SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                  For the quarterly period ended March 31, 1998

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

                         Commission file number 33-96716

                      ESSEX HOSPITALITY ASSOCIATES IV L.P.

               (Exact name of registrant as specified in charter)

                                    NEW YORK
         (State or other jurisdiction of incorporation or organization)

                                   16-1485632
                      (I.R.S. Employer Identification No.)

                               100 CORPORATE WOODS
                            ROCHESTER, NEW YORK 14623
                     (Address of principal executive office)

       Registrant's telephone number, including area code: (716) 272-2300

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
                         ---                               ----

As of May 11, 1998, a total of 2,945 Limited Partnership Units were outstanding.



<PAGE>





                                     PART 1
                                     ------

                              FINANCIAL INFORMATION
                              ---------------------

 Item 1.   Financial Statements
--------------------------------------------------------------------------------

                      Essex Hospitality Associates IV L.P.
                                 Balance Sheets
                          As of March 31, 1998 and 1997




                          ASSETS                         1998           1997
                          -------                       -----           ----
Investments in real estate, at cost:
       Land                                         $  1,531,644      2,492,194
       Land improvements                                 191,023        271,348
       Buildings                                       4,728,324      4,961,877
       Furniture, fixtures and equipment                 964,824      1,339,793
       Construction in progress                        1,745,625      1,967,458
                                                    ------------    -----------
                                                       9,161,440     11,032,670
       Less accumulated depreciation                    (275,158)      (346,658)
                                                    ------------    -----------
          Net investments in real estate               8,886,283     10,686,012
                                                    ------------    -----------

Cash and cash equivalents                                414,558      2,159,932
Land held for sale                                       646,981
Deferred costs:
       Debt issuance                                     873,926        780,755
       Franchise                                          85,000        128,000
       Other                                              50,766         60,766
                                                    ------------    -----------
                                                       1,009,692        969,521
       Less accumulated amortization                    (233,853)      (222,284)
                                                    ------------    -----------
                                                         775,839        747,237
                                                    ------------    -----------

Investment in partnership                                277,133           --

Due from affiliate                                          --          110,000

Other assets                                             191,887        158,426
                                                    ------------    -----------

       Total assets                                 $ 11,192,681     13,861,607
                                                    ============    ===========

           LIABILIITIES AND PARTNERS' CAPITAL
           ----------------------------------
Liabilities
       Accounts payable and accrued expenses        $     74,828        117,995
       Accounts payable - construction                   982,948        869,993
       First mortgage loan payable                     4,500,000      5,000,000
       Subordinated notes payable                      5,413,000      5,182,000
       Construction loan payable                          28,507           --
       Notes payable                                        --        1,500,000
                                                    ------------    -----------
           Total liabilities                          10,999,283     12,669,988
                                                    ------------    -----------

       Minority interest - Essex Glenmaura L.P.             --          566,095
                                                    ------------    -----------

Commitments and contingencies (notes 5 and 6)

Partners' capital                                        219,939        791,777
       Less notes receivable from partners               (26,541)      (166,253)
                                                    ------------    -----------
           Total partners' capital                       193,398        625,524
                                                    ------------    -----------

Total liabilities and partners' capital             $ 11,192,681     13,861,607
                                                    ============    ===========

 See accompanying notes to unaudited consolidated financial statements.




<PAGE>





                      Essex Hospitality Associates IV L.P.
                            Statements of Operations
                 For the Quarters ended March 31, 1998 and 1997

                                                            1998          1997
                                                            -----         ----
REVENUE:
-------
      Rooms                                                 495,624     420,339
      Food and beverage                                        --        56,265
      Telephone and other commissions                        36,028      32,435
                                                           --------    --------
                                                            531,652     509,039
                                                           --------    --------

OPERATING EXPENSES:
------------------
      Rooms                                                 117,390     118,381
      Food & beverage expenses                                 --        66,572
      Commissions expenses                                   18,942      13,001
      Advertising & promotion                                28,188      30,191
      Repairs & maintenance                                  16,868      25,622
      Utilities                                              41,684      39,464
      Administrative & general                               29,586      47,511
      Property taxes                                         10,017       9,501
      Insurance                                               3,325      13,506
      Franchise fees                                         18,376      14,842
      Management fees                                        22,709      20,563
      Partnership management fees                             3,784       3,427
      Equity in loss of partnership                          71,268        --
      Depreciation and amortization                         120,418     146,198
      Miscellaneous                                          10,707       9,189
                                                           --------    --------
                                                            513,262     557,968
                                                           --------    --------

Income (loss) from operations before interest                18,390     (48,929)

      Interest expense                                     (198,935)   (228,454)
      Interest income                                        13,113      27,232
                                                           --------    --------
                                                           (185,822)   (201,222)
                                                           --------    --------

           Loss before minority interest in loss of
                    partnership                            (167,432)   (250,151)
                                                           --------    --------

Minority interest in income/(loss) of partnership              --       (75,273)
                                                           --------

Net income                                                 (167,432)   (174,878)
                                                           ========    ========

Net loss - general partners                                  (1,674)     (1,749)
               - limited partners                          (165,757)   (173,129)
                                                           --------    --------
                                                           (167,432)   (174,878)
                                                           ========    ========

Net loss per limited partner unit                               (56)        (78)
                                                           ========    ========

 See accompanying notes to unaudited consolidated financial statements.



