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|                                  
|----------------------------------
|UNITED STATES                     
|SECURITIES AND EXCHANGE COMMISSION
|Washington,
 D.C. 20549           
|                                  
|FORM
 10-Q                        

|  |                                                                                                                                              
|- | ---------------------------------------------------------------------------------------------------------------------------------------------
|x | QUARTERLY
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011      
|  |                                                                                                                                              
|o | TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
 OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______

|                                                      
|------------------------------------------------------
|Commission
 File Number 000-53175                     
|                                                      
|Apple
 REIT Eight, Inc.                               
|(Exact name of registrant as specified in its charter)

|                                         |                    
|---------------------------------------- | -------------------
|Virginia                                 | 20- 8268625        
|(State or other jurisdiction             | (IRS Employer      
|of incorporation or organization)        | Identification No.)
|                                         |                    
|814 East Main Street                     |                    
|Richmond, Virginia                       | 23219              
|(Address of principal executive offices) | (Zip Code)         

|                                                    
|----------------------------------------------------
|(804) 344-8121                                      
|(Registrants telephone number, including area code)

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90
days.     Yes   x     No   o

Indicate by
check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such
files).     Yes   o     No   o

Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule
12b-2 of the Exchange Act:

|                          |                     |                                                |                            
|------------------------- | ------------------- | ---------------------------------------------- | ---------------------------
|Large accelerated filer o | Accelerated filer o | Non-accelerated filer x                        | Smaller reporting company o
|                          |                     | (Do not check if a smaller
 reporting company) |                            

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

Number of registrants
common shares outstanding as of May 1, 2011: 93,938,833

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Apple REIT Eight, Inc. 
FORM 10-Q 
INDEX

|                                   |  |                                                                                        |  |             
|---------------------------------- |  | -------------------------------------------------------------------------------------- |  | ------------
|                                   |  |                                                                                        |  | Page
 Number
|                                   |  |                                                                                        |  |             
|PART
 I.     FINANCIAL INFORMATION |  |                                                                                       
|                                   |  |                                                                                        |  |             
|Item
 1.                           |  | Financial Statements (Unaudited)                                                       |  |             
|                                   |  | Consolidated Balance Sheets March 31, 2011
 and December 31, 2010                     |  | 3           
|                                   |  | Consolidated Statements of Operations 
 Three months ended March 31, 2011 and 2010    |  | 4           
|                                   |  | Consolidated Statements of Cash Flows 
 Three months ended March 31, 2011 and 2010    |  | 5           
|                                   |  | Notes to Consolidated Financial Statements                                             |  | 6           
|Item 2.                            |  | Managements
 Discussion and Analysis of Financial Condition and Results of Operations |  | 11          
|Item 3.                            |  | Quantitative
 and Qualitative Disclosures About Market Risk                            |  | 19          
|Item 4.                            |  | Controls and
 Procedures                                                               |  | 19          
|                                   |  |                                                                                        |  |             
|PART II.     OTHER
 INFORMATION    |  |                                                                                       
|                                   |  |                                                                                        |  |             
|Item 2.                            |  | Unregistered
 Sales of Equity Securities and Use of Proceeds                           |  | 20          
|Item 6.                            |  | Exhibits                                                                               |  | 21          
|                                   |  |                                                                                        |  |             
|Signatures                         |  |                                                                                        |  | 22          

This
Form 10-Q includes references to certain trademarks or service marks. The
SpringHill Suites® by Marriott, TownePlace Suites® by Marriott, Fairfield Inn® by Marriott,
Residence Inn® by Marriott, Courtyard® by Marriott, Marriott®, and Renaissance® trademarks are the property of Marriott International, Inc. or one of
its affiliates. The Homewood Suites® by Hilton, Hilton
Garden Inn®, Hampton Inn® and Hampton Inn & Suites® trademarks are
the property of Hilton Worldwide or one or more of its affiliates. For
convenience, the applicable trademark or service mark symbol has been omitted
but will be deemed to be included wherever the above referenced terms are used.

2

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Apple REIT Eight, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)

|                                                                                                                                               |  |               |          |                  |   |          |  
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | -------- | ---------------- | - | -------- | -
|                                                                                                                                               |  | March 31,2011 |          | December 31,2010 |  
|                                                                                                                                               |  |               |          |                  |  
|ASSETS                                                                                                                                         |  |               |          |                  |   |          |  
|Investment in hotels, net of accumulated
 depreciation of $99,094 and $90,261                                                                  |  | $             | 937,140  |                  | $ | 945,312  |  
|Restricted cash-furniture, fixtures and
 other escrows                                                                                         |  |               | 9,768    |                  |   | 8,934    |  
|Due from third party managers, net                                                                                                             |  |               | 7,379    |                  |   | 4,031    |  
|Other assets, net                                                                                                                              |  |               | 4,899    |                  |   | 4,209    |  
|                                                                                                                                               |  |               |          |                  |   |          |  
|TOTAL ASSETS                                                                                                                                   |  | $             | 959,186  |                  | $ | 962,486  |  
|                                                                                                                                               |  |               |          |                  |   |          |  
|                                                                                                                                               |  |               |          |                  |   |          |  
|LIABILITIES                                                                                                                                    |  |               |          |                  |   |          |  
|Accounts payable and accrued expenses                                                                                                          |  | $             | 17,301   |                  | $ | 14,878   |  
|Intangible liabilities, net                                                                                                                    |  |               | 10,378   |                  |   | 10,600   |  
|Credit facility                                                                                                                                |  |               | 68,703   |                  |   | 51,893   |  
|Mortgage debt                                                                                                                                  |  |               | 148,026  |                  |   | 148,546  |  
|                                                                                                                                               |  |               |          |                  |   |          |  
|TOTAL LIABILITIES                                                                                                                              |  |               | 244,408  |                  |   | 225,917  |  
|                                                                                                                                               |  |               |          |                  |   |          |  
|                                                                                                                                               |  |               |          |                  |   |          |  
|SHAREHOLDERS EQUITY                                                                                                                           |  |               |          |                  |   |          |  
|Preferred stock, authorized 15,000,000
 shares; none issued and outstanding                                                                    |  |               |         |                  |   |         |  
|Series A preferred stock, no par value, authorized
 200,000,000 shares; issued and outstanding 94,471,332 and 94,615,462 shares,
 respectively |  |               |         |                  |   |         |  
|Series B convertible preferred stock, no
 par value, authorized 240,000 shares; issued and outstanding 240,000 shares                          |  |               | 24       |                  |   | 24       |  
|Common stock, no par value, authorized
 200,000,000 shares; issued and outstanding 94,471,332 and 94,615,462 shares,
 respectively             |  |               | 937,208  |                  |   | 938,733  |  
|Distributions greater than net income                                                                                                          |  |               | (222,454 | )                |   | (202,188 | )
|                                                                                                                                               |  |               |          |                  |   |          |  
|TOTAL SHAREHOLDERS EQUITY                                                                                                                     |  |               | 714,778  |                  |   | 736,569  |  
|                                                                                                                                               |  |               |          |                  |   |          |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                     |  | $             | 959,186  |                  | $ | 962,486  |  
|                                                                                                                                               |  |               |          |                  |   |          |  

See notes to consolidated financial
statements.

3

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Apple REIT Eight, Inc.Consolidated Statements of Operations(Unaudited)(In thousands, except per share data)

|                                                                |  |                                |        |                                |   |        |  
|--------------------------------------------------------------- |  | ------------------------------ | ------ | ------------------------------ | - | ------ | -
|                                                                |  | Three monthsendedMarch 31,2011 |        | Three monthsendedMarch 31,2010 |  
|                                                                |  |                                |        |                                |  
|Revenues:                                                       |  |                                |        |                                |   |        |  
|Room revenue                                                    |  | $                              | 37,496 |                                | $ | 36,555 |  
|Other revenue                                                   |  |                                | 2,821  |                                |   | 2,848  |  
|                                                                |  |                                |        |                                |   |        |  
|Total revenue                                                   |  |                                | 40,317 |                                |   | 39,403 |  
|                                                                |  |                                |        |                                |   |        |  
|Expenses:                                                       |  |                                |        |                                |   |        |  
|Operating expense                                               |  |                                | 11,264 |                                |   | 11,025 |  
|Hotel administrative expense                                    |  |                                | 3,817  |                                |   | 3,736  |  
|Sales and marketing                                             |  |                                | 3,345  |                                |   | 3,114  |  
|Utilities                                                       |  |                                | 1,980  |                                |   | 1,930  |  
|Repair and maintenance                                          |  |                                | 2,349  |                                |   | 2,185  |  
|Franchise fees                                                  |  |                                | 1,566  |                                |   | 1,507  |  
|Management fees                                                 |  |                                | 1,397  |                                |   | 1,379  |  
|Taxes, insurance and other                                      |  |                                | 2,449  |                                |   | 2,575  |  
|Land lease expense                                              |  |                                | 1,597  |                                |   | 1,597  |  
|General and administrative                                      |  |                                | 1,134  |                                |   | 1,197  |  
|Depreciation expense                                            |  |                                | 8,833  |                                |   | 8,652  |  
|                                                                |  |                                |        |                                |   |        |  
|Total expenses                                                  |  |                                | 39,731 |                                |   | 38,897 |  
|                                                                |  |                                |        |                                |   |        |  
|Operating income                                                |  |                                | 586    |                                |   | 506    |  
|                                                                |  |                                |        |                                |   |        |  
|Investment income, net                                          |  |                                |       |                                |   | 3,016  |  
|Interest expense, net                                           |  |                                | (2,695 | )                              |   | (2,133 | )
|                                                                |  |                                |        |                                |   |        |  
|                                                                |  |                                |        |                                |   |        |  
|Net income (loss)                                               |  | $                              | (2,109 | )                              | $ | 1,389  |  
|                                                                |  |                                |        |                                |   |        |  
|                                                                |  |                                |        |                                |   |        |  
|Basic and diluted net income (loss) per
 common share           |  | $                              | (0.02  | )                              | $ | 0.01   |  
|                                                                |  |                                |        |                                |   |        |  
|                                                                |  |                                |        |                                |   |        |  
|Weighted average common shares outstanding
 - basic and diluted |  |                                | 94,364 |                                |   | 93,769 |  

