##### 



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to    Commission File Number 1-14331
   Interstate Hotels &
    Resorts, Inc.
   Delaware

52-2101815(State of
    Incorporation)

(IRS Employer Identification
    No.)4501 North Fairfax Drive, Ste 500

22203Arlington, VA

(Zip Code)(Address of Principal Executive
    Offices)    www.ihrco.com This
    Form 10-Q
    can be accessed at no charge through above website.
   (703) 387-3100
 (Registrants Telephone
    Number, Including Area Code)
  þ o
  Rule 12b-2
  Large accelerated filer
    o

Accelerated filer
    þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ




---



##### 



INTERSTATE
    HOTELS & RESORTS, INC.
  INDEX
   
  PagePART I. FINANCIAL INFORMATIONItem 1:


Financial Statements (Unaudited):Consolidated Balance Sheets 
    March 31, 2008 and December 31, 2007


2Consolidated Statements of Operations and
    Comprehensive Income (Loss)  Three months ended
    March 31, 2008 and 2007


3Consolidated Statements of Cash Flows 
    Three months ended March 31, 2008 and 2007


4Notes to Consolidated Financial Statements


5Item 2:


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


22Item 3:


Quantitative and Qualitative Disclosures About
    Market Risk


30Item 4:


Controls and Procedures


31PART II. OTHER INFORMATIONItem 1:


Legal Proceedings


33Item 6:


Exhibits


33   1




---



##### 



PART I.
    FINANCIAL INFORMATION  Item 1:
    Financial
    Statements  INTERSTATE
    HOTELS & RESORTS, INC.CONSOLIDATED BALANCE SHEETS
    (In thousands, except share amounts)
  March 31,


December 31,2008


2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
10,246


$
9,775Restricted cash


7,126



7,090Accounts receivable, net of allowance for doubtful accounts of
    $1,194 and $516, respectively


25,052



27,989Due from related parties, net of allowance for doubtful accounts
    of $1,465 and $1,465, respectively


2,516



1,822Prepaid expenses and other current assets


5,376



5,101Deferred income taxes


8,060



3,796Total current assets


58,376



55,573Marketable securities


1,690



1,905Property and equipment, net


281,451



278,098Investments in unconsolidated entities


41,078



27,631Notes receivable, net of allowance of $2,551 and $2,551,
    respectively


5,492



4,976Deferred income taxes


15,240



18,247Goodwill


66,599



66,599Intangible assets, net


16,149



17,849Total assets

$
486,075


$
470,878LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS
    EQUITYCurrent liabilities:Accounts payable

$
3,431


$
2,597Accrued expenses


58,076



64,952Current portion of long-term debt


863



863Total current liabilities


62,370



68,412Deferred compensation


1,750



1,831Long-term debt


232,512



210,800Total liabilities


296,632



281,043Minority interest (redemption value of $263 at March 31,
    2008)


326



329Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value; 5,000,000 shares
    authorized, no shares issued






Common stock, $.01 par value; 250,000,000 shares
    authorized; 31,771,984 and 31,718,817 shares issued at
    March 31, 2008 and December 31, 2007, respectively


318



317Treasury stock


(69
)


(69
)Paid-in capital


196,065



195,729Accumulated other comprehensive loss


(527
)


(87
)Accumulated deficit


(6,670
)


(6,384
)Total stockholders equity


189,117



189,506Total liabilities, minority interest and stockholders
    equity

$
486,075


$
470,878   The accompanying notes are an integral part of the
    consolidated financial statements.
 2




---



##### 



INTERSTATE
    HOTELS & RESORTS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS
    AND COMPREHENSIVE INCOME (LOSS)
    (Unaudited, in thousands, except per share amounts)
  Three Months Ended March 31,2008


