SECURITIES EXCHANGE
COMMISSION Washington, D.C.  20549 FORM
10-Q  (MARK ONE) xQUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001 OR  ̈TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM  TO Commission File No. 1-6869 PRIME HOSPITALITY CORP.(Exact name of registrant as specified in its charter) Delaware
  22-2640625(State or other jurisdiction of
  (I.R.S. employer identification no.)incorporation or organization)700 Route 46 East,
  Fairfield, New Jersey  07004(Address of principal executive offices)
 (973) 882-1010(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.          YesxNo ̈ Indicate by check mark whether the registrant
has filed all documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. YesxNo ̈ The registrant had 45,008,803 shares of
common stock, $.01 par value, outstanding as of May 10, 2001.   PRIME
HOSPITALITY CORP. AND SUBSIDIARIES
INDEX



PART I.
  FINANCIAL INFORMATIONItem
  1.
  Financial
  StatementsConsolidated
  Balance Sheets March 31, 2001 and December 31, 2000 (Unaudited)Consolidated
  Statements of Income Three months ended March 31, 2001 and 2000 (Unaudited)Consolidated
  Statements of Cash Flows Three months ended March 31, 2001 and 2000
  (Unaudited)Notes
  to Interim Consolidated Financial Statements (Unaudited)Item
  2.
  Management's
  Discussion and Analysis of Financial Condition and Results of OperationsItem
  3.
  Quantitative
  and Qualitative Disclosures About Market RiskPART II.
  OTHER INFORMATIONItem 1.
  Legal ProceedingsItem
  2.
  Changes
  in Securities and Use of ProceedsItem 3.
  Defaults
  upon Senior SecuritiesItem
  4.
  Submission
  of Matters to a Vote of Security HoldersItem 5.
  Other InformationItem 6.
  Exhibits
  and Reports on Form 8-KSignaturesPRIME HOSPITALITY CORP. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In
Thousands, Except Share Data)


March 31,
  2001
  December 31,
  2000(Unaudited)ASSETSCurrent assets:Cash
  and cash equivalents
  $12,522
  $1,735Marketable securities available for sale
  4,066
  3,325Accounts receivable (net of allowances of
  $1,000)
  30,286
  25,060Current portion of mortgages andnotes receivable
  422
  3,306Other current assets
  19,200
  17,745Total current assets
  66,496
  51,171Property, equipment
  and leasehold improvements,net of accumulated depreciation and
  amortization
  1,009,193
  1,015,997Properties held for
  sale
  32,473
  32,517Mortgages and notes
  receivable, net ofcurrent portion
  12,082
  11,991Other assets
  47,295
  45,308TOTAL
  ASSETS
  $1,167,539
  $1,156,984LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Current portion of debt
  $5,804
  $4,702Current portion of deferred income
  29,615
  10,322Other current liabilities
  58,171
  59,372Total current liabilities
  93,590
  74,396Long-term debt, net of
  current portion
  343,052
  340,987Other liabilities
  12,283
  12,551Deferred income
  39,056
  60,950Total liabilities
  487,981
  488,884Commitments and
  contingencies
  -----
  -----Stockholders' equity:Preferred stock, par value $.10 per
  share;20,000,000 shares authorized; none
  issued
  -----
  -----Common stock, par value $.01 per share;75,000,000 shares authorized;
  56,053,044 and55,972,932 shares issued and
  outstandingat March 31, 2001 and December 31,
  2000,respectively
  560
  560Capital in excess of par value
  525,949
  524,549Retained earnings
  266,572
  256,966Accumulated other comprehensive loss,net of taxes
  (2,386)
  (2,838)Treasury stock (11,130,878 shares at
  March 31, 2001and December 31, 2000)
  (111,137)
  (111,137)Total stockholders' equity
  679,558
  668,100TOTAL
  LIABILITIES AND STOCKHOLDERS' EQUITY
  $1,167,539
  $1,156,984See Accompanying Notes to Interim Consolidated Financial
  Statements.