See notes to consolidated financial
statements.

4

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Apple REIT Eight, Inc.Consolidated Statements of Cash Flows(Unaudited)(In thousands)

|                                                                                                   |  |                                 |         |                                 |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | ------------------------------- | - | ------- | -
|                                                                                                   |  | Three monthsendedMarch 31, 2011 |         | Three monthsendedMarch 31, 2010 |  
|                                                                                                   |  |                                 |         |                                 |  
|                                                                                                   |  |                                 |         |                                 |  
|Cash flow from operating activities:                                                               |  |                                 |         |                                 |   |         |  
|Net income (loss)                                                                                  |  | $                               | (2,109  | )                               | $ | 1,389   |  
|Adjustments to reconcile net income (loss)
 to cash provided by operating activities:              |  |                                 |         |                                 |   |         |  
|Depreciation                                                                                       |  |                                 | 8,833   |                                 |   | 8,652   |  
|Amortization of deferred financing costs,
 fair value adjustments and other non-cash expenses, net |  |                                 | (82     | )                               |   | (64     | )
|Net realized gain on sale of investments                                                           |  |                                 |        |                                 |   | (3,011  | )
|Changes in operating assets and
 liabilities:                                                      |  |                                 |         |                                 |   |         |  
|Increase in other assets                                                                           |  |                                 | (901    | )                               |   | (567    | )
|Increase in funds due from third party
 managers                                                   |  |                                 | (3,348  | )                               |   | (3,148  | )
|Increase in accounts payable and accrued
 expenses                                                 |  |                                 | 2,331   |                                 |   | 1,297   |  
|                                                                                                   |  |                                 |         |                                 |   |         |  
|Net cash provided by operating activities                                                          |  |                                 | 4,724   |                                 |   | 4,548   |  
|                                                                                                   |  |                                 |         |                                 |   |         |  
|Cash flow from investing activities:                                                               |  |                                 |         |                                 |   |         |  
|Increase in capital improvement reserves                                                           |  |                                 | (754    | )                               |   | (84     | )
|Proceeds from sale of equity securities -
 available for sale                                      |  |                                 |        |                                 |   | 3,804   |  
|Capital improvements                                                                               |  |                                 | (569    | )                               |   | (2,531  | )
|                                                                                                   |  |                                 |         |                                 |   |         |  
|Net cash provided by (used in) investing
 activities                                               |  |                                 | (1,323  | )                               |   | 1,189   |  
|                                                                                                   |  |                                 |         |                                 |   |         |  
|Cash flow from financing activities:                                                               |  |                                 |         |                                 |   |         |  
|Net proceeds related to issuance of Units                                                          |  |                                 | 6,474   |                                 |   | 6,520   |  
|Redemptions of Units                                                                               |  |                                 | (7,999  | )                               |   | (2,248  | )
|Cash distributions paid to common
 shareholders                                                    |  |                                 | (18,157 | )                               |   | (18,037 | )
|Net proceeds from credit facility                                                                  |  |                                 | 16,810  |                                 |   | 8,610   |  
|Payments of mortgage debt                                                                          |  |                                 | (529    | )                               |   | (582    | )
|                                                                                                   |  |                                 |         |                                 |   |         |  
|Net cash used in financing activities                                                              |  |                                 | (3,401  | )                               |   | (5,737  | )
|                                                                                                   |  |                                 |         |                                 |   |         |  
|Net change in cash and cash equivalents                                                            |  |                                 |        |                                 |   |        |  
|                                                                                                   |  |                                 |         |                                 |   |         |  
|Cash and cash equivalents, beginning of
 period                                                    |  |                                 |        |                                 |   |        |  
|                                                                                                   |  |                                 |         |                                 |   |         |  
|                                                                                                   |  |                                 |         |                                 |   |         |  
|Cash and cash equivalents, end of period                                                           |  | $                               |        |                                 | $ |        |  
|                                                                                                   |  |                                 |         |                                 |   |         |  

See notes to consolidated financial
statements.

5

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APPLE REIT EIGHT, INC.

Notes to Consolidated
Financial Statements

1. General Information and Summary of
Significant Accounting Policies

Basis of Presentation

The
accompanying unaudited consolidated financial statements have been prepared in
accordance with the instructions for Article 10 of Regulation S-X. Accordingly,
they do not include all of the information required by accounting principles
generally accepted in the United States. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. These unaudited financial statements
should be read in conjunction with the Companys audited financial statements
included in its 2010 Annual Report on Form 10-K. Operating results for the
three months ended March 31, 2011 are not necessarily indicative of the results
that may be expected for the period ending December 31, 2011.

Organization

Apple REIT
Eight, Inc., together with its wholly owned subsidiaries, (the Company) is a
Virginia corporation that has elected to be treated as a real estate investment
trust (REIT) for federal income tax purposes. The Company was formed to
invest in hotels, residential apartment communities and other income-producing
real estate assets in selected metropolitan areas in the United States. Initial
capitalization occurred on January 22, 2007, when 10 Units, each Unit
consisting of one share of common stock and one share of Series A preferred
stock, were purchased by Apple Eight Advisors, Inc. (A8A), owned by Glade M.
Knight, the Companys Chairman and Chief Executive Officer, and 240,000 Series
B convertible shares were also purchased individually by Glade M. Knight. The
Company began operations on November 9, 2007 when it acquired its first hotels.
The Company completed its best efforts offering of Units in April 2008. The
Companys fiscal year end is December 31. As of March 31, 2011, the
Company owned 51 hotels. The Company has no foreign operations or assets and
its operating structure includes two segments. The consolidated financial
statements include the accounts of the Company and its subsidiaries. All
intercompany accounts and transactions have been eliminated.

Significant Accounting Policies

Use of Estimates

The
preparation of the financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.

Earnings Per Common Share

Basic earnings
per common share is computed based upon the weighted average number of shares
outstanding during the period. Diluted earnings per share is calculated after
giving effect to all potential common shares that were dilutive and outstanding
for the period. There were no potential common shares with a dilutive effect
for the three months ended March 31, 2011 or 2010. As a result, basic and
diluted outstanding shares were the same. Series B convertible preferred shares
are not included in earnings per common share calculations until such time the
Series B convertible preferred shares are eligible to be converted to common
shares.

6

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2. Gain on Sale of Investments

In the first
quarter of 2010, the Company sold equity securities that had been classified as
available-for-sale, in accordance with the Financial Accounting Standards
Boards (FASB) accounting standards codification for accounting for certain
investments in debt and equity securities. The sale resulted in a realized gain
of $3.0 million which is recorded in Investment income, net on the Companys
consolidated statements of operations in 2010.

3. Credit Facility and Mortgage Debt

The Company
has a $75 million unsecured line of credit with a commercial bank. The
applicable interest rate is equal to LIBOR (the London Interbank Offered Rate,
0.24% at March 31, 2011) plus 2.25% annually with a floor of 3.5%. The credit
facility has a scheduled maturity of October 2012. At March 31, 2011, the
credit facility had an outstanding principal balance of $68.7 million. At
December 31, 2010, the credit facility had an outstanding principal balance of
$51.9 million. The credit facility is unsecured, however does contain a
negative pledge agreement that requires approval from the lender to materially
change the Companys investment in 10 properties including using those 10
properties as security for additional financing. The credit facility also has
financial covenants requiring a minimum consolidated net worth and debt service
charge and a maximum debt to equity and distribution to income ratio. The
Company was in compliance with these covenants at March 31, 2011.