2007(As restated)Revenue:Lodging

$
23,918


$
13,076Management fees


8,523



10,622Management fees-related parties


1,386



847Termination fees


3,010



1,575Other


2,099



2,26938,936



28,389Other revenue from managed properties


151,014



176,370Total revenue


189,950



204,759Expenses:Lodging


17,025



9,372Administrative and general


15,829



13,315Depreciation and amortization


4,274



3,225Asset impairments and write-offs


1,112



2,39938,240



28,311Other expenses from managed properties


151,014



176,370Total operating expenses


189,254



204,681OPERATING INCOME


696



78Interest income


319



436Interest expense


(3,815
)


(2,733
)Equity in earnings from unconsolidated entities


2,361



401LOSS BEFORE INCOME TAXES AND MINORITY INTEREST


(439
)


(1,818
)Income tax benefit


151



781Minority interest income (expense)


2



(46
)LOSS FROM CONTINUING OPERATIONS


(286
)


(1,083
)Income from discontinued operations, net of tax






17,001NET (LOSS) INCOME

$
(286
)

$
15,918Other comprehensive (loss) income, net of tax:Foreign currency translation gain (loss)


11



(5
)Unrealized (loss) gain on cash flow hedge instruments


(451
)


Unrealized gain on investments


1



17COMPREHENSIVE (LOSS) INCOME

$
(725
)

$
15,930BASIC (LOSS) EARNINGS PER SHARE:Continuing operations

$
(0.01
)

$
(0.04
)Discontinued operations






0.54Basic (loss) earnings per share

$
(0.01
)

$
0.50DILUTED (LOSS) EARNINGS PER SHARE:Continuing operations

$
(0.01
)

$
(0.04
)Discontinued operations






0.54Diluted (loss) earnings per share

$
(0.01
)

$
0.50   The accompanying notes are an integral part of the
    consolidated financial statements.
 3




---



##### 



INTERSTATE
    HOTELS & RESORTS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited, in thousands)
  Three Months Ended March 31,2008


2007(As restated)OPERATING ACTIVITIES:Net income (loss)

$
(286
)

$
15,918Adjustments to reconcile net income (loss) to cash provided by
    operating activities:Depreciation and amortization


4,274



3,225Amortization of deferred financing fees


306



743Amortization of key money management contracts


189



154Stock compensation expense


372



259Discount on note receivable


148



Bad debt expense


722



(32
)Asset impairments and write-offs


1,112



2,399Equity in earnings from unconsolidated entities


(2,361
)


(401
)Operating distributions from unconsolidated entities


145



63Minority interest


(2
)


46Deferred income taxes


(1,257
)


(1,350
)Excess tax benefits from share-based payment arrangements


23



(56
)Discontinued operations:Gain loss on sale






(17,609
)Changes in operating assets and liabilities:Accounts receivable


1,633



(1,859
)Due from related parties, net


(694
)


311Prepaid expenses and other current assets


(275
)


(778
)Accounts payable and accrued expenses


(5,746
)


(9,150
)Changes in assets and liabilities held for sale






93Other changes in asset and liability accounts


406



10Cash used in operating activities


(1,291
)


(8,014
)INVESTING ACTIVITIES:Proceeds from the sale of discontinued operations






34,444Change in restricted cash


(36
)


(1,906
)Acquisition of hotel






(52,180
)Purchases related to discontinued operations






(68
)Purchases of property and equipment


(7,102
)


(1,492
)Additions to intangible assets


(498
)


(909
)Contributions to unconsolidated entities


(13,517
)


(815
)Distributions from unconsolidated entities


1,830



300Changes in notes receivable


(594
)


41Cash used in investing activities


(19,917
)


(22,585
)FINANCING ACTIVITIES:Proceeds from borrowings


22,000



97,825Repayment of borrowings


(288
)


(40,526
)Proceeds from issuance of common stock


1



1Excess tax benefits from share-based payment arrangements


(23
)


56Financing fees paid






(2,164
)Cash provided by financing activities


21,690



55,192Effect of exchange rate changes on cash


(11
)


