SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)

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

       For the fiscal year ended January 31, 2001.

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

       For the transition period from  _______________ to _________________.

                           Commission File No. 1-7062

                           InnSuites Hospitality Trust

-------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

            Ohio                                          34-6647590
-------------------------------                 ------------------------------
(State or Other Jurisdiction of                       (I.R.S. Employer
Incorporation or Organization)                      Identification Number)

InnSuites Hotels Centre, 1615 E. Northern Avenue,
              Suite 102, Phoenix, Arizona                           85020
-------------------------------------------------               ---------------
(Address of Principal Executive Offices)                          (ZIP Code)

Registrant's Telephone Number, including area code           (602) 944-1500
                                                             --------------


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

Title of Each Class                   Name of Exchange on Which Registered
--------------------------          -----------------------------------------
Shares of Beneficial                         American Stock Exchange
Interest, without
par value

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 / /

     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. / /

     Aggregate market value of voting stock held by non-affiliates of the
Registrant as of April 26, 2001: $4,513,706.

Number of shares of voting stock outstanding as of April 26, 2001:  2,149,384.

<PAGE>

                                     PART I

Item 1.  BUSINESS.
         --------

Introduction to Our Business

         InnSuites Hospitality Trust, formerly known as Realty ReFund Trust (the
"Trust"), was organized in 1971 and operates as an unincorporated Ohio real
estate investment trust. On January 31, 2001, the Trust owned a 48.17% sole
general partner interest in RRF Limited Partnership, a Delaware limited
partnership (the "Partnership"). On January 31, 2001, the Partnership owned,
directly or indirectly, eleven InnSuites(R) hotels located in Arizona, New
Mexico, and southern California (all eleven InnSuites(R) hotels are hereinafter
referred to as the "Hotels"). The Trust employs seven people.

         The Hotels feature 1,751 hotel suites and operate as moderate- and
full-service hotels which apply a value studio and two-room suite operating
philosophy formulated in 1980 by James F. Wirth, current Chairman, President and
Chief Executive Officer of the Trust ("Mr. Wirth"). The Trust attempts to
acquire under-performing hotel properties below replacement cost. Through
intensive refurbishment and management programs, the Trust repositions the
acquired hotels as studio and two-room suite hotels that offer services such as
free breakfast buffets and complementary afternoon social hours plus amenities,
such as microwave ovens, refrigerators and coffee makers in each studio or
two-room suite.

         The Trust has elected to be taxed as a real estate investment trust
("REIT"), as that term is defined and used in Sections 856-860 of the Internal
Revenue Code of 1986, and the Regulations thereunder (all as amended, the
"Code"). In order to maintain its REIT tax status, the Trust has affiliated with
certain other hotel hospitality companies. The Partnership leases the Hotels to
InnSuites Hotels, Inc. (the "Lessee"). The Lessee pays rent to the Partnership
pursuant to percentage lease agreements (the "Percentage Leases") providing for
periodic rental payments based primarily upon the revenues of the Hotels. The
Trust obtains income from cash distributions made by the Partnership and those
distributions largely depend upon the Partnership's earnings under the
Percentage Leases.

         Further affiliations involve managing the Hotels and licensing the
InnSuites brand. Prior to February 1, 2001, the Lessee operated and managed all
of the Hotels, with the assistance of InnSuites Innternational Hotels, Inc.
("InnSuites Innternational"). Pursuant to management contracts, the Lessee paid
InnSuites Innternational an annual management fee of 2.5% of gross room and
other revenues for property management services. Following the acquisition of
the Lessee by the Trust effective February 1, 2001, the Lessee will operate and
manage the Hotels with the assistance of Suite Hospitality Management Company
(the "New Management Company") pursuant to substantially the same terms as the
InnSuites Innternational management agreements. See "Acquisition of the Lessee
by the Trust" below.

         The Lessee pays InnSuites Licensing Corp. (the "Licensing Corp.") an
annual licensing fee of 2.5% of gross room and other revenues (1.25% for those
hotel properties which also carry a third-party franchise, such as Best
Western(R) or Holiday Inn(R)) for trademark and licensing services relating to
the use of the InnSuites(R) name and marks.

         Effective October 12, 1999, the Partnership, the Lessee and InnSuites
Innternational entered into an Intercompany Agreement (the "Intercompany
Agreement") whereby, subject to certain terms and conditions, the Partnership
will grant the Lessee a right of first refusal to lease, and InnSuites
Innternational a right of first refusal to operate, any real property acquired
by the Partnership. In return, the Partnership will be granted a right of first
refusal to pursue opportunities presented to the Lessee or InnSuites
Innternational to purchase investments in real estate, hotel properties, real
estate mortgages, real estate derivatives or entities that invest in the
foregoing. In connection with the

                                       -1-

<PAGE>


acquisition of the Lessee by the Trust, the Intercompany Agreement was amended
effective February 1, 2001 to provide for the assumption by the New Management
Company of the rights and obligations of InnSuites Innternational thereunder.
See "Acquisition of the Lessee by the Trust" below.

Historical Operations and the Formation Transactions

         Until January 31, 1998, the Trust specialized in wrap-around mortgage
lending, whereby the Trust offered borrowers a total mortgage loan (the
wrap-around loan), the principal amount of which equaled the balance outstanding
on an existing prior mortgage loan on the borrower's property, plus an
additional amount supplied by the Trust, on existing income-producing
commercial, industrial and multi-unit residential real property.

         On December 27, 1996, the Trust and Hospitality Corporation
International ("HCI"), an Arizona corporation owned by Mr. Wirth and his wife,
which controlled seven all-suite hotel properties, comprising 1,036 hotel studio
and two-room suites, in Tucson, Phoenix, Scottsdale, Tempe, Flagstaff and Yuma,
Arizona and in Ontario, California (the "Initial Hotels"), executed a definitive
Formation Agreement (the "Formation Agreement") whereby, through a series of
transactions, the Initial Hotels were combined with the Trust.

         The Formation Agreement provided for the organization of the
Partnership, of which the Trust would be the sole general partner, initially
holding a 13.6% interest, with the former partners in the Initial Hotels
investing as limited partners, receiving a collective 86.4% interest, and for
restructuring the Trust into an "umbrella partnership REIT", or "UPREIT". The
Partnership acquired substantial interests in six of the Initial Hotels. The
seventh hotel, located in Scottsdale, Arizona, was acquired directly by RRF Sub
Corp., a then newly-formed Nevada corporation and wholly-owned subsidiary of the
Trust. RRF Sub Corp. subsequently contributed the Scottsdale, Arizona hotel to
the Partnership in exchange for general partnership interests therein. The Trust
contributed $2,081,000 in cash to the Partnership to obtain its initial 13.6%
sole general partner interest.

         The Partnership has two outstanding classes of limited partnership
interests, Class A and Class B, identical in all respects except that each Class
A limited partnership unit is convertible, at the option of the Class A holder,
into one newly-issued Share of Beneficial Interest of the Trust. No particular
conversion will be allowed, however, if a determination is made that such
conversion would cause the Trust to no longer qualify as a REIT under the Code.
A total of 2,174,931 Class A limited partnership units were issued to the former
partners in the Initial Hotels. Class B limited partnership units may be
converted only upon the approval of the Board of Trustees, provided that such
conversion would not cause the Trust to fail to qualify as a REIT. A total of
4,017,361 Class B limited partnership units were issued to Mr. Wirth and certain
of his affiliates in order to satisfy ownership concentration limitations placed
upon REITs by the Code. The Partnership Agreement of the Partnership subjects
both general and limited partner units to restrictions on transfer.

Hotel Acquisitions following the Formation Transactions

         Following the Formation Transactions, the Partnership acquired four
additional all-suite hotels. First, effective as of February 1, 1998, the
Partnership acquired the InnSuites Hotels Tucson St. Mary's located in Tucson,
Arizona. The total consideration for the acquisition was $10,820,000 and was
based upon an appraisal conducted by an independent third party. Mr. Wirth and
his wife indirectly owned the Tucson St. Mary's hotel property. Second, on April
29, 1998, the Partnership acquired the Lafayette Hotel Ramada Inn & Conference
Center located in San Diego, California. The Partnership paid $5,148,000 for
this hotel property based on arms-length negotiations with the owners of that
property. Third, the Partnership acquired the InnSuites Hotel located in Buena
Park, California,

                                       -2-

<PAGE>


effective June 1, 1998. The total consideration for the acquisition was
$7,100,000 and was based upon an appraisal conducted by an independent third
party. Mr. Wirth and Steven S. Robson indirectly owned the Buena Park hotel
property. Subsequent to this acquisition, Mr. Robson was elected as a Trustee of
the Trust by the shareholders of the Trust. Fourth, the Partnership acquired the
Best Western Airport Inn located in Albuquerque, New Mexico, effective August
30, 2000. The total consideration for the acquisition was $2,100,000 based on
arms-length negotiations with the owners of the property.

         The Trust believes that the greatest opportunities for revenue growth
and profitability will arise from the skillful management of the Trust's eleven
existing Hotels plus the skillful management and repositioning of current and
future acquired hotel properties. The Trust's primary business objectives are to
maximize returns to its shareholders through increases in asset value and cash
flow available for distribution and to increase long-term total returns to
shareholders. The Trust will seek to achieve these objectives through (i)
participation in increased revenues from the Hotels pursuant to the Percentage
Leases by intensive management and marketing, and (ii) selective acquisitions
and expansion of the InnSuites Hotels in the in the southwestern region of the
United States.

Acquisition of the Lessee by the Trust

         In December 2000, the Lessee and the Trust established independent
review groups to consider altering the current structure of the management and
operations of the Hotels pursuant to the provisions of the REIT Modernization
Act (the "RMA"). The RMA, among other things, permits the Trust to own the stock
of a taxable REIT subsidiary ("TRS") that may engage in businesses previously
prohibited by the Trust, including leasing hotels, provided that such hotels are
managed and operated by independent third parties. Based on discussions between
the independent review groups, and in consultation with its legal and accounting
advisors, effective February 1, 2001, the Trust acquired all of the common and
preferred equity stock of the Lessee for $10,000 in cash consideration. The
Lessee was owned 23% by Marc E. Berg, Executive Vice President, Secretary,
Treasurer and Trustee of the Trust, and 9.8% by InnSuites Innternational, an
affiliate of Mr. Wirth.

         Following the acquisition, the Lessee elected to be treated as a TRS
under the RMA. As a result, the management contracts relating to the Hotels
between the Lessee and InnSuites Innternational were terminated effective
January 31, 2001 and new management contracts were entered into on substantially
similar terms with the New Management Company, which qualifies as an independent
third party manager and operator of the Hotels under the RMA. In return, the New
Management Company assumed certain liabilities of InnSuites Innternational,
including its obligations under the Intercompany Agreement. In connection with
acquisition, the rate structures of the Percentage Leases for the Hotels were
also amended to reflect current economic and market conditions and employees of
the Lessee became employees of the New Management Company. The benefits to the
Trust are anticipated to include a more direct relationship between the Hotels
and the Trust, the inclusion of Lessee revenues in excess of required rent
payments in the Trust's consolidated financial reports, the elimination of
potential conflicts of interest and the reduction of certain administrative
costs relative to the operation of the Hotels and the administration of the
Percentage Leases.

Competition in the Hotel Industry

         The hotel industry is highly competitive. Each of the Hotels
experiences competition primarily from other mid-market hotels in its immediate
vicinity, but also competes with other hotel properties in other geographic
markets. While none of the Hotels' competitors dominate any of the Trust's
geographic markets, some of those competitors have substantially greater
marketing and financial resources than the Trust and the Partnership.

                                       -3-

<PAGE>


         A number of additional hotel property developments have been announced
or have recently been completed by competitors in a number of the Hotels'
markets, and additional hotel property developments may be built in the future.
Such hotel developments have had, and could continue to have, an adverse effect
on the revenues of the Hotels in such competitive markets.

         The Trust has chosen to focus its hotel investments in the southwest
region of the United States. The Trust has a concentration of assets in the
metropolitan Phoenix and Tucson, Arizona markets. In the Phoenix and Tucson,
Arizona markets, the supply of hotel rooms has been increasing faster than the
rate of demand. Supply rates also generally increased faster than demand rates
in the Flagstaff and Yuma, Arizona markets. The Buena Park, San Diego and
Ontario, California markets continue to support balanced supply and demand.

         The Trust and the Partnership may also compete for investment
opportunities with other entities that have substantially greater financial
resources. These entities also may generally accept more risk than the Trust and
the Partnership can prudently manage. Competition may generally reduce the
number of suitable future investment opportunities available to the Trust and
the Partnership and increase the bargaining power of owners seeking to sell
their properties.

Seasonality of the Hotel Business

         The Hotels' operations historically have been seasonal. The six
southern Arizona hotels experience their highest occupancy in the first fiscal
quarter and, to a lesser extent, the fourth fiscal quarter. The second fiscal
quarter tends to be the lowest occupancy period at those six southern Arizona
hotels. This seasonality pattern can be expected to cause fluctuations in the
Trust's quarterly lease revenue under the Percentage Leases. The hotels located
in northern Arizona, California and New Mexico historically experience their
most profitable periods during the second and third fiscal quarters (the summer
season), providing some balance to the general seasonality of the hotel
business. To the extent that cash flow from operations is insufficient during
any quarter, due to temporary or seasonal fluctuations in lease revenue, the
Trust may utilize other cash on hand or borrowings to make distributions to its
shareholders. No assurance can be given that the Trust will make distributions
in the future.

Financial Information

         See "Item 6 -- Selected Financial Data" herein for information
regarding the Trust's revenues, net loss and total assets.

Item 2.  PROPERTIES.
         ----------

         The Trust maintains its administrative offices at the InnSuites Hotels
Centre in Phoenix, Arizona. The Trust does not directly own any real property.
At January 31, 2001, the Partnership owned, directly or indirectly, eleven
hotels. All of the Hotels are operated as InnSuites(R) Hotels, while four are
also marketed as Best Western(R) Hotels and one is also marketed as a Holiday
Inn(R) Hotel and Suites. All of the Hotels are managed by the New Management
Company and operate in the following locations:

<TABLE>
<CAPTION>
                                                                  NUMBER      YEAR OF CONSTRUCTION/     MOST RECENT
PROPERTY                                                        OF SUITES            ADDITION            RENOVATION
--------                                                        ---------     ---------------------     -----------

<S>                                                             <C>           <C>                       <C>
InnSuites Hotels

Airport Inn Albuquerque Best Western......................           104             1975/1985             2000

InnSuites Hotels

Phoenix Best Western......................................           123                  1980             1996

InnSuites Hotels Tempe/
Phoenix Airport/South Mountain............................           170             1982/1985             1996

InnSuites Hotels Tucson,
Catalina Foothills Best Western...........................           159             1981/1983             1996

InnSuites Hotels

Yuma Best Western.........................................           166             1982/1984             1996
</TABLE>


                                       -4-

<PAGE>


<TABLE>
<S>                                                             <C>           <C>                       <C>
Holiday Inn Airport Hotel and

Suites/Ontario(an InnSuites Hotel)........................           150                  1990             1996

InnSuites Hotels Flagstaff/
Grand Canyon..............................................           118             1966/1972             1997

InnSuites Hotels Scottsdale/
El Dorado Park Resort.....................................           132                  1980             1996

InnSuites Hotels Tucson St. Mary's........................           297             1960/1971             1997

InnSuites Hotels San Diego................................           147             1946/1989             1998

InnSuites Hotels Buena Park...............................           185             1972/1980             1998
                                                                   -----
Total suites                                                       1,751
                                                                   =====
</TABLE>

See "Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations" herein for a discussion of occupancy rates at the Hotels.

See "Item 8 - Financial Statements and Supplementary Data" herein for a
discussion of mortgages encumbering the Hotels.

Item 3.  LEGAL PROCEEDINGS.
         -----------------

         The Trust is not a party, nor are its properties subject to, any
material litigation or environmental regulatory proceedings.

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 fiscal quarter ended January 31, 2001.

                                     PART II

                                     -------

Item 5.  MARKET FOR THE TRUST'S SHARES AND RELATED SECURITY HOLDER MATTERS.
         -----------------------------------------------------------------

         Until February 23, 1999, the Trust's Shares of Beneficial Interest were
traded on the New York Stock Exchange under the symbol "IHT". Since April 7,
1999, the Trust's Shares of Beneficial Interest have been traded on the American
Stock Exchange under the symbol "IHT". On January 31, 2001, the Trust had
2,126,484 shares outstanding and 536 holders of record.

         The following table sets forth, for the periods indicated, the high and
low sales prices of the Trust's Shares of Beneficial Interest, as quoted by the
American or New York Stock Exchange, as well as dividends declared thereon:

<TABLE>
<CAPTION>
    Fiscal Year 2001               High          Low          Dividends
    ----------------               ----          ---          ---------

<S>                                <C>           <C>          <C>
         First Quarter             2 3/8         2 1/16            .01
         Second Quarter            2 1/2         1 3/4             .01
         Third Quarter             2 3/8         2 1/16            .01
         Fourth Quarter            2 3/8         1 7/16            .01

<CAPTION>
    Fiscal Year 2000               High          Low          Dividends
    ----------------               ----          ---          ---------

<S>                                <C>           <C>          <C>
         First Quarter             3 1/16        2 1/4              --
         Second Quarter            3 1/8         2 5/16             --
         Third Quarter             2 15/16       2                 .01
         Fourth Quarter            2 7/8         1 3/4             .01
</TABLE>

         The Trust intends to maintain a conservative dividend policy to
facilitate internal growth. In fiscal year 2001, the Trust paid dividends of
$.01 per share in the first, second, third and fourth quarters. In fiscal year
2000, the Trust paid dividends of $.01 per share in the third and fourth
quarters and in fiscal year 1999, the Trust paid a dividend in the third quarter
of $.10 per share.

                                       -5-

<PAGE>


Item 6.  SELECTED FINANCIAL DATA.
         -----------------------

         The following selected financial data of the Trust for the five fiscal
years ended January 31, 2001, has been derived from the audited consolidated
financial statements of the Trust. The consolidated financial statements of the
Trust for the two fiscal years ended January 31, 1998 were audited by Arthur
Andersen LLP, independent public accountants. The consolidated financial
statements of the Trust for the three fiscal years ended January 31, 2001 were
audited by KPMG LLP, independent public accountants. All of the data should be
read in conjunction with the respective consolidated financial statements and
related notes included herein.

<TABLE>
<CAPTION>
                                2001           2000          1999           1998         1997

<S>                          <C>            <C>           <C>            <C>           <C>
Total revenues               $ 9,738,455    $ 9,546,181   $ 9,909,758    $ 1,421,979   $3,915,506

Net loss                     $(2,594,754)   $  (951,811)  $  (193,071)   $  (573,509)  $ (888,365)

Loss
per share-basic

and diluted                  $     (1.12)   $      (.40)  $      (.10)   $      (.56)  $     (.87)

Cash dividends
paid and declared

per share                    $       .04    $       .02   $       .10    $       .15   $      .40

Total assets                 $63,905,561    $65,305,519   $67,804,770    $43,619,639   $6,416,123

Bank and other

borrowings                   $44,525,300    $38,746,662   $36,924,834    $22,428,880   $2,300,000
</TABLE>

See "Item 1 - Business - Historical Operations and the Formation Transactions"
herein for a discussion of the change in the nature of the business of the
Trust.

                                       -6-

<PAGE>


Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         ----------------------------------------------------------------
         RESULTS OF OPERATIONS.
         ---------------------

GENERAL

         The following discussion should be read in conjunction with the
InnSuites Hospitality Trust consolidated financial statements and notes thereto
and the InnSuites Hotels, Inc. financial statements and notes thereto appearing
elsewhere in this Annual Report.

         The Trust is a real estate investment trust which owns the sole general
partner interest in the Partnership. In order for the Trust to qualify as a REIT
under prior provisions of the Code, neither the Trust nor the Partnership could
operate the Hotels. Therefore, each of the Hotels was leased to, and operated
by, the Lessee pursuant to a Percentage Lease. Each Percentage Lease obligates
the Lessee to pay rent equal to the greater of a minimum rent or a percentage
rent based on the gross revenues of each Hotel. The Lessee also holds the
franchise agreement for each Hotel. Prior to February 1, 2001, the Lessee was
owned 9.8% by InnSuites Innternational Hotels, Inc., an entity owned by Mr.
Wirth and his wife. Effective February 1, 2001, however, the Lessee became a
wholly-owned subsidiary of the Trust. See "Item 1 - Business - Acquisition of
the Lessee by the Trust."

         The Trust's principal source of cash flows is distributions from the
Partnership, which are dependent upon lease payments from the Lessee pursuant to
the Percentage Leases. The Lessee's ability to make payments to the Partnership
pursuant to the Percentage Leases is dependent primarily upon the operations of
the Hotels. As a result of the Trust's acquisition of the Lessee as of February
1, 2001, any profits earned by the Lessee in its operation of the Hotels may be
distributed to the Trust.

         At January 31, 2001, the Trust owned a 48.2% interest in the Hotels
through its sole general partner's interest in the Partnership. This change in
ownership resulted primarily from the following transactions:

         On March 15, 1999, the Trust purchased 1 million additional general
         partner units in the Partnership for $2 million. This transaction was
         fully funded

                                       -7-

<PAGE>


         by Mr. Wirth who provided an unsecured loan to the Trust at 7% interest
         payable annually beginning March 15, 2000. The unpaid principal balance
         and accrued interest is due on March 15, 2004.

         On April 2, 1999, the Partnership made an unsecured loan to the Trust
         in the amount of $2.6 million. Annual interest only payments are due on
         March 1 of each year and are based on a 7% interest rate. The unpaid
         principal balance is due at maturity on April 2, 2006. The Trust used
         the proceeds of that loan to purchase 1.3 million general partner units
         in the Partnership. The money lent by the Partnership was generated by
         refinancing the Northern Phoenix hotel and borrowing an additional $1.8
         million that was secured by a mortgage on that property. The original
         mortgage note was restructured to match the terms of the refinanced
         note, which bears interest at 8.25% and matures on April 1, 2014.
         Monthly principal and interest payments began on April 1, 1999.