In March 2011
the Company requested the loans secured by the Winston-Salem, North Carolina
Courtyard, Tampa, Florida TownePlace Suites, Greenville, South Carolina
Residence Inn and Suffolk, Virginia TownePlace Suites and Courtyard to be
placed with a special servicer to negotiate the terms of the loans. To have the
loans placed with the special servicer the Company suspended making its
scheduled monthly debt payments beginning in March 2011. The Company has
received default notices from the lenders and does not know the timing and
resolution of the anticipated negotiations. The total outstanding balance
including unpaid interest of the five loans at March 31, 2011 was approximately
$37.0 million. The net book value of the properties securing these loans at
March 31, 2011 was approximately $52.8 million. If the Company is unable to
renegotiate the loans, it may be more cost beneficial to pursue a deed in lieu
of foreclosure with the lender(s). If the Company did pursue a deed in lieu of
foreclosure it would record an impairment loss of the difference between the
propertys carrying value and fair value, which could range from $7 million to
$11 million based on estimated values at March 31, 2011.

4. Fair Value of Financial Instruments

The Company
estimates the fair value of its fixed rate debt by discounting the future cash
flows of each instrument at estimated market rates consistent with the maturity
of the debt obligation with similar credit terms and credit characteristics.
Market rates take into consideration general market conditions and maturity. As
of March 31, 2011, the carrying value and estimated fair value of the Companys
debt was $216.7 million and $217.9 million. As of December 31, 2010, the
carrying value and estimated fair value of the Companys debt was $200.4
million and $200.5 million.

The Company
has an interest rate swap agreement that effectively fixes the interest rate on
a variable rate mortgage. The notional amount was $6.9 million as of March 31,
2011, and matures in October 2015. This derivative is recorded on the Companys
Consolidated Balance Sheets at fair value of $83,000 and $40,000 at March 31,
2011 and December 31, 2010 and is included in Other assets, net. The fair value
of the interest rate swap is determined using the market standard methodology
of netting the discounted future fixed cash payments (or receipts) and the
discounted expected variable cash receipts (or payments) which is considered a
Level 2 measurement within the FASBs fair value hierarchy. The variable cash
receipts (or payments) are based on an expectation of future interest rates
(forward curves) derived from observable market interest rate curves. This
derivative is not designated as a hedge, and the changes in the fair value are
recorded to Interest expense, net in the Consolidated Statements of Operations.
For the three months ended March 31, 2011, the change in fair value was
$43,000.

7

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5. Related Parties

The Company
has significant transactions with related parties. These transactions cannot be
construed to be arms length, and the results of the Companys operations may
be different if these transactions were conducted with non-related parties. The
Companys independent members of the Board of Directors oversee and annually
review the Companys related party relationships (which include the
relationships discussed in this section) and are required to approve any
significant modifications to these contracts, as well as any new significant
related party transactions. There were no changes to the contracts discussed in
this section and no new significant related party transactions during 2011. The
Board of Directors is not required to approve each individual transaction that
falls under a related party relationship, however under the direction of the
Board of Directors, at least one member of the Companys senior management team
approves each related party transaction.

The Company is
party to an advisory agreement with A8A, pursuant to which A8A provides
management services to the Company. An annual fee ranging from 0.1% to 0.25% of
total equity proceeds received by the Company, in addition to certain
reimbursable expenses, are payable for these services. Total advisory fees
incurred by the Company under the advisory agreement are included in general
and administrative expenses and totaled approximately $0.3 million for both the
three months ended March 31, 2011 and 2010.

In addition to
the fees payable to A8A, the Company reimbursed A8A or paid directly to Apple
REIT Six, Inc. (AR6) on behalf of A8A approximately $0.4 million and $0.5
million for the three months ended March 31, 2011 and 2010. The costs are
included in general and administrative expenses and are for the Companys
proportionate share of the staffing and related costs provided by AR6. The
costs are actual costs with no markup or profit to AR6. Also, as part of this
arrangement, the day to day transactions may result in amounts due to or from
the noted related parties. To efficiently manage cash disbursements, the
individual companies may make payments for any or all of the related companies.
The amounts due to or from the related individual companies are reimbursed or
collected and are not significant in amount.

A8A is 100%
owned by Glade M. Knight, Chairman and Chief Executive Officer of the Company.
Mr. Knight is also Chairman and Chief Executive Officer of AR6, Apple REIT
Seven, Inc., Apple REIT Nine, Inc. and Apple REIT Ten, Inc. Members of the
Companys Board of Directors are also on the boards of Apple REIT Six, Inc.,
Apple REIT Seven, Inc., Apple REIT Nine, Inc. and Apple REIT Ten, Inc.

Included in
other assets, net on the Companys consolidated balance sheets is a 24%
ownership interest in Apple Air Holding, LLC (Apple Air). The other members
of Apple Air are Apple REIT Six, Inc., Apple REIT Seven, Inc. and Apple REIT
Nine, Inc. Through its ownership interest the Company has access to Apple Airs
aircraft for asset management and renovation purposes. The Companys ownership
interest was $2.2 million at both March 31, 2011 and December 31, 2010. The
Company has recorded its share of income and losses of the entity under the equity
method of accounting and adjusted its investment in Apple Air accordingly. For
the three months ended March 31, 2011 and 2010, the Company recorded a loss of
approximately $49,000 and $110,000 in each period as its share of the net loss
of Apple Air, which primarily relates to the depreciation of the aircraft, and
is included in general and administrative expense in the Companys consolidated
statements of operations. Apple Air owned two aircraft during 2010, but reduced
its ownership to one aircraft during the first quarter of 2011.

6. Shareholders Equity

In the second
quarter of 2008, the Company instituted a Dividend Reinvestment Plan for its
shareholders. The plan provides a convenient and cost effective way to increase
shareholder investment in the Company by reinvesting dividends to purchase
additional Units of the Company. The uses of the proceeds from this plan may
include purchasing Units under the Companys Unit Redemption Program, enhancing
properties, satisfying financing obligations and other expenses, increasing
working capital, funding various corporate operations, and acquiring hotels.
The Company has registered 10 million Units for potential issuance under
the plan. During the first three months of 2011 and 2010, approximately 0.6
million Units were issued under the plan in each period representing
approximately $6.5 million. Since inception of the plan through

8

---



March 31,
2011, the Company has issued approximately 6.9 million Units representing
approximately $75.4 million.

The Company
has a Unit Redemption Program to provide limited interim liquidity to its
shareholders who have held their Units for at least one year. Shareholders may
request redemption of Units for a purchase price equal to 92% of the price paid
per Unit if the Units have been owned for less than three years, or 100% of the
price paid per Unit if the Units have been owned more than three years. The
maximum number of Units that may be redeemed in any 12-month period is three
percent of the weighted average number of Units outstanding during the 12-month
period immediately prior to the date of redemption. The Company reserves the
right to change the purchase price for redemptions, reject any request for
redemption, or otherwise amend the terms of, suspend, or terminate the Unit
Redemption Program. During the three months ended March 31, 2011, the Company
redeemed approximately 733,000 Units in the amount of $8.0 million under the
program. For the first three months of 2010, the Company redeemed approximately
216,000 Units in the amount of $2.2 million. Since inception of the program
through March 31, 2011, the Company has redeemed approximately 3.5 million
Units representing approximately $37.0 million. As contemplated by the program,
beginning with the January 2011 redemption, the Company redeemed Units on a
pro-rata basis with approximately 61% of the amount requested redeemed.

The Companys
annual distribution rate as of March 31, 2011 was $0.77 per common share,
payable monthly. For the three months ended March 31, 2011 and 2010 the Company
made distributions of $0.193 per common share for a total of $18.2 million and
$18.0 million.