PRIME HOSPITALITY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME(Unaudited)
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(In Thousands, Except Per Share Amounts)

2001
  2000Revenues:Hotel revenues
  $127,169
  $134,132Management, franchise and other fees.
  3,675
  2,849Rental and other revenues
  898
  910Total revenues
  131,742
  137,891Costs and expenses:Hotel operating expenses
  67,643
  70,687Rent and other occupancy
  23,387
  18,587General and administrative
  7,334
  8,146Depreciation and amortization
  9,427
  10,699Total costs and expenses
  107,791
  108,119Operating income
  23,951
  29,772Investment income
  576
  240Interest expense
  (8,908)
  (12,730)Other income,net
  --
  353Income before income
  taxes and extraordinary items
  15,619
  17,635Provision for income
  taxes
  6,013
  6,878Income before
  extraordinary items
  9,606
  10,757Extraordinary items -
  loss on dischargeof indebtedness, net of income taxes
  --
  (302)Net income
  $9,606
  $10,455Earnings per common
  share:Basic:Income before extraordinary items
  $0.21
  $0.22Extraordinary items - loss on dischargeof indebtedness
  --
  --Net earnings
  $0.21
  $0.22Diluted:Income before extraordinary items
  $0.21
  $0.22Extraordinary items - loss on dischargeof indebtedness
  --
  --Net earnings
  $0.21
  $0.22See Accompanying Notes to Interim Consolidated Financial
Statements.

PRIME HOSPITALITY CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(In Thousands)

2001
  2000Cash flows from
  operating activities:Net income
  $9,606
  $10,455Adjustments to reconcile net income to
  net cash provided by operating activities:Depreciation and amortization
  9,427
  10,699Amortization of deferred financing
  costs
  763
  865Utilization of net operating loss
  carryforwards
  764
  764Net gain on asset disposals
  -----
  (353)Deferred income taxes
  977
  973Amortization of deferred income
  (2,538)
  (2,496)Increase (decrease) from changes in
  other operating assets and liabilities:Accounts receivable
  (5,226)
  (3,734)Other current assets
  (1,644)
  (348)Other liabilities
  (3,404)
  1,748Net cash provided by operating
  activities
  8,725
  18,573Cash flows from
  investing activities:Proceeds from mortgages and notes
  receivable
  1,452
  95Disbursements for mortgages and notes
  receivable
  (201)
  (356)Proceeds from sales of property,
  equipment and leasehold improvements
  4,664
  81,496Construction and conversion of hotels
  (2,734)
  (4,993)Purchases of property, equipment and
  leasehold improvements
  (3,953)
  (5,051)Other
  (935)
  41Net cash (used in)provided by
  investing activities
  (1,707)
  71,232Cash flows from
  financing activities:Net proceeds from issuance of debt
  8,965
  10,926Payments of debt
  (5,833)
  (83,834)Proceeds from the exercise of stock
  options
  637
  42Treasury stock purchases
  -----
  (11,556)Net cash provided by (used in)
  financing activities
  3,769
  (84,422)Net increase in cash and cash equivalents
  10,787
  5,383Cash and cash equivalents at beginning of
  period
  1,735
  7,240Cash and cash equivalents at end of
  period
  $12,522
  $12,623Supplemental cash flow disclosures of non-cash activities:Hotels sold in exchange for assumption of
  debt
  -----
  $17,364Land acquired in exchange for notes
  recievable
  $1,952
  -----Other cash flow disclosures:Interest paid
  $6,943
  $11,139Income taxes paid
  $390
  $1,462See Accompanying Notes to Interim Consolidated Financial
  Statements.

PRIME HOSPITALITY CORP. AND
SUBSIDIARIESNOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(Unaudited)

Note 1 - Basis of Presentation

In the opinion of management, the
accompanying interim unaudited consolidated financial statements of Prime
Hospitality Corp. and subsidiaries (the "Company") contain all
material adjustments, consisting of normal recurring adjustments, necessary to
present fairly the financial position of the Company as of March 31, 2001 and
the results of its operations for the three months ended March 31, 2001 and 2000
and cash flows for the three months ended March 31, 2001 and 2000.