<PAGE>





<TABLE>
<CAPTION>

                      Essex Hospitality Associates IV L.P.
                            Statements of Cash Flows
                 For the Quarters ended March 31, 1998 and 1997

                                                                1998          1997
                                                               -----          ----
<S>                                                         <C>          <C>    
Cash flows from operating activities
       Cash received from customers                             480,772       518,958
       Cash paid to suppliers                                  (357,926)     (536,596)
       Interest received                                         13,113        27,232
       Interest paid                                           (198,935)     (228,454)
                                                             ----------    ----------
          Net cash from operating activities                    (62,976)     (218,860)
                                                             ----------    ----------

Cash flows from investing activities
       Payments for land and construction in progress        (1,024,599)   (1,078,583)
       Payments for deposits                                    (89,615)      (10,757)
                                                             ----------    ----------
          Net cash used in investing activities              (1,114,214)   (1,089,340)
                                                             ----------    ----------

Cash flows from financing activities
       Partners' capital contributions                             --         141,422
       Payments for syndication costs                            (1,373)      (16,074)
       Proceeds from notes payable                                 --         262,000
       Proceeds from 1st mortgage loan                             --       5,000,000
       Proceeds from (payoff of) construction loan               28,507    (4,294,243)
       Payments for debt acquisition costs                      (77,333)      (98,446)
       Payments for distributions                                  --         (42,212)
                                                             ----------    ----------
          Net cash from financing activities                    (50,199)      952,447
                                                             ----------    ----------

Net increase in cash and cash equivalents                    (1,227,389)     (355,753)

Cash and cash equivalents - beginning of quarter              1,641,947     2,515,685
                                                             ----------    ----------

Cash and cash equivalents - end of quarter                      414,558     2,159,932
                                                             ==========    ==========


Reconciliation of net income to net cash flows from 
      operating activities:

Net loss                                                       (167,432)     (174,878)

Adjustments to reconcile net loss to net cash used in
      operating activities:
       Depreciation and amortization                            120,418       146,198
       Changes in:
          Shortterm assets                                      (59,580)         (157)
          Equity on loss of partnership                          71,268
           Minority interest in net loss of partnership            --         (75,273)
          Accounts payable and other expenses                   (27,646)     (114,750)
                                                             ----------    ----------
                                                                (62,972)     (218,860)
                                                             ==========    ==========

</TABLE>

 See accompanying notes to unaudited consolidated financial statements.



<PAGE>






                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                                 March 31, 1998

(1)      ORGANIZATION
         ------------

         Essex Hospitality Associates IV L.P. (the Partnership) is a New York
         limited partnership formed in 1995 for the purpose of acquiring land
         and constructing, owning and operating a series of hotels. The
         Partnership may also invest in and lend funds to other partnerships
         that own hotels. The Partnership is financing its activities through a
         public offering of notes and limited partnership units which was
         completed in November 1997. The Partnership's general partner is Essex
         Partners Inc. (Essex Partners), a wholly-owned subsidiary of Essex
         Investment Group, Inc. (Essex).

         The Partnership has acquired land in order to construct and operate
         hotels. A Hampton Inn hotel was constructed in Solon, Ohio and the
         hotel commenced operations in August 1997. In June 1997, land was
         purchased in Erie, Pennsylvania and construction of a Hampton Inn hotel
         has begun. In December 1995, land was purchased in Warwick, Rhode
         Island in anticipation of the construction of a Homewood Suites hotel.
         However, as a result of higher than projected construction costs and a
         change in market conditions, the Partnership has decided not to proceed
         with development of the hotel and is now pursuing the sale of the land.

         In 1997 Solon Hotel LLC, a special purpose entity was created to own
         the Solon Hampton Inn. The managing member of the Solon Hotel LLC is
         Essex Hotel LLC, a single purpose entity created to act as the managing
         member. The membership interests of Solon Hotel LLC are owned 99% by
         the Partnership and 1% by Essex Hotel LLC, whose sole member is the
         Partnership.

