium payment
or as part of a transaction with multiple elements. Boykin has
adopted the disclosure requirements of Interpretation
No. 45 for all guarantees entered into prior to
January 1, 2003. There are no guarantees which require
recognition under this Interpretation as of December 31,
2003.


In December 2002, the FASB issued Statement
No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure  an amendment
of FASB Statement No. 123. Statement No. 148
amends FASB Statement No. 123, Accounting for
Stock-Based Compensation, to provide alternative methods
of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In
addition, Statement No. 148 amends the disclosure
requirements of Statement No. 123 to require prominent
disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results. Adoption did not have a material effect on the
financial condition or results of operations of Boykin.

At December 31, 2003, Boykin has a Long-Term
Incentive Plan, which is described more fully in Note 11.
Boykin has adopted the disclosure only provisions of SFAS
No. 123, Accounting for Stock-Based
Compensation, and applies Accounting Principles Board
Opinion No. 25 and related interpretations in accounting
for its employee share option plan. If Boykin had elected to
recognize compensation costs for the LTIP based on the fair
value at the grant dates for option awards consistent with the
method prescribed by SFAS No. 123, reported amounts of net
loss and loss per share would have been changed to the pro forma
amounts indicated below.

|                                                                      |         |                   |        |                   |   |                   |        |       |   |   |         |       |  
|--------------------------------------------------------------------- | ------- | ----------------- | ------ | ----------------- | - | ----------------- | ------ | ----- | - | - | ------- | ----- | -
|                                                                      |         |                  
|                                                                      |         | Year Ended       
|                                                                      |         |                  
|                                                                      |         | December 31, 2003 |        | December 31, 2002 |   | December 31, 2001
|                                                                      |         |                   |        |                   |   |                  
|                                                                      |         | Pro Forma         |        | Pro Forma         |   | Pro Forma        
|                                                                      |         |                   |        |                   |   |                  
|Net loss attributable to common shareholders                          |         | $                 | (8,177 | )                 |   | $                 | (1,480 | )     |   | $ | (29,570 | )    
|Stock-based employee compensation expense                             |         |                   | (126   | )                 |   |                   | (151   | )     |   |   | (151    | )    
|                                                                      |         |                   |        |                   |   |                   |        |       |   |   |         |      
|Pro forma net loss attributable to common
    shareholders            |         |                   | (8,303 | )                 |   |                   | (1,631 | )     |   |   | (29,721 | )    
|Pro forma net loss attributable to common
    shareholders per share: |         |                   |        |                   |   |                   |        |       |   |   |         |      
|                                                                      | Basic   |                   | $      | (0.48             | ) |                   | $      | (0.09 | ) |   | $       | (1.73 | )
|                                                                      | Diluted |                   | $      | (0.48             | ) |                   | $      | (0.09 | ) |   | $       | (1.73 | )

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest
Entities, which addresses consolidation by business
enterprises of variable interest entities. In general, a
variable interest entity is a corporation, partnership, trust,
or any other legal structure used for business purposes that
either (a) does not have equity investors with voting
rights or (b) has equity investors that do not provide
sufficient financial resources for the entity to support its
activities. A variable interest entity often holds financial
assets, including loans or receivables, real estate or other
property. A variable interest entity may be essentially passive
or it may engage in research and development or other activities
on behalf of another company. The objective of Interpretation
No. 46 is not to restrict the use of variable interest
entities but to improve financial reporting by companies
involved with variable interest entities. Until now, a company
generally has included another entity in its consolidated
financial statements only if it controlled the entity through
voting interests. Interpretation No. 46 changes that by
requiring a variable interest entity to be consolidated by a
company if that company is subject to a

F-18



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





majority of the risk of loss from the variable
interest entitys activities or is entitled to receive a
majority of the entitys residual returns or both. The
consolidation requirements of Interpretation No. 46 apply
immediately to variable interest entities created after
January 31, 2003. In December 2003, the FASB issued a
revised Interpretation which modifies and clarifies various
aspects of the original Interpretation. The consolidation
requirements apply to older entities in the first fiscal year or
interim period beginning after December 15, 2003 for those
entities which may be defined as special purpose entities.
Certain of the disclosure requirements apply in all financial
statements issued after January 31, 2003, regardless of
when the variable interest entity was established. Boykin does
not believe that it has any unconsolidated variable interest
entities as of December 31, 2003.


On April 30, 2003 the FASB issued Statement
No. 149 (SFAS 149), Amendment of
Statement 133 on Derivative Instruments and Hedging
Activities. SFAS 149 amends and clarifies accounting
for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging
activities under Statement 133. In particular, this
Statement clarifies under what circumstances a contract with an
initial net investment meets the characteristic of a derivative
as discussed in Statement 133 and it clarifies when a
derivative contains a financing component that warrants special
reporting in the statement of cash flows. SFAS 149 is
effective for contracts entered into or modified after
June 30, 2003 and for hedging relationships designated
after June 30, 2003 and is to be applied prospectively.
This Statement has not had and is not expected to have a
material impact on Boykins financial position or results
of operations.

In May 2003, the FASB issued Statement
No. 150 (SFAS 150), Accounting for
Certain Financial Instruments with Characteristics of Both
Liabilities and Equity, which establishes standards for
how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity.
It requires that an issuer classify a financial instrument that
is within its scope as a liability. The effective date of a
portion of the Statement has been indefinitely postponed by the
FASB. Boykin did not enter into new financial instruments
subsequent to May 2003 which would fall within the scope of this
statement. Boykin has identified a consolidated joint venture
which has minority interest amounts totaling $210 at
December 31, 2003 that appear to meet the criteria for
liability recognition in accordance with paragraphs 9 and 10
under SFAS 150 due to the finite life of the joint venture
arrangements. Accordingly, if and when the measurement and
classification provisions of these paragraphs are adopted,
Boykin may be required to reclassify the liquidation amounts of
such minority interests to liabilities with the resulting income
statement effect being classified as a cumulative effect of an
accounting change and subsequent fluctuations in current
liquidation amounts recorded through interest expense.



| |                 
| | ----------------
| | Use of Estimates

The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates.



| |                  
| | -----------------
| | Reclassifications

Certain reclassifications have been made to the
prior year financial statements to conform with the current year
presentation.

F-19



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





3.     Hotel
Transactions:

The following table summarizes Boykins
hotel acquisitions and dispositions in 2003, 2002 and 2001:

|                              |  |          |                   |                  |  |                 |               |            |  |                     |     |          |  |   |        |  |  |  |     |   |  |  |         | 
|----------------------------- |  | -------- | ----------------- | ---------------- |  | --------------- | ------------- | ---------- |  | ------------------- | --- | -------- |  | - | ------ |  |  |  | --- | - |  |  | ------- | 
|                              |  |          |                   | Acquisition/     |  |                 |               | Purchase/  |  | Percentage owned by |     |         
|Hotel                         |  | Location |                   | Disposition Date |  | Number of Rooms |               | Sale Price |  | Partnership         |     | Operator
|                              |  |          |                   |                  |  |                 |               |            |  |                     |     |         
|Acquisitions:                 |  |          |                   |                  |  |                 |               |            |  |                     |     |          |  |   |        |  |  |  |     |   |  |  |         | 
|Radisson Suite Beach Resort   |  |          | Marco Island, FL  |                  |  |                 | August 2003   |            |  |                     | 233 |          |  | $ | 27,250 |  |  |  | 100 | % |  |  | BMC     | 
|Novotel Meadowlands*          |  |          | Lyndhurst, NJ     |                  |  |                 | July 2001     |            |  |                     | 219 | *        |  | $ | 17,500 |  |  |  | 50  | % |  |  | Concord | 
|                             
|Dispositions:                 |  |          |                   |                  |  |                 |               |            |  |                     |     |          |  |   |        |  |  |  |     |   |  |  |         | 
|Doubletree Spokane Valley     |  |          | Spokane, WA       |                  |  |                 | August 2003   |            |  |                     | 237 |          |  | $ | 5,400  |  |  |  | 100 | % |  |  | Hilton  | 
|Springfield                   |  |          | Springfield, OR   |                  |  |                 | July 2003     |            |  |                     | 234 |          |  | $ | 6,500  |  |  |  | 100 | % |  |  | Hilton  | 
|Holiday Inn Lake Norman       |  |          | Charlotte, NC     |                  |  |                 | June 2003     |            |  |                     | 119 |          |  | $ | 2,550  |  |  |  | 100 | % |  |  | BMC     | 
|Hampton Inn Lake Norman       |  |          | Charlotte, NC     |                  |  |                 | February 2003 |            |  |                     | 117 |          |  | $ | 3,700  |  |  |  | 100 | % |  |  | BMC     | 
|Knoxville Hilton              |  |          | Knoxville, TN     |                  |  |                 | February 2003 |            |  |                     | 317 |          |  | $ | 11,500 |  |  |  | 100 | % |  |  | BMC     | 
|Daytona Beach Radisson Resort |  |          | Daytona Beach, FL |                  |  |                 | January 2001  |            |  |                     | 206 |          |  | $ | 12,500 |  |  |  | 100 | % |  |  | BMC     | 



---



|  |                                                                                                                                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | In February 2002, a renovation of this hotel was
    completed resulting in eight additional rooms at the property
    and the hotel was rebranded as a Courtyard by Marriott.

The operating results of the Radisson
Suite Beach Resort are included in the consolidated
operating results of Boykin starting on the date of acquisition.
The operating results of the Lyndhurst, New Jersey property are
included in the consolidated operating results of Boykin as
equity in income (loss) of unconsolidated joint ventures
since the hotel was acquired through an unconsolidated joint
venture.

4.     Discontinued
Operations:

The provisions of SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets require that hotels sold or held for sale be
treated as discontinued operations. Boykin considers assets to
be held for sale when they are under contract,
significant non-refundable deposits have been made by the
potential buyer and the assets are immediately available to be
sold.

During 2003, Boykin sold the Knoxville Hilton,
the Hampton Inn Lake Norman, the Holiday Inn Lake Norman, a
hotel in Springfield, Oregon and the Doubletree Spokane Valley
for aggregate proceeds of $29,650. The net proceeds of the
Knoxville Hilton, Hampton Inn Lake Norman and Holiday Inn Lake
Norman were applied to the $108,000 term loan in connection with
a release of the assets as security for the loan. Net proceeds
from the sale of the Springfield hotel and the Doubletree
Spokane Valley were used to pay off outstanding amounts on
Boykins previously existing credit facility as well as for
general corporate purposes.

The assets and liabilities of the five properties
as of December 31, 2002 and the results of operations of
the properties through the sale date and for years ended
December 31, 2002 and 2001, have been reclassified as
discontinued operations in the accompanying financial
statements. Interest expense and deferred loan costs have been
attributed to the properties, as applicable, based upon the term
loan amounts that were repaid with the proceeds of the sales.

F-20



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





The results of operations and the financial
position related to the five properties sold were as follows:

|                                                  |                                            |                         |        |        |   |      |         |     |  |   |        |        |  
|------------------------------------------------- | ------------------------------------------ | ----------------------- | ------ | ------ | - | ---- | ------- | --- |  | - | ------ | ------ | -
|                                                  |                                            |                        
|                                                  |                                            | Year Ended December 31,
|                                                  |                                            |                        
|                                                  |                                            | 2003                    |        | 2002   |   | 2001
|                                                  |                                            |                         |        |        |   |     
|Lease revenue from related party                  |                                            | $                       |       |        |   | $    |        |     |  | $ | 5,872  |       
|Hotel revenues                                    |                                            |                         | 6,827  |        |   |      | 20,895  |     |  |   |       |       
|Hotel operating expenses                          |                                            |                         | (6,401 | )      |   |      | (16,478 | )   |  |   |       |       
|Management fees to related party                  |                                            |                         | (45    | )      |   |      | (366    | )   |  |   |       |       
|Management fees  other                           |                                            |                         | (157   | )      |   |      | (289    | )   |  |   |       |       
|Property taxes, insurance and other               |                                            |                         | (1,446 | )      |   |      | (1,047  | )   |  |   | (785   | )     
|Other expenses                                    |                                            |                         | (10    | )      |   |      | (45     | )   |  |   | (47    | )     
|Other income                                      |                                            |                         |       |        |   |      | 129     |     |  |   | 202    |       
|Interest expense                                  |                                            |                         | (141   | )      |   |      | (715    | )   |  |   | (1,111 | )     
|Real estate related depreciation and amortization |                                            |                         | (627   | )      |   |      | (1,856  | )   |  |   | (1,760 | )     
|Impairment of real estate                         |                                            |                         |       |        |   |      |        |     |  |   | (6,102 | )     
|Amortization of deferred financing costs          |                                            |                         | (179   | )      |   |      | (57     | )   |  |   | (56    | )     
|                                                  |                                            |                         |        |        |   |      |         |     |  |   |        |       
|                                                  | Income (loss) from discontinued operations |                         | $      | (2,179 | ) |      | $       | 171 |  |   | $      | (3,787 | )
|                                                  |                                            |                         |        |        |   |      |         |     |  |   |        |       

|                                      |                   |              |        |        | 
|------------------------------------- | ----------------- | ------------ | ------ | ------ | 
|                                      |                   | December 31,
|                                      |                   | 2002        
|                                      |                   |             
|Accounts receivable, net              |                   | $            | 716    |       
|Inventories                           |                   |              | 135    |       
|Other assets                          |                   |              | 348    |       
|Deferred financing costs, net         |                   |              | 228    |       
|Investment in hotel properties, net   |                   |              | 28,006 |       
|                                      |                   |              |        |       
|                                      | Total assets      |              | $      | 29,433 | 
|                                      |                   |              |        |       
|Accounts payable and accrued expenses |                   | $            | 1,868  |       
|Accounts payable to related party     |                   |              | 120    |       
|Term notes payable                    |                   |              | 16,875 |       
|                                      |                   |              |        |       
|                                      | Total liabilities |              | $      | 18,863 | 
|                                      |                   |              |        |       



|   |                 
|-- | ----------------
|5. | Credit Facility:

In October 2003, Boykin entered into a new
secured, revolving credit facility with a financial institution
which enables Boykin to borrow up to $78,000, subject to
borrowing base and loan-to-value limitations. At December 31,
2003, Boykin had borrowed $71,945 from the new secured credit
facility and used the proceeds to repay the $27,500 outstanding
under Boykins previous credit facility, $41,967
outstanding under the maturing $45,000 term loan (Note 6) and
for other corporate purposes. The new facility has a term of
three years and initially bears interest at a floating rate of
LIBOR plus 3.75% (4.94% at December 31, 2003). Boykin is
required to pay a fee of 0.375% on the unused portion of the
credit facility. The new facility is secured by seven hotel
properties with a carrying value of $90,518 at December 31,
2003.