The consolidated financial
statements for the three months ended March 31, 2001 and 2000 were prepared on
a consistent basis with the audited consolidated financial statements for the
year ended December 31, 2000. Certain reclassifications have been made to the
March 31, 2000 consolidated financial statements to conform them to the March
31, 2001 presentation.

The consolidated results of
operations for the three months ended March 31, 2001 are not necessarily
indicative of the results to be expected for the full year.  These interim unaudited consolidated
financial statements should be read in conjunction with the audited
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2000.

The balance sheet at December 31,
2000 has been derived from the audited financial statements at that date, but
does not include all the information and footnotes required by accounting
principles generally accepted in the United States for complete financial
statements.

Note 2 - Accounting Policies

In June 1999, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards No. 137, amending Statement of Financial Accounting Standards No.
133, Accounting for Derivative Instruments and Hedging Activities (SFAS
133), which extended the required date of adoption to fiscal years beginning
after June 15, 2000.  SFAS 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded on the balance sheet as either an asset or liability measured at its
fair value.  SFAS 133 requires that
changes in the derivatives fair value be recognized currently in earnings
unless specific hedge accounting criteria are met.   The Company adopted SFAS 133 in 2001.  Currently SFAS 133, has no impact due to the lack of any
derivative activity.

Note 3 - Hotel Dispositions

During
the three months ended March 31, 2001, the Company sold a vacant land parcel
for $4.9 million.  The sale generated a
net gain of approximately $241,000.

Subsequent
to the end of the first quarter of 2001, the Company sold a Wellesley Inn in
Fairfax, VA for $5.0 million.  The sale
generated a net gain of approximately $700,000 and provided for the Company to
receive franchise fees under a twenty-year franchise agreement.

Note 4 - Earnings Per Common
Share

Basic earnings per common share was
computed based on the weighted average number of common shares outstanding
during each period.  The weighted
average number of common shares used in computing basic earnings per common
share was 44.9 million and 48.0 million for the three months ended March 31,
2001 and 2000, respectively.

Diluted earnings per common share
reflect adjustments to basic earnings per common share for the dilutive effect
of stock options.  The weighted average
number of common shares used in computing diluted earnings per common share was
46.3 million and 48.6 million for the three months ended March 31, 2001 and
2000, respectively.

Note 5 - Treasury Stock

In April 2001, the Company repurchased 377,000 shares of its common stock
at an average price per share of $9.82.The Companys $175 Million Revolving Credit Facility (the
Revolving Credit Facility) allows for stock repurchases equal to 50% of net
proceeds from asset sales with repurchases not to exceed $100.0 million.  As of April 30, 2001, the Company has
repurchased $37.4 million of its shares under this covenant and has $45.6
million of availability based on the proceeds from asset sales.

Note 6
- Comprehensive Income

For the three months ended March
31, 2001 and 2000, comprehensive income consisted of the following (in
thousands):



Three Months Ended March 31,2001
  2000Net
  income
  $9,606
  $10,455Unrealized
  gain (loss) on  marketable securities   available for sale, net of income
  taxes
  452
  2Total
  $10,058
  $10,457

The accumulated other comprehensive loss consist
primarily of unrealized loss on marketable securities available for sale, net
of income taxes.

Note 7 - Geographic and
Business Information

The
Companys hotels primarily operate in three major lodging industry segments:
the all-suites segment, under its AmeriSuites brand; the limited-service
segment, primarily under its Wellesley Inn & Suites brand; and the
full-service segment under major national franchises.  The Companys 133 AmeriSuites are upscale hotels located in 31
states throughout the United States. 
The 70 Wellesley Inn & Suites hotels compete in the mid-price
segment, and are primarily located in Northeast, Texas and Florida region of
the United States.  The Company also
operates 28 non-proprietary brand hotels, which compete primarily in the
upscale full-service segment, with food service and banquet facilities under
franchise agreements with national hotel brands.  The Companys non-proprietary hotels are primarily located in the
northeastern region of the United States.