(5
)Net increase in cash and cash equivalents


471



24,588CASH AND CASH EQUIVALENTS, beginning of period


9,775



25,308CASH AND CASH EQUIVALENTS, end of period

$
10,246


$
49,896SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for interest and income taxes:Interest

$
3,499


$
1,751Income taxes


143



1,250   The accompanying notes are an integral part of the
    consolidated financial statements.
 4




---



##### 



INTERSTATE
    HOTELS & RESORTS, INC.NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
  1.
    BUSINESS
    SUMMARY          2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  General
  Form 10-K,
    Form 10-Q.
 5




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Form 10-K,
    As of March 31, 2007(As Reported)


Adjustments


(Restated)ASSETSCurrent assets:Cash and equivalents

$
49,896






$
49,896Escrow and restricted funds


8,391







8,391Accounts receivable, net


33,073







33,073Due to related party, net


1,483







1,483Prepaid expenses and other current assets


3,523







3,523Total current assets


96,366







96,366Marketable securities


1,656







1,656Property and equipment, net


154,739







154,739Investments in affiliates


11,998







11,998Notes receivable, net


4,994







4,994Deferred income taxes


12,385



1,416



13,801Goodwill


73,672







73,672Intangible assets, net


31,215



(2,223
)


28,992Total assets

$
387,025



(807
)

$
386,218LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS
    EQUITYCurrent liabilities:Accounts payable

$
2,653






$
2,653Accrued expenses


58,194



488



58,682Current portion of long-term debt


650







650Total current liabilities


61,497



488



61,985Deferred compensation


1,717







1,717Long-term debt


140,875







140,875Total liabilities


204,089



488



204,577Minority interests


521



(7
)


514Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value










Common stock, $.01 par value


316







316Treasury stock


(69
)






(69
)Paid in capital


194,625







194,625Accumulated other comprehensive (loss) income


(451
)






(451
)Accumulated deficit


(12,006
)


(1,288
)


(13,294
)Total stockholders equity


182,415



(1,288
)


181,127Total liabilities, minority interests and stockholders
    equity

$
387,025



(807
)

$
386,218   6




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Three Months Ended March 31, 2007(As Reported)


Adjustments


(Restated)Total revenue


204,759







204,759Expenses:Lodging


9,372







9,372Administrative and general


13,315







13,315Depreciation and amortization


3,293



(68
)


3,225Asset impairments and write-offs


108



2,291



2,39926,088



2,223



28,311Other expenses from managed properties


176,370







176,370Total operating expenses


202,458



2,223



204,681OPERATING INCOME (LOSS)


2,301



(2,223
)


78INCOME (LOSS) BEFORE MINORITY INTERESTS AND INCOME TAXES


405



(2,223
)


(1,818
)Income tax (expense) benefit


(147
)


928



781Minority interests (expense) benefit


(53
)


7



(46
)INCOME (LOSS) FROM CONTINUING OPERATIONS


205



(1,288
)


(1,083
)Income from discontinued operations, net of tax


17,001







17,001NET INCOME (LOSS)

$
17,206



(1,288
)

$
15,918BASIC EARNINGS (LOSS) PER SHARE:Continuing Operations

$
0.01



(0.05
)

$
(0.04
)Discontinued Operations

$
0.54






$
0.54Basic earnings per share

$
0.55



(0.05
)

$
0.50DILUTED EARNINGS (LOSS) PER SHARE:Continuing Operations

$
0.01



(0.05
)

$
(0.04
)Discontinued Operations

$
0.53



0.01


$
0.54Diluted earnings per share

$
0.54



(0.04
)

$
0.50     Revenue
    Recognition Related to Termination Fees
    04-1,
 7




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (EITF 04-1), EITF 04-1,
  Related
    Parties
      Fair
    Value Accounting
  No. 157-2 SFAS 157-2). SFAS 157-2 SFAS 157-2
       8




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Fair Value at March 31, 2008Total