The credit facility requires Boykin, among other
things, to maintain a minimum net worth, a coverage ratio of
EBITDA to debt service, a coverage ratio of EBITDA to debt
service and fixed charges and a maximum leverage ratio. Further,
Boykin is required to maintain the franchise agreement at each
hotel and to maintain its REIT status. The terms of the
agreement provide certain restrictions on common share
dividends; however,

F-21



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





Boykin is entitled to distribute sufficient
dividends to maintain its REIT status. Boykin was in compliance
with its covenants at December 31, 2003.


As of December 31, 2002, Boykin had a
secured credit facility which enabled it to borrow up to $65,000
subject to borrowing base and loan-to-value limitations that was
secured by seven hotel properties. The net proceeds from the
October 2002 preferred stock offering (Note 7) were used to
repay the outstanding balance on the credit facility, therefore;
at December 31, 2002, there were no amounts outstanding on
the facility.



|   |                    
|-- | -------------------
|6. | Term Notes Payable:

Red Lion Inns Operating L.P. (OLP), a
wholly-owned subsidiary of the Partnership, has a $130,000 term
loan agreement that expires in June 2023 and may be prepaid
without penalty after May 21, 2008. The outstanding balance
as of December 31, 2003 and 2002 was $122,597 and $124,860,
respectively. The loan bears interest at a fixed rate of 6.9%
until May 2008, and at a new fixed rate to be determined
thereafter. The loan was secured by seven Doubletree hotels with
a net carrying value of $209,123 at December 31, 2003 and
ten Doubletree hotels with a net carrying value of $226,698 at
December 31, 2002 and requires principal repayments based
on a 25-year amortization schedule. Under covenants in the loan
agreement, assets of OLP are not available to pay the creditors
of any other Boykin entity, except to the extent of permitted
cash distributions from OLP to Boykin. Likewise, the assets of
other Boykin entities are not available to pay the creditors of
OLP. The loan agreement also requires OLP to hold funds in
escrow for the payment of capital expenditures, insurance and
real estate taxes and requires OLP to maintain certain financial
reporting requirements. OLP was in compliance with these
requirements at December 31, 2003 and 2002.

Boykin Holding, LLC (BHC), a
wholly-owned subsidiary of the Partnership, has a $108,000 term
loan agreement. In connection with the sale of the Knoxville
Hilton, the Hampton Inn Lake Norman and the Holiday Inn Lake
Norman in 2003, the loan balance was reduced to $91,125. The
loan had an initial maturity date of July 2003. Boykin exercised
the first of two available one-year extension options extending
the maturity date to July 2004. As of December 31, 2003,
the loan was secured by six hotel properties with a net carrying
value of $61,273. The net carrying value of the nine properties
that secured the loan at December 31, 2002 was $74,136. The
term loan bears interest at a rate that fluctuates at LIBOR plus
2.35% (3.47% at December 31, 2003). Under covenants in the
loan agreement, assets of BHC are not available to pay the
creditors of any other Boykin entity, except to the extent of
permitted cash distributions from BHC to Boykin. Likewise, the
assets of other entities are not available to pay the creditors
of BHC. The loan agreement also requires BHC to hold funds in
escrow for the payment of capital expenditures, insurance,
interest and real estate taxes and requires BHC to maintain
certain financial reporting requirements. BHC was in compliance
with these requirements at December 31, 2003 and 2002.

In March 2001, the Partnership entered into an
interest rate swap which fixed the overall interest rate at
7.32% on $83,000 of debt designated to BHCs $108,000 term
note. The swap expired in July 2003, and Boykin did not renew
the swap or purchase a replacement instrument. BHC also had
interest rate protection on the remaining $25,000 original
principal to cap the overall loan interest rate at no more than
10.25%. The initial cap matured in July 2003, at which time
Boykin purchased interest rate protection on the entire
outstanding balance of $91,125, to cap the interest rate at no
more than 10.25% for a period of one year. The cap had no value
at December 31, 2003.

Boykin previously had an outstanding term loan
which had an original balance of $45,000 and was secured by
three hotel properties. Boykin used a portion of the net
proceeds from the preferred stock offering in October 2002
(Note 7) to reduce the outstanding loan balance to $41,967
as of December 31, 2002. The loan bore interest at a rate
that fluctuated at LIBOR plus 2.0% to LIBOR plus 4.0%. In
October 2003, Boykin used a portion of the proceeds from the new
credit facility to repay the entire outstanding balance of
$41,967.

F-22



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





In January 2003, White Sand Villas Development
LLC, a wholly-owned subsidiary of Bellboy, closed on a $23,300
construction loan with a bank. The loan is due in 2005, bears
interest at a rate that fluctuates at LIBOR plus 2.50% (3.67% at
December 31, 2003) and requires principal payments based
upon the closing of condominium sales. At December 31,
2003, $13,222 was outstanding on the loan.

As a part of normal business activities, Boykin
issues letters of credit through major banking institutions as
required by certain debt and insurance agreements. As of
December 31, 2003, there were no letters of credit
outstanding. As of December 31, 2002, letters of credit
outstanding totaled $2,116. As of December 31, 2003, Boykin
has not entered into any significant other off-balance sheet
financing arrangements.

Maturities of long-term debt at December 31,
2003 were as follows:

|                    |  |   |         | 
|------------------- |  | - | ------- | 
|2004                |  | $ | 93,527  | 
|2005                |  |   | 15,824  | 
|2006                |  |   | 2,788   | 
|2007                |  |   | 2,990   | 
|2008                |  |   | 3,204   | 
|2009 and thereafter |  |   | 108,611 | 
|                    |  |   |         | 
|                    |  | $ | 226,944 | 
|                    |  |   |         | 



|   |                               
|-- | ------------------------------
|7. | Description of Capital Shares:

Common
Shares

Holders of Boykins common shares are
entitled to receive dividends, as and if declared by the Board
of Directors, out of funds legally available therefore. The
holders of common shares, upon any liquidation, dissolution or
winding-up of Boykin, are entitled to share ratably in any
assets remaining after payment in full of all liabilities of
Boykin and all preferences of the holders of any outstanding
preferred shares. The common shares possess ordinary voting
rights, each share entitling the holder thereof to one vote.
Holders of common shares do not have cumulative voting rights in
the election of directors and do not have preemptive rights.

Preferred
Shares

The Board of Directors is authorized to provide
for the issuance of two classes of preferred shares, each in one
or more series, to establish the number of shares in each series
and to fix the designation, powers, preferences and rights
(other than voting rights) of each series and the
qualifications, limitations or restrictions thereon. Because the
Board of Directors has the power to establish the preferences
and rights of each series of preferred shares, the Board of
Directors may afford the holders of any series of preferred
shares preferences, powers and rights senior to the rights of
holders of common shares. The issuance of preferred shares could
have the effect of delaying or preventing a change in control of
Boykin. As a result of the preferred offering in October 2002 as
discussed below, there were 181,000 preferred shares issued and
outstanding at December 31, 2003 and 2002.

In October 2002, Boykin completed an underwritten
public offering of 1,800,000 preferred depositary shares. Each
depositary share represents a 1/10 interest in one share of
Boykins 10 1/2% Class A Cumulative Preferred
Shares, Series 2002-A, and has a liquidation preference of
$25 per share. Dividends on the depositary shares are payable
quarterly, upon authorization by the Board of Directors,
beginning on January 15, 2003 at an annual rate of $2.625
per depositary share and are senior to the common shares. The
shares are listed and traded on the New York Stock Exchange. The
shares do not have a stated maturity and are not subject to any
sinking fund or mandatory redemption provisions. Net proceeds
from the offering were used to repay the outstanding balance on
the $65,000 credit facility (Note 5) and pay down $3,033 on
the $45,000 term note (Note 6). An additional 10,000
depositary shares were later issued to cover over-allotments.

F-23



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued







|   |                               
|-- | ------------------------------
|8. | Limited Partnership Interests:

Pursuant to the Partnership Agreement, the
minority interest limited partners of the Partnership have
exchange rights which enable them to cause the Partnership to
pay cash for their interests in the Partnership or, at
Boykins election, to exchange common shares for such
interests. The exchange rights may be exercised in whole or in
part. The number of common shares issuable to the limited
partners upon exercise of the exchange rights as of
December 31, 2001 was 1,291,114. Effective January 1,
2002, in conjunction with the TRS transactions discussed in
Note 1, an additional 1,427,142 limited partnership units
were issued as consideration for the acquisition of leasehold
interests in the hotels. As such, as of December 31, 2003
and 2002, there were 2,718,256 minority interest limited
partnership units outstanding. The number of shares issuable
upon exercise of the exchange rights will be adjusted upon the
occurrence of stock splits, mergers, consolidations or similar
pro rata share transactions, which otherwise would have the
effect of diluting the ownership interests of the limited
partners or the shareholders of Boykin.

Boykin owns a corresponding Series A
Preferred equity interest in the Partnership that entitles it to
income and distributions in amounts equal to the dividends
payable on the Series A Preferred shares discussed in
Note 7.



|   |                        
|-- | -----------------------
|9. | Joint Venture with AEW:

In February 1999, Boykin formed a joint venture
with AEW. Pursuant to the joint venture agreement, AEW has
contributed $21,834 of equity capital into the joint venture.
Boykin has contributed $7,278, has served as the operating
partner of the joint venture for which it receives compensation
from the joint venture, and has the right to receive incentive
returns based on the performance of acquired assets. Because of
the non-controlling nature of its ownership interest in the
joint venture, Boykin accounts for its investment utilizing the
equity method.

AEW has the option to acquire convertible
preferred shares in exchange for its capital invested in the
joint venture. If issued, the preferred shares would be
convertible into common shares at $16.48 per common share and
would have a minimum cumulative annual dividend equivalent to
$1.88 per common share. As of December 31, 2003, AEW had
the option to acquire preferred shares convertible into
1,324,849 common shares.

In August 1999, the Boykin/ AEW venture partnered
with a private investor, forming Boykin Chicago, L.L.C., in
which Boykin/ AEW has a 75% interest. Boykin Chicago, L.L.C.
purchased Hotel 71, located in Chicago, Illinois for cash
consideration of $48,000. The acquisition was accounted for as a
purchase and was funded with proceeds from a $30,000 secured
mortgage note with the remainder in cash from the partners. In
September 2000, Boykin purchased the 25% interest in Boykin
Chicago, L.L.C. from the private investor for $6,270, thereby
increasing Boykins total ownership interest in the hotel
from 18.75% to 43.75%. A subsidiary of BMC leased the property
pursuant to a long-term percentage lease agreement, which was
terminated on June 30, 2001. Subsequently, a TRS of Boykin
Chicago, L.L.C. entered into a management agreement with the
subsidiary of BMC to manage the property.



|    |                             
|--- | ----------------------------
|10. | Percentage Lease Agreements:

Rent due under percentage leases is the greater
of minimum rent, as defined, or percentage rent. Percentage rent
applicable to room and other hotel revenues varies by lease and
is calculated by multiplying fixed percentages by the total
amounts of such revenues over specified threshold amounts. Both
the minimum rent and the revenue thresholds used in computing
percentage rents applicable to room and other hotel revenues are
subject to annual adjustments based on increases in the United
States Consumer Price Index (CPI). Percentage rent
applicable to food and beverage revenues is calculated by
multiplying fixed percentages by the total amounts of such
revenues. Percentage lease revenues related to hotels still
owned as of December 31, 2003 were $1,958, $4,730 and
$66,118 respectively, for the years ended December 31,
2003, 2002 and 2001, of which approximately $611, $1,082 and
$11,016, respectively, was in excess of minimum rent. Effective
January 1, 2002, the majority of Boykins hotels were
leased to consolidated subsidiaries under the TRS structure
(Note 1).

F-24



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





The one percentage lease remaining for the
property not operated under the TRS structure (Note 1) has a
noncancelable remaining term of four years, subject to earlier
termination on the occurrence of certain contingencies, as
defined. Future minimum rentals (excluding future CPI increases)
to be received by Boykin from this lease for each of the years
in the period 2004 to 2007 are as follows:

|     |  |   |       | 
|---- |  | - | ----- | 
|2004 |  | $ | 1,373 | 
|2005 |  |   | 1,373 | 
|2006 |  |   | 1,373 | 
|2007 |  |   | 1,170 | 
|     |  |   |       | 
|     |  | $ | 5,289 | 
|     |  |   |       | 



|    |                          
|--- | -------------------------
|11. | Share Compensation Plans:

Boykin has a Long-Term Incentive Plan
(LTIP) which provides for the granting to officers
and eligible employees of incentive or nonqualified share
options, restricted shares, deferred shares, share purchase
rights and share appreciation rights in tandem with options, or
any combination thereof. Boykin has reserved 1,700,000 common
shares for issuance under the LTIP.