The Company evaluates the
performance of its segments based primarily on earnings before interest, taxes
and depreciation and amortization (EBITDA) generated by the operations of its
Owned Hotels.  Interest expense is
primarily related to debt incurred by the Company through its corporate
obligations and collateralized by certain of its hotel properties.  The Companys taxes are included in the
consolidated Federal income tax return and are allocated based upon the relative
contribution to the Companys consolidated taxable income/losses and changes in
temporary differences.  Other income,
net consist of property transactions, which are not part of the recurring
operation of the Company.  The
allocation of interest expense, taxes and other income, net are not evaluated
at the segment level and therefore, would be necessary in order to reconcile
EBITDA to consolidated net income on the consolidated financial statements.

The following table presents
revenues and other financial information for the owned and leased hotels by
business segment for the three months ended March 31, 2001 and 2000  (in thousands):



Three Months Ended March 31, 2001
  All-
  Suites
  Limited-
  Service
  Full-
  Service
  Corporate / Other
  ConsolidatedHotel revenues
  $  67,667
  $  27,433
  $  32,135
  $   4,507
  $   131,742EBITDA (1)
  14,543
  9,637
  4,826
  4,372
  33,378Depreciation and
  amortization
  4,615
  2,993
  1,465
  354
  9,427Capital expenditures
  1,453
  3,667
  705
  862
  6,687Total Assets
  $583,958
  $383,613
  $107,896
  $92,072
  $1,167,539Three Months Ended March 31, 2000
  All-
  Suites
  Limited-
  Service
  Full-
  Service
  Corporate/Other
  ConsolidatedHotel revenues
  $
  57,857
  $
  29,950
  $
  46,325
  $   3,759
  $   137,891EBITDA (1)
  20,256
  12,284
  9,959
  (2,028)
  40,471Depreciation and
  amortization
  4,946
  3,251
  2,233
  269
  10,699Capital expenditures
  5,277
  2,314
  2,064
  389
  10,044Total Assets
  $579,732
  $412,536
  $122,899
  $120,989
  $1,236,156

(1)
EBITDA represents earnings before interest, income taxes, depreciation and
amortization.



Note 8  Meristar Lease
Termination

Meristar Hospitality Corp. (Meristar)
exercised its termination rights on four hotels it leases to Prime effective
May 1, 2001.  The impact of the lease
termination on Primes financial condition is expected to be immaterial.  Under the terms of the lease agreement,
Meristar has paid Prime an estimated termination fee of $3.7 million.  The fee is based on a multiple of cash flow
for the twelve months ended April 30, 2001 and will be adjusted when Aprils
results are available.  In addition, the
Company will record the unamortized portion of the gain on the initial sale of
the hotels of approximately $22.0 million (currently a component of deferred
income on the balance sheet) as income in the second quarter of 2001.  The deferred gain was being amortized into
income as a reduction of rent expense of $3.4 million per year over the life of
the lease.



PART I.FINANCIAL INFORMATION

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

General

Prime
Hospitality Corp. (Prime or the Company) is an owner, operator and
franchisor of hotels, with 231 hotels in operation containing 29,592 rooms
located in 33 states (the Portfolio) as of May10, 2001.  Prime controls two hotel brands 
AmeriSuites (R) and Wellesley Inn & Suites (R)  as well as a portfolio of
non-proprietary brand hotels which are primarily upscale, full-service hotels
operated under franchise agreements with national hotel chains.  Primes portfolio consists primarily of new,
well-maintained hotels, with an average age of approximately 7 years.

The following table sets forth
information with respect to the Portfolio as of May 10, 2001:



Owned
  Leased
  Managed
  Franchised
  TotalHotels
  Rooms
  Hotels
  Rooms
  Hotels
  Rooms
  Hotels
  Rooms
  Hotels
  RoomsAmeriSuites
  65
  8,409
  46
  5,710
  4
  542
  18
  2,205
  133
  16,866Wellesley Inns & Suites
  58
  6,746
  
  
  5
  463
  7
  673
  70
  7,882Non-Proprietary Brands
  12
  2,303
  5
  821
  11
  1,720
  
  
  28
  4,844Total
  135
  17,458
  51
  6,531
  20
  2,725
  25
  2,878
  231
  29,592

In
addition to the above, as of May 10, 2001, Prime has 2 AmeriSuites comprising
275 rooms under construction, while franchisees are constructing an additional
6 AmeriSuites comprising 807 rooms.