         As of April 2, 1999, the Trust transferred, at historical cost, its
         interest in the Scottsdale property to the Partnership (approximately
         $7 million) in exchange for 1.6 million general partner units.

         As a result of the aforementioned transactions, the Trust increased its
         ownership interest in the Partnership from approximately 18% to
         approximately 42% as of April 2, 1999. Other incremental, less
         material, transactions have contributed to the increase from 42% to the
         Trust's 48.2% sole general partner's interest in the Partnership at
         January 31, 2001.

         The expenses of the Trust consist primarily of property taxes,
insurance, corporate overhead, interest on mortgage debt, professional fees and
depreciation of the Hotels. Under the terms of its Partnership Agreement, the
Partnership is required to reimburse the Trust for all such expenses. The
Percentage Leases provide for the payment of base rent and percentage rent. For
the year ended January 31, 2001, base rent and percentage rent in the aggregate
amount of $9.7 million was earned by the Trust. The principal determinant of
percentage rent is the Lessee's room revenues at the Hotels, as defined by the
Percentage Leases. Therefore, management believes that a review of the
historical performance of the operations of the Hotels, particularly with
respect to occupancy, average daily rate ("ADR"), calculated as total room
revenue divided by number of rooms sold, and revenue per available room,
calculated as total room revenue divided by number of rooms available (known as
"REVPAR"), is appropriate for understanding revenue from the Percentage Leases.
ADR decreased $1.24 to $66.46 in fiscal year 2001 from $67.70 in fiscal 2000 due
to management's efforts to increase occupancy. Occupancy increased 3.4% to 63.2%
in fiscal 2001 from 59.8% in fiscal year 2000 as a result management's concerted
effort to drive occupancy with a more competitive ADR. This resulted in an
increase in REVPAR of $1.56 to $42.02 in fiscal 2001 from $40.46 in fiscal 2000.

         The following table shows certain historical financial and other
information for the periods indicated.

<TABLE>
<CAPTION>
                                                      For the Year Ended
                                                          January 31,
                                              -----------------------------------
                                               2001           2000          1999
                                              ------         ------        ------
<S>                                           <C>            <C>           <C>
Occupancy                                      63.23%         59.80%        60.80%
Average Daily Rate (ADR)                      $66.46         $67.70        $66.89
Revenue Per Available Room (REVPAR)           $42.02         $40.46        $40.65
</TABLE>

         No assurance can be given that the trends reflected in this data will
continue or that Occupancy, ADR and REVPAR will not decrease as a result of
changes in national or local economic or hospitality industry conditions.

                                       -8-

<PAGE>


Results of Operations of the Trust for the year ended January 31, 2001 compared
to the year ended January 31, 2000.

         Results of operations for the Trust for the fiscal year ended January
31, 2001 reflect a full-year of operations of ten of the Hotels as well as a
partial-year of operations for the Best Western Airport Inn located in
Albuquerque, New Mexico. Results of operations for the Trust for the fiscal year
ended January 31, 2000 reflect a full-year of operations of ten of the Hotels.

         For the twelve months ended January 31, 2001, the Trust had total
revenues of $9.7 million compared to $9.5 million for the twelve months ended
January 31, 2000, an increase of approximately $192,000 or 2.0% due primarily to
additional revenue of $144,000 generated by the newly acquired Albuquerque
hotel. Total expenses of $14.9 million for the twelve months ended January 31,
2001 increased $3.3 million compared to total expenses of $11.6 million for the
twelve months ended January 31, 2000. The increase in total expenses included
the write-down for a partial impairment of the Scottsdale hotel property of $3.2
million. The hotel asset, including land, and fixtures, furniture, and equipment
were written down by $3.2 million. The remaining $118,000 increase in total
expenses was primarily due to the addition of operating expenses attributable to
the newly acquired Albuquerque hotel.

         Loss on impairment of hotel property was $3.2 million for the twelve
months ended January 31, 2001. This loss resulted from the write-down for a
partial impairment of a hotel asset of $3.2 million. Recent performance of the
Scottsdale hotel property indicated that the hotel asset may have significantly
decreased in value, which then required management to test the asset for
recoverability of book value under SFAS No. 121 "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Using
management's best estimate of undiscounted future cash flows from the hotel, the
hotel asset's book value was determined not to be recoverable. The hotel asset,
including land, buildings and improvements, and fixtures, furniture and
equipment, was written down by $3.2 million to the hotel's market value and new
basis of $3.7 million. The amount of impairment allocated to Shares of
Beneficial Interest was $1.5 million and the amount allocated to minority
interest was $1.7 million.

         General and administrative expenses include overhead charges for
management, accounting, shareholder and legal services for the Trust. In
comparing general and administrative expenses for the twelve months ended
January 31, 2001 and 2000, these expenses decreased $653,000 to $3.6 million in
fiscal 2001 from $4.2 million in fiscal 2000. This 15.4% decrease was primarily
due to charges to expense of $575,000 for deferred expenses relating to a
withdrawn public offering in fiscal year 2000.

         Total interest expense increased by $429,000 or 12.8% to $3.8 million
from $3.3 million in comparing the twelve months ended January 31, 2001 and
January 31, 2000, respectively. Interest on mortgage notes payable increased
$205,000 or 9.5% to $2.4 million from $2.2 million due to increased mortgage
debt related to the refinancing of the San Diego property and the acquisition of
the Albuquerque hotel during fiscal 2001. Interest on notes payable to banks
increased by 16.9% or $165,000 to $1.1 million from $977,000 due to increased
interest on the $12 million Credit Facility, which bears a variable interest
rate. Interest on notes payable to related parties increased 25.1% or $54,000 to
$267,000 from $214,000 due to additional loans from Mr. Wirth.

         Real estate and personal property taxes, insurance and ground rent
increased $29,000 or 2.1% to $1.5 million from $1.4 million in comparing the
twelve months ended January 31, 2001 and 2000, respectively. Real estate and
personal property taxes and property insurance increased primarily due to the
acquisition of the Albuquerque hotel during fiscal 2001.

                                       -9-

<PAGE>


         Real estate depreciation for the twelve months ended January 31, 2001
compared to 2000 increased approximately $294,000 or 11.6% to $2.8 million from
$2.5 million, respectively. Of the $294,000 increase, approximately $54,000 was
due to the Trust's acquisition of the Albuquerque hotel. The remaining $240,000
resulted primarily from an increase in capitalized refurbishment costs in the
current fiscal year, as well as a full year of depreciation on assets
capitalized last year.

         The Trust had a loss before minority interest of $5.1 million for the
twelve months ended January 31, 2001, a $3.1 million increased loss from the
loss of $2.0 million in the prior year. After deducting the loss allocated to
the minority interest of $2.5 million, the Trust had a net loss attributable to
Shares of Beneficial Interest of approximately $2.6 million. This represented an
increase in net loss of $1.6 million attributable to Shares of Beneficial
Interest comparing the twelve months ended January 31, 2001 and 2000. The
results for the fiscal year ended January 31, 2001 included the recognition of a
provision for uncollectible receivables of $2.4 million. Basic and diluted net
loss per share was $(1.12) for the twelve months ended January 31, 2001 compared
to $(0.40) for 2000.

Results of Operations of the Trust for the year ended January 31, 2000 compared
to the year ended January 31, 1999.

         Results of operations for the Trust for the fiscal year ended January
31, 2000 reflect a full-year of operations of ten of the Hotels (excluding the
recently acquired Best Western Airport Inn located in Albuquerque, New Mexico)
and the fiscal year ended January 31, 1999 reflects a full-year of operations of
the Initial Hotels as well as a partial-year of operations for the Tucson St.
Mary's, Buena Park and San Diego hotels.

         For the twelve months ended January 31, 2000, the Trust had total
revenues of $9.5 million compared to $9.9 million for the twelve months ended
January 31, 1999, a decrease of approximately $400,000 or 3.7% due primarily to
the change in rent formulas effective August 1, 1999. Total expenses of $11.6
million for the twelve months ended January 31, 2000 increased $1.5 million
compared to total expenses of $10.1 million for the twelve months ended January
31, 1999. The 14.3% increase in total expenses was primarily due to charges to
expense of approximately $575,000 for deferred expenses related to a withdrawn
public offering and a $1.9 million provision for uncollected rents receivable in
fiscal 2000 which was partially offset by a $780,000 loss on the termination of
the Advisory Agreement with Mid-America Reafund Advisors ("MARA") in fiscal
1999.

         General and administrative expenses include overhead charges for
management, accounting, shareholder and legal services for the Trust. In
comparing general and administrative expenses for the twelve months ended
January 31, 2000 and 1999, these expenses increased $1.5 million to $4.2 million
in fiscal 2000 from $2.7 million in fiscal 1999. This 54.5% increase was
primarily due to charges to expense of approximately $575,000 for deferred
expenses relating to a withdrawn public offering and a $1.9 million provision
for uncollected rents receivable from the Lessee in fiscal 2000. These were
offset by decreases primarily relating to the incurrence of Advisory Agreement
fees of approximately $364,000 and the loss of approximately $780,000 for the
termination of the Advisory Agreement with MARA in fiscal 1999.

         Total interest expense increased by $544,000 or 19.5% to $3.3 million
from $2.8 million in comparing the twelve months ended January 31, 2000 and
January 31, 1999, respectively. Interest on mortgage notes payable increased
approximately $200,000 or 10% to $2.1 million from $1.9 million due to increased
mortgage debt related to the acquisition of the Buena Park and San Diego
properties during fiscal 1999 and net additional borrowings of approximately
$2.3 million during fiscal 2000 for the loan modification relating to the
Northern Phoenix property and the refinancing of the San Diego property.
Interest on notes payable to banks increased by 52.8% or approximately $338,000
to $977,000 from $639,000 due to a full year of interest in fiscal 2000 on the
$12 million Credit Facility obtained

                                      -10-

<PAGE>


during fiscal 1999, which bears a variable interest rate. Interest on notes
payable to related parties increased 4.6% or approximately $10,000 to $214,000
from $204,000 due to additional loans of $956,000 (net of payments) from Mr.
Wirth.

         Real estate and personal property taxes, insurance and ground rent
increased approximately $200,000 or 16.4% to $1.4 million from $1.2 million in
comparing the twelve months ended January 31, 2000 and 1999, respectively. Real
estate and personal property taxes and property insurance increased $145,000
primarily due to the acquisition of the Buena Park and San Diego properties
during fiscal 1999 resulting in a full year of expenses in fiscal 2000 compared
to 9 months of expenses for San Diego and 8 months of expenses for Buena Park in
fiscal 1999.

         Real estate depreciation for the twelve months ended January 31, 2000
compared to 1999 increased approximately $350,000 or 15.9% to $2.5 million from
$2.2 million, respectively. Of the $350,000 increase, approximately $184,000 was
due to the Trust's acquisitions of the Buena Park and San Diego properties
resulting in a full year of depreciation in fiscal year 2000. The remaining
$166,000 resulted primarily from an increase in capitalized refurbishment costs
in the current year.

         The Trust had a loss before minority interest of $2.0 million for the
twelve months ended January 31, 2000, a $1.8 million increase from the loss of
$200,000 in the prior year. After deducting the loss allocated to the minority
interest of $1.1 million, the Trust had a net loss attributable to Shares of
Beneficial Interest of approximately $952,000. This represented an increase in
net loss of $759,000 attributable to Shares of Beneficial Interest comparing the
twelve months ended January 31, 2000 and 1999. The results for the fiscal year
ended January 31, 2000 included the recognition of a provision for uncollectible
receivables of $1.9 million and a charge of approximately $575,000 resulting
from withdrawing a public offering. Basic and diluted net loss per share was
$(0.40) for the twelve months ended January 31, 2000 compared to $(0.10) for
1999. Without considering the effect of the aforementioned charges, the Trust
would have reported net income of approximately $23,000 and basic earnings per
share of $0.01.

Results of Operations of the Lessee

Comparison of actual results for the year ended January 31, 2001 compared to the
year ended January 31, 2000.

         Results of operations for the Lessee for the fiscal year ended January
31, 2001 reflect a full-year of operations of ten of the Hotels as well as a
partial-year of operations for the Best Western Airport Inn located in
Albuquerque, New Mexico. Results of operations for the fiscal year ended January
31, 2000 reflect a full-year of operations of ten of the Hotels.

         Total revenues for the Lessee increased 3.2% or $904,000 to $28.9
million from $28.0 million for the twelve months ended January 31, 2001 and
2000, respectively. Room revenues increased 3.7% or $932,000 to $26.1 million
from $25.1 million due to the addition of the Albuquerque hotel, which
contributed revenues of $548,000, and to an overall increase in occupancy. Food
and beverage revenues of $1.7 million were consistent with the prior year.
Telecommunications revenues of $336,000 were also consistent with the prior
year. Other revenue of $734,000 was consistent with the prior year.

         Total expenses increased 4.9% or $1.5 million to $31.5 million from
$30.1 million for the twelve months ended January 31, 2001 compared to the
twelve months ended January 31, 2000, respectively.

         Guest room expense increased by 6.4% or $429,000 to $7.1 million from
$6.7 million for the twelve months ended January 31, 2001 and 2000,
respectively, primarily due to the addition of the Albuquerque hotel, which
accounted for $193,000 of the increase, and increased occupancy.

                                      -11-

<PAGE>


         Telecommunications expenses, which are primarily long-distance service
charges and high speed data communication services, increased by 14.9% or
$58,000 due to upgrading voice and data communications lines in fiscal year
2001.

         General and administrative expenses increased by 16.4% or $643,000 to
$4.6 million from $3.9 million for the twelve months ended January 31, 2001
compared to the twelve months ended January 31, 2000, respectively. The increase
is primarily to the addition of the Albuquerque hotel and increased salary and
benefits paid to key hotel employees.

         Repairs and maintenance decreased 10.3% or approximately $209,000 to
$1.8 million from $2.0 million for the twelve months ended January 31, 2001
compared with the twelve months ended January 31, 2000, respectively. The
decrease is primarily due to an intensified capital improvement program.

         Hospitality expenses increased 6.5% or approximately $101,000 to $1.6
million from $1.5 million for the twelve months ended January 31, 2001 compared
with the twelve months ended January 31, 2000, respectively, primarily due to
the addition of the Albuquerque hotel and increased occupancy.

         Percentage rent increased 1.9% or $183,000 to $9.7 million from $9.5
million for the twelve months ended January 31, 2001 compared with the twelve
months ended January 31, 2000, respectively, primarily due to the addition of
the Albuquerque hotel.

Comparison of actual results for the year ended January 31, 2000 compared to the
year ended January 31, 1999.

         Results of operations for the Lessee for the fiscal year ended January
31, 2000 reflect a full-year of operations of ten of the Hotels (excluding the
recently acquired Best Western Airport Inn located in Albuquerque, New Mexico)
and the fiscal year ended January 31, 1999 reflects a full-year of operations of
the Initial Hotels as well as a partial-year of operations for the Tucson St.
Mary's, Buena Park and San Diego hotels.

         Total revenues for the Lessee increased 4.7% or approximately $1.2
million to $28.0 million from $26.7 million for the twelve months ended January
31, 2000 and 1999, respectively. Room revenues increased 3.3% or approximately
$805,000 to $25.1 million from $24.3 million due to the addition of the
California properties and from sharp increases in room revenues at the Tucson
St. Mary's Arizona property due to increased occupancy rates and ADR for the
year ended January 31, 2000, which was partially offset by the other six Arizona
properties' room revenues slightly declining due to decreased occupancy. Food
and beverage revenues increased 6.9% or approximately $112,000 to $1.7 million
from $1.6 million primarily due to increased occupancy rates at the Ontario,
California and Tucson St. Mary's Arizona properties, which feature full service
restaurants. Telecommunications revenue declined 24.9% or approximately $115,000
to $346,000 from $461,000 for the twelve months ended January 31, 2000 and 1999,
respectively, primarily due to decreased long-distance rates charged by the
various long distance carriers. Other revenue increased $444,000 to $735,000
from $291,000 primarily due to the addition of the California properties and
increased occupancy at the Ontario and Tucson St. Mary's properties.

         Total expenses increased 0.1% or approximately $19,000 to $30.1 million
from $30.0 million for the twelve months ended January 31, 2000 compared to the
twelve months ended January 31, 1999, respectively.

         Guest room expense decreased by 13.9% or approximately $1.1 million to
$6.7 million from $7.8 million for the twelve months ended January 31, 2000 and
1999, respectively, primarily due to management's programs to increase
efficiency and reduce costs associated with housekeeping.

         Food and beverage expense increased 15.4% or approximately $218,000 to
$1.6 million from $1.4 million for the twelve months ended January 31, 2000
compared to the twelve months ended January 31, 1999. The increase is
attributable to the increased room revenue and the addition of room service at
ten of the Hotel properties.

                                      -12-

<PAGE>


         Telecommunications expenses, which are primarily long-distance service
charges, decreased due to decreased long-distance rates charged by the various
long distance carriers by 21.4% or approximately $106,000 for the twelve months
ended January 31, 2000 compared to the twelve months ended January 31, 1999,
respectively.

         Other expenses increased greater than 100.0% or approximately $299,000
to $437,000 from $138,000 for the twelve months ended January 31, 2000 compared
to the twelve months ended January 31, 1999, respectively, primarily due to the
write-off of certain assets that management identified as having no future
value.

         Repairs and maintenance increased 50.6% or approximately $681,000 to
$2.0 million from $1.3 million for the twelve months ended January 31, 2000
compared with the twelve months ended January 31, 1999, respectively. The
increase is due to a focused effort by management to maintain the quality of the
Hotels and increase repeat business as a result of guest satisfaction.

         Hospitality expenses increased 28.7% or approximately $345,000 to $1.6
million from $1.2 million for the twelve months ended January 31, 2000 compared
with the twelve months ended January 31, 1999, respectively, primarily due to
increased hospitality programs in fiscal year 2000 over fiscal year 1999.

         Percentage rent decreased 4.6% or approximately $461,000 to $9.5
million from $10.0 million for the twelve months ended January 31, 2000 compared
with the twelve months ended January 31, 1999, respectively, primarily due to an
amendment of the calculation of rent payable under the Percentage Leases
effective August 1, 1999.

LIQUIDITY AND CAPITAL RESOURCES

         Through its ownership interest in the Partnership and, effective
February 1, 2001, the Lessee, the Trust has its proportionate share of the
benefits and obligations of the Partnership's ownership interests and Lessee's
operational interests in the Hotels. The Trust's principal source of cash to
meet its cash requirements, including distributions to its shareholders, is its
share of the Partnership's cash flow. The Partnership's principal source of
revenue is rent payments under the Percentage Leases. The Lessee's obligations
under the Percentage Leases are unsecured and its ability to make rent payments
to the Partnership under the Percentage Leases, and the Trust's liquidity,
including its ability to make distributions to its shareholders, will depend
upon the ability of the Lessee to generate sufficient cash flow from hotel
operations. As a result of the Trust's acquisition of the Lessee as of February
1, 2001, any profits earned by the Lessee in its operation of the Hotels may be
distributed to the Trust. See "Item 1 - Business - Acquisition of the Lessee by
the Trust" above. For the twelve months ended January 31, 2001 and 2000, the
Trust recorded provisions of approximately $2.4 million and $1.9 million for
uncollectible receivables. These charges reflect the Trust's assessment of the
collectibility of its receivables, which primarily consists of rent receivable
from the Lessee, based on an evaluation of the Lessee's estimated future cash
flows.

         As of January 31, 2001, the Trust has no commitments for capital
expenditures beyond a 4% reserve for refurbishment and replacements set aside
annually, as described below.

         The Trust intends to acquire and develop additional hotels and expects
to incur indebtedness to fund those acquisitions and developments. The Trust may
also incur indebtedness to meet distribution requirements imposed on a REIT
under the Code to the extent that working capital and cash flow from the Trust's
investments are insufficient to make the required distributions.

         On April 16, 1998, the Trust obtained a $12 million Credit Facility
from Pacific Century Bank to assist it in its funding of the acquisition and
development of additional hotels and for certain other business purposes.
Borrowings under the Credit Facility are secured by first mortgages on three of
the Hotels. As of January 31, 2001, the Trust had drawn $11.3 million from the
Credit Facility, which charges interest at a

                                      -13-

<PAGE>


variable interest rate. By its terms, the Credit Facility expired on April 16,
2001. During the third quarter of fiscal 2001, the Trust was notified that
Pacific Century Bank would not renew the Credit Facility when it expired on
April 16, 2001 due to a decision by Pacific Century Bank to cease funding
hospitality operations. Pacific Century Bank also announced that it would
commence selling its Arizona branches.

         In order to replace the liquidity provided by the Credit Facility, the
Trust actively sought individual loans on the Tucson Oracle, Flagstaff and
Scottsdale properties that secure the Credit Facility. On April 18, 2001, the
Trust refinanced its Ontario property and utilized $4.2 million of the net
proceeds to reduce the outstanding balance of the Credit Facility from $11.3
million to $7.1 million. On April 27, 2001, the Trust closed the financing of
its Tucson Oracle property and used $4.8 million of the net proceeds to reduce
the outstanding balance of the Credit Facility to approximately $2.3 million.
Pacific Century Bank has proposed the issuance of a term loan to replace the
portion of the Credit Facility that is secured by the Flagstaff and Scottsdale
properties. The terms of the replacement term loan are subject to review and
approval by Pacific Century Bank. If, for any reason, Pacific Century Bank does
not issue the replacement term loan, the Trust has sufficient unencumbered
equity in the Flagstaff and Scottsdale properties to refinance the $2.3 million
outstanding balance of the Credit Facility with another lending institution and
therefore satisfy the outstanding balance of the Credit Facility. In the
unlikely event that Pacific Century Bank forecloses on the Flagstaff and
Scottsdale properties, management believes that the unencumbered equity will be
sufficient to prevent a loss at a foreclosure sale. Pacific Century Bank has
agreed to waive all covenants relating to the Credit Facility and to extend the
effectiveness of the Credit Facility until July 26, 2001 to structure the
replacement term loan to be secured by the Flagstaff and Scottsdale properties.