Share
Option Plan

The following summarizes information related to
share option activity in 2003, 2002 and 2001:

|                                 |                                          |                   |         |                      |   |   |       |       | 
|-------------------------------- | ---------------------------------------- | ----------------- | ------- | -------------------- | - | - | ----- | ----- | 
|                                 |                                          |                   |         | Weighted Average Per
|                                 |                                          | Number of Options |         | Share Exercise Price
|                                 |                                          |                   |         |                     
|Outstanding at January 1, 2001   |                                          |                   | 419,139 |                      |   | $ | 15.05 |      
|                                 | Options granted (officers and employees) |                   |         | 145,000              |   |   | $     | 7.62  | 
|                                 | Options granted (non-employee directors) |                   |         | 30,000               |   |   | $     | 7.295 | 
|                                 | Options exercised/forfeited/expired      |                   |         |                     |   |   |       |      | 
|                                 |                                          |                   |         |                      |   |   |       |      
|Outstanding at December 31, 2001 |                                          |                   | 594,139 |                      |   | $ | 12.84 |      
|                                 | Options granted (officers and employees) |                   |         | 353,000              |   |   | $     | 8.30  | 
|                                 | Options exercised/forfeited/expired      |                   |         | (108,000             | ) |   | $     | 10.48 | 
|                                 |                                          |                   |         |                      |   |   |       |      
|Outstanding at December 31, 2002 |                                          |                   | 839,139 |                      |   | $ | 11.24 |      
|                                 | Options granted                          |                   |         |                     |   |   |       |      | 
|                                 | Options exercised/forfeited/expired      |                   |         |                     |   |   |       |      | 
|                                 |                                          |                   |         |                      |   |   |       |      
|Outstanding at December 31, 2003 |                                          |                   | 839,139 |                      |   | $ | 11.24 |      

|     |      |         |  |                       |         |                     |  |                |      |  |  |  |         |  |  |   |       | 
|---- | ---- | ------- |  | --------------------- | ------- | ------------------- |  | -------------- | ---- |  |  |  | ------- |  |  | - | ----- | 
|     |      |         |  |                       |         |                    
|     |      |         |  |                       |         | Exercisable Options
|     |      |         |  |                       |         |                    
|     |      |         |  |                       |         |                     |  | Weighted      
|     |      |         |  | Weighted Average Fair |         |                     |  | Average Per   
|     |      | Options |  | Value of Options      |         |                     |  | Share Exercise
|Year |      | Granted |  | Granted               |         | Options Outstanding |  | Price         
|     |      |         |  |                       |         |                     |  |               
|     | 2003 |         |  |                       |        |                     |  |                |     |  |  |  | 518,539 |  |  | $ | 12.87 | 
|     | 2002 |         |  |                       | 353,000 |                     |  | $              | 1.05 |  |  |  | 422,405 |  |  | $ | 13.72 | 
|     | 2001 |         |  |                       | 175,000 |                     |  | $              | 0.66 |  |  |  | 361,073 |  |  | $ | 14.75 | 

F-25



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





As of December 31, 2003, information related
to outstanding options was as follows:

|                         |                   |               |  |                     |         |                  |  |             |       |                    |  |  |           |  |  |  |         |  |  |   |       | 
|------------------------ | ----------------- | ------------- |  | ------------------- | ------- | ---------------- |  | ----------- | ----- | ------------------ |  |  | --------- |  |  |  | ------- |  |  | - | ----- | 
|                         |                   |               |  |                    
|                         |                   | Total Options |  | Exercisable Options
|                         |                   |               |  |                    
|                         |                   |               |  | Weighted Average    |         | Weighted Average |  |             |       | Weighted Average  
|                         |                   | Options       |  | Per Share Exercise  |         | Remaining        |  | Options     |       | Per Share Exercise
|Range of Exercise Prices |                   | Outstanding   |  | Price               |         | Contractual Life |  | Outstanding |       | Price             
|                         |                   |               |  |                     |         |                  |  |             |       |                   
|                         | $ 7.295  $ 8.40  |               |  |                     | 479,000 |                  |  | $           | 8.00  |                    |  |  | 8.0 years |  |  |  | 198,000 |  |  | $ | 7.61  | 
|                         | $10.938  $13.75  |               |  |                     | 235,139 |                  |  | $           | 12.36 |                    |  |  | 5.5 years |  |  |  | 195,539 |  |  | $ | 12.65 | 
|                         | $20.00   $25.626 |               |  |                     | 125,000 |                  |  | $           | 21.52 |                    |  |  | 3.1 years |  |  |  | 125,000 |  |  | $ | 21.52 | 
|                         |                   |               |  |                     |         |                  |  |             |       |                    |  |  |           |  |  |  |         |  |  |   |       | 
|                         |                   |               |  |                     | 839,139 |                  |  | $           | 11.24 |                    |  |  | 6.6 years |  |  |  | 518,539 |  |  | $ | 12.87 | 
|                         |                   |               |  |                     |         |                  |  |             |       |                    |  |  |           |  |  |  |         |  |  |   |       | 

Options vest over various periods ranging from
one to nine years from the date of grant. In addition, certain
outstanding options are also subject to vesting based upon
financial performance targets. The term of each option granted
will not exceed ten years from date of grant, and the exercise
price may not be less than 100% of the fair market value of
Boykins common shares on the grant date.

The fair value of employee share options used to
compute the pro forma amounts of net income (loss) and
basic earnings per share presented in Note 2 was estimated
using the Black-Scholes option pricing model with the following
weighted average assumptions:

|                        |  |                    |   |      |  |      |           |   |  |  |           |  
|----------------------- |  | ------------------ | - | ---- |  | ---- | --------- | - |  |  | --------- | -
|                        |  |                   
|                        |  | Options Issued In:
|                        |  |                   
|                        |  | 2003               |   | 2002 |  | 2001
|                        |  |                    |   |      |  |     
|Dividend yield          |  |                    |  |      |  |      | 10.00     | % |  |  | 12.29     | %
|Expected volatility     |  |                    |  |      |  |      | 34.30     | % |  |  | 35.94     | %
|Risk-free interest rate |  |                    |  |      |  |      | 4.40      | % |  |  | 5.40      | %
|Expected holding period |  |                    |  |      |  |      | 5.0 years |   |  |  | 8.0 years |  

Restricted
Share Grant Plan

The following table summarizes Boykins
restricted share grant activity related to its officers,
eligible employees and non-employee directors.

|                                                      |  |      |         |      |  |  |         |  
|----------------------------------------------------- |  | ---- | ------- | ---- |  |  | ------- | -
|                                                      |  | 2003 |         | 2002
|                                                      |  |      |         |     
|Restricted shares outstanding 
    beginning of year |  |      | 219,352 |      |  |  | 200,736 |  
|New share grants                                      |  |      | 132,000 |      |  |  | 99,170  |  
|Shares cancelled                                      |  |      | (3,481  | )    |  |  | (11,315 | )
|Shares vested                                         |  |      | (59,131 | )    |  |  | (69,239 | )
|                                                      |  |      |         |      |  |  |         |  
|Restricted shares outstanding- end of year            |  |      | 288,740 |      |  |  | 219,352 |  
|                                                      |  |      |         |      |  |  |         |  

The restricted shares vest over various periods
ranging from one to five years from the date of grant. The value
of shares granted has been calculated based on the average of
the high and low share price on the date of grant and is being
amortized as compensation expense over the respective vesting
periods. For the years ended December 31, 2003, 2002 and
2001, Boykins compensation expense related to these
restricted shares was $756, $992 and $589, respectively. As of
December 31, 2003, the unearned compensation related to
restricted share grants was $1,428 and has been classified as a
component of shareholders equity in the accompanying
balance sheet.



|    |                        
|--- | -----------------------
|12. | Employee Benefit Plans:

Boykin maintains two employee benefit plans, the
Boykin Lodging Company Money Purchase Pension Plan and the
Boykin Lodging Company Profit Sharing Plan. Both plans are
defined contribution plans which were

F-26



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





established to provide retirement benefits to
eligible employees. Boykins contributions to these plans
for the years ended December 31, 2003, 2002 and 2001
totaled $290, $219 and $275, respectively.




|    |             
|--- | ------------
|13. | Commitments:

Portions of land related to six of the hotels
owned by Boykin as of December 31, 2003 are subject to land
leases which expire at various dates through 2068. All leases
require minimum annual rentals, and one lease requires
percentage rent based on hotel revenues. The other five leases
are adjusted for increases in CPI every one to ten years. Rental
expense charged to operations related to these leases for the
years ended December 31, 2003, 2002 and 2001 was $897, $943
and $1,013, respectively for continuing operations. Rental
expense charged to operations related to discontinued operations
for the years ended December 31, 2003, 2002 and 2001
totaled $23, $44 and $44, respectively.

Boykin entered into a lease agreement which
expires in January 2008 for the office space currently used by
Boykin and BMC and its subsidiaries. Pursuant to a shared
services and office space agreement, BMC reimburses Boykin for
its proportionate share of the space used under the lease
agreement. Boykins expense charged to operations related
to its proportionate share of the utilized space for the years
ended December 31, 2003, 2002 and 2001 was $75, $64 and
$61, respectively. Amounts reimbursed from BMC for the years
ended December 31, 2003, 2002 and 2001 was $147, $119 and
$113, respectively.

As a part of normal operations, Boykin has
numerous operating leases related to the hotels in its portfolio
or its corporate office. Additionally, as a part of ongoing
capital improvement projects at the hotels and corporate
offices, purchase obligations are often entered into.

Boykins annual obligations to make future
minimum payments under the land lease agreements (excluding
future CPI increases), the office space lease, other operating
leases and purchase obligations which are not required to be
reflected in the balance sheet as of December 31, 2003 are
as follows:

|                    |  |   |        | 
|------------------- |  | - | ------ | 
|2004                |  | $ | 10,229 | 
|2005                |  |   | 1,436  | 
|2006                |  |   | 1,111  | 
|2007                |  |   | 962    | 
|2008                |  |   | 685    | 
|2009 and thereafter |  |   | 23,718 | 
|                    |  |   |        | 
|                    |  | $ | 38,141 | 
|                    |  |   |        | 

In addition to the amounts disclosed above, as of
December 31, 2003 Boykin has also entered into various
franchise, management and other lease agreements that are
contingent upon future results of operations of the hotels in
its portfolio and provide for potential termination fees
dependent upon the timing and method of termination of such
agreements.

Upon purchasing the Doubletree Kansas City in
1997, Boykin assumed certain obligations related to a tax
increment financing (TIF). The hotel is subject to a
lease (the Lease) with the City of Kansas City (the
City), which provides for rent payments equal to the
debt service related to the Taxable Lease Revenue Bonds
(Municipal Auditorium and 13th and Wyandotte Hotel Redevelopment
Projects), Series 1996 (the Bonds), issued by
the Land Clearance for Redevelopment Authority of Kansas City,
Missouri (the Authority), offset by incremental tax
and parking revenues received by the City which are generated by
the project, including real estate tax revenues and special
assessments paid by the hotel and parking rental payments made
by the hotel plus a credit enhancement fee. Revenues received by
the City have, and are expected to continue to, fully offset
rent payments which would otherwise be due pursuant to the Lease
other than the credit enhancement fee. The present value of the
fixed and determinable payments to be made pursuant to a special
assessment, credit enhancement

F-27



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





fees and a garage management agreement have been
reflected as liabilities totaling $6,106 in Boykins
financial statements as of December 31, 2003 in accordance
with the provisions of Emerging Issues Task Force 91-10,
Accounting for Special Assessments and Tax Increment
Financing Entities. Boykin had previously accounted for
the payments under these arrangements as period costs and the
capitalization of these amounts at December 31, 2003 was
not deemed material to prior periods and had no affect on net
income in 2003 or shareholders equity at December 31,
2003.


The City and the Authority have the right,
commencing in 2006 and upon no less than 12 months notice,
to require Boykin Kansas City LLC, owner of the hotel and
wholly-owned subsidiary of the Partnership, to purchase certain
property (including the land under the hotel and parking areas)
at a price based primarily on the redemption price of the Bonds
(the Purchase). The balance on the Bonds as of
December 31, 2003 was $14,470. Under certain circumstances,
this Purchase may be delayed by Boykin Kansas City LLC for up to
two years. In the event the City requires Boykin Kansas City LLC
to complete the Purchase and redeem the Bonds, the City has
indicated that it will continue to make the incremental tax
revenues available to support a refinancing of the Bonds. The
hotel serves as collateral for the Lease and certain other
obligations of Boykin Kansas City LLC.

Boykins joint venture partner in Shawan
Road Hotel Limited Partnership has the right, subject to certain
performance criteria, to sell one-half of its respective
interests in this joint venture to Boykin at fair market value,
with Boykin retaining the option to fund the purchase price with
cash or through the issuance of common shares. As of
December 31, 2003, Boykins joint venture partner did
not have the ability to exercise this right.



|    |                            
|--- | ---------------------------
|14. | Related Party Transactions:

The Chairman and Chief Executive Officer of
Boykin is the majority shareholder of BMC. BMC and Westboy,
previously a subsidiary of BMC, were significant sources of
Boykins percentage lease revenue through December 31,
2001, providing $54,371 of lease revenues during 2001. Boykin
paid a $1,600 lease termination fee to BMC related to the sale
of the Daytona hotel in January 2001.

As a result of the TRS transaction discussed in
Note 1, Boykin acquired 16 subsidiaries of BMC whose primary
assets were leasehold interests in 25 hotel properties owned by
Boykin for consideration comprised of 1,427,142 limited
partnership units valued at approximately $11,400 (based upon
the average closing price of the common shares for the five-day
period prior to the closing of the transaction), and the
assumption of $1,600 of working capital liabilities in excess of
assets relating to Westboy. In connection with these events,Boykins Board of Directors established a special
committee (the Special Committee), consisting only
of independent directors, to evaluate and negotiate the
transactions with BMC. In determining the amount of the
consideration paid to BMC, the Special Committee considered,
among other things, the expected profitability of the entities
acquired offset by the expected costs of management fees and
income taxes to be incurred by the TRS following the
transaction. The Special Committee also took into account the
benefits of expected operational efficiencies as well as the
elimination of potential lease termination fees upon the sale of
hotels. The Special Committee was advised by independent counsel
and financial advisors. Boykin believes that the methodology
used to determine the consideration paid to BMC was reasonable.
At December 31, 2001, Boykin had recorded a receivable from
BMC of $2,008 for the net working capital assets of the
subsidiaries acquired. As of December 31, 2002, $6 of the
receivable was outstanding and was collected in full during 2003.

Also in conjunction with the TRS transaction,
effective January 1, 2002, BMC assumed management of 16 of
the consolidated properties in which Boykin owned an interest.
Additionally, during October 2002, BMC assumed management of the
Doubletree Kansas City and the Pink Shell Beach Resort after
Boykin terminated the previously existing management agreements
with Interstate Hotels and Resorts (Interstate).
During 2003, BMC assumed management of seven other hotels in
conjunction with the Hilton Modification Agreement as discussed
in Note 1 and assumed management of the Holiday Inn Minneapolis
West after Boykin terminated the previously existing management
agreement with Interstate. Management fees earned by BMC related
to the

F-28



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





continuing operations of these hotels during the
years ended December 31, 2003 and 2002 totaled $4,746 and
$3,973, respectively. Management fees earned by BMC related to
discontinued operations totaled $45 and $366 for 2003 and 2002,
respectively. An additional $12 was paid during 2003 for other
services provided pursuant to the management agreements.


Prior to the TRS transactions, a wholly owned
subsidiary of BMC managed the Radisson Hotel Mount Laurel
pursuant to a management agreement. Boykin paid this subsidiary
management fees of $200 in 2001.

The management agreements between Boykin and BMC
were approved by the independent members of Boykins Board
of Directors.

As of December 31, 2003 and 2002, Boykin had
related party payables to BMC related to continuing operations
of $991 and $678, primarily related to management fees and
reimbursements of expenses on behalf of the hotel properties.
Payables to related parties as of December 31, 2002
pertaining to discontinued operations are disclosed in
Note 4.

During the years ended December 31, 2003,
2002 and 2001, Boykin paid a wholly-owned subsidiary of BMC
$630, $192 and $774, respectively, for design and project
management services and for reimbursement of expenses related to
capital improvements at its hotels. During 2001, a subsidiary of
BMC sold a portion of its business to an unrelated third party.
A portion of the sales price is payable contingent upon future
revenues of the business, including revenues from Boykin. During
2003 and 2002, an additional $59 and $78 of sales proceeds was
provided to BMC as a result of purchases made by Boykin. Fees
paid to BMC and its subsidiaries for services which are not
subject to management agreements are at market prices as
determined by the independent members of the Board of Directors.
The Boards market price determinations are based from time
to time on market checks performed by management and outside
consultants, comparative information provided by BMC and
industry publications.