The
Companys strategy is to develop its proprietary AmeriSuites and Wellesley Inn
& Suites brands primarily through franchising.  Through the development of its proprietary brands, the Company is
transforming itself from an owner/operator into a franchisor and manager and
has positioned itself to generate additional revenues with minimal capital
investment.  Since the Company began
franchising in mid-1998, the Company has executed 73 AmeriSuites franchise
agreements for new hotels.  To date,
eight of these AmeriSuites have opened and there are currently four under
construction.  Of the remaining pipeline
of 61 hotels, nine are scheduled to begin construction during the second and
third quarters of 2001.  The Company
also has ten Wellesley Inn & Suites franchise agreements for new hotels,
including six new agreements signed in the first quarter of 2001.  Given the successful conversion of 38 hotels
to the Wellesley Inn & Suites brand in 1999, the Company also intends to
further grow the brand through conversions from other hotel brands.  During the quarter, the Company completed
the conversion of a Howard Johnson hotel in Wayne, NJ to a Wellesley Inn and is
currently converting another of its Owned Hotels in Whippany, NJ to the
Wellesley brand.  The Company will also
begin the conversion of two additional hotels owned by a third party during the
second and third quarter of 2001. All other franchise agreements related to
opened hotels were generated pursuant to asset sales.

The
Companys strategy is also focused on growing the operating profits of its
Portfolio.  With over 200 hotels in
operation, Prime believes it possesses the hotel management expertise to
maximize the profitability and value of its hotel assets.

For the three months ended
March 31, 2001, net income decreased by $850,000, to $9.6 million from $10.5
million for the same three-month period in 2000.  These results were primarily impacted by the effect of hotel
divestitures.  Prior year results
included the results of the Frenchmans Reef Beach Resort hotel, which
contributed a net additional $.03 per share before its sale in March 2000.

For
the quarter, revenues were $131.7 million and earnings before interest, taxes
and depreciation and amortization (EBITDA) were $33.4 million.  Excluding the impact from hotel divestitures
in the past year, revenues grew over the same three-month periods in the prior
year by 10.9% and EBITDA grew by 13.3%. 
The Company evaluates the performance of its segments based primarily on
EBITDA.  EBITDA is not a measurement of
financial performance under accounting principles generally accepted in the
United States and should not be considered as alternatives to net income as an
indicator of the Companys operating performance or as alternatives to cash
flows as a measure of liquidity.

Certain
statements in this Form 10-Q constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements involve
known and unknown risks, uncertainties and other important factors that could
cause the actual results, performance or achievements of the Company, or
industry results, to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements.

Forward-looking
statements include the information about Primes possible or assumed future
results of operations and statements preceded by, followed by or that include
the words believe, except, anticipate, intend, plan, estimate, or
similar expressions, or the negative thereof. 
Actual results may differ materially from those expressed in these
forward-looking statements.  Readers of
this Form 10-Q are cautioned not to unduly rely on any forward-looking
statements.

The
following important factors, in addition to those discussed elsewhere in this
Form 10-Q or incorporated herein by reference, could cause results to differ
materially from those expressed in such forward-looking statements: competition
within each of the Companys business segments in areas such as access,
location, quality or accommodations and room rate structures; the balance
between supply of and demand for hotel rooms and accommodations; the Companys
continued ability to obtain new operating contracts and franchise agreements;
the Companys ability to develop and maintain positive relations with current
and potential hotel owners and other industry participants; the level of rates
and occupancy that can be achieved by such properties and the availability and
terms of financing; changes in travel patterns, taxes and government
regulations which influence or determine wages, prices, construction procedures
and costs; the effect of national and regional economic conditions that will
affect, among other things, demand for products and services at the Companys
hotels; government approvals, actions and initiatives including the need for
compliance with environmental and safety requirements, and change in laws and
regulations or the interpretation thereof and the potential effects of tax
legislative action; and other risks described from time to time in the
Companys filings with the SEC, including its Form 10-K..