         The terms of the Credit Facility required the Trust to maintain a net
worth (combined with minority interest) of not less than $15 million and, as of
the end of each fiscal quarter, maintain a debt to net worth ratio of not
greater than 1.75 to 1.0, a net operating income to debt service relating to
encumbered properties ratio of not less than 1.30 to 1.0, and a net operating
income to debt service ratio of not less than 1.25 to 1.0. The Trust was
permitted to prepay the Credit Facility, subject to a prepayment penalty of $250
plus a yield-maintenance penalty. During the term of the Credit Facility, the
Trust could not further encumber its collateral, sell its collateral, change the
nature of its business or unreasonably suspend its business.

         On December 12, 2000 and again on April 18, 2001, the Trust notified
Pacific Century Bank that the Trust was not in compliance with certain financial
covenants contained in the Credit Facility. The Trust applied for, and received,
waivers of such noncompliance from Pacific Century Bank.

         The Trust may seek to negotiate additional credit facilities or issue
debt instruments. Any debt incurred or issued by the Trust 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 Trust considers prudent.

         The Trust will acquire or develop additional hotels only as suitable
opportunities arise, and the Trust will not undertake acquisition or
redevelopment of properties unless adequate sources of financing are available.
Funds for future acquisitions or development of hotels are expected to be
derived, in whole or in part, from borrowings or from the proceeds of additional
issuances of Shares of Beneficial Interest or other securities. However, there
can be no assurance that the Trust will successfully acquire or develop
additional hotels.

         Effective August 30, 2000, Albuquerque Suite Hospitality, LLC, a 100%
owned subsidiary of the Partnership, purchased the 122-suite Best Western
Airport Inn located in Albuquerque, New Mexico for $2.1 million. The funds
utilized for the purchase price were secured by a first mortgage on the
Albuquerque hotel in the amount of $1,575,000 and the remaining amount was
loaned by Mr. Wirth and his affiliates to the Trust.

         On April 28, 2001, the mortgage note payable to Bank One on the Tucson
St. Mary's hotel matured. The outstanding principal balance was $3,762,839. Bank
One has proposed an extension of the term of the mortgage note for twelve months
until April 28, 2002. The extended note will bear interest at the Bank One Prime
Rate plus one percent (1%). On April 30, 2001, the Bank One Prime Rate was seven
and one-half percent (7.5%). These terms are subject to formal review and
approval by the Bank One Credit Committee. If, for any reason, Bank One does not
extend the mortgage note, the Trust has sufficient unencumbered equity in the
Tucson St. Mary's property to refinance the outstanding balance of the mortgage
note with another lending institution and therefore satisfy the outstanding
balance of the mortgage note. In the unlikely event that Bank One forecloses on
the Tucson St. Mary's property, management believes that the unencumbered equity
will be sufficient to prevent a loss at a foreclosure sale.

         The Partnership continues to contribute to a Capital Expenditures Fund
(the "Fund") from the rent paid under the Percentage Leases, an amount equal to
4% of the Lessee's revenues from operation of the Hotels. The Fund is intended
to be used for capital improvements to the Hotels and refurbishment and
replacement of furniture, fixtures and equipment, in addition to other uses of
amounts in the Fund considered appropriate from time to time. The Partnership
anticipates making similar arrangements with respect to future hotels that it
may acquire or develop. During the twelve months ended January 31, 2001 and
2000, the Hotels spent approximately $2.2 million and $1.5 million,
respectively, for capital expenditures. The Trust considers the majority of
these improvements to be revenue

                                      -14-

<PAGE>


producing. Therefore, these amounts have been capitalized and are being
depreciated over their estimated useful lives. The Lessee also spent
approximately $1.8 million and $2.0 million, during fiscal years 2001 and 2000,
respectively, on repairs and maintenance and these amounts have been charged to
expense as incurred.

         Management believes that cash on hand, future cash receipts and
borrowings from affiliates in fiscal year 2002 will be sufficient to meet the
Trust's expansion plans and to pay all obligations as they become due for the
next twelve months.

NEW ACCOUNTING STANDARDS

         In June 1998 the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
which established standards for the accounting and reporting for all derivative
instruments and hedging activities. This statement requires that all derivatives
are recognized as assets or liabilities in the balance sheet and measured at
fair value, and that recognition of gains and losses are required on hedging
instruments based on changes in fair value or the earnings effect of forecasted
transactions. This new standard, as amended by SFAS No. 137 and No. 138, is
effective beginning January 1, 2001. This pronouncement did not have an impact
on our consolidated financial statements.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements," (SAB No. 101) which summarizes the SEC staff's views in applying
accounting principles generally accepted in the United States of America to
revenue recognition in financial statements. SAB No. 101 was amended by SAB No.
101A and No. No. 101B in March and June, 2000, respectively, to delay the
implementations date of SAB No. 101 until no later than the fourth fiscal
quarter of fiscal years beginning after December 16, 1999. We have adopted the
provisions of SAB No. 101 and the adoption did not have a material effect on our
consolidated financial statements.

         In March 2000, the FASB issued Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - An Interpretation of APB
Opinion No. 25." The Interpretation clarifies the application of APB Opinion No.
25 in certain situations, as defined. The Interpretation was effective July 1,
2000, but covers certain events having occurred after December 15, 1998. We have
adopted this Interpretation and the adoption did not have a material impact on
our consolidated financial statements.

INFLATION

         The Trust's revenues are based on the Percentage Leases which result in
changes in the Trust's revenues based on changes in the underlying Hotel
revenues. Therefore, the Trust relies entirely on the performance of the Hotels
and the Lessee's ability to increase revenues to keep pace with inflation.
Operators of hotels in general, and the Lessee in particular, can change room
rates quickly, but competitive pressures may limit the Lessee's ability to raise
rates faster than inflation.

SEASONALITY

         The Hotels' operations historically have been seasonal. The six
southern Arizona hotels experience their highest occupancy in the first fiscal
quarter and, to a lesser extent, the fourth fiscal quarter. The second fiscal
quarter tends to be the lowest occupancy period at those six southern Arizona
hotels. This seasonality pattern can be expected to cause fluctuations in the
Trust's quarterly lease revenue under the Percentage Leases. The hotels located
in northern Arizona, California and New Mexico historically experience their
most profitable periods during the second and third fiscal quarters (the summer
season), providing some balance to the general seasonality of the hotel
business. To the extent that cash flow from operations is insufficient during
any quarter, because of temporary or seasonal fluctuations in lease revenue, the
Trust may utilize other cash on hand or borrowings to make distributions to its
shareholders. No assurance can be given that the Trust will make distributions
in the future.

FORWARD-LOOKING STATEMENTS

         Certain statements in this Annual Report constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The Trust intends that such
forward-looking statements be subject to the safe harbors created by such Acts.
Those forward-looking statements include statements regarding the intent, belief
or current expectations of the Trust, its Trustees or its officers in respect of
(i) the declaration or payment of dividends; (ii) the leasing, management or
operation of the Hotels; (iii) the adequacy of reserves for renovation and
refurbishment; (iv) the Trust's financing plans; (v) the Trust's position
regarding investments, acquisitions, developments, financings, conflicts of
interest and other matters; (vi) the Trust's continued qualification as a REIT;
and (vii) trends affecting the Trust's or any Hotel's financial condition or
results of operations. The words and phrases "looking ahead", "we are
confident", "should be", "will be", "predicted", "believe", "expect",
"anticipate" and similar expressions identify forward-looking statements.

         These forward-looking statements reflect the Trust's current views in
respect of future events and financial performance, but are subject to many
uncertainties and factors relating to the operations and business environment of
the Hotels which may cause the actual results of the Trust to differ materially
from any future results expressed or implied by such forward-looking statements.

                                      -15-

<PAGE>


Examples of such uncertainties include, but are not limited to: fluctuations in
hotel occupancy rates; changes in room rental rates which may be charged by the
Lessee in response to market rental rate changes or otherwise; interest rate
fluctuations; changes in federal income tax laws and regulations; competition;
any changes in the Trust's financial condition or operating results due to
acquisitions or dispositions of hotel properties; real estate and hospitality
market conditions; hospitality industry factors; and local or national economic
and business conditions, including, without limitation, conditions which may
affect public securities markets generally, the hospitality industry, or the
markets in which the Trust operates or will operate. The Trust does not
undertake any obligation to update publicly or revise any forward-looking
statements whether as a result of new information, future events or otherwise.
Pursuant to Section 21E(b)(2)(E) of the Securities Exchange Act of 1934, the
qualifications set forth hereinabove are inapplicable to any forward-looking
statements in this Annual Report relating to the operations of the Partnership.

Item 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
          ----------------------------------------------------------

         The Trust is exposed to interest rate risk primarily as a result of its
mortgage notes payable, notes payable to banks and other notes payable. The
proceeds from these loans were used to maintain liquidity, fund capital
expenditures and expand the Trust's real estate investment portfolio and
operations. The Trust's interest rate risk management objective is to limit the
impact of interest rate changes on earnings and cash flows and to lower its
overall borrowing costs. To achieve its objectives, the Trust borrows using
fixed rate debt, when possible. The Trust could enter into derivative financial
instruments such as interest rate swaps, caps and treasury locks in order to
mitigate its interest rate risk on a related financial instrument. To date, the
Trust has not entered into any such derivative transactions.

         The Trust's interest rate risk is monitored using a variety of
techniques. The table below presents the principal amounts, weighted average
interest rates, fair value and other terms required, by year of expected
maturity, in order to evaluate the expected cash flows and sensitivity to
interest rate changes.

<TABLE>
<CAPTION>
                                                  Fiscal

                              -----------------------------------------------------
        DEBT TYPE             2002          2003        2004        2005       2006     THEREAFTER    TOTAL(1)    FAIR VALUE
        ---------             ----          ----        ----        ----       ----     ----------    --------    ----------
<S>                        <C>           <C>         <C>         <C>         <C>         <C>         <C>          <C>
Fixed rate debt(2)         $ 5,315,735   1,417,755   1,247,077   6,438,401   2,321,893   9,104,989   25,845,850   26,899,006

Average interest rate             8.25%       8.25%       8.25%       8.25%       8.25%       8.25%        8.25%        8.00%

Variable rate debt(2)      $15,119,589      43,573      48,812   3,167,471                           18,379,445   18,301,020

Interest rate available

on January 31, 2001               9.61%           -           -           -           -           -        9.61%       9.61%
</TABLE>

-------------------------
(1)      Approximately $300,000 of debt was repaid by February 09, 2001 and
         is not included in the aforementioned summary.

(2)      The fair value of fixed rate debt and variable rate debt were
         determined based on current rates offered for fixed rate debt and
         variable rate LIBOR debt with similar risks and maturities.

         The table incorporates only those exposures that exist as of January
31, 2001 and does not consider those exposures or positions which would arise
after that date. Moreover, because firm commitments are not represented in the
table above, the information presented therein has limited predictive value. As
a result, the Trust's interest rate fluctuations will depend on the exposures
that arise during the period and future interest rates.

                                      -16-

<PAGE>



Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
         -------------------------------------------

                           INNSUITES HOSPITALITY TRUST
             LIST OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

The following consolidated financial statements of InnSuites Hospitality Trust
are included in Item 8:

         Independent Auditors' Report;

         Consolidated Balance Sheets - January 31, 2001 and 2000;

         Consolidated Statements of Operations - For the Years Ended January 31,
         2001, 2000 and 1999;

         Consolidated Statements of Shareholders' Equity - For the Years Ended
         January 31, 2001, 2000 and 1999;

         Consolidated Statements of Cash Flows - For the Years Ended January 31,
         2001, 2000 and 1999; and

         Notes to the Consolidated Financial Statements - January 31, 2001, 2000
         and 1999.

The following financial statement schedule of InnSuites Hospitality Trust is
included in Item 14(a)1:

         Schedule III - Real Estate and Accumulated Depreciation.

All other schedules are omitted, as the information is not required or is
otherwise furnished.

                                      -17-

<PAGE>


                             INNSUITES HOTELS, INC.
                          LIST OF FINANCIAL STATEMENTS

The following financial statements of InnSuites Hotels, Inc. are included in
Item 8:

         KPMG LLP Independent Auditors' Report;

         Michael Maastricht, CPA Report of Independent Public Accountants;

         Balance Sheets - January 31, 2001 and 2000;

         Statements of Operations - For the Years Ended January 31, 2001, 2000
         and 1999;

         Statements of Shareholders' Deficit - For the Years Ended January 31,
         2001, 2000 and 1999;

         Statements of Cash Flows - For the Years Ended January 31, 2001, 2000
         and 1999; and

         Notes to the Financial Statements - January 31, 2001, 2000 and 1999.

All schedules are omitted, as the information is not required or is otherwise
furnished.

                                      -18-

<PAGE>


                          INDEPENDENT AUDITORS' REPORT

The Shareholders and Trustees
InnSuites Hospitality Trust:

We have audited the accompanying consolidated balance sheets of InnSuites
Hospitality Trust (an Ohio real estate investment trust) and subsidiary (the
"Trust") as of January 31, 2001 and 2000, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
years in the three-year period ended January 31, 2001. In connection with our
audits of the consolidated financial statements, we also audited the
accompanying financial statement schedule. These consolidated financial
statements and financial statement schedule are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
consolidated 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 consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of InnSuites
Hospitality Trust and subsidiary as of January 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the years in the
three-year period ended January 31, 2001 in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, the related 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.

                                  /s/ KPMG LLP

Phoenix, Arizona
April 30, 2001

                                      -19-

<PAGE>


                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                      January 31,
                                                             ---------------------------
                                                                 2001            2000
                                                             ------------    -----------
<S>                                                          <C>              <C>
                             ASSETS

Hotel Properties, net                                        $ 62,591,376     64,479,347
Cash and Cash Equivalents                                         415,390        208,109
Rent Receivable from Affiliate,
  net of $5,251,861 and $2,845,732 allowance, respectively           --             --
Interest Receivable and Other Assets                              898,795        618,063
                                                             ------------    -----------
TOTAL ASSETS                                                 $ 63,905,561     65,305,519
                                                             ============    ===========

              LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
Mortgage Notes Payable                                       $ 25,628,572     24,251,662
Notes Payable to Banks                                         11,300,000     11,300,000
Other Notes Payable                                               125,021        225,000
Notes Payable to Related Parties                                  631,409           --
Advances Payable to Related Parties                             6,840,298      2,970,000
Accounts Payable and Accrued Expenses                           1,251,237      1,138,168
                                                             ------------    -----------

TOTAL LIABILITIES                                              45,776,537     39,884,830

MINORITY INTEREST IN PARTNERSHIP                               13,091,117     16,789,423

SHAREHOLDERS' EQUITY:
Shares of beneficial interest without par value; unlimited
  authorization; 2,126,484 and 2,507,949 shares issued and
  outstanding in 2001 and 2000, respectively                    6,532,348      9,093,020
Treasury Stock                                                 (1,494,441)      (461,754)
                                                             ------------    -----------
TOTAL SHAREHOLDER'S EQUITY                                      5,037,907      8,631,266
                                                             ------------    -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $ 63,905,561     65,305,519
                                                             ============    ===========
</TABLE>


                            See accompanying notes to

                        consolidated financial statements

                                      -20-

<PAGE>



                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                            YEARS ENDED JANUARY 31,
                                                                      2001            2000          1999
                                                                  ------------    -----------    -----------
<S>                                                               <C>               <C>            <C>
REVENUES:
   Rent revenue from affiliate                                    $  9,699,418      9,503,041      9,886,008
   Interest and other income                                            39,037         43,140         23,750
                                                                  ------------    -----------    -----------
TOTAL REVENUES:                                                   $  9,738,455      9,546,181      9,909,758
                                                                  ------------    -----------    -----------
EXPENSES:
   Real estate depreciation                                       $  2,840,819      2,546,381      2,196,797
   Real estate, personal taxes, insurance
     and ground rent                                                 1,450,921      1,421,646      1,221,255
   General and administrative                                        3,593,596      4,247,063      2,748,623
   Loss on termination of advisory agreement                              --             --          780,746
   Interest on mortgage notes payable                                2,354,685      2,150,144      1,952,661
   Interest on notes payable to banks                                1,141,861        976,861        639,278
   Interest on other notes payable                                       5,492           --             --
   Interest on notes payable and advances payable
      to related parties                                               267,252        213,563        204,145
   Loss on impairment of hotel property                              3,210,648           --             --
   Fees to related party investment advisor                               --             --          364,041
   Legal expense to related party                                         --             --            2,400
                                                                  ------------    -----------    -----------
TOTAL EXPENSES                                                      14,865,274     11,555,658     10,109,946
                                                                  ------------    -----------    -----------
LOSS BEFORE MINORITY INTEREST                                       (5,126,819)    (2,009,477)      (200,188)
                                                                  ------------    -----------    -----------
LESS:  MINORITY INTEREST                                            (2,532,065)    (1,057,666)        (7,117)
NET LOSS                                                          $ (2,594,754)      (951,811)      (193,071)
                                                                  ============    ===========    ===========
NET LOSS PER SHARE - (Basic and diluted)                          $      (1.12)          (.40)          (.10)
                                                                  ============    ===========    ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - (Basic and
diluted)                                                             2,316,972      2,376,770      1,921,902
CASH DIVIDENDS PER SHARE                                          $        .04    $       .02    $       .10
                                                                  ============    ===========    ===========
</TABLE>


                            See accompanying notes to

                        consolidated financial statements

                                      -21-

<PAGE>


                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
               FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999

<TABLE>
<S>                                               <C>
BALANCE, JANUARY 31, 1998                         $5,598,971
Debt converted to equity                           2,646,690
Stock option plan                                    183,518
Net loss                                            (193,071)
Dividends                                           (166,781)
Reallocation of minority interest                   (489,292)
                                                    ---------

BALANCE, JANUARY 31, 1999                          7,580,035
Stock option plan                                     57,400
Net loss                                            (951,811)
Dividends                                            (52,889)
Purchase of treasury stock                          (461,754)
Reallocation of minority interest                  2,460,285
                                                   ---------

BALANCE, JANYUARY 31, 2000                         8,631,266
Stock option plan                                     52,516
Net loss                                          (2,594,754)
Dividends                                            (97,703)
Purchase of treasury stock                        (1,032,687)
Reallocation of minority interest                     79,269
                                                  ----------

BALANCE, JANUARY 31, 2001                         $5,037,907
                                                  ==========
</TABLE>


                            See accompanying notes to

                        consolidated financial statements

                                      -22-

<PAGE>


                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 YEARS ENDED JANUARY 31,
                                                                            2001           2000          1999
                                                                         -----------    ----------    -----------
<S>                                                                      <C>              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                            $(2,594,754)     (951,811)      (193,071)
     Adjustments to reconcile net loss to net cash provided by
         (used in) operating activities:
         Stock compensation expense                                           52,516        57,400        183,518
         Non-cash portion of loss on termination of advisory agreement          --            --          498,669
          Impairment of hotel property                                     3,210,648          --             --
         Provision for uncollectible rent receivable from affiliate        2,406,129     1,945,732        900,000
         Minority interest                                                (2,532,065)   (1,057,666)        (7,117)
         Real estate depreciation                                          2,840,819     2,546,381      2,196,797
         Amortization of deferred loan fees                                  117,440        53,937         39,346
         (Increase) in rent receivable from affiliate                     (2,406,129)   (1,157,553)    (1,473,539)
         (Increase) Decrease in interest receivable and other assets        (398,172)      414,469       (905,613)
         (Decrease) in due to Lessee                                            --            --         (944,234)
         Increase (Decrease) in accounts payable and accrued expense         113,069    (1,050,540)    (1,136,115)
                                                                         -----------    ----------    -----------
         Net cash provided by (used in) operating activities                 809,501       800,349       (841,359)
                                                                         -----------    ----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Improvements and additions to hotel properties                       (2,164,744)   (1,516,543)    (2,277,890)
     Acquisition of hotel                                                   (525,000)         --       (1,448,000)
     Disposal of furniture, fixtures and equipment                            80,685          --             --
     Proceeds from sale of land                                               20,564          --             --
                                                                         -----------    ----------    -----------
     Net cash (used in) investing activities                              (2,588,495)   (1,516,543)    (3,725,890)
                                                                         -----------    ----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Principal payments on mortgage notes payable                           (698,090)   (4,159,391)   (19,388,537)
     Proceeds from mortgage notes payable                                    500,000          --             --
     Borrowings on mortgage notes payable                                       --       5,250,000     11,705,374
     Borrowings on other notes payable                                       172,844
     Payments on other notes payable                                        (272,823)     (225,000)      (218,000)
     Bank borrowings                                                            --            --       11,300,000
     Bank repayments                                                            --            --         (155,000)
     Payment of dividends                                                    (97,703)      (52,889)      (166,781)
     Distributions to minority interest holders                             (210,308)     (264,969)      (781,451)
     Repurchase of Partnership units                                        (876,665)     (538,847)          --
     Repurchase of treasury stock                                         (1,032,687)     (461,754)          --
     Advances from related parties                                         6,340,450       956,218      1,235,628
     Principal payments on advances payable to related parties            (2,470,152)         --         (921,447)
     Borrowings on notes payable to related parties                          745,000          --             --
     Payments on notes payable to related parties                           (113,591)         --             --
                                                                         -----------    ----------    -----------
         Net cash provided by (used in) financing activities               1,986,275       503,368      2,609,786
                                                                         -----------    ----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         207,281      (212,826)    (1,957,463)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                               208,109       420,935      2,378,398
                                                                         -----------    ----------    -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                 $   415,390       208,109        420,935
                                                                         ===========    ==========    ===========
</TABLE>

                            See accompanying notes to

                        consolidated financial statements

                                      -23-

<PAGE>


                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          As of and for the years ended JANUARY 31, 2001, 2000 and 1999


1.  NATURE OF OPERATIONS AND BASIS OF PRESENTATION

InnSuites Hospitality Trust (the "Trust") is a real estate investment trust
("REIT") that owns, directly or indirectly, eleven hotels with 1,751 suites in
Arizona, southern California and New Mexico. The hotels operate as InnSuites
Hotels.