Boykin believes that the methodologies used for
determining amounts to be paid to BMC and its subsidiaries for
management and other services are reasonable.



|    |                                                        
|--- | -------------------------------------------------------
|15. | Statements of Cash Flows, Supplemental
    Disclosures:

As of December 31, 2003 and 2002, there were
$1,188 and $4,747 of dividends and Partnership distributions
which were declared but not paid.

Interest paid during the years ended
December 31, 2003, 2002, and 2001 was $16,743, $20,240 and
$22,178, respectively.

In 2003, Boykin recorded an obligation of $6,106
related to its interest in the hotel in Kansas City. The
obligation represents additional purchase consideration and was
therefore recorded as an addition to land and building and
improvements.



|    |                                             
|--- | --------------------------------------------
|16. | Quarterly Operating Results
    (Unaudited):

Boykins unaudited consolidated quarterly
operating data for the years ended December 31, 2003 and
2002 follows. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a

F-29



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





fair presentation of quarterly results have been
reflected in the data. Quarterly operating results are not
necessarily indicative of the results to be achieved in
succeeding quarters or years.


|                                                                                       |         |                            |        |         |   |              |        |             |   |   |        |        |   |   |        |        |  
|-------------------------------------------------------------------------------------- | ------- | -------------------------- | ------ | ------- | - | ------------ | ------ | ----------- | - | - | ------ | ------ | - | - | ------ | ------ | -
|                                                                                       |         |                           
|                                                                                       |         | For the 2003 Quarter Ended
|                                                                                       |         |                           
|                                                                                       |         | March 31                   |        | June 30 |   | September 30 |        | December 31
|                                                                                       |         |                            |        |         |   |              |        |            
|Total revenues                                                                         |         | $                          | 63,707 |         |   | $            | 69,332 |             |   | $ | 71,868 |        |   | $ | 64,255 |       
|Income (loss) attributable to common
    shareholders before discontinued operations   |         |                            | (3,013 | )       |   |              | (370   | )           |   |   | 47     |        |   |   | (3,644 | )     
|Discontinued operations, net of minority interest                                      |         |                            | 287    |         |   |              | (1,260 | )           |   |   | (224   | )      |   |   |       |       
|                                                                                       |         |                            |        |         |   |              |        |             |   |   |        |        |   |   |        |       
|Net loss attributable to common shareholders                                           |         |                            | (2,726 | )       |   |              | (1,630 | )           |   |   | (177   | )      |   |   | (3,644 | )     
|Loss attributable to common shareholders before
    discontinued operations per share: |         |                            |        |         |   |              |        |             |   |   |        |        |   |   |        |       
|                                                                                       | Basic   |                            |        | (0.17   | ) |              |        | (0.02       | ) |   |        | 0.00   |   |   |        | (0.21  | )
|                                                                                       | Diluted |                            |        | (0.17   | ) |              |        | (0.02       | ) |   |        | 0.00   |   |   |        | (0.21  | )
|Net loss attributable to common shareholders per
    share:                            |         |                            |        |         |   |              |        |             |   |   |        |        |   |   |        |       
|                                                                                       | Basic   |                            |        | (0.16   | ) |              |        | (0.09       | ) |   |        | (0.01  | ) |   |        | (0.21  | )
|                                                                                       | Diluted |                            |        | (0.16   | ) |              |        | (0.09       | ) |   |        | (0.01  | ) |   |        | (0.21  | )
|Weighted average number of common shares
    outstanding (in thousands):               |         |                            |        |         |   |              |        |             |   |   |        |        |   |   |        |       
|                                                                                       | Basic   |                            |        | 17,317  |   |              |        | 17,339      |   |   |        | 17,344 |   |   |        | 17,344 |  
|                                                                                       | Diluted |                            |        | 17,413  |   |              |        | 17,420      |   |   |        | 17,445 |   |   |        | 17,509 |  

|                                                                                                |         |                            |        |         |   |              |        |             |  |   |        |        |   |   |        |        |  
|----------------------------------------------------------------------------------------------- | ------- | -------------------------- | ------ | ------- | - | ------------ | ------ | ----------- |  | - | ------ | ------ | - | - | ------ | ------ | -
|                                                                                                |         |                           
|                                                                                                |         | For the 2002 Quarter Ended
|                                                                                                |         |                           
|                                                                                                |         | March 31                   |        | June 30 |   | September 30 |        | December 31
|                                                                                                |         |                            |        |         |   |              |        |            
|Total revenues                                                                                  |         | $                          | 56,946 |         |   | $            | 63,342 |             |  | $ | 62,677 |        |   | $ | 62,544 |       
|Income (loss) attributable to common
    shareholders before discontinued operations            |         |                            | (1,580 | )       |   |              | 2,627  |             |  |   | (122   | )      |   |   | (2,550 | )     
|Discontinued operations, net of minority interest                                               |         |                            | (365   | )       |   |              | 271    |             |  |   | 210    |        |   |   | 29     |       
|                                                                                                |         |                            |        |         |   |              |        |             |  |   |        |        |   |   |        |       
|Net income (loss) attributable to common
    shareholders                                       |         |                            | (1,945 | )       |   |              | 2,898  |             |  |   | 88     |        |   |   | (2,521 | )     
|Income (loss) attributable to common
    shareholders before discontinued operations per share: |         |                            |        |         |   |              |        |             |  |   |        |        |   |   |        |       
|                                                                                                | Basic   |                            |        | (0.09   | ) |              |        | 0.15        |  |   |        | (0.01  | ) |   |        | (0.15  | )
|                                                                                                | Diluted |                            |        | (0.09   | ) |              |        | 0.15        |  |   |        | (0.01  | ) |   |        | (0.15  | )
|Net income (loss) attributable to common
    shareholders per share:                            |         |                            |        |         |   |              |        |             |  |   |        |        |   |   |        |       
|                                                                                                | Basic   |                            |        | (0.11   | ) |              |        | 0.17        |  |   |        | 0.01   |   |   |        | (0.15  | )
|                                                                                                | Diluted |                            |        | (0.11   | ) |              |        | 0.17        |  |   |        | 0.01   |   |   |        | (0.15  | )
|Weighted average number of common shares
    outstanding (in thousands):                        |         |                            |        |         |   |              |        |             |  |   |        |        |   |   |        |       
|                                                                                                | Basic   |                            |        | 17,218  |   |              |        | 17,239      |  |   |        | 17,262 |   |   |        | 17,273 |  
|                                                                                                | Diluted |                            |        | 17,294  |   |              |        | 17,379      |  |   |        | 17,385 |   |   |        | 17,396 |  

F-30



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued







|    |                   
|--- | ------------------
|17. | Subsequent Events:

On March 2, 2004, the City of Portland,
through the Portland Development Commission (PDC),
acquired the Doubletree Portland Downtown Hotel in Portland,
Oregon, through its power of eminent domain. Boykin was informed
that the property will be redeveloped for the purpose of student
housing, academic, retail and conference uses for Portland State
University. The PDC acquired the property for its fair market
value of $19,700. Approximately $16,870 of the proceeds were
applied to the outstanding balance of Boykins $130,000
term loan, for which the property served as collateral. The
remainder of the net proceeds was available for general
corporate purposes. Additionally, Boykin sold the related
furniture, fixtures and equipment contained within the property
to Portland State University for $2,272. The proceeds from the
sale of the related furniture, fixtures and equipment were
deposited into the furniture, fixtures and equipment reserve
fund of the $130,000 term loan. Boykin anticipates recording a
gain on sale/disposal of assets of approximately $1,500 as a
result of these transactions.

In compliance with the terms of the Modification
Agreement, Hilton ceased management of Boykins hotel in
Yakima, Washington, in February 2004. Simultaneously, the hotel
changed from a Doubletree to a Clarion. At that time, Boykin
entered into an agreement with a regional management company to
take over operations of the hotel. The new management agreement
has an indefinite life but is cancelable by Boykin without
penalty upon providing 30 days notice.

During February 2004, Boykins hotel in Ft.
Myers, Florida, which previously was a Radisson, was re-flagged
as a Best Western.

F-31



---



##### Table of Contents



BOYKIN LODGING COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





BOYKIN LODGING COMPANY

SCHEDULE III  REAL ESTATE AND
ACCUMULATED DEPRECIATION

AS OF DECEMBER 31, 2003

(in thousands)

|                                                                   |  |              |     |              |  |               |        |                            |  |               |        |      |  |               |        |             |  |   |        |   |  |   |        |  |  |   |        |  |  |   |        | 
|------------------------------------------------------------------ |  | ------------ | --- | ------------ |  | ------------- | ------ | -------------------------- |  | ------------- | ------ | ---- |  | ------------- | ------ | ----------- |  | - | ------ | - |  | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                                                   |  |              |     |              |  |               |        |                            |  |               |        |      |  |              
|                                                                   |  |              |     |              |  |               |        | Costs Capitalized          |  |              
|                                                                   |  |              |     |              |  | Subsequent to |        | Gross Amounts at Which    
|                                                                   |  |              |     | Initial Cost |  | Acquisition   |        | Carried at Close of Period
|                                                                   |  |              |     |              |  |               |        |                           
|                                                                   |  |              |     |              |  | Buildings and |        |                            |  | Buildings and |        |      |  | Buildings and |        |            
|Description                                                        |  | Encumbrances |     | Land         |  | Improvements  |        | Land                       |  | Improvements  |        | Land |  | Improvements  |        | Total(f)(g)
|                                                                   |  |              |     |              |  |               |        |                            |  |               |        |      |  |               |        |            
|Corporate Offices
    Cleveland, Ohio                              |  |              |    |              |  | $             |       |                            |  | $             |       |      |  | $             |       |             |  | $ | 35     |   |  | $ |       |  |  | $ | 35     |  |  | $ | 35     | 
|Doubletree Berkeley Marina
    Berkeley, California                |  |              | (c | )            |  |               |       |                            |  |               | 10,807 |      |  |               |       |             |  |   | 8,846  |   |  |   |       |  |  |   | 19,653 |  |  |   | 19,653 | 
|Buffalo Marriott
    Buffalo, New York                             |  |              | (c | )            |  |               | 1,164  |                            |  |               | 15,174 |      |  |               |       |             |  |   | 2,666  |   |  |   | 1,164  |  |  |   | 17,840 |  |  |   | 19,004 | 
|Cleveland Airport Marriott
    Cleveland, Ohio                     |  |              | (c | )            |  |               | 1,175  |                            |  |               | 11,441 |      |  |               |       |             |  |   | 9,032  |   |  |   | 1,175  |  |  |   | 20,473 |  |  |   | 21,648 | 
|Columbus North Marriott
    Columbus, Ohio                         |  |              |    |              |  |               | 1,635  |                            |  |               | 12,873 |      |  |               |       |             |  |   | 2,892  |   |  |   | 1,635  |  |  |   | 15,765 |  |  |   | 17,400 | 
|Melbourne Quality Suites
    Melbourne, Florida                    |  |              | (a | )            |  |               | 3,092  |                            |  |               | 7,819  |      |  |               |       |             |  |   | 1,423  |   |  |   | 3,092  |  |  |   | 9,242  |  |  |   | 12,334 | 
|Radisson Inn Sanibel Gateway
    Ft. Myers, Florida                |  |              | (c | )            |  |               | 718    |                            |  |               | 2,686  |      |  |               |       |             |  |   | 818    |   |  |   | 718    |  |  |   | 3,504  |  |  |   | 4,222  | 
|Holiday Inn Crabtree
    Raleigh, North Carolina                   |  |              | (c | )            |  |               | 725    |                            |  |               | 6,542  |      |  |               |       |             |  |   | 1,471  |   |  |   | 725    |  |  |   | 8,013  |  |  |   | 8,738  | 
|Melbourne Hilton Oceanfront
    Melbourne, Florida                 |  |              | (a | )            |  |               | 852    |                            |  |               | 7,699  |      |  |               |       |             |  |   | 1,059  |   |  |   | 852    |  |  |   | 8,758  |  |  |   | 9,610  | 
|French Lick Springs Resort and Spa
    French Lick, Indiana        |  |              |    |              |  |               | 2,000  |                            |  |               | 16,000 |      |  |               | (3     | )           |  |   | 1,716  |   |  |   | 1,997  |  |  |   | 17,716 |  |  |   | 19,713 | 
|Holiday Inn Minneapolis West
    Minneapolis, Minnesota            |  |              | (a | )            |  |               | 1,000  |                            |  |               | 10,604 |      |  |               |       |             |  |   | (1,002 | ) |  |   | 1,000  |  |  |   | 9,602  |  |  |   | 10,602 | 
|Marriotts Hunt Valley Inn
    Baltimore, Maryland                 |  |              | (a | )            |  |               | 2,890  |                            |  |               | 21,575 |      |  |               |       |             |  |   | 2,389  |   |  |   | 2,890  |  |  |   | 23,964 |  |  |   | 26,854 | 
|Hampton Inn San Diego Airport/ Sea World
    San Diego, California |  |              | (c | )            |  |               | 1,000  |                            |  |               | 7,400  |      |  |               |       |             |  |   | 609    |   |  |   | 1,000  |  |  |   | 8,009  |  |  |   | 9,009  | 
|Doubletree Kansas City
    Kansas City, Missouri                   |  |              | (d | )            |  |               | 1,500  |                            |  |               | 20,958 |      |  |               | 3,664  |             |  |   | (5,618 | ) |  |   | 5,164  |  |  |   | 15,340 |  |  |   | 20,504 | 
|High Point Radisson
    High Point, North Carolina                 |  |              | (a | )            |  |               | 450    |                            |  |               | 25,057 |      |  |               |       |             |  |   | (2,160 | ) |  |   | 450    |  |  |   | 22,897 |  |  |   | 23,347 | 
|Radisson Hotel Mt. Laurel
    Mt. Laurel, New Jersey               |  |              | (a | )            |  |               | 2,000  |                            |  |               | 19,697 |      |  |               |       |             |  |   | (5,595 | ) |  |   | 2,000  |  |  |   | 14,102 |  |  |   | 16,102 | 
|Pink Shell Beach Resort
    Ft. Myers, Florida                     |  |              | (e | )            |  |               | 6,000  |                            |  |               | 13,445 |      |  |               | (1,800 | )           |  |   | (7,315 | ) |  |   | 4,200  |  |  |   | 6,130  |  |  |   | 10,330 | 
|Radisson Suite Beach Resort
    Marco Island, Florida              |  |              |    |              |  |               | 14,570 |                            |  |               | 12,605 |      |  |               |       |             |  |   | 18     |   |  |   | 14,570 |  |  |   | 12,623 |  |  |   | 27,193 | 
|Doubletree Sacramento
    Sacramento, California                   |  |              | (b | )            |  |               | 4,400  |                            |  |               | 41,884 |      |  |               |       |             |  |   | 3,584  |   |  |   | 4,400  |  |  |   | 45,468 |  |  |   | 49,868 | 
|Doubletree Colorado Springs
    Colorado Springs, Colorado         |  |              | (b | )            |  |               | 3,340  |                            |  |               | 31,296 |      |  |               |       |             |  |   | 1,438  |   |  |   | 3,340  |  |  |   | 32,734 |  |  |   | 36,074 | 
|Doubletree Boise
    Boise, Idaho                                  |  |              | (b | )            |  |               | 2,470  |                            |  |               | 23,998 |      |  |               |       |             |  |   | 2,645  |   |  |   | 2,470  |  |  |   | 26,643 |  |  |   | 29,113 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                                   |  |                 |       |                |  |              |        |             |  |                 |      |  |  |  |      |  |  |  |          | 
|------------------------------------------------------------------ |  | --------------- | ----- | -------------- |  | ------------ | ------ | ----------- |  | --------------- | ---- |  |  |  | ---- |  |  |  | -------- | 
|                                                                   |  |                 |       |                |  |              |        |             |  | Life on Which  
|                                                                   |  | Accumulated     |       | Net Book       |  |              |        |             |  | Depreciation in
|                                                                   |  | Depreciation    |       | Value Land and |  |              |        |             |  | Statement of   
|                                                                   |  | Building and    |       | Buildings and  |  | Date of      |        | Date of     |  | Operations is  
|Description                                                        |  | Improvements(h) |       | Improvements   |  | Construction |        | Acquisition |  | Computed       
|                                                                   |  |                 |       |                |  |              |        |             |  |                
|Corporate Offices
    Cleveland, Ohio                              |  | $               | 20    |                |  | $            | 15     |             |  |                 | 1998 |  |  |  |      |  |  |  | 10 years | 
|Doubletree Berkeley Marina
    Berkeley, California                |  |                 | 5,275 |                |  |              | 14,378 |             |  |                 | 1972 |  |  |  | 1996 |  |  |  | 20 years | 
|Buffalo Marriott
    Buffalo, New York                             |  |                 | 4,746 |                |  |              | 14,258 |             |  |                 | 1981 |  |  |  | 1996 |  |  |  | 25 years | 
|Cleveland Airport Marriott
    Cleveland, Ohio                     |  |                 | 6,722 |                |  |              | 14,926 |             |  |                 | 1970 |  |  |  | 1996 |  |  |  | 20 years | 
|Columbus North Marriott
    Columbus, Ohio                         |  |                 | 4,219 |                |  |              | 13,181 |             |  |                 | 1981 |  |  |  | 1996 |  |  |  | 25 years | 
|Melbourne Quality Suites
    Melbourne, Florida                    |  |                 | 2,029 |                |  |              | 10,305 |             |  |                 | 1986 |  |  |  | 1996 |  |  |  | 30 years | 
|Radisson Inn Sanibel Gateway
    Ft. Myers, Florida                |  |                 | 741   |                |  |              | 3,481  |             |  |                 | 1986 |  |  |  | 1996 |  |  |  | 30 years | 
|Holiday Inn Crabtree
    Raleigh, North Carolina                   |  |                 | 1,944 |                |  |              | 6,794  |             |  |                 | 1974 |  |  |  | 1997 |  |  |  | 30 years | 
|Melbourne Hilton Oceanfront
    Melbourne, Florida                 |  |                 | 1,635 |                |  |              | 7,975  |             |  |                 | 1986 |  |  |  | 1997 |  |  |  | 35 years | 
|French Lick Springs Resort and Spa
    French Lick, Indiana        |  |                 | 4,095 |                |  |              | 15,618 |             |  |                 | 1903 |  |  |  | 1997 |  |  |  | 30 years | 
|Holiday Inn Minneapolis West
    Minneapolis, Minnesota            |  |                 | 2,501 |                |  |              | 8,101  |             |  |                 | 1986 |  |  |  | 1997 |  |  |  | 30 years | 
|Marriotts Hunt Valley Inn
    Baltimore, Maryland                 |  |                 | 4,929 |                |  |              | 21,925 |             |  |                 | 1971 |  |  |  | 1997 |  |  |  | 30 years | 
|Hampton Inn San Diego Airport/ Sea World
    San Diego, California |  |                 | 1,573 |                |  |              | 7,436  |             |  |                 | 1989 |  |  |  | 1997 |  |  |  | 30 years | 
|Doubletree Kansas City
    Kansas City, Missouri                   |  |                 | 4,349 |                |  |              | 16,155 |             |  |                 | 1969 |  |  |  | 1997 |  |  |  | 30 years | 
|High Point Radisson
    High Point, North Carolina                 |  |                 | 4,769 |                |  |              | 18,578 |             |  |                 | 1982 |  |  |  | 1998 |  |  |  | 30 years | 
|Radisson Hotel Mt. Laurel
    Mt. Laurel, New Jersey               |  |                 | 3,094 |                |  |              | 13,008 |             |  |                 | 1975 |  |  |  | 1998 |  |  |  | 30 years | 
|Pink Shell Beach Resort
    Ft. Myers, Florida                     |  |                 | 4,578 |                |  |              | 5,752  |             |  |                 | 1989 |  |  |  | 1998 |  |  |  | 30 years | 
|Radisson Suite Beach Resort
    Marco Island, Florida              |  |                 | 140   |                |  |              | 27,053 |             |  |                 | 1986 |  |  |  | 2003 |  |  |  | 30 years | 
|Doubletree Sacramento
    Sacramento, California                   |  |                 | 8,172 |                |  |              | 41,696 |             |  |                 | 1974 |  |  |  | 1998 |  |  |  | 30 years | 
|Doubletree Colorado Springs
    Colorado Springs, Colorado         |  |                 | 6,033 |                |  |              | 30,041 |             |  |                 | 1986 |  |  |  | 1998 |  |  |  | 30 years | 
|Doubletree Boise
    Boise, Idaho                                  |  |                 | 4,750 |                |  |              | 24,363 |             |  |                 | 1968 |  |  |  | 1998 |  |  |  | 30 years | 