Level 1


Level 2


Level 3Assets:Derivative instruments

$
7


$



$
7


$
Marketable securities

$
1,690


$
1,690


$



$
Total:

$
1,697


$
1,690


$
7


$
Liabilities:Derivative instruments

$
752


$



$
752


$
         Recently
    Issued Accounting Pronouncements
  Non-controlling Interests in Consolidated Financial
    Statements
  Business Combinations Business Combinations
 9




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Disclosures
    about Derivative Instruments and Hedging Activities Accounting for Derivative
    Instruments and Hedging Activities
  3.
    EARNINGS
    PER SHARE    Three Months EndedMarch 31, 2008


March 31, 2007Income/





Per Share


Income/





Per Share(Loss)


Shares


Amount


(Loss)


Shares


Amount(Loss) income from continuing operations

$
(286
)


31,714


$
(0.01
)

$
(1,083
)


31,546


$
(0.04
)(Loss) income from discontinued operations, net of tax














17,001







0.54Basic and diluted net (loss) income

$
(286
)


31,714


$
(0.01
)

$
15,918



31,546


$
0.50  10




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    INVESTMENTS
    IN UNCONSOLIDATED ENTITIES    Our Equity


March 31,


December 31,Joint Venture

Number of Hotels


Participation


2008


2007Amitel Holdings, LLC


6



15.0
%

$
4,013


$
4,065Budget Portfolio Properties, LLC


22



10.0
%


1,546



250CNL/IHC Partners, L.P.


3



15.0
%


2,896



2,825Cameron S-Sixteen Broadway, LLC


1



15.7
%


961



1,002Cameron S-Sixteen Hospitality, LLC


1



10.9
%


267



399Harte IHR Joint
    Venture(1)


4



20.0
%


11,494



2,356IHR Greenbuck Hotel Venture,
    LLC(2)






15.0
%


2,531



2,038IHR Invest Hospitality Holdings, LLC


2



15.0
%


4,186



4,372IHR/Steadfast Hospitality Management,
    LLC(3)






50.0
%


740



649Interstate Cross Keys, LLC


1



15.0
%


511



557RQB Resort/Development Investors, LLC


1



10.0
%


1,693



1,378Steadfast Mexico, LLC


3



15.0
%


6,221



6,133Other


3



various



4,019



1,607Total


47






$
41,078


$
27,631     (1)
    
    The joint venture closed on the
    purchase of four properties in February 2008. The structure of
    this joint venture includes 10 legal entities which compose our
    20 percent interest.(2)
    
    Hotel number is not listed as this
    joint venture is in the process of developing hotels.(3)
    
    Hotel number is not listed as this
    joint venture owns a management company.      .
   11




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
      5.
    PROPERTY
    AND EQUIPMENT    March 31,


December 31,2008


2007Land

$
29,712


$
26,912Furniture and fixtures


30,385



28,841Building and improvements


232,465



230,058Leasehold improvements


5,722



5,695Computer equipment


6,294



6,686Software


12,411



12,336Total


316,989



310,528Less accumulated depreciation


(35,538
)


(32,430
)Property and equipment, net

$
281,451


$
278,098    12




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    INTANGIBLE
    ASSETS    March 31,


December 31,2008


2007Management contracts

$
19,868


$
21,338Franchise fees


1,924



1,925Deferred financing fees


3,615



3,619Total cost


25,407



26,882Less accumulated amortization


(9,258
)


(9,033
)Intangible assets, net

$
16,149


$
17,849            13




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    ACCRUED
    EXPENSES    March 31,


December 31,2008


2007Salaries and employee related benefits

$
22,161


$
27,837Other


35,915



37,115Total

$
58,076


$
64,952     8.
    LONG-TERM
    DEBT    March 31,


December 31,2008


2007Senior credit facility  term loan

$
113,850


$
114,138Senior credit facility  revolver loan


62,000



40,000Mortgage debt


57,525



57,525Total long-term debt


233,375



211,663Less current portion


(863
)