Until January 31, 1998, the Trust, formerly known as Realty ReFund Trust,
specialized in mortgage financing as its investment vehicle, refinancing
existing income producing commercial, industrial and multi-unit residential real
property by supplementing or replacing existing financing. The primary
refinancing technique that the Trust employed was wrap-around mortgage lending.

On January 31, 1998, the Trust contributed $2,081,000 to RRF Limited Partnership
(the "Partnership"), a Delaware limited partnership, in exchange for a 13.6%
general partnership interest therein. The Trust is the sole general partner of
the Partnership. The Partnership issued limited partnership interests
representing 86.4% of the Partnership to acquire six hotel properties from
various entities. In addition, in order to acquire a seventh hotel property,
through a wholly-owned subsidiary, RRF Sub Corp., the Trust issued 647,231
Shares of Beneficial Interest in exchange for all of the outstanding shares of
Buenaventura Properties, Inc. which owned a hotel located in Scottsdale, Arizona
("InnSuites Hotels Scottsdale"). These seven hotels are collectively referred to
as the "Initial Hotels." The Initial Hotels, together with subsequent hotel
acquisitions, are referred to herein as the "Hotels." The Hotels are leased to
InnSuites Hotels, Inc., formerly known as Realty Hotel Lessee Corp. (the
"Lessee"), pursuant to leases, which contain provisions for rent based on the
revenues of the Hotels (the "Percentage Leases"). Each Percentage Lease
obligates the Lessee to pay rent equal to the greater of the minimum rent ("Base
Rent") or a percentage rent based on the gross revenues of each Hotel. The
Lessee holds the franchise agreement for each Hotel. The Lessee is owned 9.8% by
InnSuites Innternational Hotels, Inc., an entity owned by James F. Wirth,
Chairman, President and Chief Executive Officer of the Trust ("Wirth") and his
spouse.

The Trust's general partnership interest in the Partnership was 48.17% on
January 31, 2001, and the weighted average for the twelve months ended January
31, 2001 was 46.57%.

PARTNERSHIP AGREEMENT

The Partnership Agreement of the Partnership provides for the issuance of two
classes of limited partnership units, Class A and Class B. Such classes are
identical in all respects, except that each Class A limited partnership unit in
the Partnership shall be convertible into a like number of Shares of Beneficial
Interest of the Trust, at any time at the option of the particular limited
partner, if the Trust determines that such conversion would not cause the Trust
to fail to qualify as a REIT. As of January 31, 2001, a total of 1,621,627 Class
A limited partnership units were issued and outstanding. Additionally a total of
5,226,364 Class B limited partnership units were outstanding to Wirth and his
affiliates, in lieu of the issuance of Class A limited partnership units. If all
of the Class A and B limited partnership units were to be converted, the limited
partners in the Partnership would receive 6,847,991 Shares of Beneficial
Interest of the Trust. The Class B limited partnership units may only become
convertible with the approval of the Board of Trustees, in its sole discretion.

                                      -24-

<PAGE>


BASIS OF PRESENTATION

As sole general partner of the Partnership, the Trust exercises unilateral
control over the Partnership. Therefore, the financial statements of the
Partnership are consolidated with the Trust, and all significant intercompany
transactions and balances have been eliminated. Certain prior period amounts
have been reclassified to be consistent with current year financial statement
presentation.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles 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 consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

HOTEL PROPERTIES

Hotel properties are stated at cost and are depreciated using the straight-line
method over estimated lives ranging from 5 to 40 years for buildings and
improvements and 3 to 15 years for furniture and equipment.

The Trust applies Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" in accounting for its hotel properties.

Recent performance of the Scottsdale hotel property indicated that the hotel
asset may have significantly decreased in value, which then required management
to test the asset for recoverability of book value under SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." Using management's best estimate of undiscounted future cash
flows from the hotel, the hotel asset's book value was determined not to be
recoverable. The hotel asset, including land, buildings and improvements, and
fixtures, furniture, and equipment were written down by $3.2 million to the
hotel's market value and new basis of $3.7 million.

In accounting for the acquisitions of the Hotels discussed in Note 1, purchase
accounting was applied. The historical carrying values of the assets and
liabilities of the Buena Park hotel property were adjusted to their respective
fair values based upon the aggregate fair market value of Shares of Beneficial
Interest issued to acquire the outstanding shares of Buena Park Suite
Hospitality LCC. The Trust's purchase of its initial 13.6% general partnership
interest in the Partnership and the Partnership's acquisition of interests in
the Hotels from third parties resulted in adjustments to the historical net
carrying values of such hotel properties in amounts equal to 34% of the
difference between the fair values and the historical net carrying values of the
respective hotel properties. The Partnership's acquisition of interests in the
Hotels (other than the Buena Park hotel property) held by Wirth and his
affiliates did not result in purchase accounting adjustments to historical net
carrying values as such transactions were between entities under common control.
Hotels purchased subsequent to January 31, 1998 have been recorded at fair
value.

CASH AND CASH EQUIVALENTS

The Trust considers all highly liquid short-term investments with original
maturities of three months or less to be cash equivalents.

                                      -25-

<PAGE>


ALLOWANCE FOR UNCOLLECTIBLE RECEIVABLES

Financial instruments, which potentially subject the Trust to credit risk,
primarily consist of rent receivable from the Lessee. The Trust periodically
assesses the collectibility of its receivables based on its evaluation of the
Lessee's estimated future cash flows available for payment. As a result, for the
fiscal years 2001, 2000, and 1999 the Trust recorded a provision of $2.4
million, $1.9 million and $900,000, respectively, for uncollectible receivables
which is reflected in the accompanying consolidated statements of operations as
a component of general and administrative expenses.

REVENUE RECOGNITION

Trust revenues are recognized when earned. Minimum rent revenues are calculated
and recognized monthly. Percentage rent is calculated quarterly and recognized
if percentage rent is greater than minimum rent.

DIVIDENDS AND DISTRIBUTIONS

The Trust expects to pay dividends that are largely dependent upon the receipt
of distributions from the Partnership.

STOCK-BASED COMPENSATION

The Trust accounts for its stock option plan in accordance with the provisions
of SFAS No. 123, "Accounting for Stock-based Compensation" (SFAS No. 123) which
permits entities to recognize as expense over the vesting period, the fair value
of all stock based awards on the date of grant. Alternatively, SFAS No. 123 also
allows entities to apply the provisions of APB Opinion No. 25 "Accounting for
Stock Issued to Employees and Related Operations" (APB No. 25) and provide
pro-forma net income and pro-forma earnings per share disclosures for employee
stock option grants as if the fair-value based method defined in SFAS No. 123
had been applied. The Trust has elected to apply the provisions of APB No. 25.

INCOME TAXES

The Trust has elected to be taxed as a REIT under Sections 856 through 860 of
the Internal Revenue Code. If the Trust qualifies for taxation as a REIT, the
Trust generally will not be subject to Federal corporate income tax on that
portion of its net income that is currently distributed to shareholders.
Accordingly, no provision for income taxes has been included in the accompanying
consolidated financial statements.

MINORITY INTEREST

The Trust accounts for Minority Interest in accordance with EITF number 94-2
"Treatment of Minority Interests in Certain Real Estate Investments" and EITF
number 95-7 "Implementation Issues Related to the Treatment of Minority Interest
in Certain Real Estate Investment Trusts."

Minority interest in the Partnership represents the limited partners'
proportionate share of the equity in the Partnership. Income or loss is
allocated to minority interest based on the weighted average limited partnership
percentage ownership throughout the period and equity is allocated based on the
ownership percentage at year-end. Any difference is recorded as a reallocation
of minority interest in Shareholders' Equity.

                                      -26-

<PAGE>


EARNINGS PER SHARE

Basic and diluted earnings per share have been computed based on the
weighted-average number of shares outstanding during the periods and potentially
dilutive securities.

For the twelve months ended January 31, 2001, 2000 and 1999, there were Class A
and Class B limited partnership units outstanding, which are convertible to
Shares of Beneficial Interest of the Trust. Assuming conversion, the aggregate
weighted-average of these Shares of Beneficial Interest would be 7,062,778,
7,604,166, and 7,822,562 for fiscal 2001, 2000, and 1999, respectively. These
shares are anti-dilutive due to the losses for each of the aforementioned years.
Therefore, these shares have not been used in the calculation of diluted
earnings per share.

For the twelve months ended January 31, 2001, 2000 and 1999, 344,100, 375,600
and 389,700 stock options, respectively, are not included in the computation of
diluted earnings per share since the option exercise prices were greater than
the average market price of the Shares of Beneficial Interest.

FAIR VALUE OF FINANCIAL INSTRUMENTS

For disclosure purposes, fair value is determined by using available market
information and appropriate valuation methodologies. Due to their short
maturities, cash and cash equivalents and rent receivable from affiliate are
carried at cost, which reasonably approximates fair value.

The fair value of mortgage notes payable and notes payable to banks is estimated
by discounting the future cash flows using the current rates which would be
available for similar loans having the same remaining maturities. The carrying
value of other note payables and advances to related parties approximates fair
value.

SEGMENT REPORTING

The Trust views its operations as one operating business segment, a real estate
investment trust that owns, directly or indirectly, eleven hotels with 1,751
suites in Arizona, southern California and New Mexico.

3.  HOTEL PROPERTIES

Hotel properties as of January 31, 2001 and 2000 consisted of the following:

<TABLE>
<CAPTION>
                                              2001                   2000
                                              ----                   ----
<S>                                       <C>                     <C>
Land                                      $ 5,501,235              5,685,590
Building and improvements                  54,523,741             55,027,114
Furniture and equipment                     9,224,971              8,509,821
                                          -----------             ----------

Total hotel properties                     69,249,947             69,222,525
Less accumulated depreciation               6,658,571              4,743,178
                                          -----------             ----------

Hotel properties (net)                    $62,591,376             64,479,347
                                          ===========             ==========
</TABLE>

Seven of the Hotels are located in Arizona, three of the Hotels are located in
California, and one of the Hotels is located in New Mexico. All hotels are
subject to Percentage Leases as described in Note 12.

                                      -27-

<PAGE>


4.  ACQUISITIONS

Effective August 30, 2000, Albuquerque Suite Hospitality, LLC, a wholly-owned
subsidiary of the Partnership, acquired 100% of the ownership interest in a
hotel located in Albuquerque, New Mexico for $2,100,000. The acquisition was
funded with a first mortgage on the Albuquerque property in the amount of
$1,575,000 and cash from loans made to the Partnership by Wirth and his
affiliates.

Effective June 1, 1998, the Partnership acquired 100% of the ownership of the
InnSuites Hotels Buena Park for $7,100,000. The Partnership assumed $4,116,754
in mortgage debt and other obligations and issued 627,377 limited partnership
units to Wirth and Steve S. Robson (of which 13,034 units were subsequently paid
to a third party as an advisory fee), who each held a 50% equity ownership
interest in the Buena Park hotel. Mr. Robson is a Trustee of the Trust. Wirth
and his affiliates also received an additional 53,681 Class B limited
partnership units as payment for debt owed to Wirth and his affiliates at time
of acquisition.

Effective February 1, 1998, the Partnership acquired 100% of the ownership
interests in the Tucson St. Mary's Hotel and Resort for $10,820,000. The
Partnership issued 699,933 Class B limited partnership units to Wirth, and his
spouse, who each held a 50% equity ownership interest in the Tucson St. Mary's
hotel. Effective April 29, 1998, the Trust acquired a hotel property located in
San Diego, California for an aggregate consideration of $5,148,000, which was
funded with cash, proceeds from the Trust's Credit Facility and two promissory
notes secured by mortgage trust deeds on the property.

All of the aforementioned acquisitions have been accounted for as purchases.

5.  ALLOWANCE FOR UNCOLLECTIBLE RENT RECEIVABLE

At January 31, 2001, the Trust had an accumulated allowance for uncollectible
rents receivable from the Lessee totaling approximately $5.3 million. After
review of the estimated cash flow projections for fiscal year 2002 and actual
fiscal year 2001 and 2000 cash flows, management recorded a provision for
uncollectible rent receivable in the amounts of approximately $2.4 million, $1.9
million and $900,000 for the fiscal years 2001, 2000, and 1999, respectively.
The following reconciles the allowance for uncollectible rent receivable from
the Lessee:

As of and for the years ended January 31, 2001, 2000, and 1999

<TABLE>
<CAPTION>
                   ALLOWANCE FOR UNCOLLECTIBLE RENT RECEIVABLE
                   -------------------------------------------

       <S>                                                      <C>
       Balance as of January 31, 1998                           $    -
       Provision                                                   900,000
                                                                ----------

       Balance as of January 31, 1999                              900,000
       Provision                                                 1,945,732
                                                                ----------

       Balance as of January 31, 2000                            2,845,732
       Provision                                                 2,406,129
                                                                ----------

       Balance as of January 31, 2001                           $5,251,861
                                                                ----------
</TABLE>


6.  MORTGAGE NOTES PAYABLE

At January 31, 2001, the Trust had mortgage notes payable outstanding with
respect to eight of the Hotels. The mortgage notes payable have various
repayment terms and have scheduled maturity dates ranging from April 28, 2001 to
September 1, 2015. Weighted average interest rates on the mortgage notes for the
years ended January 31, 2001, 2000, and 1999 was 8.25%, 8.49%, and 8.9%,
respectively. At

                                      -28-

<PAGE>


January 31, 2001, all of the Hotels were in compliance with their respective
debt covenants.

On April 28, 2001, the mortgage note payable to Bank One on the Tucson St.
Mary's hotel matured. The outstanding principal balance was $3,762,839. Bank One
has proposed an extension of the term of the note for twelve months until April
28, 2002. The extended note will bear interest at the Bank One Prime Rate plus
one percent (1%). On April 30, 2001, the Bank One Prime Rate was seven and
one-half percent (7.5%). These terms are subject to formal review and approval
by the Bank One Credit Committee. If, for any reason, Bank One does not extend
the mortgage note, the Trust has sufficient unencumbered equity in the Tuscon
St. Mary's property to refinance the outstanding balance of the mortgage note
with another lending institution and therefore satisfy the outstanding balance
of the mortgage note. In the unlikely event that Bank One forecloses on the
Tucson St. Mary's property, management believes that the unencumbered equity
will be sufficient to prevent a loss at a foreclosure sale.

On August 30, 2000, Albuquerque Suite Hospitality, LLC, a wholly-owned
subsidiary of the Partnership, acquired 100% of the ownership interest in a
hotel located in Albuquerque, New Mexico for $2,100,000. The acquisition was
funded in part with a first mortgage on the property in the amount of $1,575,000
which bears interest at 8.875% and has a maturity date of September 1, 2015.

On November 3, 1999, The Trust refinanced its mortgage note on the San Diego
property. The principal amount of the new loan was $4,000,000 with an interest
rate of 9.0%. The loan matures on November 23, 2004. A special condition limited
the initial amount to be funded at closing to $3,500,000. Subsequently, on May
2, 2000, the lender funded the additional $500,000. Financial covenants require
(as defined in the loan agreement) a debt coverage ratio of no less than 1.2. In
the event of noncompliance, the lenders commitment to fund the additional
$500,000 would become null and void. As of January 31, 2001, the Trust was in
compliance with its financial covenants.

On March 30, 1999, the Trust modified and extended the mortgage agreement on its
Northern Phoenix property. The Partnership borrowed an additional $1,750,000 at
8.25% that matures on April 1, 2014. The original note was restructured to match
the terms of the new note. The maturity date of the original note was extended
from April 1, 2007 to April 1, 2014.

Wirth and certain of his affliates have guaranteed $10,742,202 of the mortgage
notes payable. The net book value of properties securing the mortgage notes
payable at January 31, 2001, 2000, and 1999 was $50,224,805, $48,581,869, and
$49,258,778 respectively. See Note 10 for scheduled minimum payments.

7.  NOTES PAYABLE TO BANKS

On April 16, 1998, the Trust obtained the $12 million Credit Facility from
Pacific Century Bank to assist in its funding of the acquisition and development
of additional hotels and for certain other business purposes. Borrowings under
the Credit Facility are secured by first mortgages on three of the Hotels. As of
January 31, 2001, the Trust has drawn $11.3 million from the Credit Facility,
which charges interest at a variable interest rate. By its terms, the Credit
Facility expired on April 16, 2001. During the third quarter of fiscal 2001, the
Trust was notified that Pacific Century Bank would not renew the Credit Facility
when it expired on April 16, 2001 due to a decision by Pacific Century Bank to
cease funding hospitality operations. Pacific Century Bank has also announced
that they are selling their Arizona branches.

In order to replace the liquidity provided by the Credit Facility, the Trust
actively sought individual loans on the Tucson Oracle, Flagstaff and Scottsdale
properties that secure the Credit Facility. On April 18, 2001, the Trust
refinanced its Ontario property and utilized $4.2 million of the net proceeds to
reduce the outstanding balance of the Credit Facility from $11.3 million to $7.1
million. On April 27, 2001, the Trust closed the financing of its Tucson Oracle
property and used $4.8 million of the net proceeds to reduce the outstanding
balance of the Credit Facility to approximately $2.3 million. Pacific Century
Bank has proposed the issuance of a term loan to replace the portion of the
Credit Facility that is secured by the Flagstaff and Scottsdale properties. The
terms of the replacement term loan are subject to review and approval by Pacific
Century Bank. If, for any reason, Pacific Century Bank does not issue the
replacement term loan, the Trust has sufficient unencumbered equity in the
Flagstaff and Scottsdale properties to refinance the $2.3 million outstanding
balance of the Credit Facility with another lending institution and therefore
satisfy the outstanding balance of the Credit Facility. In the unlikely event
that Pacific Century Bank forecloses on the Flagstaff and Scottsdale properties,
management believes that the unencumbered equity will be sufficient to prevent a
loss at a foreclosure sale. Pacific Century Bank has agreed to waive all
covenants relating to the Credit Facility and to extend the effectiveness of the
Credit Facility until July 26, 2001 to structure the replacement term loan to be
secured by the Flagstaff and Scottsdale properties.

On December 12, 2000 and again on April 18, 2001, the Trust notified Pacific
Century Bank that the Trust was not in compliance with certain financial
covenants contained in the Credit Facility. The Trust applied for, and received,
waivers of such noncompliance from Pacific Century Bank.


The terms of the Credit Facility required the Trust to maintain a net
worth (combined with minority interest) of not less than $15 million and, as of
the end of each fiscal quarter, maintain a debt to net worth ratio of not
greater than 1.75 to 1.0, a net operating income to debt service relating to
encumbered properties ratio of not less than 1.30 to 1.0, and a net operating
income to debt service ratio of not less than 1.25 to 1.0. The Trust was
permitted to prepay the Credit Facility, subject to a prepayment penalty of $250
plus a yield-maintenance penalty. During the term of the Credit Facility the
Trust may not further encumber its collateral, sell its collateral, change the
nature of its business or unreasonably suspend its business.


                                      -29-
<PAGE>


In accordance with the Credit Facility, the Trust may choose interest rates
based on: 1) Base Rate, as defined, plus .5 basis points; 2) Treasury Bill Rate
plus 2.75 basis points; or 3) London Interbank Offering Rate ("LIBOR") plus 2.75
basis points and requires quarterly interest-only payments. The Credit Facility
is secured by the Scottsdale, Flagstaff, and Tucson Oracle hotel properties. The
net book value of properties securing the Credit Facility at January 31, 2001,
2000, and 1999 was $12.3 million, $15.9 million, and $16.3 million,
respectively. Interest is based on LIBOR plus 2.75 basis points (9.0%, 9.04%,
and 7.59% at January 31, 2001, 2000, and 1999 respectively).



8.  OTHER NOTES PAYABLE

On September 26, 2000, the Trust purchased 22,500 Class A limited partnership
units from Diane Jones by making an $844 down payment and issuing an unsecured
promissory note in the amount of $52,000. The promissory note in the amount of
$52,000 bears interest at 7% per year, effective September 26, 2000. The unpaid
principal balance and accrued interest are due in 36 monthly payments of $1,606
beginning on November 27, 2000 and ending on October 27, 2003. To date, all
payments have been made as scheduled. The balance on January 31, 2001 was
$48,070.

On April 3, 2000, the Partnership repurchased 60,000 of the Trust's shares from
Anderson Charitable Remainder Trust by issuing a secured promissory note in the
amount of $120,000. The promissory note is secured by the repurchased shares.
The secured promissory note bears interest at 7% per year, effective April 3,
2000. The unpaid principal balance and accrued interest are due in 24 monthly
payments of $5,373 beginning on May 1, 2000 and ending on April 1, 2002. All
payments have been made as scheduled. The balance on January 31, 2001 was
$76,951.

In connection with the termination of an advisory agreement between the
Partnership and Mid-America ReaFund Advisors, Inc. (the "Advisor"), as further
described at Note 14, the Trust assumed the Advisor's outstanding debt totaling
$450,000. The note bore interest at 7% and matured January 30, 2000. The Trust
paid the final principal payment and all interest due on February 11, 2000.

9.  NOTES AND ADVANCES PAYABLE TO RELATED PARTIES

Notes and advances payable to related parties consists of funds provided by
James F. Wirth and other related parties to repurchase Partnership units and to
fund working capital and capital improvement needs. The aggregate amounts
outstanding were approximately $7.5 million and $3.0 million as of January 31,
2001 and 2000, respectively. The loans payable to related party are as follows:

         Wirth made an unsecured loan to the Trust in the amount of $2 million,
bearing interest at 7% per year, effective March 15, 1999. Interest only
payments were due annually beginning March 15, 2000. The unpaid principal
balance and accrued interest is due on March 15, 2004. The Trust used the
proceeds to purchase general partner units in the Partnership. The balance as of
January 31, 2001 was $2,000,000.