F-32



---



##### Table of Contents



|                                                      |  |              |     |              |  |               |        |                            |  |               |         |      |  |               |       |             |  |   |        |   |  |   |        |  |  |   |         |  |  |   |         | 
|----------------------------------------------------- |  | ------------ | --- | ------------ |  | ------------- | ------ | -------------------------- |  | ------------- | ------- | ---- |  | ------------- | ----- | ----------- |  | - | ------ | - |  | - | ------ |  |  | - | ------- |  |  | - | ------- | 
|                                                      |  |              |     |              |  |               |        |                            |  |               |         |      |  |              
|                                                      |  |              |     |              |  |               |        | Costs Capitalized          |  |              
|                                                      |  |              |     |              |  | Subsequent to |        | Gross Amounts at Which    
|                                                      |  |              |     | Initial Cost |  | Acquisition   |        | Carried at Close of Period
|                                                      |  |              |     |              |  |               |        |                           
|                                                      |  |              |     |              |  | Buildings and |        |                            |  | Buildings and |         |      |  | Buildings and |       |            
|Description                                           |  | Encumbrances |     | Land         |  | Improvements  |        | Land                       |  | Improvements  |         | Land |  | Improvements  |       | Total(f)(g)
|                                                      |  |              |     |              |  |               |        |                            |  |               |         |      |  |               |       |            
|Doubletree Omaha
    Omaha, Nebraska                  |  |              | (b | )            |  |               | 1,100  |                            |  |               | 19,690  |      |  |               |      |             |  |   | 8,968  |   |  |   | 1,100  |  |  |   | 28,658  |  |  |   | 29,758  | 
|Doubletree Portland Lloyd Center
    Portland, Oregon |  |              | (b | )            |  |               | 3,900  |                            |  |               | 61,633  |      |  |               |      |             |  |   | 2,456  |   |  |   | 3,900  |  |  |   | 64,089  |  |  |   | 67,989  | 
|Doubletree Portland Downtown
    Portland, Oregon     |  |              | (b | )            |  |               | 1,800  |                            |  |               | 21,034  |      |  |               |      |             |  |   | 964    |   |  |   | 1,800  |  |  |   | 21,998  |  |  |   | 23,798  | 
|Ramada Inn Bellevue Center
    Bellevue, Washington   |  |              |    |              |  |               | 2,400  |                            |  |               | 13,730  |      |  |               |      |             |  |   | 146    |   |  |   | 2,400  |  |  |   | 13,876  |  |  |   | 16,276  | 
|Doubletree Yakima Valley
    Yakima, Washington       |  |              |    |              |  |               | 1,140  |                            |  |               | 6,188   |      |  |               |      |             |  |   | (3,064 | ) |  |   | 1,140  |  |  |   | 3,124   |  |  |   | 4,264   | 
|Embassy Suites Southfield
    Southfield, Michigan    |  |              | (a | )            |  |               | 777    |                            |  |               | 7,639   |      |  |               |      |             |  |   | 3,300  |   |  |   | 777    |  |  |   | 10,939  |  |  |   | 11,716  | 
|Doubletree Hotel San Antonio
    San Antonio, Texas   |  |              | (b | )            |  |               | 1,140  |                            |  |               | 11,203  |      |  |               |      |             |  |   | 539    |   |  |   | 1,140  |  |  |   | 11,742  |  |  |   | 12,882  | 
|                                                      |  |              |     |              |  |               |        |                            |  |               |         |      |  |               |       |             |  |   |        |   |  |   |        |  |  |   |         |  |  |   |         | 
|Total                                                 |  |              |     |              |  | $             | 63,238 |                            |  | $             | 460,677 |      |  | $             | 1,861 |             |  | $ | 32,260 |   |  | $ | 65,099 |  |  | $ | 492,937 |  |  | $ | 558,036 | 
|                                                      |  |              |     |              |  |               |        |                            |  |               |         |      |  |               |       |             |  |   |        |   |  |   |        |  |  |   |         |  |  |   |         | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                      |  |                 |         |                |  |              |         |             |  |                 |         |  |  |  |      |  |  |  |          | 
|----------------------------------------------------- |  | --------------- | ------- | -------------- |  | ------------ | ------- | ----------- |  | --------------- | ------- |  |  |  | ---- |  |  |  | -------- | 
|                                                      |  |                 |         |                |  |              |         |             |  | Life on Which  
|                                                      |  | Accumulated     |         | Net Book       |  |              |         |             |  | Depreciation in
|                                                      |  | Depreciation    |         | Value Land and |  |              |         |             |  | Statement of   
|                                                      |  | Building and    |         | Buildings and  |  | Date of      |         | Date of     |  | Operations is  
|Description                                           |  | Improvements(h) |         | Improvements   |  | Construction |         | Acquisition |  | Computed       
|                                                      |  |                 |         |                |  |              |         |             |  |                
|Doubletree Omaha
    Omaha, Nebraska                  |  |                 | 4,312   |                |  |              | 25,446  |             |  |                 | 1970/81 |  |  |  | 1998 |  |  |  | 30 years | 
|Doubletree Portland Lloyd Center
    Portland, Oregon |  |                 | 11,768  |                |  |              | 56,221  |             |  |                 | 1964/81 |  |  |  | 1998 |  |  |  | 30 years | 
|Doubletree Portland Downtown
    Portland, Oregon     |  |                 | 4,027   |                |  |              | 19,771  |             |  |                 | 1972    |  |  |  | 1998 |  |  |  | 30 years | 
|Ramada Inn Bellevue Center
    Bellevue, Washington   |  |                 | 3,136   |                |  |              | 13,140  |             |  |                 | 1981    |  |  |  | 1998 |  |  |  | 30 years | 
|Doubletree Yakima Valley
    Yakima, Washington       |  |                 | 971     |                |  |              | 3,293   |             |  |                 | 1968    |  |  |  | 1998 |  |  |  | 30 years | 
|Embassy Suites Southfield
    Southfield, Michigan    |  |                 | 1,090   |                |  |              | 10,626  |             |  |                 | 1978    |  |  |  | 2000 |  |  |  | 30 years | 
|Doubletree Hotel San Antonio
    San Antonio, Texas   |  |                 | 1,297   |                |  |              | 11,585  |             |  |                 | 1987    |  |  |  | 2000 |  |  |  | 30 years | 
|                                                      |  |                 |         |                |  |              |         |             |  |                 |         |  |  |  |      |  |  |  |          | 
|Total                                                 |  | $               | 102,915 |                |  | $            | 449,015 |             |  |                 |         |  |  |  |      |  |  |  |          | 
|                                                      |  |                 |         |                |  |              |         |             |  |                 |         |  |  |  |      |  |  |  |          | 



| | 
| | 
| | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | These hotels are collateral for the line of
    credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(b) | These hotels are collateral for the $130,000 term
    note payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(c) | These hotels are collateral for the $108,000 term
    note payable.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(d) | Effective November 30, 2001, Interstate
    assigned their 20% minority interest in the joint venture which
    owns the hotel to the Partnership. The elimination of the
    minority interest in the hotel ($5,129) was accounted for as a
    reduction in the value of the building as of November 30,
    2001. The hotel serves as collateral for certain obligations of
    Boykin Kansas City LLC related to a tax increment financing.                                                                         
|   
|(e) | This activity includes the reclassification of
    the net book value of the Sanbiel View Villas to other assets
    for their eventual sales, the disposal of cottages at the Pink
    Shell Beach Resort to make way for the construction of White
    Sand Villas, both of which occurred in 2002, and the 2003
    transfer of certain land underlying the Captiva and Useppa
    buildings at the Pink Shell to other assets as the land will
    eventually be sold with the new Captiva Villas condominium units.



|    |                                                                                                 
|--- | ------------------------------------------------------------------------------------------------
|(f) | Aggregate cost for federal income tax reporting
    purposes at December 31, 2003 is as follows:

|                           |  |   |         | 
|-------------------------- |  | - | ------- | 
|Land                       |  | $ | 58,865  | 
|Buildings and improvements |  |   | 541,419 | 
|                           |  |   |         | 
|                           |  | $ | 600,284 | 
|                           |  |   |         | 



|    |                                                                        
|--- | -----------------------------------------------------------------------
|(g) | Reconciliation of Gross Amounts of Land,
    Buildings and Improvements

|                                 |  |   |         |  
|-------------------------------- |  | - | ------- | -
|Balance as of December 31, 2002  |  | $ | 548,467 |  
|Disposals                        |  |   | (36,618 | )
|Improvements and other additions |  |   | 46,187  |  
|                                 |  |   |         |  
|Balance as of December 31, 2003  |  | $ | 558,036 |  
|                                 |  |   |         |  



|    |                                                                             
|--- | ----------------------------------------------------------------------------
|(h) | Reconciliation of Accumulated Depreciation of
    Buildings and Improvements

|                             |  |   |         |  
|---------------------------- |  | - | ------- | -
|Balance at December 31, 2002 |  | $ | 88,959  |  
|Disposals                    |  |   | (7,240  | )
|Depreciation expense         |  |   | 21,196  |  
|                             |  |   |         |  
|Balance at December 31, 2003 |  | $ | 102,915 |  
|                             |  |   |         |  

F-33



---



##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Members of

Boykin/ AEW, LLC and Subsidiaries:


We have audited the accompanying consolidated
balance sheets of Boykin/ AEW, LLC and Subsidiaries
(Boykin/ AEW) as of December 31, 2003 and 2002,
and the related consolidated statements of operations,
members equity and cash flows for the years then ended.
These financial statements are the responsibility of Boykin/
AEWs management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such financial statements present
fairly, in all material respects, the financial position of
Boykin/ AEW as of December 31, 2003 and 2002, and the
results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally
accepted in the United States of America.