Although
the Company believes the expectations reflected in these forward-looking
statements are based upon reasonable assumptions, no assurance can be given
that Prime will attain these expectations or that any deviations will not be
material.  Except as otherwise required
by the federal securities laws, the Company disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward-looking
statement contained herein to reflect any change in its expectations with
regard thereto or any change in events, conditions or circumstances on which
any such statement is based.



Results of
Operations for the Three months ended March 31, 2001 Compared to the Three
months ended March 31, 2000

Hotel
revenues consist of lodging revenues (which consist primarily of room,
telephone and vending revenues) and food and beverage revenues.  Hotel revenues decreased by $6.9 million, or
5.2%, from $134.1 million for the three-month period in 2000 to $127.2 million
for the same period in 2001, primarily due to revenues of $21.6 million in 2000
related to properties sold during the past 12 months.  The decrease was partially offset by $15.4 million of hotel
revenues generated by new hotels added during 2000 and 2001.  The new hotels consisted primarily of the
leasehold interests in 27 Sumner Suites hotels acquired from Sholodge in July
2001 and subsequently converted to AmeriSuites in November 2001.

The
Company operates three product types: its proprietary AmeriSuites which are
upscale all-suites hotels; its proprietary Wellesley Inn & Suites which are
mid-price limited service hotels and its non-proprietary brand hotels which are
primarily upscale full-service hotels.

The
following table illustrates the REVPAR (revenue per available room) growth
for the quarter, by segment for all system-wide hotels, which were operated for
comparable three-month periods in 2001 and 2000.



Three Months Ended March 31,2001
  2000
  % ChangeAmeriSuitesOccupancy
  63.0%
  66.4%ADR
  $86.52
  $81.98REVPAR
  $54.49
  $54.44
  0.1%Wellesley
  Inn & SuitesOccupancy
  63.9%
  63.3%ADR
  $68.56
  $64.58REVPAR
  $43.79
  $40.88
  7.1%Non-Proprietary BrandsOccupancy
  61.5%
  61.2%ADR
  $99.45
  $96.12REVPAR
  $61.14
  $58.79
  4.0%TotalOccupancy
  62.9%
  64.3%ADR
  $84.03
  $79.99REVPAR
  $52.85
  $51.43
  2.8%

The
REVPAR at comparable hotels was impacted in the three-month period by the
slowdown in the economy.  A significant
number of key corporate customers reduced their travel budgets, which affected
occupancy at the upscale AmeriSuites, particularly in the North Atlanta,
Cincinnati and Detroit markets.  In
addition, the non-proprietary brands were affected by the performance of the
eleven full-service hotels owned by the Company.  These hotels, which are all located in the Northeast, registered
a 0.9% REVPAR decrease due to declines in group business and softness in the
New York market.  The mid-price
Wellesley Inn & Suites brand, however, performed well in this environment
driven by a 9.3% REVPAR increase at the 38 recently converted Wellesley Inn
& Suites hotels and by strong results at the original Wellesley Inns in
Florida where REVPAR rose by 6.7%.



Management, franchise and
other fees consist primarily of base and incentive fees earned under management
agreements, royalties earned under franchise agreements and sales commissions
earned by the Company's national sales group.  Management, franchise and other fees increased by $826,000, or
29.0%, from $2.8 million for the three-month period in 2000 to $3.7 million for
the same period in 2001. The increase was primarily due to franchise royalty
fees derived from hotels sold to franchisees and new hotel openings.

Rental and other revenues consists
of rental income, interest on mortgages and notes receivable and other
miscellaneous operating income. Rental and other revenues decreased by $12,000
from $910,000 for the three-month period in 2000 compared to $898,000 for the
same period in 2001.