         In June 1997, the Partnership transferred the Erie property to a single
         purpose entity, Erie Hotel LLC. The managing member of Erie Hotel LLC
         is Essex Hotels II LLC, a single purpose entity created to act as the
         managing member of Erie Hotel LLC. The membership interests in Erie
         Hotel LLC are owned 99% by the Partnership and 1% by Essex Hotels II
         LLC, whose sole member is the Partnership.

         In January 1996, the Partnership acquired a 54.3% limited partnership
         interest in Essex Glenmaura L.P. (Glenmaura) through the purchase of
         12.5 limited partnership units for $1,250,000. The purchase price was
         equal to the pro rata portion of the fair value of the net assets
         acquired. Glenmaura owns and operates a Courtyard by Marriott hotel
         near Scranton, Pennsylvania. Construction of the hotel was completed
         and operations began in September 1996. In June 1997, the Partnership
         sold 1.05 limited partnership units of Glenmaura to Essex Partners for
         $105,000, reducing the Partnership's ownership interest to 49.8%.

         A general description of the allocation of Partnership income, loss,
         and distributions follows. For a more comprehensive description see the
         Partnership Agreement:

         Allocations of income from operations will be allocated 99% to the
         limited partners and 1% to the general partner until the amount
         allocated to the limited partners equals the cumulative annual return
         of 8% of their contribution. Any remaining income from operations is
         allocated 80% to the limited partners and 20% to the general partner.
         Income on the sale of any or all of the hotels is allocated 99% to the
         limited partners until each limited partner has been allocated income
         in an amount equal to his or her pro rata share of the nondeductible
         syndication expenses and sales commission and 1% to the general
         partner. Thereafter, income on the sale of any or all the hotels is
         allocated in the same manner as income from operations.





<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                                 March 31, 1998

(1)      ORGANIZATION, CONTINUED
         -----------------------

         Allocations of losses from operations will be allocated 80% to the
         limited partners and 20% to the general partner in the amounts
         sufficient to offset all income which was allocated 80% to the limited
         partners. Thereafter, operating losses are allocated 99% to the limited
         partners and 1% to the general partner. Loss on the sale of any or all
         of the hotels will be first allocated in the same manner as losses from
         operations, except that the allocation of such loss would be made prior
         to allocations of income from operations. All other losses are
         allocated 99% to the limited partners and 1% to the general partner.

         Cash distributions will initially be made 99% to the limited partners
         and 1% to the general partner. After the limited partners have received
         a cumulative annual return of 8% of their contribution, additional
         distributions may then be made 80% to the limited partners and 20% to
         the general partner. Distributions of the net proceeds of sale or
         refinancing of any or all hotels will be made 1% to the general partner
         and 99% to the limited partners pro rata in accordance with the number
         of units held by each limited partner until the limited partners have
         received distributions from sale or refinance of hotels equal to $1,000
         per unit. Thereafter, distributions shall next be made 1% to the
         general partner and 99% to the limited partners until each limited
         partner has received any unpaid cumulative return accrued through the
         date of the distribution. Additional distributions will then be made
         20% to the general partner and 80% to the limited partners.

         Essex Partners and its affiliates are receiving substantial fees in
         connection with the offering of notes and limited partnership units.
         Additional fees will be paid to them in connection with the
         acquisition, development and operation of the hotels and management of
         the Partnership (see note 6).


(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------

         BASIS OF ACCOUNTING
         -------------------

         The financial statements of the Partnership were prepared on the
         accrual basis of accounting in conformity with generally accepted
         accounting principles.

         PRINCIPLES OF CONSOLIDATION
         ---------------------------

         The consolidated financial statements include the accounts of the
         Partnership, Solon Hotel LLC, Essex Hotel LLC, Erie Hotel LLC and Essex
         Hotels II LLC. All significant inter-partnership transactions and
         balances have been eliminated in consolidation.

         The first quarter 1997 consolidated financial statements also include
         the accounts of Glenmaura.

         INVESTMENT IN REAL ESTATE
         -------------------------

         Investment in real estate is shared at cost. Possible impairment of the
         carrying value is evaluated when events or changed circumstances may
         affect the underlying basis of the asset. Depreciation is calculated
         using the straight-




<PAGE>



                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                                 March 31, 1998



(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
         -----------------------------------------------------

         line method for buildings and accelerated methods for land
         improvements, furniture, fixtures, and equipment over the estimated
         useful lives of the assets as each hotel commences operations:


             Buildings                                  39 years

             Land improvements                          15 years

             Furniture, fixtures and equipment          5 - 7 years


         CASH AND CASH EQUIVALENTS
         -------------------------

         Cash investments with maturities of three months or less at the time of
         purchase are considered to be cash equivalents.

         DEFERRED COSTS
         --------------

         Costs of issuing debt are being amortized on a straight-line basis over
         the terms of the debt.