/s/Deloitte & Touche LLP

Cleveland, Ohio


March 12, 2004


F-34



---



##### Table of Contents



BOYKIN/ AEW, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2003 AND 2002

(amounts in thousands)

|                                                                                                        |                                   |      |        |        |   |   |        |        |  
|------------------------------------------------------------------------------------------------------- | --------------------------------- | ---- | ------ | ------ | - | - | ------ | ------ | -
|                                                                                                        |                                   | 2003 |        | 2002  
|                                                                                                        |                                   |      |        |       
|ASSETS                                                                                                  |                                   |      |        |        |   |   |        |       
|Investment in hotel property                                                                            |                                   | $    | 75,042 |        |   | $ | 73,103 |       
|Accumulated depreciation                                                                                |                                   |      | (8,882 | )      |   |   | (5,785 | )     
|                                                                                                        |                                   |      |        |        |   |   |        |       
|Investment in hotel property  net                                                                      |                                   |      | 66,160 |        |   |   | 67,318 |       
|Cash and cash equivalents                                                                               |                                   |      | 1,145  |        |   |   | 387    |       
|Accounts receivable, net of allowance of $13 and
    $6, as of December 31, 2003 and 2002, respectively |                                   |      | 882    |        |   |   | 823    |       
|Deferred expenses  net                                                                                 |                                   |      | 69     |        |   |   | 346    |       
|Other assets                                                                                            |                                   |      | 345    |        |   |   | 371    |       
|                                                                                                        |                                   |      |        |        |   |   |        |       
|                                                                                                        |                                   | $    | 68,601 |        |   | $ | 69,245 |       
|                                                                                                        |                                   |      |        |        |   |   |        |       
|LIABILITIES AND MEMBERS EQUITY                                                                         |                                   |      |        |        |   |   |        |       
|Mortgage note payable                                                                                   |                                   | $    | 37,236 |        |   | $ | 36,656 |       
|Accounts payable and accrued expenses                                                                   |                                   |      | 2,884  |        |   |   | 3,285  |       
|Minority interest in joint venture                                                                      |                                   |      | 7,081  |        |   |   | 7,283  |       
|                                                                                                       
|MEMBERS EQUITY:                                                                                        |                                   |      |        |        |   |   |        |       
|                                                                                                        | Contributed capital               |      |        | 28,726 |   |   |        | 27,901 |  
|                                                                                                        | Distributions in excess of income |      |        | (7,326 | ) |   |        | (5,880 | )
|                                                                                                        |                                   |      |        |        |   |   |        |       
|                                                                                                        | Total members equity             |      |        | 21,400 |   |   |        | 22,021 |  
|                                                                                                        |                                   |      |        |        |   |   |        |       
|                                                                                                        |                                   | $    | 68,601 |        |   | $ | 69,245 |       
|                                                                                                        |                                   |      |        |        |   |   |        |       

See notes to consolidated financial statements.

F-35



---



##### Table of Contents



BOYKIN/ AEW, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
OPERATIONS

AS OF DECEMBER 31, 2003, 2002 AND 2001
(unaudited)

(amounts in thousands)

|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |        |        | 
|---------------------------------------------------------------------------------- | --------------------------------------------------------- | ------------------------------- | ------ | ------ | ------ | ----------- | ------ | ------ | ------ | - | ----- | ------ | ------ | 
|                                                                                   |                                                           |                                 |        |        |        | (unaudited)
|                                                                                   |                                                           | 2003                            |        | 2002   |        | 2001       
|                                                                                   |                                                           |                                 |        |        |        |            
|Revenues:                                                                          |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|                                                                                   | Hotel revenues:                                           |                                 |        |        |        |             |        |        |        |   |       |        |       
|                                                                                   |                                                           | Rooms                           |        | $      | 12,929 |             |        | $      | 8,629  |   |       | $      | 5,920  | 
|                                                                                   |                                                           | Food and beverage               |        |        | 1,301  |             |        |        | 1,167  |   |       |        | 796    | 
|                                                                                   |                                                           | Other                           |        |        | 712    |             |        |        | 253    |   |       |        | 236    | 
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|                                                                                   | Total hotel revenues                                      |                                 |        | 14,942 |        |             |        | 10,049 |        |   |       | 6,952  |       
|                                                                                   | Lease revenue from related party                          |                                 |        |       |        |             |        |       |        |   |       | 3,932  |       
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|                                                                                   |                                                           | Total revenues                  |        |        | 14,942 |             |        |        | 10,049 |   |       |        | 10,884 | 
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|Expenses:                                                                          |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|                                                                                   | Hotel operating expenses:                                 |                                 |        |        |        |             |        |        |        |   |       |        |       
|                                                                                   |                                                           | Rooms                           |        |        | 3,475  |             |        |        | 2,562  |   |       |        | 1,214  | 
|                                                                                   |                                                           | Food and beverage               |        |        | 1,378  |             |        |        | 1,329  |   |       |        | 642    | 
|                                                                                   |                                                           | Other                           |        |        | 338    |             |        |        | 213    |   |       |        | 98     | 
|                                                                                   |                                                           | General and administrative      |        |        | 1,258  |             |        |        | 1,240  |   |       |        | 657    | 
|                                                                                   |                                                           | Marketing and franchise         |        |        | 1,862  |             |        |        | 1,945  |   |       |        | 549    | 
|                                                                                   |                                                           | Utilities and maintenance       |        |        | 1,525  |             |        |        | 1,463  |   |       |        | 572    | 
|                                                                                   |                                                           | Management fees  related party |        |        | 446    |             |        |        | 75     |   |       |        | 35     | 
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|                                                                                   | Total hotel operating expenses                            |                                 |        | 10,282 |        |             |        | 8,827  |        |   |       | 3,767  |       
|                                                                                   | Property taxes and insurance and other                    |                                 |        | 1,054  |        |             |        | 1,188  |        |   |       | 1,193  |       
|                                                                                   | Real estate related depreciation and amortization         |                                 |        | 3,099  |        |             |        | 1,938  |        |   |       | 1,658  |       
|                                                                                   | Asset management fees                                     |                                 |        | 191    |        |             |        | 172    |        |   |       | 122    |       
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|                                                                                   |                                                           | Total operating expenses        |        |        | 14,626 |             |        |        | 12,125 |   |       |        | 6,740  | 
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|                                                                                   |                                                           | Operating income (loss)         |        |        | 316    |             |        |        | (2,076 | ) |       |        | 4,144  | 
|                                                                                   | Investment income and other                               |                                 |        | 14     |        |             |        | 26     |        |   |       | 194    |       
|                                                                                   | Interest expense                                          |                                 |        | (1,716 | )      |             |        | (1,648 | )      |   |       | (2,296 | )     
|                                                                                   | Amortization of deferred financing costs                  |                                 |        | (277   | )      |             |        | (334   | )      |   |       | (361   | )     
|                                                                                   | Other amortization                                        |                                 |        | (5     | )      |             |        |       |        |   |       |       |       
|                                                                                   | Minority interest in (earnings) loss of joint
    venture |                                 |        | 414    |        |             |        | 1,031  |        |   |       | (426   | )     
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|Income (loss) before loss on disposal of assets
    and provision for income taxes |                                                           |                                 | (1,254 | )      |        |             | (3,001 | )      |        |   | 1,255 |       
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|Loss on disposal of assets                                                         |                                                           |                                 | (5     | )      |        |             | (107   | )      |        |   |      |       
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|Income (loss) before provision for income taxes                                    |                                                           |                                 | (1,259 | )      |        |             | (3,108 | )      |        |   | 1,255 |       
|                                                                                   | Provision for income taxes                                |                                 |        |       |        |             |        |       |        |   |       | (7     | )     
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       
|Net income (loss)                                                                  |                                                           | $                               | (1,259 | )      |        | $           | (3,108 | )      |        | $ | 1,248 |       
|                                                                                   |                                                           |                                 |        |        |        |             |        |        |        |   |       |       

See notes to consolidated financial statements.

F-36



---



##### Table of Contents



BOYKIN/ AEW, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF MEMBERS
EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002
AND 2001 (unaudited)

(amounts in thousands)

|                             |                               |             |        |               |  |       |        |        |   |   |        |        |  
|---------------------------- | ----------------------------- | ----------- | ------ | ------------- |  | ----- | ------ | ------ | - | - | ------ | ------ | -
|                             |                               |             |        | Distributions |  |      
|                             |                               | Contributed |        | in Excess of  |  |      
|                             |                               | Capital     |        | Income        |  | Total
|                             |                               |             |        |               |  |      
|Balance at January 1, 2001   |                               | $           | 17,095 |               |  | $     | (1,419 | )      |   | $ | 15,676 |       
|                             | Capital contributions         |             |        | 3,295         |  |       |        |       |   |   |        | 3,295  |  
|                             | Distributions paid to members |             |        |              |  |       |        | (2,355 | ) |   |        | (2,355 | )
|                             | Net income                    |             |        |              |  |       |        | 1,248  |   |   |        | 1,248  |  
|                             |                               |             |        |               |  |       |        |        |   |   |        |       
|Balance at December 31, 2001 |                               |             | 20,390 |               |  |       | (2,526 | )      |   |   | 17,864 |       
|                             | Capital contributions         |             |        | 7,511         |  |       |        |       |   |   |        | 7,511  |  
|                             | Distributions paid to members |             |        |              |  |       |        | (246   | ) |   |        | (246   | )
|                             | Net loss                      |             |        |              |  |       |        | (3,108 | ) |   |        | (3,108 | )
|                             |                               |             |        |               |  |       |        |        |   |   |        |       
|Balance at December 31, 2002 |                               |             | 27,901 |               |  |       | (5,880 | )      |   |   | 22,021 |       
|                             | Capital contributions         |             |        | 825           |  |       |        |       |   |   |        | 825    |  
|                             | Distributions paid to members |             |        |              |  |       |        | (187   | ) |   |        | (187   | )
|                             | Net loss                      |             |        |              |  |       |        | (1,259 | ) |   |        | (1,259 | )
|                             |                               |             |        |               |  |       |        |        |   |   |        |       
|Balance at December 31, 2003 |                               | $           | 28,726 |               |  | $     | (7,326 | )      |   | $ | 21,400 |       
|                             |                               |             |        |               |  |       |        |        |   |   |        |       

See notes to consolidated financial statements.

F-37



---



##### Table of Contents



BOYKIN/ AEW, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002
AND 2001 (unaudited)

(amounts in thousands)

|                                                             |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |         |       |        |  
|------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ------------------------------------- | ------ | ----- | ----------- | ------- | ------- | ------ | ---- | ------ | ------- | ----- | ------ | -
|                                                             |                                                                                                                 |                                                   |                                       |        |       | (unaudited)
|                                                             |                                                                                                                 | 2003                                              |                                       | 2002   |       | 2001       
|                                                             |                                                                                                                 |                                                   |                                       |        |       |            
|Cash flows from operating activities:                        |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        
|                                                             | Net income (loss)                                                                                               |                                                   | $                                     | (1,259 | )     |             | $       | (3,108  | )      |      | $      | 1,248   |      
|                                                             | Adjustments to reconcile net income
    (loss) to net cash flow provided by (used in) operating
    activities: |                                                   |                                       |        |       |             |         |         |        |      |        |         |      
|                                                             |                                                                                                                 | Depreciation and amortization                     |                                       |        | 3,381 |             |         |         | 2,272  |      |        |         | 2,019 |       
|                                                             |                                                                                                                 | Loss on disposal of assets                        |                                       |        | 5     |             |         |         | 107    |      |        |         |      |       
|                                                             |                                                                                                                 | Minority interest                                 |                                       |        | (414  | )           |         |         | (1,031 | )    |        |         | 426   |       
|                                                             |                                                                                                                 | Changes in operating assets and
    liabilities  |                                       |        |       |             |         |         |        |      |        |         |       |       
|                                                             |                                                                                                                 |                                                   | Rent receivable                       |        |       |            |         |         |        |     |        |         |       | 924    |  
|                                                             |                                                                                                                 |                                                   | Accounts receivable                   |        |       | (59         | )       |         |        | (168 | )      |         |       | 237    |  
|                                                             |                                                                                                                 |                                                   | Accounts payable and accrued expenses |        |       | (401        | )       |         |        | 273  |        |         |       | (2,357 | )
|                                                             |                                                                                                                 |                                                   | Other                                 |        |       | 21          |         |         |        | (298 | )      |         |       | (65    | )
|                                                             |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        
|Net cash flow provided by (used in) operating
    activities |                                                                                                                 |                                                   | 1,274                                 |        |       |             | (1,953  | )       |        |      | 2,432  |        
|                                                             |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        
|Cash flows from investing activities:                        |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        
|                                                             | Improvements and additions to hotel property, net                                                               |                                                   |                                       | (1,946 | )     |             |         | (16,828 | )      |      |        | (4,393  | )    
|                                                             | Acquisition of leasehold interest, net of cash
    acquired of $2,693                                           |                                                   |                                       |       |       |             |         |        |        |      |        | 2,135   |      
|                                                             |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        
|Net cash flow used in investing activities                   |                                                                                                                 |                                                   | (1,946                                | )      |       |             | (16,828 | )       |        |      | (2,258 | )      
|                                                             |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        
|Cash flows from financing activities:                        |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        
|                                                             | Distributions to members                                                                                        |                                                   |                                       | (187   | )     |             |         | (246    | )      |      |        | (2,355  | )    
|                                                             | Borrowings of term note                                                                                         |                                                   |                                       | 1,344  |       |             |         | 6,656   |        |      |        | 30,000  |      
|                                                             | Payment of term note                                                                                            |                                                   |                                       | (764   | )     |             |         |        |        |      |        | (30,000 | )    
|                                                             | Payment of deferred financing costs                                                                             |                                                   |                                       |       |       |             |         | (100    | )      |      |        | (785    | )    
|                                                             | Net contributions from joint venture partner                                                                    |                                                   |                                       | 212    |       |             |         | 2,432   |        |      |        | 324     |      
|                                                             | Capital contributions                                                                                           |                                                   |                                       | 825    |       |             |         | 7,511   |        |      |        | 3,295   |      
|                                                             |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        
|Net cash flow provided by financing activities               |                                                                                                                 |                                                   | 1,430                                 |        |       |             | 16,253  |         |        |      | 479    |        
|                                                             |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        
|Net change in cash and cash equivalents                      |                                                                                                                 |                                                   | 758                                   |        |       |             | (2,528  | )       |        |      | 653    |        
|Cash and cash equivalents, beginning of year                 |                                                                                                                 |                                                   | 387                                   |        |       |             | 2,915   |         |        |      | 2,262  |        
|                                                             |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        
|Cash and cash equivalents, end of year                       |                                                                                                                 | $                                                 | 1,145                                 |        |       | $           | 387     |         |        | $    | 2,915  |        
|                                                             |                                                                                                                 |                                                   |                                       |        |       |             |         |         |        |      |        |        

See notes to consolidated financial statements.