(863
)Long-term debt, net of current portion

$
232,512


$
210,800   Senior
    Credit Facility
  and/or
    30-day
   14




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Mortgage
    Debt
    Principal

Maturity

Spread over

Interest Rate as ofAmount

Date(1)

30-Day LIBOR

March 31, 2008Hilton Arlington

$
24.7 million



November 2009



135 bps



4.23
%Hilton Houston Westchase

$
32.8 million



February 2010



135 bps



4.23
%     (1)
    
    We are required to make
    interest-only payments until these loans mature, with two
    optional one-year extensions.        Interest
    Rate Caps
    Maturity

30-day LIBORAmount

Date

Cap RateOctober 2006 (Hilton Arlington mortgage loan)

$
24.7 million



November 2009



7.25
%February 2007 (Hilton Westchase mortgage loan)

$
32.8 million



February 2010



7.25
%         Interest
    Rate Collar
  30-day 30-day
 15




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  30-day
  9.
    SEGMENT
    INFORMATION            16




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Hotel


HotelOwnership


Management


Corporate


ConsolidatedThree months ended March 31, 2008Revenue

$
23,918


$
15,018


$



$
38,936Depreciation and amortization


3,184



975



115



4,274Operating expense


17,441



15,233



1,292



33,966Operating income (loss)


3,293



(1,190
)


(1,407
)


696Interest expense, net


(3,496
)










(3,496
)Equity in earnings of affiliates


2,361











2,361Income (loss) before minority interests and income taxes

$
2,158


$
(1,190
)

$
(1,407
)

$
(439
)Total assets

$
327,704


$
120,295


$
38,076


$
486,075Capital expenditures

$
6,760


$
298


$
44


$
7,102Three months ended March 31, 2007Revenue

$
13,076


$
15,313


$



$
28,389Depreciation and amortization


1,426



1,695



104



3,225Operating expense


9,736



14,401



949



25,086Operating income (loss)


1,914



(783
)


(1,053
)


78Interest expense, net


(1,410
)






(887
)


(2,297
)Equity in earnings of affiliates


401











401Income (loss) before minority interests and income taxes

$
905


$
(783
)

$
(1,940
)

$
(1,818
)Total assets

$
170,436


$
146,843


$
68,939


$
386,218Capital expenditures

$
52,938


$
587


$
147


$
53,672   (1),(2)
  Three Months EndedMarch 31,2008

2007Russia(3)

$
178


$
180Other

$
97


$
94     (1)
    
    Revenues for the United Kingdom and
    France related solely to BridgeStreet operations have been
    reclassified as discontinued operations on the consolidated
    statement of operations for the related periods due to the sale
    of BridgeStreet during the first quarter of 2007 and therefore
    have not been included in the above table. BridgeStreet revenues
    from the United Kingdom and France were $2.8 million and
    $0.2 million, respectively, for the three months ended
    March 31, 2007. These revenues have been classified as
    discontinued operations on the consolidated statement of
    operations for the related periods.(2)
    
    Management fee revenues from our
    managed properties in Mexico are recorded through our joint
    venture, IHR/Steadfast Hospitality Management, LLC, and as such,
    are included in equity in earnings in our consolidated statement
    of operations for the three months ended March 31, 2008.(3)
    
    Deferred revenues related to
    incentive fees paid, but not yet earned, of $1.2 million
    have not been included for the three month periods ended
    March 31, 2008. There was no deferred revenue for the three
    months ended March 31, 2007.   17




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    COMMITMENTS
    AND CONTINGENCIES  Insurance
    Matters
      Insurance
    Receivables and Reserves
   18




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Leases
    March 31,
    2008-2009

$
4,016March 31,
    2009-2010


4,186March 31,
    2010-2011


4,269March 31,
    2011-2012


3,726March 31,
    2012-2013


3,724Thereafter


2,209Total

$
22,130     March 31,
    2008-2009

$
1,145March 31,
    2009-2010


1,190March 31,
    2010-2011


1,238March 31,
    2011-2012


1,288March 31,
    2012-2013


1,339Thereafter


571Total

$
6,771   Commitments
    Related to Management Agreements and Hotel
    Ownership
       19