         Franchise fees paid for the right to own and operate the hotels will be
         amortized on a straight-line basis over the term of each franchise
         agreement, once each hotel commences operations.

         SYNDICATION COSTS
         -----------------

         Selling commissions and legal, accounting, printing and other filing
         costs totaling $418,892 related to the offering of the limited
         partnership units were charged against the proceeds of the public
         offering.

         RECOGNITION OF REVENUE
         ----------------------

         Revenues are recognized as earned in accordance with contractual
         arrangements for each transaction.

         LIMITED PARTNERSHIP PER UNIT DATA
         ---------------------------------

         Net loss per limited partner unit is calculated by dividing net loss by
         the weighted average number of units outstanding during the year. The
         weighted average number of units outstanding was 2,945 in 1998 and
         2,242 in 1997.

         USE OF ESTIMATES
         ----------------

         The preparation of the financial statements in conformity with
         generally accepted accounting principles requires the managing general
         partner to make estimates and assumptions that affect the reported
         amounts of asset and


<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                                 March 31, 1998


(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
         -----------------------------------------------------

         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of income and
         expenses during the reporting period. Actual results could differ from
         those estimates.


(3)      INVESTMENT IN PARTNERSHIP
         -------------------------

         Summarized financial information for Glenmaura as of and for the
         quarters ended March 31, 1998 and 1997 follows:

                                                          MARCH 31,
                                                          ---------
                                                     1998            1997
                                                     ----            ----

              Net investment in real estate     $ 7,030,000     $ 7,449,000

              Net deferred costs                    130,000         177,000

              Other assets                          213,000         280,000

              Borrowed funds                      6,496,000       6,500,000

              Other liabilities                     322,000         128,000

              Partners' capital                     602,000       1,249,000

              Minority interest                          --         566,000

              Revenue                               509,000         509,000

              Operating Income (Loss)                10,000         (47,000)

              Interest Expense                      153,000         137,000

              Net Loss                              143,000         165,000

              Minority Interest in Loss                  --          75,000
      


         The Partnership's ownership interest in Glenmaura was reduced from
         54.3% to 49.8% as of June 9, 1997. Therefore, the assets, liabilities
         and results of operations of Glenmaura, and the minority interest
         thereon, are only reflected in the accompanying financial statements
         for the first quarter of 1997.









<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                                 March 31, 1998

(4)      DEBT
         ----

         MORTGAGE NOTE PAYABLE
         ---------------------

         On July 7, 1997, the Partnership obtained permanent financing from GMAC
         Commercial Mortgage Corporation (GMAC) for $4,500,000 for the Solon,
         Ohio hotel. The loan is due July 1, 2001 with a one year extension
         available upon the payment of a fee and if certain debt service
         coverage is attained. Interest accrues at 3.25% over the 30-day LIBOR
         index (8.94% at March 31, 1998). Monthly payments of interest only are
         due until August 1, 1998. Principal and interest payments are due
         thereafter based on a 25-year amortization. Starting in the second year
         of the loan, the Partnership will be required to contribute 2% of
         monthly room revenues to a replacement reserve. The replacement reserve
         payment will increase to 4% of monthly room revenues in the third year
         of the loan. The loan is collateralized by the real and personal
         property and certain other assets of Solon Hotel LLC. The Partnership
         was also required to pledge its limited partnership interest in
         Glenmaura and the loan is thirty percent guaranteed by Essex Partners.

         SUBORDINATED NOTES PAYABLE
         --------------------------

         Subordinated notes payable of $5,413,000 bear interest at a rate of
         10.5% per annum, payable monthly, and mature December 31, 2001, unless
         extended by the Partnership to December 31, 2001 upon payment to
         holders of an extension fee equal to .5% of the principal amount of the
         subordinated notes outstanding. The notes are issued as unsecured
         obligations of the Partnership.

         The future annual principal payments of the debt obligations
         outstanding as of March 31, 1998 are estimated as follows:


                       1998               $ 17,500

                       1999                 44,500

                       2000                 49,000

                       2001              9,801,000
                                         =========

                                         9,798,000
                                         =========
         
         In the first quarter of 1998 and 1997, interest of $43,904 and $37,615,
         respectively, was capitalized in investments in real estate as the debt
         was used to finance construction of hotels.


         CONSTRUCTION LOAN COMMITMENT
         ----------------------------

         In 1998 the Partnership received construction financing from a bank for
         $4,700,000 for the Hampton Inn in Erie, Pennsylvania. The term is for
         twelve months and requires monthly payments of interest only at a rate
         of 2.5% over the LIBOR rate (8.2% at March 31, 1998). The facility is
         guaranteed by Essex Partners and collateralized by the related hotel
         property. Additionally, covenants require minimum net worth and limited
         distributions. There were



<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                                 March 31, 1998

(4)      DEBT, CONTINUED
         ---------------

         no draws outstanding on the facility at March 31, 1998 except for
         approximately $28,000 in loan fees and interest. The Partnership is
         also negotiating with GMAC for permanent financing of the Erie Hampton
         Inn hotel.