F-38



---



##### Table of Contents



BOYKIN/ AEW, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002
AND 2001 (unaudited)

(dollar amounts in thousands)



|   |            
|-- | -----------
|1. | Background:

In February 1999, Boykin Lodging Company
(Boykin), a publicly held real estate investment
trust (REIT), through its operating partnership
Boykin Hotel Properties, L.P., formed a joint venture with AEW
Partners III, L.P. (AEW), an investment
partnership managed by AEW Capital Management, L.P., a
Boston-based real estate investment firm. The joint venture,
Boykin/ AEW, LLC (Boykin/ AEW), is owned 75% by AEW
while Boykin owns the remaining 25% interest.

In August 1999, Boykin/ AEW partnered with a
private investor forming Boykin Chicago, L.L.C. (Boykin
Chicago), in which Boykin/ AEW has a 75% interest. Boykin
Chicago purchased the 421-room Executive Plaza hotel located in
Chicago, Illinois for cash consideration of $48,000. The
acquisition was accounted for as a purchase and was funded with
proceeds from a $30,000 secured mortgage note (see Note 3) with
the remainder in cash contributions from the partners. In
September 2000, Boykin purchased the remaining 25% ownership
interest in Boykin Chicago from the private investor thereby
increasing Boykins total ownership interest in the hotel
from 18.75% to 43.75%.

Upon acquisition of the hotel, Boykin Chicago
entered into a long-term percentage lease agreement with a
wholly-owned subsidiary of Boykin Management Company Limited
Liability Company (BMC), an affiliated entity of
Boykin. Boykin Chicago terminated the percentage lease effective
June 30, 2001. As of July 1, 2001, under the structuring
permitted by the Work Incentives Improvement Act of 1999
(REIT Modernization Act), the hotel was leased to a
Taxable REIT Subsidiary (TRS) of Boykin Chicago. The
TRS assumed net working capital liabilities of $558, including
$2,693 of cash, from the prior lessee. BMC continues to operate
the hotel pursuant to a management agreement entered into on
July 1, 2001.

The hotel is located at 71 East Wacker Drive, one
block from Michigan Avenue in downtown Chicago and includes such
amenities as meeting space, a restaurant, lounge, and banquet
facilities. The hotel also offers valet service, a health and
fitness center and a business center.

In 2001, Boykin Chicago commenced a renovation of
the hotels guestrooms, meeting rooms and food and beverage
facilities. During 2002, Boykin Chicago completed the guestroom
portion of the renovation and renamed the property Hotel
71 to reflect its new position in the market as a
four-star quality independent hotel. The renovation increased
the number of rooms at the property by 33 units, bringing the
total number of rooms to 454. The remaining portions of the
renovation were completed in 2003.



|   |                                                
|-- | -----------------------------------------------
|2. | Summary of Significant Accounting
    Policies:

Principles of
Consolidation The
accompanying consolidated financial statements of Boykin/ AEW
include Boykin/ AEW, Boykin Chicago and its wholly-owned TRS,
71 E. Wacker Leasing, Inc. All material intercompany
transactions and balances have been eliminated. The results of
operations contained within the consolidated financial
statements reflect all costs of Boykin/ AEW doing business.

Investment in Hotel
Property Hotel property is
stated at cost and is depreciated using the straight-line method
over estimated useful lives ranging from ten to 30 years
for building and improvements and three to ten years for
furniture and equipment.

F-39



---



##### Table of Contents



BOYKIN/ AEW, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





Investment in the hotel property as of
December 31, 2003 and 2002 consisted of the following:

|                              |  |      |        |      |  |   |        |  
|----------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                              |  | 2003 |        | 2002
|                              |  |      |        |     
|Land                          |  | $    | 9,100  |      |  | $ | 9,100  |  
|Buildings and improvements    |  |      | 57,813 |      |  |   | 56,858 |  
|Furniture and equipment       |  |      | 7,863  |      |  |   | 7,145  |  
|Construction in progress      |  |      | 266    |      |  |   |       |  
|                              |  |      |        |      |  |   |        |  
|                              |  |      | 75,042 |      |  |   | 73,103 |  
|Less accumulated depreciation |  |      | (8,882 | )    |  |   | (5,785 | )
|                              |  |      |        |      |  |   |        |  
|Total                         |  | $    | 66,160 |      |  | $ | 67,318 |  
|                              |  |      |        |      |  |   |        |  

Boykin Chicago reviews the hotel property for
impairment when events or changes in circumstances indicate that
the carrying value of the hotel property may not be recoverable.
Events or circumstances that may cause a review include, but are
not limited to, adverse changes in the demand for lodging at the
property due to declining national or local economic conditions,
new hotel construction in the market where the hotel is located
or changes in the expected holding period of the property. When
such conditions exist, management performs an analysis to
determine if the estimated undiscounted future cash flows from
operations and the proceeds from the ultimate disposition of the
hotel property exceeds its carrying value. If the estimated
undiscounted future cash flows are less than the carrying amount
of the asset, an adjustment to reduce the carrying amount to the
hotel propertys estimated fair market value would be
recorded and an impairment loss would be recognized. Boykin
Chicago does not believe that there are any factors or
circumstances indicating impairment of its investment in the
hotel property at this time.

Cash and Cash
Equivalents Cash and cash
equivalents are defined as cash on hand and in banks, plus
short-term investments with an original maturity of three months
or less.

Inventories
Inventories consisting primarily of food and beverages and gift
store merchandise are stated at the lower of first-in, first-out
cost or market.

Accounts
Receivable Accounts
receivable, consisting primarily of hotel guest receivables, is
stated at fair value. Bad debt expense (recoveries) for the
years ended December 31, 2003, 2002 and 2001 were $12, $2
and $(79), respectively.

Deferred Expenses 
Net Included in deferred
expenses at December 31, 2003 and 2002 are the following:

|                         |  |      |      |      |  |   |      |  
|------------------------ |  | ---- | ---- | ---- |  | - | ---- | -
|                         |  | 2003 |      | 2002
|                         |  |      |      |     
|Financing costs          |  | $    | 986  |      |  | $ | 986  |  
|Accumulated amortization |  |      | (917 | )    |  |   | (640 | )
|                         |  |      |      |      |  |   |      |  
|Total                    |  | $    | 69   |      |  | $ | 346  |  
|                         |  |      |      |      |  |   |      |  

Deferred financing costs of the mortgage note are
being amortized over the initial term of the related credit
agreement, excluding any available extension terms.

Minority
Interest Minority interest
in joint venture represents Boykins direct 25% ownership
in Boykin Chicago. Income and losses are allocated to minority
interest based upon the joint venture partners percentage
ownership throughout the period a defined in the joint venture
agreement.

F-40



---



##### Table of Contents



BOYKIN/ AEW, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued







| |                    
| | -------------------
| | Revenue Recognition

Hotel
Revenues Hotel revenues
including room, food, beverage and other hotel revenues are
recognized as the related services are delivered. Ongoing credit
evaluations are performed and an allowance for potential credit
losses is provided against the portion of accounts receivable
that is estimated to be uncollectible.

Lease
Revenue Through
June 30, 2001, Boykin Chicago recognized lease revenue on
an accrual basis pursuant to the terms of the percentage lease
agreement. Effective July 1, 2001, percentage lease revenue
is eliminated upon consolidation of Boykin Chicago and the TRS,
therefore, the accompanying consolidated statement reflects the
revenues of the hotel operations after that date.

Fair Value of Financial
Instruments Fair value is
determined by using available market information and appropriate
valuation methodologies. Boykin Chicagos principal
financial instruments are cash, cash equivalents, accounts
receivable and the mortgage note payable. Cash, cash equivalents
and accounts receivable, due to their short maturities, are
carried at amounts which reasonably approximate fair value. The
mortgage note payable (see Note 3) bears interest at variable
market rates and its carrying value approximates market value at
December 31, 2003.

Income
Taxes As Boykin/ AEW and
Boykin Chicago are limited liability companies, no related
provision has been made in the accompanying consolidated
financial statements for income taxes for these entities since
these taxes are the responsibility of the members. Upon
formation on July 1, 2001, the TRS became subject to federal,
state and local income taxes. The TRS accounts for income taxes
in accordance with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes. The necessary provision for
income taxes related to the TRS for 2001 has been reflected in
the accompanying consolidated financial statements. As of
December 31, 2003, the TRS had a deferred tax asset of
approximately $2,750, prior to any valuation allowance, related
to the net operating losses of the TRS. The TRS has recorded a
100% valuation allowance against this asset due to the
uncertainty of realization of the deferred tax asset, and
therefore, for 2003 and 2002, no provision or benefit from
income taxes is reflected in the accompanying consolidated
statement of operations. As of December 31, 2003, the net
operating loss carryforward has a remaining life of
19 years.

New Accounting
Pronouncements In August
2001, the Financial Accounting Standards Board
(FASB) issued SFAS No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets. The
provisions of Statement 144 are effective for Boykin/ AEW
beginning in the fiscal year ended December 31, 2002. SFAS
No. 144 supersedes SFAS No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of. SFAS No. 144 also requires that one
accounting model be used for long-lived assets to be disposed of
by sale. The Statement did not have a material effect on the
financial condition or results of operations of Boykin/AEW.

In April 2002, the FASB issued SFAS No. 145,
Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections. Included in SFAS No. 145 is a requirement
that all gains and losses related to extinguishments of debt
(other than extinguishments of debt items meeting the criteria
in APB Opinion No. 30, Reporting the Results of
OperationsReporting the Effects of Disposal of a Segment
of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions (APB Opinion
30)) not be treated as extraordinary items. The provisions
of this statement are effective for Boykin/ AEW on
January 1, 2003. The adoption of the Statement did not have
an effect on the financial condition or results of operations of
Boykin/ AEW.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, which addresses the disclosure to be
made by a guarantor in its interim and annual financial
statements about its obligations under guarantees.
Interpretation No. 45 also requires the recognition of a
liability by a guarantor at the inception of certain guarantees.
Interpretation No. 45 requires the guarantor to recognize a
liability for the non-contingent

F-41



---



##### Table of Contents



BOYKIN/ AEW, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued





component of the guarantee, this is the
obligation to stand ready to perform in the event that specified
triggering events or conditions occur. The initial measurement
of this liability is the fair value of the guarantee at
inception. The recognition of the liability is required even if
it is not probable that payments will be required under the
guarantee or if the guarantee was issued with a premium payment
or as part of a transaction with multiple elements. Boykin/ AEW
has adopted the disclosure requirements of Interpretation
No. 45 and will apply the recognition and measurement
provisions for all guarantees entered into or modified after
December 31, 2002. To date, Boykin/ AEW has not entered
into guarantees.


In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest
Entities, which addresses consolidation by business
enterprises of variable interest entities. In general, a
variable interest entity is a corporation, partnership, trust,
or any other legal structure used for business purposes that
either (a) does not have equity investors with voting
rights or (b) has equity investors that do not provide
sufficient financial resources for the entity to support its
activities. Interpretation No. 46 requires a variable
interest entity to be consolidated by a company if that company
is subject to a majority of the risk of loss from the
entitys activities or is entitled to receive a majority of
the entitys residual returns or both. In December 2003,
the FASB issued a revised Interpretation which modified and
clarifies various aspects of the original Interpretation. The
consolidation requirements of Interpretation No. 46 apply
immediately to variable interest entities created after
January 31, 2003 and apply to older entities in the fourth
quarter of 2003. Boykin/ AEW does not believe that it has any
unconsolidated variable interest entities as of
December 31, 2003.

In May 2003, the FASB issued Statement
No. 150 (SFAS 150), Accounting for
Certain Financial Instruments with Characteristics of Both
Liabilities and Equity, which establishes standards for
how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity.
It requires that an issuer classify a financial instrument that
is within its scope as a liability. The effective date of a
portion of the Statement has been indefinitely postponed by the
FASB. Based upon the FASBs deferral of this provision, the
adoption of SFAS 150 did not have an impact on the consolidated
financial statements.

Use of
Estimates The preparation
of financial statements in conformity with accounting principles
generally accepted in the United States of America requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.



|   |                       
|-- | ----------------------
|3. | Mortgage Note Payable:

In March 2001, Boykin Chicago obtained a $38,000
mortgage note from Corus Bank, N.A. (Corus) to
refinance the initial $30,000 note obtained for the acquisition
of the hotel and to provide $8,000 of funding related to the
renovation of the hotel. Corus advanced $30,000 upon closing of
the loan. An additional $6,656 was advanced during 2002, and the
remaining $1,344 was funded in 2003. The loan had an original
maturity date of March 2004 and contained two one-year extension
options. In February 2004, Boykin Chicago exercised the first of
the available options to extend the maturity date by one year;
the loan is now scheduled to mature in March 2005. The loan is
secured by the hotel property and bears interest at a rate that
fluctuates at LIBOR plus 3.25% (4.41% at December 31,
2003). Principal payments commenced in April 2003 based upon a
twenty-two year amortization schedule from the origination of
the note. Principal payments of $764 were made in 2003. The
mortgage loan agreement contains certain financial reporting
covenants and Boykin Chicago was in compliance with such
covenants as of December 31, 2003 and 2002.

Subject to the provisions of the loan, additional
funds of $4,000 are required to be posted to support the loan.
The loan agreement allows for Boykin Chicago to defer this
requirement to the members of Boykin/ AEW. As such, based upon
its percentage ownership within Boykin/ AEW, Boykin has posted
$1,750 of cash with its bank to meet such requirement.