7. Industry Segments

The Company
has two reportable segments (the New York hotel and all other hotels). The
Company does not allocate corporate-level accounts to its operating segments,
including corporate general and administrative expenses, non-operating interest
income and interest expense. Dollar amounts are in thousands.

|                                   |  |                                           |         |                   |   |           |   |              |        |   |   |         |  
|---------------------------------- |  | ----------------------------------------- | ------- | ----------------- | - | --------- | - | ------------ | ------ | - | - | ------- | -
|                                   |  | For the three months ended March 31, 2011
|                                   |  |                                          
|                                   |  | New York,
 New York
 Hotel                |         | All Other
 Hotels |   | Corporate |   | Consolidated |       
|                                   |  |                                           |         |                   |   |           |   |              |       
|Total revenue                      |  | $                                         | 4,077   |                   | $ | 36,240    |   | $            |       |   | $ | 40,317  |  
|Hotel operating expenses           |  |                                           | 4,325   |                   |   | 25,439    |   |              |       |   |   | 29,764  |  
|General and administrative expense |  |                                           |        |                   |   |          |   |              | 1,134  |   |   | 1,134   |  
|Depreciation expense               |  |                                           | 1,633   |                   |   | 7,200     |   |              |       |   |   | 8,833   |  
|                                   |  |                                           |         |                   |   |           |   |              |        |   |   |         |  
|Operating income/(loss)            |  |                                           | (1,881  | )                 |   | 3,601     |   |              | (1,134 | ) |   | 586     |  
|Interest expense, net              |  |                                           |        |                   |   | (1,904    | ) |              | (791   | ) |   | (2,695  | )
|                                   |  |                                           |         |                   |   |           |   |              |        |   |   |         |  
|Net income/(loss)                  |  | $                                         | (1,881  | )                 | $ | 1,697     |   | $            | (1,925 | ) | $ | (2,109  | )
|                                   |  |                                           |         |                   |   |           |   |              |        |   |   |         |  
|Total assets                       |  | $                                         | 116,580 |                   | $ | 840,133   |   | $            | 2,473  |   | $ | 959,186 |  

|                                   |  |                                           |         |                   |   |           |   |              |        |   |   |         |  
|---------------------------------- |  | ----------------------------------------- | ------- | ----------------- | - | --------- | - | ------------ | ------ | - | - | ------- | -
|                                   |  | For the three months ended March 31, 2010
|                                   |  |                                          
|                                   |  | New York,
 New York
 Hotel                |         | All Other
 Hotels |   | Corporate |   | Consolidated |       
|                                   |  |                                           |         |                   |   |           |   |              |       
|Total revenue                      |  | $                                         | 3,948   |                   | $ | 35,455    |   | $            |       |   | $ | 39,403  |  
|Hotel operating expenses           |  |                                           | 4,074   |                   |   | 24,974    |   |              |       |   |   | 29,048  |  
|General and administrative expense |  |                                           |        |                   |   |          |   |              | 1,197  |   |   | 1,197   |  
|Depreciation expense               |  |                                           | 1,593   |                   |   | 7,059     |   |              |       |   |   | 8,652   |  
|                                   |  |                                           |         |                   |   |           |   |              |        |   |   |         |  
|Operating income/(loss)            |  |                                           | (1,719  | )                 |   | 3,422     |   |              | (1,197 | ) |   | 506     |  
|Investment income, net             |  |                                           |        |                   |   |          |   |              | 3,016  |   |   | 3,016   |  
|Interest expense, net              |  |                                           |        |                   |   | (1,805    | ) |              | (328   | ) |   | (2,133  | )
|                                   |  |                                           |         |                   |   |           |   |              |        |   |   |         |  
|Net income/(loss)                  |  | $                                         | (1,719  | )                 | $ | 1,617     |   | $            | 1,491  |   | $ | 1,389   |  
|                                   |  |                                           |         |                   |   |           |   |              |        |   |   |         |  
|                                   |  |                                           |         |                   |   |           |   |              |        |   |   |         |  
|Total assets                       |  | $                                         | 121,925 |                   | $ | 868,255   |   | $            | 2,829  |   | $ | 993,009 |  

9

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8. Subsequent Events

In April 2011,
the Company declared and paid approximately $6.1 million in distributions to
its common shareholders, or $0.064167 per outstanding common share. Under the
Companys Dividend Reinvestment Plan, $2.2 million were reinvested, resulting
in the issuance of approximately 197,000 Units.

In April 2011,
the Company redeemed approximately 729,000 Units in the amount of $8.0 million under
its Unit Redemption Program. As contemplated in the Program, the Company
redeemed Units on a pro-rata basis. The redemption was approximately 48% of the
requested redemption amount.

On April 19,
2011, the Company entered into a Loan Agreement (the Loan Agreement) with
Bank of America, N.A. The Loan Agreement provides for a revolving credit
facility of $20 million and a maturity date of April 19, 2012. Interest will be
payable quarterly on the outstanding balance based on an annual rate of One
Month LIBOR plus 2.0%. Under the terms and conditions of the Loan Agreement,
the Company may make voluntary prepayments in whole or in part, at any time.
The Loan Agreement is guaranteed by Glade M. Knight, the Companys Chairman and
Chief Executive Officer and is secured by assets of Mr. Knight. Mr. Knight will
not receive any consideration in exchange for providing this guaranty and
security. Proceeds of the loan will be used by the Company for general working
capital purposes, including the payment of redemptions and distributions. The
independent directors of the Companys Board of Directors approved Mr. Knight
providing a guaranty under the Loan Agreement.

10

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Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations

This quarterly
report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements involve known and unknown risks, uncertainties, and other factors
which may cause the actual results, performance, or achievements of the Company
to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, but are not limited to, the ability of the Company to implement its
acquisition strategy and operating strategy; the Companys ability to manage
planned growth; changes in economic cycles and competition within the hotel
industry. Although the Company believes that the assumptions underlying
the forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore there can be no assurance that
such statements included in the quarterly report will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the results or conditions described in such statements or the objectives
and plans of the Company will be achieved. In addition, the Companys
qualification as a real estate investment trust involves the application of
highly technical and complex provisions of the Internal Revenue
Code. Readers should carefully review the Companys financial statements
and the notes thereto, as well as the risk factors described in the Companys
filings with the Securities and Exchange Commission. Any forward-looking
statement that the Company makes speaks only as of the date of this report. The
Company undertakes no obligation to publically update or revise any
forward-looking statements or cautionary factors, as a result of new
information, future events, or otherwise, except as required by law.

Overview

Apple REIT
Eight, Inc. together with its wholly owned subsidiaries (the Company) is a
Virginia corporation that has elected to be treated as a real estate investment
trust (REIT) for federal income tax purposes. The Company, which owned 51 properties
as of March 31, 2011 with its first hotel acquired on November 9, 2007, was
formed to invest in hotels, residential apartment communities and other real
estate in selected metropolitan areas in the United States. Initial
capitalization occurred on January 22, 2007, when 10 Units, each Unit
consisting of one share of common stock and one share of Series A preferred
stock were purchased by Apple Eight Advisors, Inc. (A8A) and 240,000 shares
of Series B Preferred shares were purchased by Mr. Glade M. Knight,
the Companys Chairman and Chief Executive Officer. The Company completed its
best-efforts offering of Units in April 2008. The Companys fiscal year end is
December 31. The consolidated financial statements include the accounts of
the Company and its subsidiaries. All intercompany transactions and balances
have been eliminated upon consolidation.

Hotel
performance can be influenced by many factors including local competition,
local and national economic conditions in the United States and the performance
of individual managers assigned to each hotel. While the Companys hotels
performance as compared to other hotels within each individual market has met
expectations for the periods held, overall financial results have not met
expectations, due to the significant decline in economic conditions throughout
the United States. It is anticipated the properties financial performance will
be below pre-recession levels until general economic conditions return to
pre-recessionary levels. Although slightly behind industry averages, the
Companys revenues increased in the first quarter of 2011 as compared to the
first quarter of 2010 by approximately 2%. There is no way to predict future
general economic conditions, however the Company anticipates mid single digit
percentage increases in revenue for the remainder of 2011 as compared to 2010.

In evaluating
financial condition and operating performance, the most important matters on
which the Company focuses are revenue measurements, such as average occupancy,
average daily rate (ADR), revenue per available room (RevPAR), and Market
Yield, which compares an individual hotels results to other hotels in its
local market, and expenses, such as hotel operating expenses, general and
administrative and other expenses described below.

The following
is a summary of the Companys results for the first three months of 2011 and
2010:

11

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|                                         |  |                                    |        |                     |  |                                    |   |                     |        |                 |  |     |   |  |     |  
|---------------------------------------- |  | ---------------------------------- | ------ | ------------------- |  | ---------------------------------- | - | ------------------- | ------ | --------------- |  | --- | - |  | --- | -
|(in
 thousands, except statistical data) |  | Three months ended
 March 31, 2011 |        | Percent of
 Revenue |  | Three months ended
 March 31, 2010 |   | Percent of
 Revenue |        | Percent
 Change | 
|                                         |  |                                    |        |                     |  |                                    |   |                     |        |                 |  |     |   |  |     |  
|Total revenues                           |  | $                                  | 40,317 |                     |  | 100                                | % | $                   | 39,403 |                 |  | 100 | % |  | 2   | %
|Hotel operating expenses                 |  |                                    | 25,718 |                     |  | 64                                 | % |                     | 24,876 |                 |  | 63  | % |  | 3   | %
|Taxes, insurance and other expense       |  |                                    | 2,449  |                     |  | 6                                  | % |                     | 2,575  |                 |  | 7   | % |  | -5  | %
|Land lease expense                       |  |                                    | 1,597  |                     |  | 4                                  | % |                     | 1,597  |                 |  | 4   | % |  |    |  
|General and administrative expense       |  |                                    | 1,134  |                     |  | 3                                  | % |                     | 1,197  |                 |  | 3   | % |  | -5  | %
|                                         |  |                                    |        |                     |  |                                    |   |                     |        |                 |  |     |   |  |     |  
|Depreciation                             |  |                                    | 8,833  |                     |  |                                    |   |                     | 8,652  |                 |  |     |   |  | 2   | %
|Investment income, net                   |  |                                    |       |                     |  |                                    |   |                     | 3,016  |                 |  |     |   |  | N/A |  
|Interest expense, net                    |  |                                    | (2,695 | )                   |  |                                    |   |                     | (2,133 | )               |  |     |   |  | 26  | %
|                                         |  |                                    |        |                     |  |                                    |   |                     |        |                 |  |     |   |  |     |  
|Number of hotels                         |  |                                    | 51     |                     |  |                                    |   |                     | 51     |                 |  |     |   |  |    |  
|Average RevPAR Index (1)                 |  |                                    | 132    |                     |  |                                    |   |                     | 134    |                 |  |     |   |  | -1  | %
|ADR                                      |  | $                                  | 106    |                     |  |                                    |   | $                   | 105    |                 |  |     |   |  | 1   | %
|Occupancy                                |  |                                    | 66     | %                   |  |                                    |   |                     | 65     | %               |  |     |   |  | 2   | %
|RevPAR                                   |  | $                                  | 70     |                     |  |                                    |   | $                   | 68     |                 |  |     |   |  | 3   | %
|Room nights sold (in 000s)(2)            |  |                                    | 350    |                     |  |                                    |   |                     | 343    |                 |  |     |   |  | 2   | %
|Room nights available (in 000s)(3)       |  |                                    | 529    |                     |  |                                    |   |                     | 529    |                 |  |     |   |  |    |  