(5)      FRANCHISE FEES
         --------------

         The Solon, Ohio Hampton Inn opened under a license agreement with
         Promus Corporation (Promus). An initial franchise fee of $40,000 was
         paid in 1995. In 1997, the Partnership entered into another license
         agreement with Promus to operate the Hampton Inn in Erie, Pennsylvania.
         An initial franchise fee of $45,000 was required. The term of the
         license agreement is approximately twenty years from the date the hotel
         commences operations. In addition, for each hotel, the Partnership will
         be required to pay Promus a monthly royalty fee of an 4% of gross rooms
         revenues, a monthly marketing/reservation fee of an additional 4% of
         gross room revenue, an initial software license fee of $3,000 plus $85
         per guest room with a monthly maintenance charge of $200 to $400 per
         month, and a monthly amount equal to any sales tax or similar tax
         imposed on Promus on payments received under the license agreement.
         Royalty and marketing/reservation fees were each $18,376 in the first
         quarter of 1998. There were no royalty, marketing/reservation fees for
         the first quarter of 1997 under the Promus license agreement.

         Promus requires the Partnership to establish a capital reserve escrow
         account based on a percentage of room revenues generated by each hotel
         which will be used for product quality requirements of the hotel.
         Cumulative funding of the reserve for the first five years increases
         from 1% to 5% of gross revenues and stabilizes at 5% for the term of
         the agreement. The Promus franchise agreements impose certain
         restrictions on the transfer of limited partnership units. Promus
         restricts the sale, pledge or transfer of units in excess of 25%
         without their consent.

         Glenmaura has a franchise agreement with Marriott International, Inc.
         Under the terms of the agreement, Glenmaura paid an initial franchise
         fee of $48,000 in 1995. The term and amortization period of the
         franchise agreement is twenty years, with an option to renew for an
         additional ten-year period. Glenmaura is required to pay a monthly
         royalty fee in an amount equal to 4% of gross room rentals for the
         first two years of operations and 5% during the remainder of the term
         of the agreement, a marketing fee of 2-3% gross revenues, a reservation
         system fee and a property management system fee. In the first quarter
         1997, these fees totaled $40,976.

         In 1995, the Partnership entered into a license agreement with Promus
         to operate a Homewood Suites hotel in Warwick, Rhode Island. An initial
         franchise fee of $40,000 was paid. The franchise agreement for the
         Homewood Suites in Warwick has expired. The franchise fee has been
         written off since the franchise agreement has expired.

(6)      RELATED PARTY TRANSACTIONS
         --------------------------

         A summary of fees earned by Essex Partners or its affiliates for the
         three months ended September 30, 1997 under the terms of the
         Partnership agreement follows:







<PAGE>


                       ESSEX HOSPITALITY ASSOCIATES IV L.P
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                                 March 31, 1998


<TABLE>
<CAPTION>
                                                                                        1ST QTR         1ST QTR
TYPE OF FEE                   AMOUNT OF FEE                                               1998            1997
-----------                   -------------                                               ----            ----

<S>                          <C>                                                  <C>               <C>     
Selling Commission            Up to $80 per limited partnership unit and            $       -0-        $ 25,690
                              $55 per $1,000 sold

Organization and Offering     3.4% of the gross proceeds of the offering                    -0-          13,700
Fee

Acquisition Fee               $110,000 per hotel site                                       -0-             -0-

Development Fee               $160,000 per hotel, plus 5% of the total cost             112,500         108,000
                              of the hotel in excess of $2.7 million (not to
                              exceed $325,000 per hotel)

Property Management Fee       4.5% of gross operating revenues from the                  22,709          20,600
                              hotels

Partnership Management        .75% to 1.25% of gross operating revenues                   3,784           3,430
Fee                           from the hotels

Accounting Fee                $800 per month                                              2,400           2,400

Refinancing Fee               1% of gross proceeds of re-financing any or all            47,000             -0-
                              of the hotels                                           =========       =========
                             
                                                                                      $ 188,393       $ 173,820
                                                                                      =========       =========


         The above fees are reflected in the accompanying financial statements
as follows:


                                                                                       1ST QTR         1ST  QTR
Balance Sheet:                                                                           1998            1997
                                                                                         ----            ----
                                                                                     
     Investment in real estate                                                        $ 112,500       $ 108,000
                                                                                     
     Deferred debt issuance costs                                                        47,000          23,320
                                                                                     