                                      -30-

<PAGE>


         Wirth received an unsecured promissory note that consolidated four
outstanding unsecured loans to the Trust totaling $600,000. The loan amounts
consolidated were $200,000, $120,000, $30,000 and $250,000, all bearing interest
at 7% per year with varying maturities. Interest on these four notes through
July 31, 2000 was approximately $41,999 which was subsequently paid on August
15, 2000 according to the unsecured consolidated promissory note. The loans were
used to fund operations, to pay down the outstanding loan to the Partnership and
to pay dividends declared October 12, 1999. The unsecured consolidated
promissory note from the Trust in the amount of $600,000, bearing interest at 7%
per year, became effective August 1, 2000. The unpaid principal balance and
accrued interest on the unsecured consolidated promissory note is due on May 15,
2001. The balance as of January 31, 2001 was $600,000.

         Wirth made eight unsecured loans to the Trust in the total amount of
$2,036,000, all bearing interest at 7% per year, effective varying from August
15 to December 8, 2000. The unpaid principal balances and accrued interest are
due ranging from May 15 to July 1, 2001. The Trust used the proceeds to acquire
the Albuquerque, New Mexico hotel and to fund operations. The balance as of
January 31, 2001 was $1,472,000.

         On July 27, 2000, the Partnership repurchased 300,000 of the Trust's
shares from Wirth and/or affiliates, owned directly or indirectly by Wirth,
issuing 10 secured promissory notes in the aggregate amount of $720,000 and
$3,000 cash. The promissory notes are secured by the repurchased shares. The
secured promissory notes in the aggregate amount of $720,000 bear interest at 7%
per year, effective July 27, 2000. The unpaid principal balances and accrued
interest are due at various dates ranging from August 27, 2000 to July 27, 2003.
All payments have been made as scheduled. The balance on January 31, 2001 was
$568,298.

         On July 27, 2000, the Trust purchased 311,326 of the Partnership's
Class A limited partnership units from Steve Robson, Trustee of the Trust, for
$750,000. The Trust made an initial payment of $5,000 and issued a promissory
note in the amount of $745,000. The promissory note is secured by the purchased
Partnership units. The secured promissory note bears interest at 7% per year,
effective July 27, 2000. The unpaid principal balance and accrued interest is
amortized over 36 months. The final payment is due August 27, 2003. All payments
have been made as scheduled. The balance as of January 31, 2001 was $631,409.

         Rare Earth Development Company, owned directly or indirectly by Wirth,
made two unsecured loans to the Trust in the total amount of $2,200,000 both
bearing interest at 7% per year, effective on December 29, 2000 and January 26,
2001. The unpaid principal balances and accrued interest are due on July 15,
2001. The Trust used the proceeds to fund operations. The balance as of January
31, 2001 was $2,200,000.

10.  MINIMUM DEBT PAYMENTS

Scheduled minimum payments of debt as of January 31, 2001 are as follows:

<TABLE>
<CAPTION>
           FISCAL YEAR ENDED                                  AMOUNT
           -----------------                                  ------
           <S>                                             <C>
                 2002                                      $ 5,412,929(2)
                 2003                                        7,739,206
                 2004                                        1,486,954
                 2005                                        9,811,081
                 2006                                        2,542,271
              Thereafter                                    18,957,896
                                                           -----------

                                                           $45,950,337(1)
                                                           ===========
</TABLE>

(1) Three hundred thousand dollars ($300,000) of debt was repaid by February 9,
2001 and is not included in the aforementioned summary. See also note (2) below.

                                      -31-

<PAGE>


(2) In the first quarter of fiscal year 2002, the Trust refinanced approximately
$9 million in mortgage debt on two of its hotel properties and utilized the
funds to pay-down the amount outstanding on its $11.3 million Credit Facility.
The remaining balance of $2.3 million is being transferred to a term loan,
which, for purposes of this schedule, is included in the fiscal year 2003
payments. Principal payments on the $9 million refinanced has been included in
the respective years applicable. Also, on April 28, 2001, the mortgage note
payable on the Tucson St. Mary's hotel matured and the Bank has proposed an
extension of the term of the mortgage note for twelve months until April 28,
2002. Therefore, this amount has been included in the fiscal 2003 minimum
payments. For more information, see Note 22 "Subsequent Events" and Note 23
"Liquidity and Capital Resources."

11.  DESCRIPTION OF CAPITAL STOCK

Holders of the Trust's Shares of Beneficial Interest are entitled to receive
dividends when and if declared by the Board of Trustees of the Trust out of
funds legally available therefore. The holders of Shares of Beneficial Interest,
upon any liquidation, dissolution or winding-down of the Trust, are entitled to
share ratably in any assets remaining after payment in full of all liabilities
of the Trust. The Shares of Beneficial Interest possess ordinary voting rights,
each share entitling the holder thereof to one vote. Holders of Shares of
Beneficial Interest do not have cumulative voting rights in the election of
directors and do not have preemptive rights.

For the years ended January 31, 2001 and 2000, the Trust repurchased 461,743 and
189,500 Shares of Beneficial Interest at an average price of $2.24 and $2.44 per
share, respectively. Repurchase of these shares are accounted for on the
Treasury Stock Method and are reported as such in the Statement of Shareholders'
Equity.

12.  PERCENTAGE LEASE AGREEMENTS

Effective February 1, 2001, the Trust amended its Percentage Leases modifying
the interim calculations of percentage rent and the expiration dates of the
agreements. The Percentage Leases have non-cancelable terms, which expire on
January 31, 2009, subject to earlier termination on the occurrence of certain
contingencies, as defined. The rent due under each Percentage Lease is the
greater of minimum rent, as defined, or percentage rent. Percentage rent
applicable to room and other hotel revenue varies by lease and is calculated on
a quarterly basis by multiplying fixed percentages by the actual quarterly
amounts of such gross revenues in excess of specified threshold amounts. Both
the minimum rent and the revenue thresholds used in computing percentage rents
are subject to annual adjustments beginning January 1, 1999, based on increases
in the United States Consumer Price Index. Percentage rent applicable to food
and beverage revenues is calculated as 5% of such revenue over a minimum
threshold.

Future minimum rentals (ignoring CPI increases) to be received by the Trust from
the Lessee pursuant to the Percentage Leases for each of the next five years and
in total thereafter are as follows:

<TABLE>
                 <S>                                    <C>
                    2002                                $ 7,275,000
                    2003                                  7,275,000
                    2004                                  7,275,000
                    2005                                  7,275,000
                    2006                                  7,275,000
                 Thereafter                              21,825,000
                                                        -----------

                                                        $58,200,000
                                                        ===========
</TABLE>

The Trust earned approximately $9.7 million, $9.5 million and $ 9.9 million in
rent revenue during fiscal 2001, 2000 and 1999, respectively, of which,
approximately $2.7 million, $2.6 million and $3.3 million, respectively, was in
excess of base rent.

13. FEDERAL INCOME TAXES

No provision for current or deferred income taxes has been made by the Trust.
The Trust has elected to be a REIT and is therefore subject to the requirements
of Sections 856 to 860 of the Internal Revenue Code, all of the requirements of
which management believes have been met for the years ended January 31, 2001 and
2000. As a REIT, the Trust normally distributes 95% of its taxable income to its

                                      -32-

<PAGE>


shareholders. For the years ended January 31, 2001, 2000 and 1999, the Trust
had a taxable income (loss) of approximately ($80,000), ($1,980,000) and
($1,164,000), respectively, before consideration of net operating loss carry
forwards. In fiscal years 2001 and 2000, the primary difference between book
loss and taxable income relates to excess book depreciation over tax
depreciation.

         The total dividends per share applicable to operating results for the
years ended January 31, 2001, 2000, and 1999, amounted to $0.04 per share, $0.01
per share, and $0.10 per share, respectively.

         The Trust has an income tax net operating loss of approximately $16.6
million at January 31, 2001. Net operating loss carryforwards expire beginning
in fiscal 2008 and ending in fiscal 2021. The quarterly allocation of cash
dividends paid per share and the characterization of dividends as either
ordinary income or return of capital for individual shareholders' income tax
purposes were as follows:

<TABLE>
<CAPTION>
                    CALENDAR 2000                       CALENDAR 1999                           CALENDAR 1998
                    -------------                       -------------                           -------------
              Ordinary   Return   Total           Ordinary   Return    Total              Ordinary   Return    Total
Month Paid     Income  of Capital  Paid            Income  of Capital  Paid                Income  of Capital  Paid
--------------------------------------------------------------------------------------------------------------------
<S>           <C>      <C>        <C>             <C>      <C>         <C>                <C>      <C>         <C>

January           -       $.01     .01                 -         -      -                       -      -          -
May               -       $.01     .01                 -         -      -                       -      -          -
July              -       $.01     .01                 -         -      -                       -      -          -
September         -          -       -                 -         -      -                       -      .10      .10
October           -       $.01     .01                 -      $.01    .01                       -      -          -
                ---        ---     ---               ---      ---     ---                     ---      ---      ---
                  -       $.04     .04                 -      $.01    .01                       -      .10      .10
                ===        ===     ===               ===      ====    ===                     ===      ===      ===
</TABLE>


         The tax status of distributions to shareholders in calendar 2001 will
be dependent on the level of the Trust's earnings in that year. If current and
accumulated earnings and profits of the Trust exceed dividends paid in calendar
2000, such dividends will represent ordinary income to the recipients
irrespective of the net operating loss carryforward. If certain changes in the
Trust's ownership should occur, there could be an annual limitation on the
amount of carryforwards that can be utilized, which could potentially impair the
ability to utilize the full amount of the carryforwards.

14.  ADVISORY AGREEMENT/EMPLOYMENT AGREEMENTS

On January 31, 1998, Wirth and his spouse purchased the stock of the Advisor
which provided the administration of the day-to-day investment operations of the
Trust and the Partnership. The Advisor was formerly owned by the former Chairman
and President of the Trust. Under the terms of an advisory agreement between the
Partnership and the Advisor, the Advisor received, subject to certain
limitations, a monthly fee equal to 1/12 of 1% of invested assets, as defined in
the advisory agreement, and an annual incentive fee equal to (a) 10% of the
amount by which the net income of the Partnership exceeded 8% of the average net
worth for the year and (b) 10% of any net realized capital gains less
accumulated net realized capital losses, as defined. For any fiscal year in
which operating expenses of the Partnership exceeded certain thresholds
specified in the advisory agreement, the Advisor was required to refund to the
Partnership the amount of such excess. There was no fee to the Advisor during
fiscal year 1998 due to the reduction in the Trust's investment in mortgage
loans. During fiscal 1999, the Advisor received approximately $364,000 in fees.

Effective January 1, 1999, the Partnership terminated its agreement with the
Advisor in exchange for the Trust's assumption of $450,000 of outstanding notes,
the issuance of 67,000 Class B limited partnership units valued at $2 per unit
and the forgiveness of $85,331 in net liabilities. As a result, the Trust
recorded a net $498,669 charge to operations resulting from $780,746 loss on
termination of advisory agreement offset by $282,077 of forgiven fees to related
party investment advisor.

                                      -33-

<PAGE>


Wirth has an employment agreement with the Trust which expires in December 2007.
The employment agreement provides that Wirth received no compensation from the
Trust as long as the advisory agreement was in effect. However, pursuant to the
terms of the employment agreement, since the Advisor no longer provides services
to the Partnership or the Trust, Wirth will be compensated at an amount up to
the same annual basis as the Advisor would have been compensated under the terms
of the advisory agreement had it remained in effect. Wirth is currently being
compensated, however, at a lesser rate of $130,000 a year.

15.  OTHER RELATED PARTY TRANSACTIONS

The Partnership is responsible for all expenses incurred by the Trust in
accordance with the Partnership Agreement.

At January 31, 2001, Wirth was a 9.8% indirect shareholder of the Lessee. See
Note 22 "Subsequent Events." At January 31, 2001 the Trust had a $493,500
receivable from the Lessee.

The Initial Hotels were acquired by the Partnership from entities in which Wirth
and his affiliates had substantial ownership interests. Wirth and his affiliates
received 4,017,361 Class B limited partnership units and 647,231 Shares of
Beneficial Interest in the Trust in exchange for their interests in the Initial
Hotels. As of January 31, 2001 and 2000 Wirth and his affiliates held 5,226,364
Class B limited partnership units. As of January 31, 2001 and 2000 Wirth and his
affiliates held 630,713 and 834,613, respectively, Shares of Beneficial Interest
in the Trust.

At January 31, 2001, the Trust owned a 48.17% interest in the eleven hotels (the
"Hotels") through its sole general partner's interest in the Partnership. This
change in ownership resulted primarily from the following transactions:

         On March 15, 1999, the Trust purchased 1 million additional general
         partner units in the Partnership for $2 million. This transaction was
         fully funded by Mr. Wirth who provided an unsecured loan to the Trust
         at 7% interest payable annually beginning March 15, 2000. The unpaid
         principal balance and accrued interest is due on March 15, 2004.

         On April 2, 1999, the Partnership made an unsecured loan to the Trust
         in the amount of $2.6 million. Annual interest only payments are due on
         March 1 of each year and are based on a 7% interest rate. The unpaid
         principal balance is due at maturity on April 2, 2006. The Trust used
         the proceeds of that loan to purchase 1.3 million general partner units
         in the Partnership. The money lent by the Partnership was generated by
         refinancing the Northern Phoenix hotel and borrowing an additional $1.8
         million that was secured by a mortgage on that property. The original
         mortgage note was restructured to match the terms of the refinanced
         note, which bears interest at 8.25% and matures on April 1, 2014.
         Monthly principal and interest payments began on April 1, 1999.

         As of April 2, 1999, the Trust transferred, at historical cost of
         approximately $7 million, its interest in the Scottsdale property to
         the Partnership in exchange for 1.6 million general partner units.

         The Trust repurchased 131,493 of the Partnership's Class A limited
         partnership units in fiscal 2000 at a weighted average price per unit
         of $4.10. The units were then retired.

         The Trust repurchased 370,487 of the Partnership's Class A limited
         partnership units in fiscal 2001 at a weighted average price per unit
         of $2.37. Of these units, 36,911 were then retired and the remaining
         333,576 then became general partner units.

                                      -34-

<PAGE>


The Trust recorded expenses of $0, $17,000, and $2,400, in fiscal years 2001,
2000 and 1999, respectively, for legal services provided by a law firm of which
the former President of the Trust and another former Trustee are principals.

The Trust paid interest on related party notes to Mr. Wirth in the amounts of
$185,597, $14,000, and $135,000 for the twelve months ended January 31, 2001,
2000 and 1999, respectively.

The expenses of the Trust consist primarily of property taxes, insurance,
corporate overhead, interest on mortgage debt, professional fees, and
depreciation of the Hotels. Under the terms of its Partnership Agreement, the
Partnership is required to reimburse the Trust for all such expenses.

16.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Trust's significant financial
instruments at January 31, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                              2001                                  2000
                                              ----                                  ----
                                    CARRYING            FAIR              CARRYING             FAIR
                                     AMOUNT             VALUE              AMOUNT             VALUE
                                     ------             -----              ------             -----
<S>                                  <C>               <C>                  <C>             <C>
Mortgage notes payable               $25,628,572       26,303,299           24,251,662      22,523,421
Notes payable to banks               $11,300,000       11,300,000           11,300,000      11,300,000
Other notes payable                      125,021          125,021              125,000         125,000

Notes and advances payable to
   related parties                   $ 7,471,707                *            2,970,000               *
</TABLE>

* It is not practical to estimate the fair value of related party payables.

17. SUPPLEMENTAL CASH FLOW DISCLOSURES

Cash paid for interest amounted to approximately $3.4 million, $3.4 million, and
$2.4 million for fiscal years 2001, 2000, and 1999, respectively.

The Trust satisfied its $2.6 million participating mortgage obligation related
to the Ontario hotel through the issuance of 423,687 Shares of Beneficial
Interest to former partners of Ontario Hospitality Properties Limited
Partnership and 133,492 Class B limited partnership units in the Partnership to
Wirth and his affiliates for their respective interests in fiscal 1999.

During the second quarter of fiscal 1999, several non-exchanging partners from
the formation exchange offer exchanged their interests in the hotels for
interests in the Partnership. The fair value in excess of the historical net
carrying values of the respective hotels resulted in a write-up of approximately
$1.0 million.

In connection with the acquisition of the Buena Park hotel during the second
quarter of fiscal 1999, approximately $4.5 million of historical net book value
in hotel properties was contributed to the Partnership in exchange for
partnership units and the Partnership assumed approximately $4.1 million of debt
and other obligations.

In connection with the acquisition of the San Diego hotel, approximately $3.7
million of the purchase price was satisfied through promissory notes payable to
the sellers.

In connection with the acquisition of the Albuquerque hotel, approximately $1.6
million of the purchase price was satisfied through a mortgage note payable to a
third party lender.

18.  COMMITMENTS AND CONTINGENCIES

Two of the Hotels are subject to non-cancelable ground leases expiring December
31, 2051 and January 9, 2029. Total expense for the fiscal years ended January
31,

                                      -35-

<PAGE>


2001, 2000 and 1999 was $104,805, $70,000 and $70,000 plus a variable component
that totaled approximately $64,000, $67,000 and $77,000, respectively.

Future minimum lease payments are as follows:

<TABLE>
<CAPTION>
             Fiscal Year Ended

             <S>                                            <C>
                      2002                                     159,780
                      2003                                     159,780
                      2004                                     159,780
                      2005                                     159,780
                      2006                                     159,780
             Thereafter                                      5,549,940
                                                            ----------

                                                            $6,348,840
                                                            ==========
</TABLE>

The Trust is obligated to make funds available to the Hotels for capital
expenditures (the "Reserve Funds"), as determined in accordance with the
Percentage Leases. The Reserve Funds have not been recorded on the books and
records of the Trust as such amounts are capitalized as incurred. The amounts
obligated under the Reserve Funds are 4% of the individual Hotels' total
revenues.

The nature of the operations of the Hotels exposes them to risks of claims and
litigation in the normal course of their business. Although the outcome of these
matters cannot be determined, management does not expect that the ultimate
resolution of these matters will have a material adverse effect on the financial
position, results of operations or liquidity of the Hotels.

The Trust is involved from time-to-time in various other claims and legal
actions arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not have a material
adverse effect on the Trust's consolidated financial position, results of
operations or liquidity.

19.  STOCK OPTION PLAN

During fiscal 1999, the shareholders of the Trust adopted the 1997 Stock
Incentive and Option Plan (the "Plan"). Pursuant to the Plan, the Compensation
Committee may grant options to the Trustees, Trust Officers, other key
employees, consultants, advisors, and similar employees of the Trust's
subsidiaries and affiliates. The number of options that may be granted is
limited to 10% of the total Common Stock and Units (Class A and Class B) as of
the first day of such year.

Generally, options granted expire in 10 years, are exercisable during the
optionee's lifetime only by the recipient and are non-transferable. Unexercised
options held by employees of the Trust generally terminate on the date the
individual ceases to be an employee of the Trust.

There were no options granted in fiscal year 2001.

The per share weighted average fair value of stock options granted under the
Plan for the years ended January 31, 2000 and 1999 was $1.12 and $1.26,
respectively, using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 2000 and 1999:

<TABLE>
<CAPTION>
                                             Years ended January 31

                                    2001             2000              1999
                                    ----             ----              ----

<S>                                 <C>              <C>             <C>
Dividend yield                        -               2.5%            -
Expected volatility                   -              34.0%           37.5%
</TABLE>



                                      -36-

<PAGE>



<TABLE>
<S>                                 <C>              <C>             <C>
Risk-free interest rate              -               5.7%            5.0%
Expected lives (years)               -               3.0             2.5
</TABLE>

At January 31, 2001, the exercise price and weighted average remaining
contractual life of options was $2.50 and 7.6 years, respectively.

The following table summarizes the stock option activity during the 2001, 2000
and 1999 fiscal years and provides information about the stock options
outstanding at January 31, 2001:

<TABLE>
<CAPTION>
                                                                          Weighted-
                                                                           Average

                                           Number of Options           Exercise Price
                                           -----------------           --------------
<S>                                        <C>                         <C>
Stock Option Activity

Outstanding, January 31, 1998                             --           $           --
     Granted                                         405,000                     4.31
     Forfeited                                       (15,300)                    4.31
     Exercised                                            --                       --
                                           -----------------           --------------

Outstanding, January 31, 1999                        389,700           $         4.31
     Granted                                          88,200                     2.50
     Forfeited                                      (102,300)                    3.83
     Exercised                                            --                       --
                                           -----------------           --------------

Outstanding, January 31, 2000                        375,600           $         2.50
     Granted                                              --                       --
     Forfeited                                       (31,500)                    2.50
     Exercised                                            --                       --
                                           -----------------           --------------

Outstanding, January 31, 2001                        344,100           $         2.50
                                           =================           ==============
</TABLE>


<TABLE>
<CAPTION>
Stock Option Information                      January 31, 2001
------------------------                      ----------------

<S>                                           <C>
Options exercisable                                   89,400
Weighted Average Exercise Price                       $ 2.50
</TABLE>

For stock options granted to non-employees of the Trust, compensation is
recognized over the respective vesting period based upon the fair value of the
options as calculated using the Black-Scholes pricing model. During the years
ended January 31, 2001, 2000, and 1999, the Trust granted 0, 28,200, and 214,100
stock options to non-employees, respectively. This resulted in the recognition
of compensation expense of $0, $57,000, and $184,000 during the respective
years.