|                                                                                                                       
|-----------------------------------------------------------------------------------------------------------------------
|(1) Statistics calculated from data provided by
 Smith Travel Research, Inc.® and excludes properties under renovation.
|(2) Represents the number of room nights sold
 during the period.                                                      
|(3) Represents the number of rooms owned by the
 Company multiplied by the number of nights in the period.             
|                                                                                                                       

Hotels Owned

The following
table summarizes the location, brand, manager, date acquired, number of rooms
and gross purchase price for each of the 51 hotels the Company owned at March
31, 2011. All dollar amounts are in thousands.

12

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|                |  |       |  |                        |  |               |  |                |  |       |  |                 |         | 
|--------------- |  | ----- |  | ---------------------- |  | ------------- |  | -------------- |  | ----- |  | --------------- | ------- | 
|Location        |  | State |  | Brand                  |  | Manager       |  | Date
 Acquired |  | Rooms |  | Purchase
 Price |        
|                |  |       |  |                        |  |               |  |                |  |       |  |                 |        
|Birmingham      |  | AL    |  | Homewood Suites        |  | McKibbon      |  | 5/23/2008      |  | 95    |  | $               | 16,500  | 
|Rogers          |  | AR    |  | Fairfield Inn & Suites |  | Intermountain |  | 2/29/2008      |  | 99    |  |                 | 8,000   | 
|Rogers          |  | AR    |  | Residence Inn          |  | Intermountain |  | 2/29/2008      |  | 88    |  |                 | 11,744  | 
|Springdale      |  | AR    |  | Residence Inn          |  | Intermountain |  | 3/14/2008      |  | 72    |  |                 | 5,606   | 
|Burbank         |  | CA    |  | Residence Inn          |  | Marriott      |  | 5/13/2008      |  | 166   |  |                 | 50,500  | 
|Cypress         |  | CA    |  | Courtyard              |  | Dimension     |  | 4/30/2008      |  | 180   |  |                 | 31,164  | 
|Oceanside       |  | CA    |  | Residence Inn          |  | Marriott      |  | 5/13/2008      |  | 125   |  |                 | 28,750  | 
|Sacramento      |  | CA    |  | Hilton Garden Inn      |  | Dimension     |  | 3/7/2008       |  | 154   |  |                 | 27,630  | 
|San Jose        |  | CA    |  | Homewood Suites        |  | Dimension     |  | 7/2/2008       |  | 140   |  |                 | 21,862  | 
|Tulare          |  | CA    |  | Hampton Inn & Suites   |  | Inn Ventures  |  | 6/26/2008      |  | 86    |  |                 | 10,331  | 
|Jacksonville    |  | FL    |  | Homewood Suites        |  | McKibbon      |  | 6/17/2008      |  | 119   |  |                 | 23,250  | 
|Sanford         |  | FL    |  | SpringHill Suites      |  | LBA           |  | 3/14/2008      |  | 105   |  |                 | 11,150  | 
|Tallahassee     |  | FL    |  | Hilton Garden Inn      |  | LBA           |  | 1/25/2008      |  | 85    |  |                 | 13,200  | 
|Tampa           |  | FL    |  | TownePlace Suites      |  | McKibbon      |  | 6/17/2008      |  | 95    |  |                 | 11,250  | 
|Port Wentworth  |  | GA    |  | Hampton Inn            |  | Newport       |  | 1/2/2008       |  | 106   |  |                 | 10,780  | 
|Savannah        |  | GA    |  | Hilton Garden Inn      |  | Newport       |  | 7/31/2008      |  | 105   |  |                 | 12,500  | 
|Overland Park   |  | KS    |  | SpringHill Suites      |  | True North    |  | 3/17/2008      |  | 102   |  |                 | 8,850   | 
|Overland Park   |  | KS    |  | Residence Inn          |  | True North    |  | 4/30/2008      |  | 120   |  |                 | 15,850  | 
|Overland Park   |  | KS    |  | Fairfield Inn & Suites |  | True North    |  | 8/20/2008      |  | 110   |  |                 | 12,050  | 
|Wichita         |  | KS    |  | Courtyard              |  | Intermountain |  | 6/13/2008      |  | 90    |  |                 | 8,874   | 
|Bowling Green   |  | KY    |  | Hampton Inn            |  | Newport       |  | 12/6/2007      |  | 130   |  |                 | 18,832  | 
|Marlborough     |  | MA    |  | Residence Inn          |  | True North    |  | 1/15/2008      |  | 112   |  |                 | 20,200  | 
|Westford        |  | MA    |  | Hampton Inn & Suites   |  | True North    |  | 3/6/2008       |  | 110   |  |                 | 15,250  | 
|Westford        |  | MA    |  | Residence Inn          |  | True North    |  | 4/30/2008      |  | 108   |  |                 | 14,850  | 
|Annapolis       |  | MD    |  | Hilton Garden Inn      |  | White         |  | 1/15/2008      |  | 126   |  |                 | 25,000  | 
|Kansas City     |  | MO    |  | Residence Inn          |  | True North    |  | 4/30/2008      |  | 106   |  |                 | 17,350  | 
|Carolina Beach  |  | NC    |  | Courtyard              |  | Crestline     |  | 6/5/2008       |  | 144   |  |                 | 24,214  | 
|Concord         |  | NC    |  | Hampton Inn            |  | Newport       |  | 3/7/2008       |  | 101   |  |                 | 9,200   | 
|Dunn            |  | NC    |  | Hampton Inn            |  | McKibbon      |  | 1/24/2008      |  | 120   |  |                 | 12,500  | 
|Fayetteville    |  | NC    |  | Residence Inn          |  | Intermountain |  | 5/9/2008       |  | 92    |  |                 | 12,201  | 
|Greensboro      |  | NC    |  | SpringHill Suites      |  | Newport       |  | 11/9/2007      |  | 82    |  |                 | 8,000   | 
|Matthews        |  | NC    |  | Hampton Inn            |  | Newport       |  | 1/15/2008      |  | 92    |  |                 | 11,300  | 
|Wilmington      |  | NC    |  | Fairfield Inn & Suites |  | Crestline     |  | 12/11/2008     |  | 122   |  |                 | 14,800  | 
|Winston-Salem   |  | NC    |  | Courtyard              |  | McKibbon      |  | 5/19/2008      |  | 122   |  |                 | 13,500  | 
|Somerset        |  | NJ    |  | Courtyard              |  | Newport       |  | 11/9/2007      |  | 162   |  |                 | 16,000  | 
|New York        |  | NY    |  | Renaissance            |  | Marriott      |  | 1/4/2008       |  | 201   |  |                 | 99,000  | 
|Tulsa           |  | OK    |  | Hampton Inn & Suites   |  | Western       |  | 12/28/2007     |  | 102   |  |                 | 10,200  | 
|Columbia        |  | SC    |  | Hilton Garden Inn      |  | Newport       |  | 9/22/2008      |  | 143   |  |                 | 21,200  | 
|Greenville      |  | SC    |  | Residence Inn          |  | McKibbon      |  | 5/19/2008      |  | 78    |  |                 | 8,700   | 
|Hilton Head     |  | SC    |  | Hilton Garden Inn      |  | McKibbon      |  | 5/29/2008      |  | 104   |  |                 | 13,500  | 
|Chattanooga     |  | TN    |  | Homewood Suites        |  | LBA           |  | 12/14/2007     |  | 76    |  |                 | 8,600   | 
|Texarkana       |  | TX    |  | Courtyard              |  | Intermountain |  | 3/7/2008       |  | 90    |  |                 | 12,924  | 
|Texarkana       |  | TX    |  | TownePlace Suites      |  | Intermountain |  | 3/7/2008       |  | 85    |  |                 | 9,057   | 
|Charlottesville |  | VA    |  | Courtyard              |  | Crestline     |  | 6/5/2008       |  | 137   |  |                 | 27,900  | 
|Chesapeake      |  | VA    |  | Marriott               |  | Crestline     |  | 10/21/2008     |  | 226   |  |                 | 38,400  | 
|Harrisonburg    |  | VA    |  | Courtyard              |  | Newport       |  | 11/16/2007     |  | 125   |  |                 | 23,219  | 
|Suffolk         |  | VA    |  | Courtyard              |  | Crestline     |  | 7/2/2008       |  | 92    |  |                 | 12,500  | 
|Suffolk         |  | VA    |  | TownePlace Suites      |  | Crestline     |  | 7/2/2008       |  | 72    |  |                 | 10,000  | 
|Virginia Beach  |  | VA    |  | Courtyard              |  | Crestline     |  | 6/5/2008       |  | 141   |  |                 | 27,100  | 
|Virginia Beach  |  | VA    |  | Courtyard              |  | Crestline     |  | 6/5/2008       |  | 160   |  |                 | 39,700  | 
|Tukwila         |  | WA    |  | Homewood Suites        |  | Dimension     |  | 7/2/2008       |  | 106   |  |                 | 15,707  | 
|                |  |       |  |                        |  |               |  |                |  |       |  |                 |         | 
|                |  |       |  |                        |  |               |  |                |  | 5,909 |  | $               | 950,745 | 
|                |  |       |  |                        |  |               |  |                |  |       |  |                 |         | 