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Guarantees
    Letters
    of Credit
    Contingent
    Liabilities Related to Partnership Interests
      11.
    ACQUISITIONS &
    DISPOSITIONS  Dispositions
   20




---



##### 



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three MonthsEndedMarch 31, 2007Revenue

$
8,500Depreciation and amortization


Operating expense


8,969Operating loss

$
(469
)Gain on sale


17,609Interest expense


Income (loss) before minority interest and taxes

$
17,140Income tax (expense) benefit


(139
)Income (loss) from discontinued operations, net of taxes

$
17,001     12.
    STOCK-BASED
    COMPENSATION  Share Based Payment
   21




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##### 



Item 2:
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Forward-Looking
    Statements
  Form 10-Q Form 10-K
  Form 10-Q Form 10-K
  Overview
    and Outlook
  Our Business 
      Industry Overview 
 22




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##### 



Financial Highlights 
    Investments in and Acquisitions of Real Estate  ,
  Property

Location

Guest RoomsSheraton Frazer Great Valley


Frazer, PA



198Sheraton Mahwah


Mahwah, NJ



225Latham Hotel Georgetown


Washington, DC



142Hilton Lafayette


Lafayette, LA



327      23




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##### 



and/or
  .
  Turnover of Management Contracts 
    Number of


Number ofProperties


RoomsAs of December 31, 2007


191



42,620New contracts


34



4,547Lost contracts


(8
)


(1,915
)As of March 31, 2008


217



45,252     Critical
    Accounting Policies and Estimates
    Form 10-K,
 24




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##### 



Results
    of Operations
  Operating
    Statistics
    As of March 31,


Percent Change2008


2007


08 vs. 07Hotel OwnershipNumber of properties


7



5



40.0
%Number of rooms


2,045



1,260



62.3
%Hotel
    Management(1)Properties managed


217



207



4.8
%Number of rooms


45,252



47,159



(4.0
)%     (1)
    
    Statistics related to hotels in
    which we hold a partial ownership interest through a joint
    venture or wholly-owned have been included in hotel management.    
    We secured 22 additional management contracts related to the
    Budget Portfolio Properties joint venture.
    We secured 11 additional management contracts from Inland
    Lodging Corporation.
    We secured 20 additional management contracts from various
    owners.
    Blackstone sold 23 properties, 15 of which we no longer manage.
    In the case of the other eight properties, we either purchased
    the properties or were retained as manager by the new owners.
    Sunstone REIT sold seven properties which we no longer manage.
    21 properties, owned by various other owners, were transitioned
    out of our system.  (2)
  Three MonthsEnded March 31,


Percent Change2008


2007


08 vs. 07Hotel ManagementRevPAR

$
96.33


$
93.47



3.1
%ADR

$
138.49


$
129.66



6.8
%Occupancy


69.6
%


72.1
%


(3.5
)%     (2)
    
    We present these operating
    statistics for the periods included in this report on a
    same-store basis. We define our same-store hotels as those which
    (i) are managed or owned by us for the entirety of the
    reporting periods being compared or have been managed by us for
    part of the reporting periods compared and we have been able to
    obtain operating statistics for the period of time in which we
    did not manage the hotel and (ii) have not sustained
    substantial property damage, business interruption or undergone
    large-scale capital projects during the periods being reported.
    In addition, the operating results of hotels for which we no
    longer manage as of March 31, 2008 are not included in
    same-store hotel results for the periods presented herein. Of
    the 217 properties that we managed as of March 31, 2008,
    172 hotels have been classified as same-store hotels. 25