The Trust applies APB Opinion No. 25 in accounting for stock options granted its
employees under the plan and, accordingly, no compensation cost has been
recognized for these stock options in the consolidated financial statements. Had
the Company determined compensation cost based on the fair value at the grant
date for its stock options under SFAS No. 123, the Company's net loss would have
been increased to the pro-forma amount indicated below:

                                      -37-

<PAGE>


<TABLE>
<CAPTION>
                                                                          YEARS ENDED JANUARY 31
                                                                          ----------------------

                                                             2001                   2000                  1999
                                                             ----                   ----                  ----

<S>                                                   <C>                    <C>                    <C>
Net loss:
   As reported                                        $    (2,594,754)       $      (951,811)       $      (193,071)
                                                      ================       ================       ================

   Pro forma                                          $    (2,698,244)       $    (1,058,408)       $      (293,468)
                                                      ================       ================       ================

Net loss per share - basic and diluted:

   As reported                                        $         (1.12)       $         (0.40)       $         (0.10)
                                                      ================       ================       ================

   Pro forma                                          $         (1.16)       $         (0.45)       $         (0.15)
                                                      ================       ================       ================
</TABLE>


Effective September 14, 1999, the Trust modified all outstanding stock options,
reducing the exercise price from the existing exercise price per share to $2.50,
to be consistent with the trading value of underlying beneficial interest as of
this date. As a result of the modification of exercise price, the Trust
recognized approximately $10,000 compensation expense for the year ended January
31, 2000.

20.  NET LOSS PER SHARE

The Trust calculates basic and diluted net income (loss) per share in accordance
with the provisions of Statement of Financial Accounting Standards No. 128,
"Earnings Per Share." Basic net income (loss) per share is computed using the
weighted average number of common shares outstanding during each period
(2,316,972, 2,376,770 and 1,921,902 shares for the years ended January 31, 2001,
2000, and 1999, respectively). Diluted net loss per share is the same as basic
net loss per share for the years ended January 31, 2001, 2000 and 1999 due to
the anti-dilutive effect of potentially dilutive securities on loss from
continuing operations.

21.  QUARTERLY RESULTS (UNAUDITED)

The following is a summary of the results of operations, by quarter, for the
fiscal years ended January 31, 2001 and 2000. Management believes that all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of such interim results have been included. The results of
operations for any interim period are not necessarily indicative of those for
the entire fiscal year.

                                      -38-

<PAGE>



<TABLE>
<CAPTION>
                                                                       QUARTER ENDED

FISCAL 2001                                      APRIL 30         JULY 31          OCTOBER 31            JANUARY 31
-----------                                      --------         -------          ----------            ----------

<S>                                              <C>             <C>                 <C>                   <C>
Total revenues                                   $3,321,309      2,086,259           2,173,744             2,157,143
                                                 ==========      ==========      =============         =============

Total revenues less interest
     expense on mortgage loans
     and operating expenses,
     and amortization expense of
     real estate held for sale                   $2,464,217      1,175,233           1,178,741             1,150,975
                                                 ==========      ==========      =============         =============

Net income (loss)                                $  392,489       (403,513)           (513,844)           (2,150,668)
                                                 ==========     ==========       =============         =============

Income (loss) per share - Basic                  $      .16           (.17)               (.24)                (.99)
                                                 ==========     ==========       =============         =============

Income (loss) per share - diluted                $      .10           (.17)               (.24)                (.99)
                                                 ==========     ==========       =============         =============

Dividends declared per share                     $      .10            .01                 .01                   .01
                                                 ==========     ==========       =============         =============

<CAPTION>
                                                                      QUARTER ENDED

FISCAL 2000                                   APRIL 30          JULY 31            OCTOBER 31            JANUARY 31
-----------                                   --------          -------            ----------            ----------
<S>                                           <C>            <C>                 <C>                   <C>
Total revenues                                $3,284,978         2,102,983           2,037,540             2,120,679
                                              ==========     =============       =============         =============

Total revenues less interest
     expense on mortgage loans
     and operating expenses,
     and amortization expense of
     real estate held for sale                $2,527,452           653,656           1,278,142             1,769,061
                                              ==========     =============       =============         =============

Net income (loss)                             $  379,307          (295,821)            (98,975)             (936,322)
                                              ==========     =============       =============         =============

Income (loss) per share - basic               $      .16              (.13)               (.04)                 (.39)
                                              ==========     =============       =============         =============

Income (loss) per share - diluted             $      .10              (.13)               (.04)                 (.39)
                                              ==========     =============       =============         =============

Dividends declared per share                  $      .10                 -                 .01                   .01
                                              ==========     =============       =============         =============
</TABLE>


22. SUSEQUENT EVENTS

Effective February 1, 2001, the Trust acquired the Lessee, InnSuites Hotels
Inc., following the guidelines of the REIT Modernization Act. The rate
structures of the Percentage Leases for the Hotels were amended to reflect
current economic and market conditions. Concurrent with these changes, a new
management company, Suite Hospitality Management, Inc., contracted with the
Lessee to assume management of the Hotels, replacing InnSuites Innternational
Hotels, Inc.

On April 18, 2001, the Trust refinanced its Ontario property and used the net
proceeds of $4.2 million to reduce the Trust's outstanding balance of $11.3
million on its Credit Facility to $7.1 million. On April 27, 2001, the Trust
closed the financing of its Tucson Oracle property and used $4.8 million of the
net proceeds to reduce the outstanding balance of the Credit Facility to
approximately $2.3 million. Pacific Century Bank has proposed the issuance of a
term loan to replace the remaining balance of the Credit Facility. The terms of
the replacement term loan are subject to review and approval by Pacific Century
Bank. If, for any reason, Pacific Century Bank does not issue the replacement
term loan, the Trust has sufficient unencumbered equity in the Flagstaff and
Scottsdale properties to refinance the $2.3 million outstanding balance of the
Credit Facility with another lending institution and therefore satisfy the
outstanding balance of the Credit Facility. In the unlikely event that Pacific
Century Bank forecloses on the Flagstaff and Scottsdale properties, management
believes that the unencumbered equity will be sufficient to prevent a loss at a
foreclosure sale. Pacific Century Bank has agreed to waive all covenants
relating to the Credit Facility and to extend the effectiveness of the Credit
Facility until July 16, 2001 to allow time to structure the replacement term
loan which will be secured by the Flagstaff and Scottsdale properties.

On April 28, 2001, the mortgage note payable to Bank One on the Tucson St.
Mary's hotel matured. The outstanding principal balance is $3,762,839. Bank One
has proposed an extension of the term of the mortgage note for twelve months
until April 28, 2002. The extended mortgage note will bear interest at the Bank
One Prime Rate plus one percent (1%). On April 30, 2001, the Bank One Prime Rate
was seven and one-half percent (7.5%). These terms are subject to formal review
and approval by the Bank One Credit Committee. If, for any reason, Bank One does
not extend the mortgage note, the Trust has sufficient unencumbered equity in
the Tucson St. Mary's property to refinance the outstanding balance of the
mortgage note with another lending institution and therefore satisfy the
outstanding balance of the mortgage note. In the unlikely event that Bank One
forecloses on the Tucson St. Mary's property, management believes that the
unencumbered equity will be sufficient to prevent a loss at a foreclosure sale.

23. LIQUIDITY AND CAPITAL RESOURCES

The Trust has experienced a net loss applicable to Shares of Beneficial Interest
of $2,594,754 and $951,811 for the years ended January 31, 2001 and 2000,
respectively. However, cash flows from operations for each of these respective
years have been $809,501 and $800,349 and the Trust has shareholders' equity of
approximately $5 million at January 31, 2001.

The Trust's principal source of cash to meet its cash requirements, including
distributions to its shareholders, is its share of the Partnership's cash flow.
The Partnership's principal source of revenue is rent payments under the
Percentage Leases. The Lessee's obligations under the Percentage Leases are
unsecured and its ability to make rent payments to the Partnership under the
Percentage Leases, and the Trust's liquidity, including its ability to make
distributions to its shareholders, will depend upon the ability of the Lessee to
generate sufficient cash flow from hotel operations. As a result of the Trust's
acquisition of the Lessee as of February 1, 2001, any profits earned by the
Lessee in its operation of the Hotels may be distributed to the Trust. See "Item
1 - Business - Acquisition of the Lessee by the Trust." For the twelve months
ended January 31, 2001 and 2000, the Trust recorded provisions of approximately
$2.4 million and $1.9 million for uncollectible receivables. These charges
reflect the Trust's assessment of the collectibility of its receivables, which
primarily consists of rent receivable from the Lessee, based on an evaluation of
the Lessee's estimated future cash flows.

On April 18, 2001, the Trust refinanced its Ontario property and utilized $4.2
million of the net proceeds to reduce the outstanding balance of the Credit
Facility from $11.3 million to $7.1 million. On April 27, 2001, the Trust closed
the financing of its Tucson Oracle property and used $4.8 million of the net
proceeds to reduce the outstanding balance of the Credit Facility to
approximately $2.3 million. Pacific Century Bank has proposed the issuance of a
term loan (twelve months) to replace the portion of the Credit Facility that is
secured by the Flagstaff and Scottsdale properties. The terms of the replacement
term loan are subject to review and approval by Pacific Century Bank. However,
if for any reason, Pacific Century Bank does not issue the replacement term
loan, the Trust has sufficient unencumbered equity in the Flagstaff and
Scottsdale properties to refinance the outstanding balance (and satisfy the
balance due to Pacific Century Bank) with another lending institution. In the
unlikely event that Pacific Century Bank forecloses on the property, management
believes the unencumbered equity will be sufficient to prevent a loss at a
foreclosure sale.

On April 28, 2001, the mortgage note payable to Bank One on the Tucson St.
Mary's hotel matured. The outstanding principal balance was $3,762,839. Bank One
has proposed an extension of the term of the mortgage note for twelve months
until April 28, 2002. The extended note will bear interest at the Bank One Prime
Rate plus one percent (1%). On April 30, 2001, the Bank One Prime Rate was seven
and one-half percent (7.5%). These terms are subject to formal review and
approval by the Bank One Credit Committee. If, for any reason, Bank One does not
extend the mortgage note, the Trust has sufficient unencumbered equity in the
Tucson St. Mary's property to refinance the outstanding balance (and satisfy the
balance due to Bank One) with another lending institution. In the unlikely event
that Bank One forecloses on the property, management believes the unencumbered
equity will be sufficient to prevent a loss at a foreclosure sale.

The Trust has approximately $4.8 million due and payable in fiscal year 2002
under notes and advances payable to Wirth. To the extent the Trust can not
satisfy these amounts as they come due, Wirth has agreed to extend the terms of
these borrowings to future dates.

Management believes that cash on hand, future cash receipts and borrowings from
affiliates in fiscal year 2002 will be sufficient to meet the Trust's expansion
plans and to pay all obligations as they become due for the next twelve months.

                                      -39-

<PAGE>


                                                                  SCHEDULE III

                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF JANUARY 31, 2001

<TABLE>
<CAPTION>
                                                                                       Cost

                                                       Initial                      Capitalized               Gross Amounts At
                                                        Cost                       Subsequent to              Which Carried At
                                                      to Trust                      Acquisition               Close of Period
                                               -------------------------        --------------------        -------------------
                                                            Building and                Building and               Building and
                              Encumbrances     Land         Improvements        Land    Improvements        Land   Improvements
                              ------------     ----         ------------        ----    ------------        ----   ------------

<S>                          <C>            <C>            <C>             <C>           <C>            <C>           <C>
InnSuites Hotels
  Phoenix Best Western

  Phoenix, Arizona           $ 4,116,825    $  418,219     $ 2,922,884     $       -     $  159,295     $  418,219     $3,082,179

InnSuites Hotels
  Tempe/Phoenix
  Airport/South
  Mountain

  Tempe, Arizona               2,223,862       686,806       6,548,348             -        196,578        686,806      6,744,926

InnSuites Hotels Tucson,
  Catalina Foothills Best
  Western Tucson, Arizona (B)          -             -       4,220,820             -      1,807,910              -      6,028,730

InnSuites Hotels Yuma Best
  Western

  Yuma, Arizona                3,326,624       251,649       4,983,292             -        797,327        251,649      5,780,619

Holiday Inn Airport
  Ontario Hotel and Suites

  Ontario, California          3,368,969     1,633,064       5,450,872             -        273,760      1,633,064      5,724,632

InnSuites Hotels
  Flagstaff/Grand Canyon

  Flagstaff, Arizona (B)               -       100,000       1,194,691             -      1,073,503        100,000      2,268,194

InnSuites Hotels
  Tucson St. Mary's

  Tucson, Arizona              3,780,692       900,000       9,166,549       (20,564)       368,760        879,436      9,535,309

Buena Park Suite
  Hospitality
  Buena Park Suites

  Buena Park, California       3,298,754       645,852       4,336,476             -      1,764,521        645,852      6,100,997

InnSuites Hotels
  San Diego Hospitality

  San Diego, California        3,959,206       700,000       3,972,785             -        205,964        700,000      4,178,749

InnSuites Hotels
  Scottsdale/

  El Dorado Park Resort

  Scottsdale, Arizona (B)              -       350,000       6,074,400      (163,791)    (3,005,262)       186,209      3,069,138

Airport Inn Albuquerque

  Albuquerque, New Mexico      1,553,640             -       1,903,970             -        106,298              -      2,010,268
                             -----------    ----------     -----------     ---------     ----------     ----------    -----------

                             $25,628,572    $5,685,590     $50,775,087     $(184,355)    $3,748,654     $5,501,235    $54,523,741
                             ===========    ==========     ===========     =========     ==========     ==========    ===========
</TABLE>



                                      -40-

<PAGE>


                            SCHEDULE III (continued)

<TABLE>
<CAPTION>
                                                                             Net
                                                                       Book Value

                                                                        Land and                                    Depreciation
                                                                        Buildings                                    in Income
                                         Total         Accumulated         and           Date of         Date of    Statement is
                                          (A)          Depreciation   Improvements     Construction    Acquisition    Computed
                                   -------------------------------------------------------------------------------------------------

<S>                                   <C>              <C>            <C>                 <C>            <C>          <C>
InnSuites Hotels
     Phoenix Best Western

      Phoenix, Arizona                $ 3,500,398      $  234,921     $ 3,265,477         1980           1998         5-40 years

InnSuites Hotels
   Tempe/Phoenix
   Airport/South
   Mountain

   Tempe, Arizona                       7,431,732         506,133       6,925,599         1982           1998         5-40 years

InnSuites Hotels Tucson,
   Catalina Foothills Best
   Western Tucson, Arizona (B)          6,028,730         452,107       5,576,623         1981           1998         5-40 years

InnSuites Hotels Yuma Best
   Western

   Yuma, Arizona                        6,032,268         432,187       5,600,081         1982           1998         5-40 years

Holiday Inn Airport
   Ontario Hotel and Suites

   Ontario, California                  7,357,696         428,288       6,929,408         1990           1998         5-40 years

InnSuites Hotels
   Flagstaff/Grand Canyon

   Flagstaff, Arizona      (B)          2,368,194         163,017       2,205,177         1966           1998         5-40 years

InnSuites Hotels
   Tucson St. Mary's

   Tucson, Arizona                     10,414,745         698,799       9,715,946         1960           1998         5-40 years

Buena Park Suite Hospitality
   Buena Park Suites

   Buena Park, California               6,746,849         401,637       6,345,212         1972           1998         5-40 years

InnSuites Hotels
   San Diego Hospitality

   San Diego, California                4,878,749         288,794       4,589,955         1946           1998         5-40 years

InnSuites Hotels Scottsdale/
   El Dorado Park Resort
   Scottsdale, Arizona     (B)          3,255,347               -       3,255,347         1980           1998         5-40 years

Airport Inn Albuquerque

   Albuquerque, New Mexico              2,010,268          27,373       1,982,895         1975           2000         5-40 years
                                      -------------------------------------------
                                      $60,024,976      $3,633,256     $56,391,720
                                      ===========      ==========     ===========
</TABLE>

              (See accompanying independent auditors report.)

(A)  Aggregate cost for federal income tax purposes at January 31, 2001 is as
     follows:

<TABLE>
<S>                                               <C>
                    Land                          $ 5,666,892
                    Buildings and improvements     24,568,835
                                                  -----------
                                                  $30,235,727

                                                  ===========
</TABLE>

(B) These properties secure the $12 million Credit Facility.

<TABLE>
<S>                                                                <C>
         Reconciliation of Real Estate:

                  Balance at January 31 1999                       $ 60,017,468
                  Improvement to hotel properties                       695,238
                                                                   ------------

                  Balance at January 31, 200                       $ 60,712,706
                  Acquisition of Hotel Properties                     1,903,970
                  Improvement to Hotel Properties                       758,213
                  Impairment of Hotel Property                       (3,329,349)
                  Sale of Land                                          (20,564)
                                                                   ------------
                  Balance at January 31, 2001                      $ 60,024,976
                                                                   ============
</TABLE>

All acquisitions of hotel properties, other than approximately $1,448,000 in
cash paid in connection with the purchase of the Buena Park property and
$2,100,000 paid

                                      -41-

<PAGE>


for the Albuquerque property, were acquired through the exchange of limited
partnership units in the Partnership.

<TABLE>
<S>                                                                 <C>
Reconciliation of Accumulated Depreciation:
   Balance at January 31, 1998                                      $        -
   Depreciation                                                      1,306,786
                                                                    ----------

   Balance at January 31, 1999                                       1,306,786
   Depreciation                                                      1,368,788
                                                                    ----------

   Balance at January 31, 2000                                       2,675,574
   Depreciation                                                      1,423,533
   Impairment of hotel property                                      (465,851)
                                                                    ----------

   Balance at January 31, 2001                                      $3,633,256
                                                                    ==========
</TABLE>



                                      -42-

<PAGE>


                          Independent Auditors' Report

The Board of Directors
InnSuites Hotels, Inc.:

We have audited the accompanying balance sheets of InnSuites Hotels, Inc. (the
"Company") as of January 31, 2001 and 2000, and the related statements of
operations, stockholders' deficit and cash flows for each of the years in the
two-year period ended January 31, 2001. These financial statements are the
responsibility of the Company'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, the financial statements referred to above present fairly, in
all material respects, the financial position of InnSuites Hotels, Inc. as of
January 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the years in the two-year period ended January 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America.

                                  /s/ KPMG LLP

Phoenix, Arizona
April 30, 2001

                                      -43-

<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------


The Board of Directors
InnSuites Hotels, Inc:

We have audited the balance sheet (not presented herein) of InnSuites Hotels,
Inc., as of January 31, 1999, and the related statements of operations and
stockholders' deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of InnSuites Hotels, Inc., as of
January 31, 1999, and the results of its operations and its cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States.

Phoenix, Arizona                          MICHAEL MAASTRICHT, CPA
April 14, 2000



                                      -44-

<PAGE>



                             INNSUITES HOTELS, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                    JANUARY 31,
                                                                                    ----------

                                                                                2001           2000
                                                                                ----           ----
<S>                                                                         <C>             <C>
Assets

Cash and cash equivalents                                                   $    71,491       203,166
Accounts receivable, net                                                      1,132,274       790,323
Prepaids and other assets                                                       223,222        41,938
                                                                            -----------    ----------

Total Assets                                                                $ 1,426,987     1,035,427
                                                                            -----------    ----------

Liabilities and Stockholders' Deficit

Liabilities

Accounts payable                                                              1,671,562     1,418,469
Loans from affiliates                                                           631,834       375,000
Percentage rent payable                                                       5,251,862     2,845,732
Accrued expenses and other liabilities                                          775,790       865,953
                                                                            -----------    ----------

Total Liabilities                                                             8,331,048     5,505,154

Stockholders' Deficit

   Preferred stock, $1 par value, 100 shares authorized,
     100 shares issued and outstanding as of January 31, 2000 and 2000              100           100
  Additional paid-in-capital                                                    249,900       249,900
   Common stock, no par value, 100,000 shares authorized,
     76,555 shares issued and outstanding as of January 21, 2001 and 2000         2,431         2,431
Accumulated Deficit                                                          (7,156,492)   (4,722,158)
                                                                            -----------    ----------

Total Stockholders' Deficit                                                  (6,904,061)   (4,469,727)
                                                                            -----------    ----------

Total Liabilities and Stockholders' Deficit                                 $ 1,426,987     1,035,427
                                                                            ===========    ==========
</TABLE>

                 See accompanying notes to financial statements.

                                      -45-

<PAGE>



                             INNSUITES HOTELS, INC.
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                        For the years ended January 31,
                                      2001            2000           1999
                                      ----            ----           ----
<S>                               <C>              <C>            <C>
Revenue from hotel operations:
     Room                         $ 26,077,800     25,146,035     24,341,384
     Food and beverage               1,709,045      1,725,730      1,613,766
     Telecommunications                335,932        346,091        460,770
     Other                             733,637        734,585        291,281
                                  ------------    -----------    -----------

         Total revenues           $ 28,856,414     27,952,441     26,707,201
                                  ------------    -----------    -----------

Department expenses:
     Rooms                        $  7,136,313      6,706,503      7,787,234
     Food and beverage               1,620,049      1,626,532      1,409,010
     Telecommunications                447,758        389,664        495,566
     Other                             445,236        437,240        138,468
     General and administrative      4,562,012      3,918,748      3,975,266
     Sales and marketing             2,173,381      2,149,781      2,082,812
     Repairs and maintenance         1,816,917      2,025,576      1,344,715
     Hospitality                     1,647,599      1,546,766      1,202,005
     Utilities                       1,824,198      1,643,788      1,572,819
     Insurance                         167,867        105,573         62,437
     Percentage rent                 9,699,418      9,516,038      9,976,880
                                  ------------    -----------    -----------

     Total expenses               $ 31,540,748     30,066,209     30,047,212
                                  ------------    -----------    -----------

Net loss                          $ (2,684,334)    (2,113,768)    (3,340,011)
                                  ============    ===========    ===========
</TABLE>

                 See accompanying notes to financial statements.