F-42



---



##### Table of Contents



BOYKIN/ AEW, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  Continued







|   |                             
|-- | ----------------------------
|4. | Percentage Lease Agreements:

Effective October 1, 2003,
71 East Wacker Leasing, Inc. subleased space to MRG
Enterprises, L.L.C. to operate a restaurant. The lease has an
initial term of five years with three five year options to
renew, subject to earlier termination in accordance with certain
provisions. The rent due under the percentage lease agreement is
the greater of minimum rent, as defined, or percentage rent.
Percentage rent applicable to banquet, catering and all other
gross sales is calculated by multiplying fixed percentages by
the total amounts of such revenues over specified threshold
amounts. Percentage lease revenues to 71 E. Wacker
Leasing, Inc. were $159 for the year ended December 31,
2003 of which none was in excess of minimum rent. The lease
agreement also requires reimbursements of certain expenses
incurred by both 71 E. Wacker Leasing, Inc. and Boykin
Chicago. Reimbursements for expenses received by Boykin Chicago
and the hotel for the year ended December 31, 2003 were $9
and $3, respectively. Percentage lease revenues and
reimbursements for expenses were included in other income.

In May 2003, 71 E. Wacker Leasing, Inc.
subleased space to Ampco System Parking to operate a parking
garage. The lease has a term of five years. The rent due under
the percentage lease agreement is base rent plus percentage
rent. Percentage rent applicable to gross parking receipts, as
defined, is calculated by multiplying fixed percentages by the
total amounts of such revenues over specified threshold amounts.
Percentage lease revenues to 71 E. Wacker Leasing, Inc. was $73
of which none was in excess of minimum rent.

Future minimum rentals to be received by 71 East
Wacker Leasing, Inc. pursuant to the percentage leases for each
of the years in the period 2004 to 2008 are as follows:

|      |  |   |       | 
|----- |  | - | ----- | 
|2004  |  | $ | 446   | 
|2005  |  |   | 475   | 
|2006  |  |   | 501   | 
|2007  |  |   | 510   | 
|2008  |  |   | 336   | 
|      |  |   |       | 
|Total |  | $ | 2,268 | 
|      |  |   |       | 



|   |                            
|-- | ---------------------------
|5. | Related Party Transactions:

BMC is owned 53.8% by the Chairman and Chief
Executive Officer of Boykin. Pursuant to the management
agreement entered into effective July 1, 2001, Boykin
Chicago paid BMC management fees of $446, $75 and $35 during
2003, 2002 and 2001, respectively.

Pursuant to the operating agreements of Boykin/
AEW and Boykin Chicago, asset management fees of $191, $172 and
$122 were paid to Boykin for the year ended December 31,
2003, 2002 and 2001, respectively, for its role as the operating
member. These fees are calculated based upon factors applied to
aggregate contributions made by the members, as defined in the
agreements.

At December 31, 2003 and 2002, there were
outstanding payables to Boykin of $16 and $32, respectively,
primarily related to asset management fees. At December 31,
2002 there were accounts receivable of $76 from BMC. At
December 31, 2003 and 2002, 71 E. Wacker Leasing,
Inc. had outstanding payables to BMC of $58 and $74,
respectively primarily related to management fees and
reimbursements of expenses on behalf of the hotel.



|   |                                                        
|-- | -------------------------------------------------------
|6. | Statements of Cash Flows, Supplemental
    Disclosures:

Interest paid during the years ended
December 31, 2003, 2002 and 2001 was $1,737, $1,636 and
$2,400 respectively.

F-43



---



##### Table of Contents



BOYKIN/ AEW, LLC

SCHEDULE III  REAL ESTATE AND
ACCUMULATED DEPRECIATION

AS OF DECEMBER 31, 2003

(in thousands)

|                                |  |              |     |              |  |               |       |                            |  |              |        |      |  |              |   |             |  |                 |        |  |  |   |       |  |  |   |        |  |  |   |        |  |  |   |       | 
|------------------------------- |  | ------------ | --- | ------------ |  | ------------- | ----- | -------------------------- |  | ------------ | ------ | ---- |  | ------------ | - | ----------- |  | --------------- | ------ |  |  | - | ----- |  |  | - | ------ |  |  | - | ------ |  |  | - | ----- | 
|                                |  |              |     |              |  |               |       |                            |  |              |        |      |  |              |   |            
|                                |  |              |     |              |  |               |       | Costs Capitalized          |  |              |        |     
|                                |  |              |     |              |  | Subsequent to |       | Gross Amounts at Which     |  |             
|                                |  |              |     | Initial Cost |  | Acquisition   |       | Carried at Close of Period |  | Accumulated 
|                                |  |              |     |              |  |               |       |                            |  | Depreciation
|                                |  |              |     |              |  | Buildings and |       |                            |  | Building and |        |      |  | Building and |   |             |  | Buildings and  
|Description                     |  | Encumbrances |     | Land         |  | Improvements  |       | Land                       |  | Improvements |        | Land |  | Improvements |   | Total(b)(c) |  | Improvements(d)
|                                |  |              |     |              |  |               |       |                            |  |              |        |      |  |              |   |             |  |                
|Hotel 71,
    Chicago, Illinois |  |              | (a) |              |  | $             | 9,100 |                            |  | $            | 40,392 |      |  | $            |  |             |  | $               | 17,421 |  |  | $ | 9,100 |  |  | $ | 57,813 |  |  | $ | 66,913 |  |  | $ | 6,723 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                |  |               |        |              |  |             |      |                 |  |  |      |  |  |  |          | 
|------------------------------- |  | ------------- | ------ | ------------ |  | ----------- | ---- | --------------- |  |  | ---- |  |  |  | -------- | 
|                                |  | Net Book      |        |              |  |             |      | Life on Which  
|                                |  | Value Land    |        |              |  |             |      | Depreciation in
|                                |  | and Buildings |        |              |  |             |      | Statement of   
|                                |  | and           |        | Date of      |  | Date of     |      | Operations is  
|Description                     |  | Improvements  |        | Construction |  | Acquisition |      | Computed       
|                                |  |               |        |              |  |             |      |                
|Hotel 71,
    Chicago, Illinois |  | $             | 60,190 |              |  |             | 1958 |                 |  |  | 1999 |  |  |  | 30 years | 



| | 
| | 
| | 



|    |                                                                    
|--- | -------------------------------------------------------------------
|(a) | This hotel is collateral for the $38,000 mortgage
    note payable.



|    |                                                                                                 
|--- | ------------------------------------------------------------------------------------------------
|(b) | Aggregate cost for federal income tax reporting
    purposes at December 31, 2003 is as follows:

|                           |  |   |        | 
|-------------------------- |  | - | ------ | 
|Land                       |  | $ | 9,100  | 
|Buildings and improvements |  |   | 58,539 | 
|                           |  |   |        | 
|                           |  | $ | 67,639 | 
|                           |  |   |        | 



|    |                                                                        
|--- | -----------------------------------------------------------------------
|(c) | Reconciliation of Gross Amounts of Land,
    Buildings and Improvements

|                                 |  |   |        | 
|-------------------------------- |  | - | ------ | 
|Balance as of December 31, 2002  |  | $ | 65,958 | 
|Disposals                        |  |   |       | 
|Improvements and other additions |  |   | 955    | 
|                                 |  |   |        | 
|Balance as of December 31, 2003  |  | $ | 66,913 | 
|                                 |  |   |        | 



|    |                                                                             
|--- | ----------------------------------------------------------------------------
|(d) | Reconciliation of Accumulated Depreciation of
    Buildings and Improvements

|                             |  |   |       | 
|---------------------------- |  | - | ----- | 
|Balance at December 31, 2002 |  | $ | 4,689 | 
|Disposals                    |  |   |      | 
|Depreciation expense         |  |   | 2,034 | 
|                             |  |   |       | 
|Balance at December 31, 2003 |  | $ | 6,723 | 
|                             |  |   |       | 

F-44



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements of
Section 13 or 15(d) 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.

|               |  |                                                       
|-------------- |  | ------------------------------------------------------
|March 29, 2004 |  | BOYKIN LODGING COMPANY                                
|              
|               |  | By: /s/ ROBERT W. BOYKIN          Robert
    W. Boykin

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.

|               |  |                                                                                                                                                          
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|March 29, 2004 |  | /s/ ROBERT W. BOYKIN     Robert W.
    Boykin
    Chairman of the Board and
    Chief Executive Officer
    (Principal Executive Officer)                
|              
|March 29, 2004 |  | /s/ SHEREEN P. JONES     Shereen P.
    Jones
    Executive Vice President, Chief Financial
    and Investment Officer
    (Principal Accounting Officer)
|              
|March 29, 2004 |  | /s/ IVAN J. WINFIELD     Ivan J.
    Winfield
    Director                                                                                               
|              
|March 29, 2004 |  | /s/ LEE C. HOWLEY, JR.     Lee C.
    Howley, Jr.
    Director                                                                                           
|              
|March 29, 2004 |  | /s/ WILLIAM H. SCHECTER     William H.
    Schecter
    Director                                                                                         
|              
|March 29, 2004 |  | /s/ ALBERT T. ADAMS     Albert T.
    Adams
    Director                                                                                                 
|              
|March 29, 2004 |  | /s/ RAYMOND P. HEITLAND     Raymond P.
    Heitland
    Director                                                                                         
|              
|March 29, 2004 |  | /s/ JAMES B. MEATHE     James B.
    Meathe
    Director                                                                                                 



---



##### Table of Contents






EXHIBIT INDEX

| |    |        |  |                                                                                                                                                                   
| | -- | ------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3  | .1(a)  |  | Amended and Restated Articles of Incorporation,
    as amended                                                                                                    
| | 3  | .2(b)  |  | Code of Regulations                                                                                                                                               
| | 4  | .1(b)  |  | Specimen Share Certificate                                                                                                                                        
| | 4  | .2(a)  |  | Dividend Reinvestment and Optional Share Purchase
    Plan                                                                                                        
| | 4  | .3(d)  |  | Shareholder Rights Agreement, dated as of
    May 25, 1999 between Boykin Lodging Company and National
    City Bank as rights agent                              
| | 4  | .3a(g) |  | Amendment to Shareholder Rights Agreement, dated
    as of December 31, 2001                                                                                      
| | 10 | .1(i)  |  | Third Amended and Restated Agreement of Limited
    Partnership of Boykin Hotel Properties, L.P.                                                                  
| | 10 | .2(b)  |  | Form of Registration Rights Agreement                                                                                                                             
| | 10 | .3(b)  |  | Long-Term Incentive Plan*                                                                                                                                         
| | 10 | .4(b)  |  | Directors Deferred Compensation Plan*                                                                                                                            
| | 10 | .5(b)  |  | Employment Agreement between the Company and
    Robert W. Boykin*                                                                                                
| | 10 | .6(b)  |  | Form of Percentage Lease                                                                                                                                          
| | 10 | .7(b)  |  | Intercompany Convertible Note                                                                                                                                     
| | 10 | .8(b)  |  | Agreements with General Partners of the
    Contributed Partnerships                                                                                              
| | 10 | .9(b)  |  | Form of Noncompetition Agreement                                                                                                                                  
| | 10 | .10(b) |  | Alignment of Interests Agreement                                                                                                                                  
| | 10 | .11(c) |  | Description of Employment Arrangement between the
    Company and Richard C. Conti*                                                                               
| | 10 | .12(d) |  | Limited Liability Company Agreement of Boykin/
    AEW LLC dated as of February 1, 1999                                                                           
| | 10 | .13(e) |  | Stock Purchase Option Agreement by and among
    Boykin Lodging Company, Boykin Hotel Properties, L.P. and AEW
    Partners III, L.P. dated as of February 1, 1999
| | 10 | .14(e) |  | Warrant to Purchase Class A Cumulative
    Preferred Stock, Series 1999-A of Boykin Lodging Company
    dated as of February 1, 1999                              
| | 10 | .15(e) |  | Registration Rights Agreement by and among Boykin
    Lodging Company and AEW Partners III, L.P. dated as of
    February 1, 1999                                 
| | 10 | .16(f) |  | Key Employee Severance Plan*                                                                                                                                      
| | 10 | .17(f) |  | Form of Severance Agreement*                                                                                                                                      
| | 10 | .18(g) |  | Master Contribution Agreement between BMC, JABO
    LLC, the Company and the Partnership dated as of
    December 31, 2001                                        
| | 10 | .19(g) |  | Form of Hotel Management Agreement*                                                                                                                               
| | 10 | .20(g) |  | Registration Rights Agreement between the Company
    and JABO LLC dated January 1, 2002                                                                          
| | 10 | .21(j) |  | Description of Employment Arrangement between the
    Company and Shereen P. Jones*                                                                               
| | 12 |        |  | Statement re Computation of Ratios                                                                                                                                
| | 16 | .1(h)  |  | Letter of Arthur Andersen LLP required by
    Item 304 of Regulation S-K                                                                                          
| | 21 |        |  | Subsidiaries of the Registrant                                                                                                                                    
| | 23 | .1     |  | Independent Auditors Consent                                                                                                                                     
| | 31 | .1     |  | Certification pursuant to Rule 13a-14(a)                                                                                                                          
| | 31 | .2     |  | Certification pursuant to Rule 13a-14(a)                                                                                                                          
| | 32 | .1     |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002                                    
| | 32 | .2     |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002                                    



---



##### Table of Contents





---



|    |                                                                                           
|--- | ------------------------------------------------------------------------------------------
|(a) | Incorporated by reference from Boykins
    Form 10-Q for the quarter ended June 30, 1999.



|    |                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Incorporated by reference from Amendment
    No. 3 to Boykins Registration Statement on
    Form S-11 (Registration No. 333-6341) (the
    Form S-11) filed on October 24, 1996. Each
    of the above exhibits has the same exhibit number in the
    Form S-11.



|    |                                                                                           
|--- | ------------------------------------------------------------------------------------------
|(c) | Incorporated by reference from Boykins
    Form 10-Q for the quarter ended June 30, 1998.



|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|(d) | Incorporated by reference from Boykins
    Form 10-Q for the quarter ended March 31, 1999.



|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|(e) | Incorporated by reference from Boykins
    Form 10-Q for the quarter ended March 31, 1999.



|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|(f) | Incorporated by reference from Boykins
    Form 10-K for the year ended December 31, 1999.



|    |                                                                                
|--- | -------------------------------------------------------------------------------
|(g) | Incorporated by reference from Boykins
    Form 8-K filed on January 14, 2002.
|   
|(h) | Incorporated by reference from Boykins
    Form 8-K filed on April 22, 2002.  



|    |                                                                                            
|--- | -------------------------------------------------------------------------------------------
|(i) | Incorporated by reference from Boykins
    Form 8-K filed on October 4, 2002.             
|   
|(j) | Incorporated by reference from Boykins
    Form 10-K for the year ended December 31, 2002.



| |   |                                                             
| | - | ------------------------------------------------------------
| | * | Management contract or compensatory plan or
    arrangement.