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##### 



Revenues
    Three MonthsEnded March 31,


Percent Change2008


2007


08 vs. 07Lodging

$
23,918


$
13,076



82.9
%Management fees


9,909



11,469



(13.6
)%Termination fees


3,010



1,575



91.1
%Other


2,099



2,269



(7.5
)%Other revenue from managed properties


151,014



176,370



(14.4
)%Total revenue

$
189,950


$
204,759



(7.2
)%   Lodging
   Management
    fees and termination fees
     Other
    revenue from managed properties
  26




---



##### 



Operating
    Expenses
    Three MonthsEnded March 31,


Percent Change2008


2007


07 vs. 06(As restated)Lodging

$
17,025


$
9,372



81.7
%Administrative and general


15,829



13,315



18.9
%Depreciation and amortization


4,274



3,225



32.5
%Asset impairments and write-offs


1,112



2,399



(53.6
)%Other expenses from managed properties


151,014



176,370



(14.4
)%Total operating expenses

$
189,254


$
204,681



(7.5
)%   Lodging
   Administrative
    and general
   Depreciation
    and amortization
   Other
    expenses from managed properties
   Asset
    impairments and write-offs
  27




---



##### 



Other
    Income and Expenses
    Three MonthsEnded March 31,


Percent Change2008


2007


08 vs. 07(As restated)Interest expense, net

$
3,496


$
2,297



52.2
%Equity in earnings from unconsolidated entities


2,361



401



>100
%Income tax benefit


(151
)


(781
)


(80.7
)%Minority interest (benefit) expense


(2
)


46



>(100
)%Income from discontinued operations, net of tax






17,001



(100
)%   Interest
    expense
   Equity in
    earnings from unconsolidated entities
   Income
    tax benefit
   Income
    from discontinued operations, net of tax
   Liquidity,
    Capital Resources and Financial Position
    Three MonthsEnded March 31,


Percent Change2008


2007


08 vs. 07(As restated)Cash used in operating activities

$
(1,291
)

$
(8,014
)


(83.9
)%Cash used in investing activities


(19,917
)


(22,585
)


(11.8
)%Cash provided by financing activities


21,690



55,192



(60.7
)%Working capital (deficit)


(3,994
)


34,381



>(100
)%Cash interest expense


3,499



1,751



99.8
%Debt balance


233,375



141,525



64.9
%   Operating
    Activities
   28




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##### 



Investing
    Activities
    
    In the first quarter of 2007, we purchased the Houston Westchase
    for $52.2 million, which included an escrow of additional
    restricted cash of $1.9 million associated with this
    acquisition, while we had no hotel acquisitions during the first
    quarter of 2008.
    We made contributions of $13.5 million in joint venture
    investments during the first quarter of 2008 compared to
    $0.8 million during the same period in 2007. In 2008, we
    contributed a total of $11.1 million for investments in
    three new joint ventures, $0.8 million in existing joint
    ventures and $1.6 million into the Duet Fund.
    We received a distribution from a joint venture, of
    $1.8 million from the sale of Doral Tesoro
    Hotel & Golf Club in February 2008. Distributions
    which are a return of our investment in the joint venture are
    recorded as investing cash flows, while distributions which are
    a return on our investment are recorded as operating cash flows.
    We spent an additional $5.6 million on property and
    equipment in the first quarter of 2008, compared to the first
    quarter of 2007, which is primarily related to improvements at
    the Westin Atlanta and the Sheraton Columbia.
    In the first quarter of 2007, the cash expenditures above were
    offset by proceeds of $34.4 million from the sale of
    BridgeStreet.  Financing
    Activities
    Liquidity
  Liquidity Requirements 
   29




---



##### 



Senior Credit Facility  and/or
  30-day
    Mortgage Debt 
  Interest Rate as ofPrincipal

Maturity

Spread Over

March 31,Amount

Date(1)

30-Day LIBOR

2008Hilton Arlington

$
24.7 million



November 2009



135 bps



4.23
%Hilton Houston Westchase

$
32.8 million



February 2010



135 bps



4.23
%     (1)
    
    We are required to make
    interest-only payments until these loans mature, with two
    optional one-year extensions.      Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
     30




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##### 



30-day 30-day
  30-day 30-day 30-day
  30-day 30-day
  Form 10-K
  Item 4.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15-d-15(e)).
    Form 10-K
  Form 10-K
 31




---



##### 



Changes
    in Internal Control over Financial Reporting
       32




---



##### 



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings    Item 6.
    Exhibits  Exhibits
  Exhibit No.