     Syndication costs, charged to partner's capital                                        -0-          16,070
                                                                                     
                                                                                      $ 159,500       $ 147,390
                                                                                      =========       =========
                                                                               
                                                             
                                                             
</TABLE>
                                                             
                                                             
<PAGE>                                                       
                                                             
                                                             
                       ESSEX HOSPITALITY ASSOCIATES IV L.P   
                        (A New York Limited Partnership)     
                                                             
                          Notes to Financial Statements   

                                 March 31, 1998

(6) RELATED PARTY TRANSACTIONS, CONTINUED
    -------------------------------------

    Statements of Operations:               
    
         Management fees to affiliates              $22,709          20,600
    
         Administrative expense                       2,400           2,400
    
         Partnership management fees                  3,784           3,430

                                                   $ 28,893       $  26,430
                                                   ========       =========

         Organization and offering fees are allocated to syndication costs and
         debt issuance costs based on the pro-rata share of limited partner's
         units and notes payable to the total offering.

         Under the terms of the Partnership agreement, Essex Partners or its
         affiliates will also earn other fees as follows:



              TYPE OF FEE                            AMOUNT OF FEE
              -----------                            -------------
          Investor Relations Fee         .25% of the gross proceeds of the 
                                         offering payable annually in 
                                         1998 through 2001
 
          Sales Fee                      3% of the gross sale price of any or
                                         all of the hotels

         The Partnership will also be subject to a number of conflicts of
         interest arising from its relationships with the general partner, its
         owners and affiliates and due to other activities and entities in which
         the general partner and its affiliates have or may have a direct or
         indirect financial interest.


<PAGE>





Item 2.  Management's Discussion and Analysis or Plan of Operation

The Partnership was formed on August 30, 1995. The Partnership completed its
public offering on November 24, 1997, raising $5,413,000 in subordinated notes
and $2,876,000 in limited partnership units for total offering proceeds of
$8,289,000.

The following discussion analyzes the financial statements of the Partnership as
of March 31, 1998 and 1997, which are attached. Investments with a 50% or less
ownership interest are accounted for by the equity method. Ownership interests
exceeding 50% are accounted for under the consolidated method. The Partnership
had a 54.3% ownership interest in Glenmaura until June 9, 1997, at which time
the Partnership's ownership interest was reduced to 49.8%. Accordingly, the
financial statements for the quarter ended March 31, 1997 include the accounts
of the Partnership and Glenmaura. In the financial statements for the quarter
ended March 31, 1998 the investment in Glenmaura is accounted for under the
equity method. All significant intercompany transactions and balances have been
eliminated in consolidation.

COMPARISON OF THE QUARTER ENDED MARCH 31, 1998 TO THE QUARTER ENDED 
MARCH 31, 1997
From April 1, 1997 to March 31, 1998, the total assets of the Partnership
decreased approximately $2.7 million. There were two primary reasons for the
decrease. The change in accounting method for Glenmaura from the consolidated to
the equity method reduced net fixed assets. The net fixed assets as of March 31,
1997 included $8,718,000 from Glenmaura, which are no longer included in the net
fixed assets of the Partnership. The investment in the Solon and Erie Hampton
Inns increased by approximately $7.8 million, due to completing construction of
the Solon Hampton Inn and acquiring the land and beginning construction of the
Erie Hampton Inn. The Partnership's cash balance decreased from approximately
$2.2 million to $415,000 from costs incurred in the acquisition and construction
of properties. Land held for sale increased $647,000, which represents the costs
incurred for the Warwick site, which is currently being offered for sale by the
Partnership. The assets of the Partnership at March 31, 1998 include $277,000 of
investment in partnership, which represents the Partnership's investment in
Glenmaura. During the period, the Partnership incurred additional deferred costs
of $394,000, representing $349,000 of additional debt acquisition costs from the
offering of the subordinated notes, costs incurred to obtain the Solon first
mortgage loan, costs incurred to obtain the construction and permanent financing
for Erie Hampton Inn and the $45,000 franchise fee paid for the Erie Hampton Inn
hotel, net of the write-off the $40,000 franchise fee paid for the Warwick site,
which has expired.

The Partnership's liabilities decreased $1,671,000 from April 1, 1997 to March
31, 1998, primarily from the change to the equity method of accounting as
described above. The liabilities as of March 31, 1997 included $128,000 of
accounts payable and accrued expenses and $6,500,000 of debt relating to
Glenmaura. Since March 31, 1997, the Partnership received a $4,500,000 first
mortgage loan for Solon from GMAC Commercial Mortgage Corp. and subordinated
notes of $231,000 were sold in the Partnership's offering. Accounts payable-
construction increased approximately $132,000 from outstanding construction
invoices for the Erie Hampton Inn hotel. The minority interest in Glenmaura is
no longer presented in the Partnership's balance sheet due to the change in
accounting method for Glenmaura. Limited partners' equity decreased $432,000.
From April 1, 1997 to March 31, 1998, the Partnership received $588,000 in
limited partner equity from proceeds of the offering, incurred an additional
$98,000 in syndication costs, paid $95,000 in distributions to limited partners,
collected $145,000 in promissory note payments from limited partners and
incurred net losses of $972,000.