13

---



With the exception of assumed mortgage loans in 2008 on 15 of its hotel properties,
substantially all of the purchases were funded with proceeds of the Companys
best-efforts offering of Units, which was completed in April 2008. The Company
leases all of its hotels to its wholly-owned taxable REIT subsidiaries under
hotel lease agreements. The Company also used the proceeds of its offering to
pay $19.0 million, representing 2% of the gross purchase price for these
hotels, as a commission to Apple Suites Realty Group, Inc. (ASRG), 100% owned
by Glade M. Knight, the Companys Chairman and Chief Executive Officer. No
hotels have been purchased since December 2008, and there are no outstanding
purchase contracts for additional hotels as of March 31, 2011.

Results of Operations

As of March 31, 2011, the
Company owned 51 hotels with 5,909 rooms. The Companys portfolio of hotels
owned is unchanged since 2008. Hotel performance is impacted by many factors,
including economic conditions in the United States, as well as each locality.
During the period from the second half of 2008 through 2010, the overall
weakness in the U.S. economy has had a considerable negative impact on both
consumer and business travel. As a result, lodging demand in most markets in
the United States has declined from levels of 2007 and the first half of 2008.
Economic conditions are showing evidence of improvement. While the Company
expects 2011 revenue and operating income for the industry and the Company to
improve over 2010 results, it is not expected that revenue and operating income
will reach pre-recession levels. Although slightly below overall industry
averages for the first quarter of 2011, the Companys hotels have shown results
consistent with the industry and brand averages for the period of ownership.

The Company separately
evaluates the performance of each of its hotel properties. Due to the
significance of the New York, New York hotel, the Company has two reportable
segments.

RevenuesThe Companys
principal source of revenue is hotel room revenue and other related revenue.
For the three months ended March 31, 2011 and 2010, the Company had total
revenue of $40.3 million and $39.4 million. Revenue for the hotel located in
New York, New York (the New York hotel) was $4.1 million or 10% of total
revenue for the first quarter of 2011 and $3.9 million or 10% of total revenue
for the first quarter of 2010.

For the three
months ended March 31, 2011, the hotels achieved combined average occupancy of
approximately 66%, ADR of $106 and RevPAR of $70. The New York hotel had
average occupancy of 77%, ADR of $232 and RevPAR of $179. For the three months
ended March 31, 2010, the hotels achieved combined average occupancy of
approximately 65%, ADR of $105 and RevPAR of $68. For the same period, the New
York hotel had average occupancy of 82%, ADR of $211 and RevPAR of $173. ADR is
calculated as room revenue divided by the number of rooms sold, and RevPAR is
calculated as occupancy multiplied by ADR. Since the beginning of 2010 the
Company has experienced an increase in demand as demonstrated by the slight
improvement in average occupancy. In addition, also signifying a stabilizing
economy, the Company experienced a modest increase in average room rates versus
the same period of 2010. The occupancy and ADR increases resulted in a three
percent increase in RevPAR during the first quarter of 2011, as compared to the
first quarter of 2010. With demand improvement and expected rate improvement,
the Company and industry anticipate percentage revenue growth for the remainder
of 2011 in the mid single digits, as compared to 2010. Although overall, the
Company was behind the industry revenue growth rate in the first quarter of
2011 as compared to the same period in 2010, the Company does expect to approximate
the industry growth rate for the full year of 2011. While reflecting the impact
of post-recessionary levels of single-digit growth in national economic
activity, the Companys hotels also continue to be leaders in their respective
markets. The Companys average Market Yield for the first three months of 2011
and 2010 was 132 and 134. The Market Yield is a measure of each hotels RevPAR
compared to the average (100) in its local market. The index excludes hotels
under renovation.

The RevPAR Index for the New
York hotel was 125 for the three months ending March 31, 2011, an increase of
9% from 115 for the first three months of 2010. The Company believes there is
more

14

---



opportunity for market
penetration and continues to work with Marriott management to increase the
RevPAR Index for the New York hotel.

ExpensesFor the three months
ended March 31, 2011 and 2010, hotel operating expenses of the Companys hotels
totaled $25.7 million or 64% of total revenue (the New York hotel had direct
expenses of $2.7 million or 66% of its total revenue for the quarter) and $24.9
million or 63% of total revenue (the New York hotel had direct expenses of $2.5
million or 62% of its total revenue for the quarter). Hotel operating expenses
consist of operating expense, hotel administrative expense, sales and marketing
expense, utilities expense, repair and maintenance expense, franchise fees and
management fees. The Company continues its efforts to control costs, however,
certain operating costs such as management costs, certain utility costs and
minimum supply and maintenance costs are relatively fixed in nature, and cannot
be curtailed or eliminated. The Company has been successful in reducing certain
labor costs, food and supply costs and utility costs by continually monitoring
and sharing utilization data across its hotels and management companies. The
increase as a percentage of revenue in the first quarter of 2011 as compared to
the same period in 2010 is due primarily to increased sales and marketing costs
incurred to increase revenue and repair and maintenance costs incurred at the
New York hotel. The Company anticipates these costs for the full year of 2011
to approximate 2010 as a percentage of revenue.

Taxes,
insurance, and other expense for the three months ended March 31, 2011 and 2010
totaled $2.4 million, or 6% of total revenues, and $2.6 million, or 7% of total
revenues (of which approximately $147,000 and $137,000 related to the New York
hotel). Decreases in these expenses for the comparable three month periods
ending March 31, 2011 and 2010 reflect lower real estate property tax
assessments at selected hotels, including the results of successful appeals of
assessments for some locations. In addition, the Company has experienced lower
property insurance expense for most hotel properties, in comparison to
insurance rates in effect during 2010.

Land lease expense was $1.6
million for both three months ended March 31, 2011 and 2010. This expense
represents the expense incurred by the Company to lease land for five hotel
properties. Land lease expense for the New York hotel was $1.5 million for both
the first quarter of 2011 and 2010.

General and administrative
expense for the three months ended March 31, 2011 and 2010 was $1.1 million and
$1.2 million. The principal components of general and administrative expense
are advisory fees and reimbursable expenses, legal fees, accounting fees,
reporting expense, and the Companys share of loss from its investment in Apple
Air Holding LLC.

Depreciation expense was
$8.8 million for the first quarter of 2011 and $8.7 million for the first
quarter of 2010. These expenses include $1.6 million in each period for the New
York hotel. Depreciation expense represents depreciation expense of the
Companys hotel buildings and related improvements, and associated furniture,
fixtures and equipment, for the respective periods owned.

In the first quarter of
2010, the Company sold its equity securities in a publicly traded real estate
investment trust, resulting in realized gains and other investment income of
$3.0 million.

Interest expense, net for
the first quarter of 2011 and 2010 was $2.7 million and $2.1 million. Interest
expense for both periods includes interest expense on 15 mortgages assumed in
2008 and the Companys credit facility and term loan. Interest expense in the
first quarter of 2010 was reduced by capitalized interest of $101,000 related
to the renovation of two hotel properties.