                                      -46-

<PAGE>



                             INNSUITES HOTELS, INC.
                       STATEMENTS OF STOCKHOLDERS' DEFICIT

               For the years ended January 31, 2001, 2000 and 1999


<TABLE>
<CAPTION>
                                                                             RETAINED

                                        PREFERRED         COMMON             EARNINGS
                                          STOCK           STOCK        (ACCUMULATED DEFICIT)      TOTAL
                                          -----           -----                                   -----

<S>                                     <C>              <C>               <C>                    <C>
BALANCE, January 31, 1998               $250,000         $2,431            $      1,621           $   254,052
     Contributions                            --             --                 480,000               480,000
     Net Loss                                 --             --              (3,340,011)           (3,340,011)
                                        --------         ------            ------------           -----------
BALANCE, January 31, 1999               $250,000          2,431            $ (2,858,390)          $(2,605,959)
                                        --------         ------            ------------           -----------
     Contributions                            --             --                 250,000               250,000
     Net Loss                                 --             --              (2,113,768)           (2,113,768)
                                        --------         ------            ------------           -----------
BALANCE, January 31, 2000               $250,000         $2,431            $ (4,722,158)          $(4,469,727)
                                        --------         ------            ------------           -----------
Contributions                                 --             --                 250,000               250,000
Net loss                                      --             --              (2,684,334)           (2,684,334)
                                        --------         ------            ------------           -----------
BALANCE, January 31, 2001               $250,000         $2,431            $ (7,156,492)          $(6,904,061)
                                        ========         ======            ============           ===========
</TABLE>

                 See accompanying notes to financial statements.

                                      -47-

<PAGE>



                             INNSUITES HOTELS, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                      For the years ended January 31,
                                                     2001           2000          1999
                                                 -----------      ----------    ---------

<S>                                              <C>            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                        $(2,684,334)   (2,113,768)   (3,340,011)
 Adjustments to reconcile net loss to net cash
   used in operating activities:
   (Increase) in Accounts receivable                (341,951)     (123,242)      142,978
   (Increase) decrease in Prepaids and
      Other Assets                                  (181,284)       78,617       639,280
   Decrease in Inventories                              --            --         493,648
   Increase in Accounts payable                      253,093       219,224       229,067
   Increase in Percentage rent payable             2,406,130     1,157,554     1,688,178
   Increase (decrease) in Accrued expenses
    and other liabilities                            (90,163)       60,050        (6,936)
                                                 -----------    ----------    ----------
   Net cash (used in) operating activities       $  (638,509)     (721,565)     (153,796)
                                                 -----------    ----------    ----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Borrowings on loans from affiliates               256,834       238,552          --
   Payments on loans from affiliates                    --            --        (212,120)
   Contributions                                     250,000       250,000       480,000
                                                 -----------    ----------    ----------
   Net cash provided by financing activities     $   506,834       488,552       267,880
                                                 -----------    ----------    ----------
Net change in cash and cash equivalents             (131,675)     (233,013)      114,084

Cash and cash equivalents at beginning of year       203,166       436,179       322,095
                                                 -----------    ----------    ----------

Cash and cash equivalents at end of year         $    71,491       203,166       436,179
                                                 ===========    ==========    ==========
</TABLE>

                 See accompanying notes to financial statements.

                                      -48-

<PAGE>


                             INNSUITES HOTELS, INC.
                          Notes to Financial Statements

                          As of and for the years-ended

                         January 31, 2001, 2000 and 1999

1.       Organization & Basis of Presentation

InnSuites Hotels, Inc., (the "Company") leases and operates hotels owned by RRF
Limited Partnership (the "Partnership"). The Partnership is owned by several
Limited Partners and a General Partner, InnSuites Hospitality Trust(the
"Trust"). The Trust is an unincorporated Ohio real estate investment trust (the
"REIT") which agreed to acquire equity interests in several existing hotel
properties on January 31, 1998 and to consider selectively the purchase or
development of additional hotels in the expansion of its business. The Trust
acquired its General Partner interest, representing a 13.6% equity interest in
the Partnership as of January 31, 1998. The partners and shareholders of the
original InnSuites Hotels, Inc. contributed their respective partnership and
corporate interests to the Partnership in exchange for cash, partnership
interests or REIT Common stock on January 31, 1998.

The following full-service hotels are leased and operated by the Company:

<TABLE>
<CAPTION>
Property                                        Location                Number of Suites
--------                                        --------                ----------------

<S>                                             <C>                     <C>
InnSuites Tempe/Airport                         Tempe, AZ                      170
InnSuites Scottsdale                            Scottsdale, AZ                 132
InnSuites Flagstaff Grand Canyon                Flagstaff, AZ                  118
InnSuites Phoenix Best Western                  Phoenix, AZ                    123
InnSuites Tucson Best Western                   Tucson, AZ                     159
InnSuites Yuma Best Western                     Yuma, AZ                       166
Holiday Inn Airport InnSuites Ontario           Ontario, CA                    150
InnSuites Tucson St. Mary's                     Tucson, AZ                     297
InnSuites San Diego                             San Diego, CA                  147
InnSuites Buena Park                            Buena Park, CA                 185
InnSuites Hotels Airport Inn Albuquerque        Albuquerque, NM                104
                                                                             -----

                                                         Total Suites        1,751
                                                                             =====
</TABLE>


The Company leases these 11 hotels pursuant to individual operating leases which
are structured on a hotel-by-hotel basis. The lessors of these leases are
subsidiaries of the Partnership (the "Lessors"). In accordance with the
lessor/lessee relationship, the operating hotels are required to make percentage
lease payments to the Lessors based on a percentage of hotel room revenues. The
amount of the lease payments is calculated on an individual hotel basis and is
governed by an executed lease agreement which details the method of lease
payment calculation. The calculation to determine each hotel percentage lease
payment is based on quarterly hotel revenues.

All of the hotels offer studio and two-room suites with a variety of room
upgrades available, such as the two-room "Executive/Family Suite", the
"Boardroom Meeting Suite" or a "Presidential Jacuzzi Suite." In addition, the
hotels operate as moderate and full-service hotels near premier vacation areas
such as the Grand Canyon and Disneyland along with other attractions and
business centers.

The financial statements include the accounts of InnSuites Hotels, Inc. and the
results of operations of the 11 leased hotels. All significant intercompany



                                      -49-

<PAGE>


transactions have been eliminated, and certain prior period amounts have been
reclassified to be consistent with current period financial statement
presentation.

2.       Summary of Significant Accounting Policies

a)       Use of Estimates

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

b)       Cash and Cash Equivalents

         All highly liquid investments with a maturity of three months or less
         when purchased are considered to be cash equivalents.

c)       Income Taxes

         The Company accounts for income taxes under the asset and liability
         method. Deferred tax assets and liabilities are recognized for the
         future consequences attributed to differences between the financial
         statement carrying amounts of existing assets and liabilities and their
         respective tax bases. Differences between income for financial and tax
         reporting purposes arise primarily from accrued expenses not deducted
         for tax. Deferred tax assets and liabilities are measured using enacted
         tax rates expected to apply to taxable income in the years in which
         those temporary differences are expected to be recovered or settled.
         The effect on deferred tax assets and liabilities of a change in tax
         rates is recognized in income in the period that includes the enactment
         date.

d)       Concentration of Credit Risk

         Financial instruments which potentially subject the Company to
         concentrations of credit risk are principally trade accounts
         receivable. The Company's receivables are unsecured.

e)       Revenue Recognition

         Revenue is recognized as earned. Ongoing credit evaluations are
         performed and an allowance for potential credit losses is provided, if
         needed, against the portion of accounts receivable which is estimated
         to be uncollectible. Such losses have been minimal and within
         management's expectations.

f)       Repairs and Maintenance

         Repairs and maintenance are charged to operations as incurred by the
         Company. Costs incurred for major renovations and fixed asset purchases
         are reimbursed and capitalized by the Lessors.

g)       Advertising and Promotion

         The costs of advertising and promotional events are expensed as
         incurred.

h)       Fair Value of Financial Instruments

         Fair value is determined by using available market information and
         valuation methodologies. Financial instruments include cash and cash
         equivalents,


                                      -50-

<PAGE>


         accounts receivable, accounts payable and accrued expenses and other
         liabilities, which due to their short maturities, are carried at
         amounts, which reasonably approximate fair value.

3.       Percentage Lease Agreements

Percentage Leases exist between the Company's individual leased hotels and the
Lessors. The Percentage Leases have noncancellable lease terms which expire on
January 31, 2009, and are subject to earlier termination on the occurrence of
certain contingencies, as defined in the Percentage Leases. The rent due under
each Percentage Lease is the greater of the minimum rent, also defined by the
Percentage Lease, or percentage rent. Percentage rent applicable to room and
other hotel revenue is calculated by multiplying fixed percentages by the total
amounts of such gross revenues in excess of specified threshold amounts. Both
the minimum rent and the revenue thresholds used in computing percentage rents
are subject to annual adjustments based on the United States Consumer Price
Index ("CPI"). Percentage rent applicable to food and beverage revenues is
calculated as 5% of such revenues over a minimum threshold. Percentage rent
expense for the years ended January 31, 2001, 2000 and 1999 was $9.7 million,
$9.5 million and $10 million, respectively, of which $2.7 million, $2.6 million
and $3.1 million, respectively, was in excess of minimum rent.

Future minimal rentals (without reflecting future CPI increases) to be paid by
the Company pursuant to the Percentage Leases for fiscal years 2002 to 2006 and
in total thereafter are as follows:

<TABLE>
<S>                                                          <C>
                              2002                          $ 7,275,000
                              2003                            7,275,000
                              2004                            7,275,000
                              2005                            7,275,000
                              2006                            7,275,000
                           Thereafter                        21,825,000
                                                            -----------

                                                            $58,200,000
                                                            ===========
</TABLE>

Other than real estate and personal property taxes, casualty insurance and
capital improvements which are obligations of the Lessor, the Percentage Leases
require the Company to pay rent, liability insurance premiums, and all costs,
expenses, utilities and other charges incurred in the operation of the leased
hotels. Property insurance premiums are allocated 50% to the Lessor and 50% to
the Company. In addition, at January 31, 2001 and 2000, outstanding receivables
due the Company from the Lessor for the reimbursement of capital improvements,
which were paid for by the Company, were netted with percentage rent payable to
the Lessor. The amounts netted against percentage rent payable were
approximately $1.6 million and $731,000 at January 31, 2001 and 2000,
respectively.

The Company is required to indemnify the Lessor against all liabilities, costs
and expenses incurred by or asserted against the Lessor in the normal course of
operating the hotels.

                                      -51-

<PAGE>



4.  Income Taxes

The components of the income tax expense (benefit) were as follows:

<TABLE>
<CAPTION>
                                                    For the year ended, January 31,
                                                      2001                  2000
                                               ----------------------------------------

<S>                                                    <C>                 <C>
                  Federal:
                    Current                            $   -               $   -
                    Deferred                               -                   -
                  State and local:
                    Current                              950                   -
                    Deferred                               -                   -
                                                       -----               -----
                                                       $ 950               $   -
                                                       =====               =====
</TABLE>

The provision for income taxes differs from the amount of income tax determined
by applying the applicable U.S. statutory federal income tax rate to pretax
income as a result of the following differences:

<TABLE>
<CAPTION>
                                                                     For the year ended,
                                                                         January 31,
                                                                  2001                  2000
                                                                  ----                  ----
<S>                                                             <C>                   <C>
             Computed "expected" tax
               expense (benefit)                               $(912,673)            (688,313)

             State income taxes, net of federal
               income tax effect                                      627             (106,469)
             Change in valuation allowance                        622,052              792,062
             Change due to difference
                    in federal rate                               254,438                    -
             Adjustment to Federal Net Operating Loss              16,914                    -
             Other, net                                            19,592                2,720
                                                                ---------            ---------
             Income tax expense (benefit)                       $     950                    -
                                                                =========            =========
</TABLE>


The components of the Company's deferred tax assets as of January 31 were as
follows:

<TABLE>
<CAPTION>
                                                                  2001                  2000
                                                                  ----                  ----
<S>                                                            <C>                  <C>
         Deferred tax assets:
              Operating loss carryforward                      $ 2,730,889              774,000
              Charitable Contributions carryfoward                   1,385                    -
              Accrued expenses                                      21,195            1,118,000
                                                               -----------          -----------
         Gross deferred tax assets                               2,753,469            1,892,000
         Less:  valuation allowance                             (2,753,469)          (1,892,000)
                                                               -----------          -----------
         Deferred tax assets, net                              $         -                    -
                                                               ===========          ===========
</TABLE>

The deferred tax assets consist of differences resulting from accrued expenses
not deductible for tax purposes and net operating loss carryforwards of
approximately $7.3 million, which expire at various dates through January 31,
2020.

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income and tax planning
strategies in making this assessment. Based upon the projections in future
taxable income over the periods in which the deferred tax assets are deductible,
management believes it is prudent to fully reserve the Company's net deferred
tax assets.

                                      -52-

<PAGE>


5.       Related Party Transactions

Loans from Affiliates represents $631,834 due the Partnership, primarily for
working capital advances. Amounts are repaid by the Company when cash flows are
adequate to cover current expenses as well as amounts advanced. Until February
1, 2001, the Company was 9.8% indirectly owned by James F. Wirth, Chairman of
the Company, who is also Chairman, President and CEO of the Trust. There are no
terms or covenants governing these advances.

Effective February 1, 2001, the Trust acquired the Company, following the
guidelines of the REIT Modernization Act. The rate structures of the Percentage
Leases for the Hotels were amended to reflect current economic and market
conditions. Until February 1, 2001, InnSuites Innternational Hotels held a
management agreement with the Company whereby the Company paid fees of 2.5% of
hotel revenues for management, administrative and accounting related services.
Effective February 1, 2001, Suite Hospitality Management, Inc. entered into a
management agreement with the Company on substantially the same terms. InnSuites
Licensing Corp., which is owned by Mr. Wirth, holds a trademark license
agreement with the Company whereby the Company incurs fees from 1.25% to 2.5% of
hotel revenues for the use of certain brand names. The Company contributes
advertising fees to a fund in the amount of 1.5% of hotel revenues for purposes
of centralized advertising programs. Amounts paid under these agreements are as
follows:

<TABLE>
<CAPTION>
                                   For the year ended January 31
                               2001              2000           1999
                               ----              ----           ----
<S>                         <C>              <C>            <C>
Management fees             $  722,284        $694,736       $768,501
Trademark license fees         552,368         533,865        300,144
Advertising fees               387,082         413,079        429,225
                            ----------       ---------      ---------
                  Total     $1,661,734       1,641,680      1,497,870
                            ==========       =========      =========
</TABLE>

Mr. Wirth contributed $250,000 for each of the years ended January 31, 2001 and
2000 for working capital needs of certain hotels. These amounts are recorded as
capital contributions.

6.       Commitments and Contingencies

Claims and Legal Matters

The nature of the operations of the Company and its hotels exposes them to the
risk of claims and litigation in the normal course of business. Although the
outcome of these matters cannot be determined, management believes the aggregate
potential losses, if any, would not have a material adverse effect on the
Company's consolidated financial position or results of operations.

Franchise Agreements

The Company has franchise agreements with Best Western(R) and Holiday Inn(R)
hotels in which fees generally approximate 3% of monthly revenues for Best
Western(R) and 9% of monthly revenues for Holiday Inn(R).

7.       401(k) Benefit Plan

All employees of the Company who have attained the age of twenty-one and have
completed one year's service are eligible to participate in a contributory
defined contribution 401(k) benefit plan. Under the plan, participants may
contribute up to 6% of their salary. The Company matches 50% of the employee
contribution.

                                      -53-

<PAGE>


Benefit expense under the plan amounted to $38,523, $25,022 and $17,822 for the
years ended January 31, 2001, 2000 and 1999, respectively.

8.       Liquidity

The financial statements of the Trust disclose that a provision was recorded for
all percentage rent receivables from the Company as of January 31, 2001. The
Company has the ability to obtain funds for working capital needs from third
parties or affiliates to fund short-term working capital needs. Based on the
structure of the Company and its relationship with the Trust as the exclusive
lessee, all payments of percentage rent expense are not called. Excluding
percentage rent expense, all of the Hotels combined are cash flow positive and
generated net income for the year ended January 31, 2001. The Trust has acquired
the Company effective February 1, 2001 following the guidelines of the REIT
Modernization Act. See "Item 1 - Business - Acquisition of the Lessee by the
Trust."

Item 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
            ---------------------------------------------------------------
            FINANCIAL DISCLOSURES.
            ----------------------

         Arthur Andersen LLP resigned as principal auditors of the Trust as of
March 18, 1999. Due to the magnitude of certain outstanding invoices payable to
Arthur Andersen LLP for accounting and tax-related services provided to the
Trust and its affiliates, Arthur Andersen LLP informed the Trust that it would
no longer be considered independent with respect to the Trust under
interpretations of the Securities and Exchange Commission and professional
standards. On April 16, 1999 the audit committee of the Board of Trustees of the
Trust approved KPMG LLP to succeed to Arthur Andersen LLP as the principal
auditors of the Trust.

         The reports of KPMG LLP for the fiscal years ended January 31, 2001 and
2000 did not contain an adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with the audits of the Trust's financial statements for the fiscal
years ended January 31, 1999 and 1998, there were no disagreements with KPMG LLP
or Arthur Andersen LLP, respectively, on any matters of accounting principles or
practices, financial statement disclosure or auditing scope and procedure which,
if not resolved to the satisfaction of the respective auditors, would have
caused the auditors to make reference to the matter in their reports.

         In connection with the audits of the Trust's financial statements for
the fiscal year ended January 31, 1999 and 1998, there were no "reportable
events" as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

         During the fiscal years ended January 31, 1999 and 1998, and during all
subsequent interim periods, the Trust did not consult with any other accountant
regarding the application of accounting principles to a specified transaction
either completed or proposed, the type of audit opinion that might be rendered
on the Trust's financial statements, or any of the matters described above.

                                      -54-

<PAGE>


                                    PART III

                                    --------

Item 10.  TRUSTEES AND EXECUTIVE OFFICERS OF THE TRUST.
          --------------------------------------------



         The information concerning the Trustees and executive officers of the
Trust set forth in the following table is based in part on information received
from the respective Trustees and executive officers and in part on the Trust's
records. The following table sets forth the name, age, term of office and
principal business experience for each Trustee, nominee as a Trustee and
executive officer of the Trust, as applicable.

<TABLE>
<CAPTION>
                                                  Principal Occupations
                                                 During Past Five Years,
                                                 Age as of April 19, 2001                            Trustee
            Name                                  and Directorships Held                              Since
            ----                                  ----------------------                              -----

<S>                            <C>                                                                   <C>
Nominees for Terms
Expiring in 2004

James F. Wirth(1)              Chairman, President and Chief Executive Officer of the                January 30, 1998
                               Trust since January 30, 1998.  President and owner of Suite
                               Hotels LLC and affiliated entities, owners and operators of
                               hotels, since 1980; President of Rare Earth Development
                               Company, a real estate investment company, since 1973.
                               Age:  55.

Peter A. Thoma                 Owner and operator of A&T Verleigh, Hamburg, Germany, a                 April 13, 1999
                               hospitality service and rental company, since 1997.  Owner
                               and operator of Thoma Zeltsysteme, Hamburg, Germany, an
                               import and sales company, since 1997.  Age:  35.


Trustees Whose Terms Expire
in 2003

Marc E. Berg(1)                Executive Vice President, Secretary and Treasurer of the              January 30, 1998
                               Trust since February 10, 1999.  Vice President -
                               Acquisitions of the Trust from December 16, 1998 to
                               February 10, 1999.  Consultant to InnSuites Hotels since
                               1989.  Self-employed as a registered investment advisor
                               since 1985.  Age:  48.

Lee J. Flory(2,3,4)            Vice President, Secretary and Director of The Grainger                January 30, 1998
                               Foundation Inc., a private charitable organization, since
                               1972.  From 1969 until his retirement in 1991, Vice
                               President and Secretary of W. W. Grainger, Inc., the
                               leading North American provider of maintenance, repair and
                               operating supplies to businesses and institutions.  Age:
                               74.
</TABLE>



                                      -55-

<PAGE>



<TABLE>
<CAPTION>
Trustees Whose Terms Expire
in 2002

<S>                            <C>                                                                   <C>
Edward G. Hill(1,2,3,4)        President of E. G. Hill & Associates, a management                    January 30, 1998
                               consulting company, since 1999.  Former President of ABCO
                               Foods, a division of Fleming Companies, Inc., an owner and
                               operator of grocery stores, from 1984 to 1998.  Age:  56.

Steven S. Robson(2,3,4)        President of Robson Communities, Inc. and Scott Homes and                June 16, 1998
                               Scott Homes Multifamily, Inc., residential real estate
                               developers, since 1979.  Age:  45.
</TABLE>


(1)  Member of the Executive Committee.
(2)  Member of the Audit Committee.
(3)  Member of the Compensation Committee.
(4)  Member of the Litigation Committee.


Other Executive Officers

Anthony B. Waters              Chief Financial Officer of the Trust since
                               February 29, 2000. Controller of the Trust since
                               June 17, 1999. Accountant and auditor with
                               Michael Maastricht, CPA from June 16, 1998 to
                               June 15, 1999, performing audits for InnSuites
                               Hotels, Inc. Self-employed, concentrating in
                               computerized accounting and information systems
                               since 1990. Age: 54.


Section 16(a) Beneficial Ownership Reporting Compliance

         Based on Trust records and information, the Trust believes that all
Securities and Exchange Commission filing requirements applicable to Trustees
and executive officers under Section 16(a) of the Securities Exchange Act of
1934 , as amended (the "Exchange Act"), for the fiscal year ended January 31,
2001, were complied with, except that purchases of 15,200 Shares of Beneficial
Interest by James F. Wirth and his wife in June 2000 were inadvertently reported
nine days late by the Trust on their behalf.