The primary revenue source for the quarter ended March 31, 1998 was room
revenues of $496,000 from the Solon Hampton Inn. The primary revenue source for
the quarter ended March 31, 1997 was room revenues of $420,000 from the
Courtyard by Marriott. There are no revenues from the Solon Hampton Inn in the
first quarter 1997 since the Solon Hampton Inn did not open until August, 1997.
Telephone and other commission revenue for the first quarter 1998 totaled
$36,000, for total revenues of $532,000. For the first quarter, 1996, food and
beverage revenue and telephone and other commission revenue from Glenmaura
totaled $89,000 for total revenues of $509,000. Operating expenses for the
quarter ended March 31, 1998, before equity loss in partnership and
depreciation, totaled $705,000. The equity loss from Glenmaura for the first
quarter, 1998 was $71,000. Depreciation and amortization of $120,000 was
recorded for income from operations of $18,000. Other than


<PAGE>



depreciation and equity loss in partnership, the largest operating expense for
the Partnership was rooms expense of $117,000, followed by utilities expenses of
$42,000. Operating expenses for the first quarter 1997 totaled $558,000. The
largest expenses in the first quarter 1997 were depreciation of $146,000, rooms
expenses of $118,000 and administrative and general expenses of $47,000. The
loss from operations in the first quarter 1997 was $49,000. Other income and
expense for the first quarter 1998 includes net interest expense of $186,000,
compared to net interest expense of $201,000 for the same period in 1997. The
Partnership's interest expense in the first quarter 1998 is composed of the
interest incurred on the first mortgage loan for Solon, and interest on the
subordinated notes to the extent the proceeds have not been used for the
construction of the Erie Hampton Inn. Interest incurred on subordinated note
proceeds used for the Erie Hampton Inn and on the Erie Hampton Inn construction
loan have been capitalized as construction period interest. The Partnership's
interest expense in the first quarter 1997 was composed of interest on the first
mortgage loan for Glenmaura and interest on the subordinated notes to the extent
the proceeds were not used for construction. Interest incurred in the first
quarter 1997 on the subordinated note proceeds which were used in construction
was capitalized as construction period interest. The net loss for the
Partnership for the first quarter, 1998 was $167,000. The loss before minority
interest in Glenmaura for the quarter ended March 31, 1997 totaled $250,000.
After allocating $75,000 to the minority interests in Glenmaura, the
Partnership's net loss for the first quarter 1997 was $175,000.

The Partnership used $63,000 of cash in operations in the first quarter 1998,
compared to cash used in operations in the first quarter 1997 of $219,000. The
cash used in operations in the first quarter 1998 was less than the same period
in 1997 for three reasons, more revenue was generated in 1998, the level of debt
is lower in 1998 without the debt attributable to Glenmaura, which resulted in
lower interest expense, and the expenses required to operate the Solon Hampton
Inn are less than the expenses required to operate the Courtyard by Marriott.
Cash required for investing activities in the first quarter 1998 was $1,114,000,
$25,000 higher than for the first quarter 1997, due to the timing of
construction activities. The Partnership required $50,000 of cash for financing
activities in the first quarter 1998 due to payments for debt acquisition costs.
Financing activities for the first quarter 1997 provided $952,000 in cash due to
the closing of the GMAC Commercial Mortgage Corp. first mortgage loan for
Glenmaura. Cash decreased $1,227,000 in the first quarter 1998, compared to a
decrease of $356,000 in the first quarter 1997.

The Solon Hampton Inn opened on August 1, 1997. The property achieved an average
occupancy of 74% in 1997 after five months of operation, with an average daily
rate of $77.97. The revenue per available room for 1997 was $57.62. The average
occupancy for the first quarter 1998 was also 74%, with an average daily rate of
$72.45. The revenue per available room for the first quarter 1998 was $53.47.
The first quarter of the year is typically the weakest quarter in the lodging
industry. The Solon Hampton Inn maintained strong results during the weakest
period of the year, which indicates that the Solon market is an extremely strong
market. Strong results have continued since the end of first quarter, with
average occupancy in April, 1998 of 81%, an average daily rate of $70.92 and
revenue per available room of $56.81.