Liquidity and Capital Resources

In October 2010 the Company
entered into a $75.0 million unsecured revolving credit facility which expires
in October 2012. The credit facility, which effectively extended the Companys
existing credit facility, was obtained for general corporate purposes,
including capital expenditures, redemptions and distributions. With the
availability of this credit facility, the Company maintains little cash on
hand, accessing the line as necessary. As a result, cash on hand was $0 at
March 31, 2011. The outstanding

15

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balance on the credit
facility was $68.7 million at March 31, 2011. Also in October 2010 the Company
entered into a $25 million term loan secured by two hotels. Interest on the
loans is due monthly, interest is based on LIBOR with a floor of 3.5%, the
interest rate for both loans was 3.5% at March 31, 2011, and the principal is
due at maturity which is October 2012. Both loans have quarterly financial
covenants which the Company was in compliance with at March 31, 2011. Although
the Company anticipates maintaining compliance with these covenants, there can
be no assurances that a default will not occur and the loans become immediately
payable.

In March 2011 the Company
requested the loans secured by the Winston-Salem, North Carolina Courtyard,
Tampa, Florida TownePlace Suites, Greenville, South Carolina Residence Inn and
Suffolk, Virginia TownePlace Suites and Courtyard to be placed with a special
servicer to negotiate the terms of the loans. To have the loans placed with the
special servicer the Company suspended making its scheduled monthly debt
payments beginning in March 2011. The Company has received default notices from
the lenders and does not know the timing and resolution of the anticipated
negotiations. The total outstanding balance including unpaid interest of the
five loans at March 31, 2011 was approximately $37.0 million. The net book
value of the properties securing these loans at March 31, 2011 was
approximately $52.8 million. If the Company is unable to renegotiate the loans,
it may be more cost beneficial to pursue a deed in lieu of foreclosure with the
lender(s). If the Company did pursue a deed in lieu of foreclosure it would
record an impairment loss of the difference between the propertys carrying
value and fair value, which could range from $7 million to $11 million based on
estimated values at March 31, 2011.

The Company anticipates that
cash flow from operations and the revolving credit facility will be adequate to
meet its anticipated liquidity requirements, including required distributions
to shareholders (the Company is not required to make distributions at its
current rate for REIT purposes), capital expenditures and debt service in 2011.
The Company intends to maintain a relatively stable distribution rate instead
of raising and lowering the distribution rate with varying economic cycles. With
the depressed financial results of the Company and the lodging industry as
compared to pre-recession levels, the Company will attempt to utilize
additional financing to achieve this objective. Although the Company has
relatively low levels of debt, there can be no assurances it will be successful
with this strategy and may need to reduce its distributions to required levels.
If the Company were unable to extend maturing debt or if it were to default on
its debt, it may be unable to make distributions.

To maintain its REIT status
the Company is required to distribute at least 90% of its ordinary income.
Distributions in the first three months of 2011 totaled $18.2 million and were
paid monthly at a rate of $0.064167 per common share. For the same three month
period, the Companys cash generated from operations was approximately $4.7
million. This shortfall includes a return of capital and was funded primarily
by additional borrowings under the Companys credit facility. The Company
intends to continue paying distributions on a monthly basis. However, since
there can be no assurance of the ability of the Companys properties to provide
income at this level, there can be no assurance as to the classification or
duration of distributions at the current monthly rate. The Board of Directors
monitors the Companys distribution rate relative to the performance of the
hotels on an ongoing basis and may make adjustments to the distribution rate as
determined to be prudent in relation to other cash requirements of the Company.

The Company has on-going
capital commitments to fund its capital improvements. The Company is required,
under all of the hotel management agreements, and under certain loan
agreements, to make available, for the repair, replacement, refurbishing of
furniture, fixtures, and equipment, a percentage of gross revenues provided
that such amount may be used for the Companys capital expenditures with
respect to the hotels. As of March 31, 2011, the Company held $8.4 million in
reserve for capital expenditures. Total capital expenditures in the first three
months of 2011 for all renovations and items recurring in nature were
approximately $0.7 million. Total capital expenditures for 2011 are anticipated
to be in the range of $12 million to $14 million.

In
the second quarter of 2008, the Company instituted a Dividend Reinvestment Plan for its shareholders. The plan
provides a convenient and cost effective way to increase shareholder investment
in the Company by reinvesting dividends to purchase additional Units of the
Company. The uses of the proceeds from this plan may include purchasing Units
under the Companys Unit Redemption Program, enhancing properties,

16

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satisfying financing
obligations and other expenses, increasing working capital, funding various
corporate operations, and acquiring hotels. The Company has registered
10 million Units for potential issuance under the plan. During the first
three months of 2011 and 2010, approximately 0.6 million Units were issued
under the plan in each period representing approximately $6.5 million. Since
inception of the plan through March 31, 2011, the Company has issued
approximately 6.9 million Units representing approximately $75.4 million.

The Company
has a Unit Redemption Program to provide limited interim liquidity to its
shareholders who have held their Units for at least one year. Shareholders may
request redemption of Units for a purchase price equal to 92% of the price paid
per Unit if the Units have been owned for less than three years, or 100% of the
price paid per Unit if the Units have been owned more than three years. The
maximum number of Units that may be redeemed in any 12-month period is three
percent of the weighted average number of Units outstanding during the 12-month
period immediately prior to the date of redemption. The Company reserves the
right to change the purchase price for redemptions, reject any request for
redemption, or otherwise amend the terms of, suspend, or terminate the Unit
Redemption Program. During the three months ended March 31, 2011, the Company
redeemed approximately 733,000 Units in the amount of $8.0 million under the
program. For the first three months of 2010, the Company redeemed approximately
216,000 Units in the amount of $2.2 million. Since inception of the program
through March 31, 2011, the Company has redeemed approximately 3.5 million
Units representing approximately $37.0 million. As contemplated by the program,
beginning with the January 2011 redemption, the Company redeemed Units on a
pro-rata basis with approximately 61% of the amount requested redeemed.

Related Party Transactions

The
Company has significant transactions with related parties. These transactions
cannot be construed to be arms length, and the results of the Companys
operations may be different if these transactions were conducted with
non-related parties. The Companys independent members of the Board of
Directors oversee and annually review the Companys related party relationships
(which include the relationships discussed in this section) and are required to
approve any significant modifications to these contracts, as well as any new
significant related party transactions. There were no changes to the contracts
discussed in this section and no new significant related party transactions
during 2011. The Board of Directors is not required to approve each individual
transaction that falls under a related party relationship, however under the
direction of the Board of Directors, at least one member of the Companys
senior management team approves each related party transaction.

The Company is party to an advisory agreement with A8A,
pursuant to which A8A provides management services to the Company. An annual
fee ranging from 0.1% to 0.25% of total equity proceeds received by the
Company, in addition to certain reimbursable expenses, are payable for these
services. Total advisory fees incurred by the Company under the advisory
agreement are included in general and administrative expenses and totaled
approximately $0.3 million for both the three months ended March 31, 2011 and
2010.

In addition to
the fees payable to A8A, the Company reimbursed A8A or paid directly to Apple
REIT Six, Inc. (AR6) on behalf of A8A approximately $0.4 million and $0.5
million for the three months ended March 31, 2011 and 2010. The costs are
included in general and administrative expenses and are for the Companys
proportionate share of the staffing and related costs provided by AR6. The
costs are actual costs with no markup or profit to AR6. Also, as part of this arrangement,
the day to day transactions may result in amounts due to or from the noted
related parties. To efficiently manage cash disbursements, the individual
companies may make payments for any or all of the related companies. The
amounts due to or from the related individual companies are reimbursed or
collected and are not significant in amount.

A8A is 100% owned by Glade
M. Knight, Chairman and Chief Executive Officer of the Company. Mr. Knight
is also Chairman and Chief Executive Officer of AR6, Apple REIT Seven, Inc.,
Apple REIT Nine, Inc. and Apple REIT Ten, Inc. Members of the Companys Board
of Directors are also on the boards of Apple REIT Six, Inc., Apple REIT Seven,
Inc., Apple REIT Nine, Inc. and Apple REIT Ten, Inc.

17

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The Company has a 24% ownership interest in Apple Air Holding, LLC
(Apple Air). The other members of Apple Air are Apple REIT Six, Inc., Apple
REIT Seven, Inc. and Apple REIT Nine, Inc. Through its ownership interest the
Company has access to Apple Airs aircraft for asset management and renovation
purposes. The Companys ownership interest was $2.2 million at both March 31,
2011 and December 31, 2010. The Company has recorded its share of income and
losses of the entity under the equity method of accounting and adjusted its investment
in Apple Air accordingly. For the three months ended March 31,
2011 and 2010, the Company recorded a loss of approximately $49,000 and
$110,000 in each period as its share of the net loss of Apple Air, which primarily relates to depreciation of
the aircraft. Apple Air owned two aircraft during 2010, but reduced its
ownership to one aircraft during the first quarter of 2011.