Description of Document3
.1

Amended and Restated Certificate of Incorporation of the
    Company, formerly MeriStar Hotels & Resorts, Inc.
    (incorporated by reference to Exhibit 3.1 to the
    Companys
    Form S-l/A
    filed with the Securities and Exchange Commission on
    July 23, 1998 (Registration
    No. 333-49881)).3
.1.1

Certificate of Amendment of the Restated Certificate of
    Incorporation of the Company dated June 30, 2001
    (incorporated by reference to Exhibit 3.1.1 to the
    Companys
    Form 10-K
    filed with the Securities and Exchange Commission on
    March 8, 2002).3
.1.2

Certificate of Merger of Interstate Hotels Corporation into
    MeriStar Hotels & Resorts, Inc. (incorporated by
    reference to Exhibit 3.1.2 to the Companys
    Form 8-A/A
    filed with the Securities and Exchange Commission on
    August 2, 2002).3
.1.3

Certificate of Amendment of the Restated Certificate of
    Incorporation of the Company dated July 31, 2002
    (incorporated by reference to Exhibit 3.1.3 to the
    Companys
    Form 8-A/A
    filed with the Securities and Exchange Commission on
    August 2, 2002).3
.2

Amended and Restated By-laws of the Company (incorporated by
    reference to Exhibit 3.2 to the Companys
    Form 8-K
    filed with the Securities and Exchange Commission on
    December 20, 2007).4
.1

Form of Common Stock Certificate of the Company (incorporated by
    reference to Exhibit 4.1 to the Companys
    Form 8-
    A/A filed with the Securities and Exchange Commission on
    August 2, 2002).4
.2

Preferred Share Purchase Rights Agreement, dated July 23,
    1998, between the Company, formerly MeriStar Hotels &
    Resorts, Inc., and the Rights Agent (incorporated by reference
    to Exhibit 4.4 to the Companys
    Form S-l/A
    filed with the Securities and Exchange Commission on
    July 23, 1998 (Registration
    No. 333-49881)).4
.2.1

Amendment to Rights Agreement, dated December 8, 2000,
    between the Company, formerly MeriStar Hotels &
    Resorts, Inc., and the Rights Agent (incorporated by reference
    to Exhibit 4.1 to the Companys
    Form 8-K
    filed with the Securities and Exchange Commission on
    December 12, 2000).4
.2.2

Second Amendment to Rights Agreement, dated May 1, 2002,
    between the Company, formerly MeriStar Hotels &
    Resorts, Inc., and the Rights Agent (incorporated by reference
    to Exhibit 4.1 to the Companys
    Form 8-K
    filed with the Securities and Exchange Commission on May 3,
    2002).4
.3

Form of Rights Certificate (incorporated by reference to
    Exhibit 4.3 to the Companys
    Form S-l/A
    filed with the Securities and Exchange Commission on
    July 23, 1998 (Registration
    No. 333-49881)).31
.1*

Sarbanes-Oxley Act Section 302 Certifications of the Chief
    Executive Officer.31
.2*

Sarbanes-Oxley Act Section 302 Certifications of the Chief
    Financial Officer.32
*

Sarbanes-Oxley Act Section 906 Certifications of Chief
    Executive Officer and Chief Financial Officer.     *
    
    Filed herewith 33




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##### 



SIGNATURE
    Interstate
    Hotels & Resorts, Inc.
  By:
    /s/  Denis
    S. Mccarthy      34