The Courtyard by Marriott hotel opened in September 1996. The property achieved
an average occupancy of 63% for the first quarter 1998, higher than the 59%
average occupancy for the first quarter 1997. The average daily rate for the
first quarter 1998 was $64.26, less than the average daily rate of $66.58 for
the first quarter 1997. The revenue per available room for the first quarter
1998 was $40.61 versus $38.95 for the first quarter 1997. The market in the
Scranton area is extremely price sensitive. The Courtyard by Marriott hotel was
able to increase revenues by reducing rates for its business travelers and
achieving higher occupancy. Results for April were disappointing, with room
revenues $15,000 lower in April 1998 than in April 1997. Additional competition
opened in the Scranton market in June, 1997, which has negatively impacted the
Courtyard by Marriott hotel. The Scranton market is stronger in the winter
months than in early spring, due to the number of skiers that visit Montage
Mountain ski resort, which is very close to the Courtyard by Marriott hotel.

YEAR 2000 DISCLOSURE
The Partnership is currently working to resolve the potential impact of the year
2000 on the processing of date- sensitive information by the Partnership's
computerized information systems. Based on preliminary information, costs of
addressing potential problems are not currently expected to have a material
adverse impact on the Partnership's financial position, results of operations or
cash flows in future periods. However, if the Partnership, its customers or
vendors are unable to resolve such processing issues in a timely manner, it
could result in a material


<PAGE>



financial risk. Accordingly, the Partnership plans to devote the necessary
resources to resolve all significant year 2000 issues in a timely manner.


LIQUIDITY AND FINANCIAL CONDITION
The Solon Hampton Inn is generating sufficient funds from operations to fund all
operating expenses and debt service payments on the first mortgage loan. As of
March 31, 1998 the Partnership has $9,913,000 in outstanding long term
indebtedness comprised of subordinated notes of $5,413,000 and first mortgage
financing of $4,500,000. In addition, the Partnership has obtained construction
financing in the amount of $4,700,000 for the Erie Hampton Inn which it expects
will be replaced by permanent first mortgage financing in the amount of
$4,700,000. The notes are due in December 2001, unless extended by their terms
for one year to December 2002. The Solon first mortgage loan Solon loan is due
July, 2001, unless extended by its terms for one year to July, 2002. The Erie
first mortgage loan is expected to be due before December, 2002, unless extended
by its terms for one year to December, 2003. Once the Solon Hampton Inn and Erie
Hampton Inn reach more stabilized operations, the Partnership expects to be able
to place larger new first mortgages on the properties, such that when it needs
to refinance the total outstanding indebtedness, (which is expected to total
approximately $14.3 million in July, 2001), it can do so through a combination
of retained excess working capital, new first mortgage financing and, if
necessary, new subordinated note financing.

The Partnership believes that it has sufficient funding to complete the
construction of the Erie Hampton Inn. However, given the uncertainty of
construction, it is possible that significant unanticipated cost overruns could
occur that would cause the Partnership to not have sufficient funds to complete
construction. The Partnership intends to monitor construction costs very closely
to minimize the possibility of significant cost overruns.

The Partnership included a working capital reserve in its total costs for the
Solon Hampton Inn and has included a working capital reserve in its costs for
the Erie Hampton Inn. The Partnership expects that the working capital reserves
will be sufficient to fund any operating deficits.

The General Partner believes good investment opportunities exist in the limited
service segments of the lodging industry. The limited service segment of the
lodging industry has experienced significant growth in recent years as a greater
number of leisure travelers seek to maximize value. The General Partner believes
that the continued success of the lodging industry will depend upon, among other
things, the continued demand for lodging facilities by both business and leisure
travelers, which such demand is affected by general economic conditions,
including, costs of labor and materials, unemployment, inflation and interest
rates. In addition to, but directly affected by, economic trends, is the
availability of financing on favorable terms for the construction and operation
of hotels. In recent years a limited number of institutional lenders have been
more willing to provide financing for hotel construction and operations, and
hotel franchisors or their affiliates have established financing programs for
construction and operation of the hotel franchisors' particular hotels. In
addition to these industry considerations, the success of the Partnership's
hotels will depend upon the hotel franchises developed and operated by the
Partnership, as well as the location of the hotels.





<PAGE>


                                     PART II
                                     -------

                                OTHER INFORMATION
                                -----------------



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------

         a.       EXHIBITS
                  --------

                  None

         b.       REPORTS ON FORM 8-K
                  -------------------

                  None


                                   SIGNATURES
                                   ----------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                              ESSEX HOSPITALITY ASSOCIATES IV L.P.
                              ------------------------------------
                                       Registrant



Dated:   May 14, 1998         /S/ LORRIE L. LOFASO
                              ------------------------------------
                              Essex Hospitality Associates IV L.P.
                              Essex Partners Inc.
                              Lorrie L. LoFaso
                              Vice President and Chief Accounting Officer