Subsequent Events

In April 2011,
the Company declared and paid approximately $6.1 million in distributions to
its common shareholders, or $0.064167 per outstanding common share. Under the
Companys Dividend Reinvestment Plan, $2.2 million were reinvested, resulting
in the issuance of approximately 197,000 Units.

In April 2011, the Company
redeemed approximately 729,000 Units in the amount of $8.0 million under its
Unit Redemption Program. As contemplated in the Program, the Company redeemed
Units on a pro-rata basis. The redemption was approximately 48% of the
requested redemption amount.

On April 19, 2011, the
Company entered into a Loan Agreement (the Loan Agreement) with Bank of
America, N.A. The Loan Agreement provides for a revolving credit facility of
$20 million and a maturity date of April 19, 2012. Interest will be payable
quarterly on the outstanding balance based on an annual rate of One Month LIBOR
plus 2.0%. Under the terms and conditions of the Loan Agreement, the Company
may make voluntary prepayments in whole or in part, at any time. The Loan
Agreement is guaranteed by Glade M. Knight, the Companys Chairman and Chief
Executive Officer and is secured by assets of Mr. Knight. Mr. Knight will not
receive any consideration in exchange for providing this guaranty and security.
Proceeds of the loan will be used by the Company for general working capital
purposes, including the payment of redemptions and distributions. The
independent directors of the Companys Board of Directors approved Mr. Knight
providing a guaranty under the Loan Agreement.

Impact of Inflation

Operators
of hotels, in general, possess the ability to adjust room rates daily to
reflect the effects of inflation. Competitive pressures may, however, limit the
operators ability to raise room rates. Currently the Company is not
experiencing any material impact from inflation.

Business Interruption

Being in the
real estate industry, the Company is exposed to natural disasters on both a
local and national scale. Although management believes there is adequate
insurance to cover this exposure, there can be no assurance that such events
will not have a material adverse effect on the Companys financial position or
results of operations.

Seasonality

The hotel
industry historically has been seasonal in nature. Generally, occupancy rates
and hotel revenues are greater in the second and third quarters than in the
first and fourth quarters. As a result, there may be quarterly fluctuations in
results of operations. To the extent that cash flow from operations is
insufficient during any quarter, due to temporary or seasonal fluctuations in
revenue, the Company expects to utilize available credit to make distributions.

18

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Item 3. Quantitative and
Qualitative Disclosures About Market Risk

With the exception of one
interest rate swap transaction entered into in October 2010, the Company has
not engaged in transactions in derivative financial instruments or derivative
commodity instruments. The Company entered into the interest rate swap, with a
notional amount at March 31, 2011 of $6.9 million, and based on the London
InterBank Offered Rate (LIBOR), to increase stability related to interest
expense on a variable rate loan. The swap is not designated as a hedge,
therefore the changes in the fair market value of this transaction are recorded
in earnings. The Company recognized a gain of $43,000 in the first quarter of
2011 from the change in fair value of this derivative.

As of March 31, 2011, the
Companys financial instruments were not exposed to significant market risk due
to foreign currency exchange risk, commodity price risk or equity price risk.
The Company will be exposed to interest rate risk due to possible changes in
short term interest rates as it invests its cash or borrows on its credit
facility and due to its variable interest rate term loans. The Company had an
outstanding balance of $68.7 million on its $75 million credit facility at
March 31, 2011, and to the extent it utilizes the credit facility, the Company
will be exposed to changes in short-term interest rates. The outstanding
balance of the Companys variable rate term loans was $42.6 million at March 31,
2011. Based on these outstanding balances at March 31, 2011, every 100 basis
point change in interest rates will impact the Companys annual net income by
$1.1 million, all other factors remaining the same. The Companys cash balance
at March 31, 2011 was $0.

Item 4. Controls and
Procedures

Senior management, including
the Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the Companys disclosure controls and procedures as of the end
of the period covered by this report. Based on this evaluation process, the
Chief Executive Officer and Chief Financial Officer have concluded that the
Companys disclosure controls and procedures are effective and that there have
been no changes in the Companys internal control over financial reporting that
occurred during the last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the Companys internal control over
financial reporting. Since that evaluation process was completed there have
been no significant changes in internal controls or in other factors that could
significantly affect these controls.

19

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PART II. OTHER INFORMATION

Item 2. Unregistered Sales
of Equity Securities and Use of Proceeds

Unit Redemption Program

The Company has instituted a
Unit Redemption Program to provide its shareholders who have held their Units
for at least one year with the benefit of limited interim liquidity, by
presenting for redemption all or any portion of their Units. As of March 31,
2011, shareholders may request redemption of Units for a purchase price equal
to 92% of the price paid per Unit if the Units have been owned less than three
years, or 100% of the price paid per Unit if the Units have been owned more
than three years. The Company reserves the right to change the purchase price
of redemptions, reject any request for redemption, or otherwise amend the terms
of, suspend, or terminate the Unit Redemption Program. In January 2011, the
first scheduled redemption date of 2011, the Company redeemed in accordance
with the Unit Redemption Program on a pro-rata basis approximately 61% of the
requested redemptions, or a total of $8.0 million. See the Companys complete
consolidated statements of cash flows for the three months ended March 31, 2011
and 2010 included in the Companys interim financial statements in Item 1 of
this Form 10-Q for a description of the sources and uses of the Companys cash
flows. The following is a summary of redemptions during the first quarter of
2011 (no redemptions occurred in February and March 2011):

|                                      |  |                                 |         |                             |   |                                                                                 |  |                                                                               |  |     |  |  | 
|------------------------------------- |  | ------------------------------- | ------- | --------------------------- | - | ------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------- |  | --- |  |  | 
|Issuer Purchases of Equity Securities
|                                      |  |                                 |         |                             |   |                                                                                 |  |                                                                               |  |     |  |  | 
|                                      |  | (a)                             |         | (b)                         |   | (c)                                                                             |  | (d)                                                                           | 
|                                      |  |                                 |         |                             |   |                                                                                 |  |                                                                               |  |     |  |  | 
|Period                                |  | Total
Number
of Units
Purchased |         | Average
Price Paid
per Unit |   | Total
Number of
Units Purchased as
Part of Publicly
Announced Plans
or Programs |  | Maximum
Number
of Units that May
Yet Be Purchased
Under the Plans or
Programs | 
|                                      |  |                                 |         |                             |   |                                                                                 |  |                                                                               | 
|January
2011                          |  |                                 | 732,647 |                             | $ | 10.92                                                                           |  | 3,508,129                                                                     |  | (1) | 

(1) The maximum number of Units that may be
redeemed in any 12 month period is limited to up to three percent (3.0%) of the
weighted average number of Units outstanding from the beginning of the 12 month
period, subject to the Companys right to change the number of Units to be
redeemed.

20

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Item 6. Exhibits

|               |  |                                                                                                                                                                                                              
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Description
of Documents                                                                                                                                                                                     
|               |  |                                                                                                                                                                                                              
|               |  |                                                                                                                                                                                                              
|3.1            |  | Articles of
Incorporation of the Registrant. (Incorporated by reference to Exhibit 3.1 to
the registrants registration statement on Form S-11 (SEC File No. 333-140548) effective July 19, 2007)            
|               |  |                                                                                                                                                                                                              
|3.2            |  | Bylaws of
the Registrant, as amended. (Incorporated by reference to Exhibit 3.2 to
amendment no. 1 to the registrants registration statement on Form S-11 (SEC
File No. 333-140548) effective July
19, 2007)
|               |  |                                                                                                                                                                                                              
|31.1           |  | Certification
of the Companys Chief Executive Officer pursuant to Rule 13a  14(a) and
Rule 15d  14(a) of the Securities Exchange Act, as amended (FILED
HEREWITH).                                        
|               |  |                                                                                                                                                                                                              
|31.2           |  | Certification
of the Companys Chief Financial Officer pursuant to Rule 13a  14(a) and
Rule 15d  14(a) of the Securities Exchange Act, as amended (FILED
HEREWITH).                                        
|               |  |                                                                                                                                                                                                              
|32.1           |  | Certification
of the Companys Chief Executive Officer and Chief Financial Officer pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (FILED HEREWITH). 

21

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SIGNATURES

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

|                       |                                                                                                  |  |  |                  
|---------------------- | ------------------------------------------------------------------------------------------------ |  |  | -----------------
|Apple REIT Eight, Inc. |                                                                                                  | 
|                       |                                                                                                  |  |  |                  
|By:                    | /s/    GLADE
M. KNIGHT                                                                           |  |  | Date: May 6, 2011
|                       |                                                                                                  |  |  |                  
|                       | Glade M. Knight,
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer) |  |  |                  
|                       |                                                                                                  |  |  |                  
|By:                    | /s/    BRYAN
PEERY                                                                               |  |  | Date: May 6, 2011
|                       |                                                                                                  |  |  |                  
|                       | Bryan Peery,
Chief Financial Officer
(Principal Financial and Principal Accounting Officer)      |  |  |                  

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