         Section 16(b) of the Exchange Act provides that any profits realized by
a Trustee, officer or beneficial owner of more than 10% of the Shares of
Beneficial Interest as the result of matching sale and purchase transactions of
Shares of Beneficial Interest that have occurred within a six month period must
be disgorged to the Trust. Mrs. Gail J. Wirth, wife of James F. Wirth,
voluntarily disgorged approximately $37,900 of imputed profits in accordance
with Section 16(b) for certain sales of Shares of Beneficial Interest during the
fiscal year ended January 31, 2001.

Item 11.  EXECUTIVE COMPENSATION.
          ----------------------

         For fiscal year 2001, the Trust paid Trustees' fees to each Trustee,
other than Messrs. Wirth and Berg, in the amount of $12,000 per year. For fiscal
year 2002, the Trust will pay Trustees' fees to each Trustee, other than Messrs.
Wirth and Berg, in the amount of $18,000 per year. The Trust compensates members
of the Litigation Committee $100 per hour for their services in connection with
that committee, up to a maximum of $5,000 per year.

                                      -56-

<PAGE>



                           SUMMARY COMPENSATION TABLE

         The table below shows individual compensation information for the
Trust's Chief Executive Officer and any other executive officer whose total
annual salary and bonus for the fiscal year ended January 31, 2001 exceeded
$100,000.

<TABLE>
<CAPTION>
                                                                                         Securities Underlying

      Name and Principal Position         Year             Annual Salary                     Options
      ---------------------------         ----             -------------                     -------
<S>                                      <C>                    <C>                      <C>
James F. Wirth
     President and Chief
     Executive Officer(1)

                                         1999                      ---                         50,000(2)
                                         2000                   $130,000                          ---
                                         2001                   $130,000                          ---
</TABLE>

-----------------
(1)      Mr. Wirth has served as President, Chief Executive Officer and Chairman
         of the Board since January 30, 1998. The terms of Mr. Wirth's
         Employment Agreement are summarized below.
(2)      The exercise price for these options is $2.50 per share.


         James F. Wirth, Chairman, President and Chief Executive Officer of the
Trust, has an Employment Agreement with the Trust expiring in December 2007
which provides that he would receive no compensation from the Trust as long as
the Partnership maintained an Advisory Agreement with MARA, a company owned by
Mr. Wirth and his wife. The Advisory Agreement was terminated effective January
1, 1999. In fiscal 1999, MARA was paid $364,041 by the Trust for advisory
services. For periods after the termination of the Advisory Agreement, Mr. Wirth
may receive up to the amount MARA would have received for advisory and
management services under the Advisory Agreement, not to exceed $160,000 per
year. For fiscal year 2001, Mr. Wirth received $130,000 salary per year. For
fiscal year 2002, the Compensation Committee has determined to increase Mr.
Wirth's salary to $136,000 per year.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
          --------------------------------------------------------------

         The following table sets forth information as of April 19, 2001 in
respect of any persons known to the Trust to be the beneficial owner of more
than 5% of the Shares of Beneficial Interest and the number of Shares of
Beneficial Interest owned beneficially by each Trustee, nominee and executive
officer, and the Trustees, nominees and executive officers as a group.

                                      -57-

<PAGE>





                       Five Percent Beneficial Owners and
        Beneficial Ownership of Trustees, Nominees and Executive Officers

<TABLE>
<CAPTION>
                                                      Shares           % of Outstanding
                     Name                        Beneficially Owned          Shares
                     ----                        ------------------      -------------

<S>                                                  <C>                    <C>
Mason E. Andersen(1)                                  292,606               13.61%
Dan Z. Bochner(2)                                     234,900               10.93%
James F. Wirth(3)                                     647,380               29.89%
Marc E. Berg(4)                                       121,225                5.61%
Lee J. Flory(5)                                       163,883                7.21%
Edward G. Hill(6)                                      16,919                  (8)
Steven S. Robson(7)                                    23,167                1.07%
Peter A. Thoma                                            300                  (8)
Anthony B. Waters                                       2,000                  (8)
Trustees, Nominees and Executive Officers as
a group (seven persons)                               974,874               42.12%
</TABLE>


  ------------------------------
  (1)Consists of 152,606 Class A Limited Partnership Units in the Partnership
     that are convertible at any time, at the option of the holder thereof, into
     Shares of Beneficial Interest, 96,000 Shares of Beneficial Interest held by
     the Andersen Trust dated August 27, 1980, of which Mr. Andersen and his
     wife are co-trustees and income beneficiaries, and 44,000 Shares of
     Beneficial Interest held by the Andersen Charitable Remainder Unitrust
     dated August 11, 1999, of which Mr. Andersen and his wife are co-trustees
     and income beneficiaries. The address for Mr. Anderson is 3024 West Sahuaro
     Drive, Phoenix, Arizona 85029.

  (2)Pursuant to Amendment No. 2 to Schedule 13-D, dated December 30, 1996,
     filed with the Securities and Exchange Commission on December 31, 1996 by
     Mr. Bochner. The address for Mr. Bochner is 1618 Cotner Avenue, Los
     Angeles, California 90025.

  (3)Consists of 16,667 Shares of Beneficial Interest that may be acquired
     within 60 days of April 19, 2001 pursuant to the exercise of stock options
     and 630,713 Shares of Beneficial Interest. These Shares of Beneficial
     Interest are owned jointly by Mr. Wirth and his wife. Mr. and Mrs. Wirth
     also own 5,226,364 Class B Limited Partnership Units in the Partnership,
     the conversion of which is restricted and permitted only at the discretion
     of the Board of Trustees of the Trust.

  (4)Consists of 10,000 Shares of Beneficial Interest that may be acquired
     within 60 days of April 19, 2001 pursuant to the exercise of stock options
     and 111,225 Shares of Beneficial Interest.

  (5)Consists of 118,344 Class A Limited Partnership Units in the Partnership
     that are convertible at any time, at the option of the holder thereof, into
     Shares of Beneficial Interest, 6,667 Shares of Beneficial Interest that may
     be acquired within 60 days of April 19, 2001 pursuant to the exercise of
     stock options and 38,872 Shares of Beneficial Interest.

  (6)Consists of 6,667 Shares of Beneficial Interest that may be acquired within
     60 days of April 19, 2001 pursuant to the exercise of stock options and
     10,252 Shares of Beneficial Interest.

  (7)Consists of 6,667 Shares of Beneficial Interest that may be acquired within
     60 days of April 19, 2001 pursuant to the exercise of stock options, and
     16,500 Shares of Beneficial Interest

  (8)Less than one percent (1.0%).



                                      -58-

<PAGE>



Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
          ----------------------------------------------

         Mr. Wirth has an Employment Agreement with the Trust, expiring in
December 2007. See "Executive Compensation."

          Mr. Wirth derived, and in the future will derive, benefits from the
management of the Trust's hotel properties by InnSuites Innternational and the
New Management Company and the license agreements with the Licensing Corp. Mr.
and Mrs. Wirth are 9.8% owners of the New Management Company and 100% owners of
InnSuites Innternational and the Licensing Corp.

         Each of the hotel properties is leased to the Lessee under
substantially identical Percentage Leases. Prior to its acquisition by the Trust
effective February 1, 2001, the Lessee contracted for certain property
management and employment services with InnSuites Innternational. Following the
Trust's acquisition, the Lessee has contracted for such services with the New
Management Company and continues to contract for certain trademark and licensing
services with the Licensing Corp. InnSuites Innternational received and the New
Management Company will receive an annual management fee of 2.5% of gross
revenues from the Lessee for its property management services. The Licensing
Corp. will receive an annual licensing fee of 2.5% of gross revenues (1.25% for
those hotel properties which also carry a third-party franchise, such as Best
Western or Holiday Inn) from the Lessee for its trademark and licensing
services. Such fees were determined through arms-length negotiations between the
Trust and each of the Lessee, InnSuites Innternational, the New Management
Company and the Licensing Corp. The Trust believes that such fees are
commercially reasonable.

         Effective October 12, 1999, the Partnership, the Lessee and InnSuites
Innternational entered into an Intercompany Agreement whereby, subject to
certain terms and conditions, the Partnership will grant the Lessee a right of
first refusal to lease, and InnSuites Innternational a right of first refusal to
operate, any real property acquired by the Partnership. In return, the
Partnership will be granted a right of first refusal to pursue opportunities
presented to the Lessee or InnSuites Innternational to purchase investments in
real estate, hotel properties, real estate mortgages, real estate derivatives or
entities that invest in the foregoing. In connection with the acquisition of the
Lessee by the Trust, The Intercompany Agreement was amended effective February
1, 2001 to provide for the assumption by the New Management Company of the
rights and obligations of InnSuites Innternational thereunder. See "Item 1 -
Business - Acquisition of the Lessee by the Trust".

         On July 27, 2000 the Trust issued a series of 10 promissory notes to
Mr. Wirth and/or his affiliates in the aggregate amount of $720,000, each
bearing interest at 7% per year. The promissory notes, which are due on dates
ranging from August 27, 2000 to July 27, 2003, were payment for the repurchase
of 300,000 of the Trust's Shares of Beneficial Interest from Mr. Wirth and/or
his affiliates. Eight of the promissory notes in an aggregate principal amount
of $151,702 were paid in full by the Trust during the second, third and fourth
quarters of fiscal year 2001. On August 1, 2000 the Trust issued to Mr. Wirth a
master promissory note in the amount of $600,000, bearing interest at 7% per
year and due May 15, 2001, to consolidate four outstanding loans that were made
by Mr. Wirth in 1999 and used by the Trust to fund operations, pay dividends and
pay down an outstanding loan to the Partnership. Additionally, Mr. Wirth made
the following loans to the Trust, each bearing interest at 7% per year: (a)
$50,000, effective August 15, 2000 and due May 15, 2001; (b) $602,000, effective
August 29, 2000 and due May 30, 2001; (c) $350,000, effective September 8, 2000
and due May 30, 2001; (d) $200,000, effective September 25, 2000 and due May 30,
2001; (e) $65,000, effective October 19, 2000 and due June 1, 2001; (f) $50,000,
effective October 23, 2000 and due June 1, 2001; (g) $145,000, effective
November 10, 2000 and due July 1, 2001; (h) $574,000, effective December 8, 2000
and due July 1, 2001; (i) $346,000, effective December 14, 2000 and due July 2,
2001; and (j) $159,000, effective December 28, 2000 and due July 1, 2001. The
$346,000 and $159,000 loans were paid in full by the Trust during the fourth
quarter ended January 31, 2001. These funds were used by the Trust to acquire a
hotel property in Albuquerque, New Mexico and fund operations, refurbishment of
the Hotels, equity repurchases by the Trust and for reducing the Trust's debt.

                                      -59-

<PAGE>


         InnSuites Innternational Hotels, Inc., an affiliate of Mr. Wirth, made
the following loans to the Trust, each bearing interest at 7% per year: (a)
$100,000, effective July 6, 2000 and due May 15, 2001; and (b) $90,000,
effective September 19, 2000 and due May 15, 2001. The $100,000 loan was paid in
full by the Trust during the third quarter ended October 31, 2000 and the
$90,000 loan was paid in full by the Trust during the fourth quarter ended
January 31, 2001. These funds were used by the Trust to fund operations and
startup costs for the recently acquired Albuquerque, New Mexico property.

         Pepper Tree/Freeway Community Limited Partnership, an affiliate of Mr.
Wirth, made the following loans to the Trust, each bearing interest at 7% per
year: (a) $50,000, effective July 28, 2000 and due May 15, 2001; (b) $200,000,
effective August 14, 2000 and due May 15, 2001; and (c) $150,000, effective
September 12, 2000 and due May 30, 2001. Each of these loans was paid in full by
the Trust during the fourth quarter ended January 31, 2001. These funds were
used by the Trust to fund operations and startup costs for the recently acquired
Albuquerque, New Mexico property.

         Suite Hotels LLC, an affiliate of Mr. Wirth, made the following loan to
the Trust, bearing interest at 7% per year: $180,000, effective June 8, 2000 and
due May 15, 2001. The loan was paid in full by the Trust during the third
quarter ended October 31, 2000. These funds were used by the Trust to fund
operations and startup costs for the recently acquired Albuquerque, New Mexico
property.

         Rare Earth Development Company, an affiliate of Mr. Wirth, made the
following loans to the Trust, bearing interest at 7% per year: (a) $750,000,
effective December 29, 2000 and due July 15, 2001; and (b) $1,450,000, effective
January 26, 2001 and due July 15, 2001. These funds were used by the Trust to
fund operations.

         The Trust issued a promissory note to Mr. Robson in the amount of
$745,000, bearing interest at 7% per year, effective on July 27, 2000 and due
August 27, 2003, as payment for the repurchase of 311,326 of the Partnership's
Class A limited partnership units from Mr. Robson.

                                     PART IV

                                     -------

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
          ---------------------------------------------------------------

<TABLE>
<CAPTION>
EXHIBITS

--------

<S>          <C>
3(a)         Second Amended and Restated Declaration of Trust dated June 16,
             1999, as further amended on July 12, 1999 (incorporated by
             reference to Exhibit 3.1 of the Registrant's Quarterly Report on
             Form 10-Q for the quarter year ended July 31, 1999, filed with the
             Securities and Exchange Commission on September 14, 1999).

10(a)        First Amended and Restated Agreement of Limited Partnership of RRF
             Limited Partnership dated January 31, 1998 (incorporated by
             reference to Exhibit 10.1 of the Registrant's Registration
             Statement on Form S-2, filed with the Securities and Exchange
             Commission on September 8, 1998).

10(b)*       Employment Agreement dated as of January 31, 1998, between the
             Trust and James F. Wirth. (incorporated by reference to Exhibit
             10(b) of the Registrant's Annual Report on Form 10-K for the fiscal
             year ended January 31, 1998, filed with the Securities and Exchange
             Commission on May 18, 1998).

</TABLE>


                                      -60-

<PAGE>


<TABLE>
<S>          <C>
10(c)        Promissory Note dated July 27, 2000 by RRF Limited Partnership in
             favor of Pepper Tree/Freeway Community Limited Partnership
             (incorporated by reference to Exhibit 10.11 of the Registrant's
             Quarterly Report on Form 10-Q for the quarter ended July 31, 2000,
             filed with the Securities and Exchange Commission on September 14,
             2000).

10(d)        Promissory Note dated July 27, 2000 by RRF Limited Partnership in
             favor of James F. Wirth (incorporated by reference to Exhibit 10.12
             of the Registrant's Quarterly Report on Form 10-Q for the quarter
             ended July 31, 2000, filed with the Securities and Exchange
             Commission on September 14, 2000).

10(e)        Promissory Note dated July 27, 2000 by RRF Limited Partnership in
             favor of Steve S. Robson (incorporated by reference to Exhibit
             10.13 of the Registrant's Quarterly Report on Form 10-Q for the
             quarter ended July 31, 2000, filed with the Securities and Exchange
             Commission on September 14, 2000).

10(f)        Promissory Note dated August 1, 2000 by InnSuites Hospitality Trust
             in favor of James F. Wirth (incorporated by reference to Exhibit
             10.15 of the Registrant's Quarterly Report on Form 10-Q for the
             quarter ended July 31, 2000, filed with the Securities and Exchange
             Commission on September 14, 2000).

10(g)        Promissory Note dated August 15, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.2 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended

</TABLE>


                                      -61-

<PAGE>


<TABLE>
<S>          <C>
             October 31, 2000, filed with the Securities and Exchange Commission
             on December 15, 2000).

10(h)        Promissory Note dated August 29, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.3 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(i)        Promissory Note dated September 8, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(j)        Promissory Note dated September 25, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.7 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(k)        Promissory Note dated October 19, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.8 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(l)        Promissory Note dated October 23, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.9 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(m)        Promissory Note dated November 10, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth.

10(n)        Promissory Note dated December 8, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth.

10(o)        Promissory Note dated December 29, 2000 by RRF Limited Partnership
             in favor of Rare Earth Development Company.

10(p)        Promissory Note dated January 26, 2001 by RRF Limited Partnership
             in favor of Rare Earth Development Company.

21           Subsidiaries of the Registrant.

99.1         Form of Percentage Lease (incorporated by reference to Exhibit 99.1
             of the Registrant's Registration Statement on Form S-2 filed with
             the Securities and Exchange Commission on September 8, 1998).

</TABLE>

* Management contract or compensatory plan or arrangement required to be filed
as an exhibit hereto.


                                      -62-

<PAGE>

FORMS 8-K

---------


         No Current Reports on Form 8-K were filed by the Trust during the
fourth fiscal quarter ended January 31, 2001.

                                      -63-

<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of Securities
Exchange Act of 1934, the Trust has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

<TABLE>
<S>                                  <C>
                                     INNSUITES HOSPITALITY TRUST


Dated:  May 4, 2001                  By:  /s/  James F. Wirth
                                          -------------------------------------
                                          James F. Wirth, Chairman,
                                          President and Chief Executive Officer
                                          (Principal Executive Officer)

Dated:  May 4, 2001                  By:  /s/  Anthony B. Waters
                                          -------------------------------------
                                          Anthony B. Waters,
                                          Chief Financial Officer
                                          (Principal Financial Officer)
</TABLE>

         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
Trust and in the capacities and on the dates indicated.

<TABLE>
<S>                                  <C>
Dated:  May 4, 2001                  /s/  James F. Wirth
                                     ------------------------------------------
                                     James F. Wirth, Chairman,
                                     President and Chief Executive Officer
                                     (Principal Executive Officer)

Dated:  May 4, 2001                  /s/  Anthony B. Waters
                                     ------------------------------------------
                                     Anthony B. Waters,
                                     Chief Financial Officer
                                     (Principal Financial Officer)

Dated:  May 1, 2001                  /s/  Marc E. Berg
                                     ------------------------------------------
                                     Marc E. Berg, Trustee

Dated:  May 1, 2001                  /s/  Steven S. Robson
                                     ------------------------------------------
                                     Steven S. Robson, Trustee

Dated:  May 1, 2001                  /s/  Lee J. Flory
                                     ------------------------------------------
                                     Lee J. Flory, Trustee

Dated:  May 1, 2001                  /s/  Edward G. Hill
                                     ------------------------------------------
                                     Edward G. Hill, Trustee
</TABLE>



                                      -64-

<PAGE>



Index of Exhibits

<TABLE>
<CAPTION>
Exhibit Number

<S>          <C>
3(a)         Second Amended and Restated Declaration of Trust dated June 16,
             1999, as further amended on July 12, 1999 (incorporated by
             reference to Exhibit 3.1 of the Registrant's Quarterly Report on
             Form 10-Q for the quarter year ended July 31, 1999, filed with the
             Securities and Exchange Commission on September 14, 1999).

10(a)        First Amended and Restated Agreement of Limited Partnership of RRF
             Limited Partnership dated January 31, 1998 (incorporated by
             reference to Exhibit 10.1 of the Registrant's Registration
             Statement on Form S-2, filed with the Securities and Exchange
             Commission on September 8, 1998).

10(b)*       Employment Agreement dated as of January 31, 1998, between the
             Trust and James F. Wirth. (incorporated by reference to Exhibit
             10(b) of the Registrant's Annual Report on Form 10-K for the fiscal
             year ended January 31, 1998, filed with the Securities and Exchange
             Commission on May 18, 1998).

10(c)        Promissory Note dated July 27, 2000 by RRF Limited Partnership in
             favor of Pepper Tree/Freeway Community Limited Partnership
             (incorporated by

</TABLE>


                                      -65-

<PAGE>


<TABLE>
<S>          <C>
             reference to Exhibit 10.11 of the Registrant's Quarterly Report on
             Form 10-Q for the quarter year ended July 31, 2000, filed with the
             Securities and Exchange Commission on September 14, 2000).

10(d)        Promissory Note dated July 27, 2000 by RRF Limited Partnership in
             favor of James F. Wirth (incorporated by reference to Exhibit 10.12
             of the Registrant's Quarterly Report on Form 10-Q for the quarter
             ended July 31, 2000, filed with the Securities and Exchange
             Commission on September 14, 2000).

10(e)        Promissory Note dated July 27, 2000 by RRF Limited Partnership in
             favor of Steve S. Robson (incorporated by reference to Exhibit
             10.13 of the Registrant's Quarterly Report on Form 10-Q for the
             quarter ended July 31, 2000, filed with the Securities and Exchange
             Commission on September 14, 2000).

10(f)        Promissory Note dated August 1, 2000 by InnSuites Hospitality Trust
             in favor of James F. Wirth (incorporated by reference to Exhibit
             10.15 of the Registrant's Quarterly Report on Form 10-Q for the
             quarter ended July 31, 2000, filed with the Securities and Exchange
             Commission on September 14, 2000).

10(g)        Promissory Note dated August 15, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.2 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(h)        Promissory Note dated August 29, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.3 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(i)        Promissory Note dated September 8, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(j)        Promissory Note dated September 25, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.7 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(k)        Promissory Note dated October 19, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.8 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(l)        Promissory Note dated October 23, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth (incorporated by reference to
             Exhibit 10.9 of the Registrant's Quarterly Report on Form 10-Q for
             the quarter ended October 31, 2000, filed with the Securities and
             Exchange Commission on December 15, 2000).

10(m)        Promissory Note dated November 10, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth.
</TABLE>


                                      -65-

<PAGE>

<TABLE>
<S>          <C>
10(n)        Promissory Note dated December 8, 2000 by InnSuites Hospitality
             Trust in favor of James F. Wirth.

10(o)        Promissory Note dated December 29, 2000 by RRF Limited Partnership
             in favor of Rare Earth Development Company.

10(p)        Promissory Note dated January 26, 2001 by RRF Limited Partnership
             in favor of Rare Earth Development Company.

21           Subsidiaries of the Registrant.

99.1         Form of Percentage Lease (incorporated by reference to Exhibit 99.1
             of the Registrant's Registration Statement on Form S-2 filed with
             the Securities and Exchange Commission on September 8, 1998).

</TABLE>

*  Management contract or compensatory plan or arrangement required to be filed
   as an exhibit hereto.


                                      -66-