Hotel operating expenses consist of
all direct costs related to the operation of the Companys properties (lodging,
food & beverage, administration, selling and advertising, utilities and
repairs and maintenance). Hotel operating expenses decreased by $3.0 million,
or 4.3 %, from $70.7 million for the three-month period in 2000 to $67.7
million for the same period in 2001 due to properties sold subsequent to March
2000.  For the comparable three-month
periods, hotel operating expenses, as a percentage of hotel revenues, increased
slightly from 52.7% in 2000 to 53.2% in 2001 due to higher energy costs.

Rent and other occupancy expenses
consist primarily of rent expense, property insurance and real estate and other
taxes. Rent and other occupancy expenses increased by $4.8 million, or 25.8%,
for the three months ended March 31, 2001 as compared to the same period in
2000, primarily due to the addition of the 27 leased hotels acquired from
Sholodge in July 2000.

General and administrative expenses
consist primarily of centralized management expenses associated with operating
the hotels, corporate expenses and national brand advertising expenses. General
and administrative expenses decreased by $812,000, or 10.0%, for the three
months ended March 31, 2001 from $8.1 million for the three-month period in
2000 to $7.3 million for the same period in 2001, due primarily to the timing
of brand advertising.  The Company plans
to initiate new national television and radio advertising campaigns for its
brands beginning in May 2001.  As a
percentage of total revenues, general and administrative expenses decreased
slightly from 5.9% in 2000 to 5.6% in 2001.

Depreciation and amortization
expense decreased by $1.3 million, or 11.9%, from $10.7 million for the
three-month period in 2000 to $9.4 million for the same period in 2001. This
decrease was primarily due to the disposal of 22 properties during 2000.

Investment income increased by
$336,000, or 140.0%, from $240,000 for the three-month period in 2000 compared
to $576,000 for the same period in 2001, primarily due to higher cash balances
and interest earned on security deposits on the leased hotels acquired from
Sholodge.

Interest expense decreased by $3.8
million, or 30.0%, from $12.7 million for the three-month period in 2000 to
$8.9 million for the same period in 2001, primarily due to the pay-downs of
debt resulting from asset sales and operating cash flow. The Company
capitalized $231,000 and $484,000 of interest during the three-month periods in
2001 and 2000, respectively.  Excluding
the impact of capitalized interest and the amortization of deferred loan fees,
cash interest expense declined by $4.0 million, or 32.2%, from $12.4 million
for the three-month period in 2000 to $8.4 million for the same period in 2001.

Other income, net consists
of property transactions and other items, which are not part of the Companys
recurring operations.  Other income, net
for the three months ended March 31, 2000 consisted primarily of $353,000 of
net gains related to the disposition of properties.

Liquidity and Capital Resources

At
March 31, 2001, the Company had cash, cash equivalents and current marketable
securities of $16.6 million.  In
addition, at March 31, 2001, the Company had $132.8 million available to it
under its Revolving Credit Facility.

The
Company's major sources of cash for the three months ended March 31, 2001 were
cash flows from operations of $8.7 million, borrowings of $9.0 million and net proceeds
from asset sales of $4.7 million. The Company's major uses of cash during the
period were capital expenditures of $6.7 million and debt repayments of $5.8
million.

Cash
flow from operations was positively impacted by the utilization of net operating
loss carryforwards ("NOLs") and other tax basis differences of
$764,000.  At March 31, 2001 the Company
had federal NOLs relating primarily to its predecessor, Prime Motor Inns, Inc.
("PMI"), of approximately $51.1 million, which are subject to annual utilization
limitations and expire in 2006.

Sources of
Capital. The Company has undertaken a strategic initiative to
dispose of certain hotel real estate while retaining the franchise rights and
to invest the proceeds in the reduction of debt, the growth of its proprietary
brands and the repurchase of the Companys common stock.  The combination of asset sales and operating
cash flow continues to strengthen the Companys overall financial condition.  At March 31, 2001, the Companys debt to
EBITDA ratio was 2.2 times and its debt to book capitalization was 34%.

During
the quarter ended March 31, 2001, the Company sold an undeveloped land parcel
in Pleasant Hill, CA for $4.6 million, net of selling costs.  Subsequent to the quarter, the Company sold
a Wellesley Inn hotel in Fairfax, VA for $5.0 million, retaining the franchise
rights under a 20-year franchise agreement.

The
Company has a $175.0 million Revolving Credit Facility, which bears interest at
LIBOR plus 2.0%.  The facility is
available through 2001 and may be extended by the Company for an additional
year.  The aggregate amount of the
Revolving Credit Facility will be reduced to $125.0 million in December
2001.  Borrowings under the facility are
secured by first liens on certain of the Companys hotels with recourse to the
Company.  Additional properties may be
added subject to the approval of the lenders. 
Availability under the facility is subject to a borrowing base test and
certain other covenants.  During the
quarter, the Company borrowed $9.0 million under this facility, with additional
availability of $132.8 million under its borrowing base test.

The
Revolving Credit Facility contains covenants requiring the Company to maintain
certain financial ratios and limitations on the incurrence of debt, liens,
dividend payments, stock repurchases, certain investments, transactions with
affiliates, asset sales, mergers and consolidations and any change of control
of the Company.

Uses of
Capital. During the quarter, the Company retired $5.8 million of its
debt outstanding.  Over the past 15
months, the Company has paid down approximately $200 million of its debt
bringing the balance to $349 million at March 31, 2001.

The
Company intends to continue the growth of its brands primarily through
franchising and, therefore, its corporate brand development will be
limited.  During the quarter, the
Company spent $2.7 million on new construction or conversions from other hotel
brands.  There are currently two
AmeriSuites hotels under construction by the Company.  In addition, the Company completed the conversion of a Howard
Johnson hotel in Wayne, NJ to a Wellesley Inn in April 2001 and is currently
converting another Howard Johnson hotel in Whippany, NJ to its Wellesley brand.  The Company expects to spend approximately
$25-30 million in 2001 in corporate brand development.  In addition, during the quarter, the Company
also spent $4.0 million on capital improvements at its Owned Hotels and expects
to spend a total of $20 million in 2001. 
The Company plans to fund both its corporate development and capital
improvements primarily with internally generated cash flow.

Subsequent
to the quarter, the Company repurchased 377,000 shares of its common stock at
an average cost of $9.82. The Revolving Credit Facility limits the purchase of
these shares to 50% of the proceeds from asset sales not to exceed $100
million.  As of April 30, 2001, the
Company has repurchased $37.4 million of its shares under this covenant and has
$45.6 million of availability based on the proceeds from asset sales.

In
order to facilitate future tax–deferred exchanges of hotel properties,
the Company from time to time enters into arrangements with an unaffiliated
third party under Section 1031 of the Internal Revenue Code of 1986, as
amended.  At March 31, 2001, the Company
had advances of approximately $126.8 million to such third party, which
advances are classified as property, equipment and leasehold improvements in
the Companys accompanying financial statements.

Item 3.Quantitative and Qualitative Disclosures About Market
Risk

The Company is exposed to changes in interest rates primarily from its
floating rate debt arrangements.  A
hypothetical 100 basis point adverse move (increase) in interest rates along
the entire rate curve would adversely affect the Companys annual interest cost
by approximately $235,000 annually.

PART II.OTHER INFORMATION

Item
1.Legal Proceedings

The Company is involved in certain legal proceedings incidental to the
normal conduct of its business.  The Company
does not believe that its liabilities relating to any of the legal proceedings
to which it is a party are likely to be, individually or in the aggregate,
material to its consolidated financial position or results of operations.

Item 2.Changes in Securities and Use of Proceeds

None.

Item 3.Defaults Upon Senior Securities

None.

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

None.

Item
5.Other Information

None.

Item 6.Exhibits and Reports on Form 8-K

(a)         Exhibits

Exhibit 11          Computation of Earnings Per Share

Exhibit 27          Financial Data Schedule

(b)        Reports
on Form 8-K

None.

SIGNATURES

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





PRIME HOSPITALITY CORP.Date:
  May 15, 2001
  By:
  /s/ A.F. PetrocelliA. F. PetrocelliPresident
  and Chief Executive OfficerDate:
  May 15, 2001
  By:
  /s/ Douglas VicariDouglas VicariSenior Vice President and Chief
  Financial Officer