SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.     20549
                     ------------------------------------

                                  FORM 10-Q

                 Quarterly Report Under Section 13 or 15(d) of
                      The Securities Exchange Act of 1934
                 ---------------------------------------------
                      
                      For the Period ended September 30, 1995           
                      
                            Commission File 0-10134  
                            
                            SUPER 8 MOTELS III, LTD
            -----------------------------------------------------
            (Exact name of registrant as specified in its charter


                  CALIFORNIA                            94 - 2664921
         ------------------------------               ------------------
         (State or other jurisdiction of               (I.R.S. Employer
         incorporation or organization)               Identification No.)


          2030 J Street
          Sacramento, California                           95814
          --------------------------------------       --------------
          Address of principal executive offices          Zip Code



Registrant's telephone number,
including area code                                  (916) 442 - 9183

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 XX   No
    ----   ------











<PAGE>

























                             SUPER 8 MOTELS III, LTD.

                      (A California Limited Partnership)

                             FINANCIAL STATEMENTS

                          SEPTEMBER 30, 1995 AND 1994



























<PAGE>


                             SUPER 8 MOTELS III, LTD.

                      (A California Limited Partnership)

                                    INDEX

Financial Statements:                                                PAGE

   Balance Sheet - September 30, 1995 and December 31, 1994            2

   Statement of Operations - Nine Months Ended
   September 30, 1995 and 1994                                         3

   Statement of Changes in Partners' Equity -
   Nine Months Ended September 30, 1995 and 1994                       4

   Statement of Cash Flows - Nine Months Ended
   September 30, 1995 and 1994                                         5

   Notes to Financial Statements                                       6

   Management Discussion and Analysis                                7 - 9

   Other Information and Signatures                                 10 - 11

































<PAGE>



                           SUPER 8 MOTELS III, LTD.
                     (A California Limited Partnership)
                                BALANCE SHEET
                   SEPTEMBER 30, 1995 AND DECEMBER 31,1994
                   ---------------------------------------

                                                         1995       1995
                                                      ---------   --------
                                                                          
                                          ASSETS
Current Assets:
  Cash and temporary investments                     $  402,316 $  403,176
  Accounts receivable                                    75,203    101,960
  Prepaid expenses                                       16,137      8,765
                                                       --------   --------
   Total current assets                                 493,656    513,901
                                                       --------   --------
Property and Equipment:
  Land                                                1,670,129  1,670,129
  Capital Improvements                                   26,175     26,175
  Buildings                                           3,276,870  3,276,870
  Furniture and equipment                               786,731    726,984
                                                      ---------  --------- 
                                                      5,759,905  5,700,158
  Accumulated depreciation and amortization          (2,708,248)(2,420,603)
                                                      ---------  --------- 
   Property and equipment, net                        3,051,657  3,279,555
                                                      ---------  ---------

   Total Assets                                      $3,545,313 $3,793,456
                                                      =========  =========

                          LIABILITIES AND PARTNERS' EQUITY

Current Liabilities:
  Current portion of note payable                    $   68,322 $   28,700
  Accounts payable and accrued liabilities               92,653     99,175
                                                      ---------  ---------
   Total current liabilities                            160,975    127,875

Long - Term Liabilities:
  Note payable                                          177,208    595,214
                                                      ---------  ---------
   Total liabilities                                    338,183    723,089

Contingent Liabilities (See Note 1)

Partners' Equity:
  General Partners                                       19,535     18,167
  Limited Partners                                    3,187,595  3,052,200
                                                      ---------  ---------
   Total partners' equity                             3,207,130  3,070,367
                                                      ---------  ---------

   Total Liabilities and Partners' Equity            $3,545,313 $3,793,456
                                                      =========  =========
   The accompanying notes are an integral part of the financial statements.

                                          -2-

<PAGE>


                           SUPER 8 MOTELS III, LTD.
                     (A California Limited Partnership)
                           STATEMENT OF OPERATION
           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
           -----------------------------------------------------
                                  Three      Nine      Three      Nine
                                  Months     Months     Months     Months
                                  Ended      Ended      Ended      Ended
                                 9/30/95    9/30/95    9/30/94    9/30/94
                               ----------  ---------  ---------  ---------
Income:                        
  Motel room income           $   398,505 $1,201,597 $  412,459 $1,256,782
  Telephone and
   vending                         10,098     24,061      8,939     25,917
  Interest                          2,900      7,030      2,104      6,256
  Other                            10,637     11,739        463      1,528
                                ---------  ---------  ---------  ---------
   Total Income                   422,140  1,244,427    423,965  1,290,483
                                ---------  ---------  ---------  ---------

Expenses:
  Motel operating expenses 
        (Note 2)                  312,707    886,964    337,044    996,056
  General and administrative       11,420     47,173      9,811     42,356
  Depreciation and amortization    39,948    123,372     36,918    110,630
  Interest                          6,273     22,681     12,865     41,580
  Property management fees         21,108     61,325     21,002     64,056
                                ---------  ---------  ---------  ---------
   Total Expenses                 391,456  1,141,515    417,640  1,254,678
                                ---------  ---------  ---------  ---------

   Net Income (Loss)          $    30,684 $  102,912 $    6,325 $   35,805
                               ==========  =========  =========  =========
Net Income (Loss) Allocable
 to General Partners                 $307     $1,029        $63       $358
                               ==========  =========  =========  =========
Net Income (Loss) Allocable
 to Limited Partners              $30,377   $101,883     $6,262    $35,447
                               ==========  =========  =========  =========
Net Income (Loss) per
 Partnership Unit                   $5.16     $17.32      $1.06      $6.03
                               ==========  =========  =========  =========
Distribution to
 Limited Partners
 Per Partnership Unit               $0.00      $0.00      $0.00      $0.00
                               ==========  =========  =========  =========









 The accompanying notes are an integral part of the financial statements.

                                          -3-
<PAGE>


                           SUPER 8 MOTELS III, LTD.
                     (A California Limited Partnership)
                        STATEMENT OF PARTNERS' EQUITY
           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
           -----------------------------------------------------


                                                         
                                                         1995       1994
                                                      ---------  ---------
General Partners:
 Balance at beginning of year                        $   18,506 $   18,167
 Net income (loss)                                        1,029        358
                                                      ---------  ---------
  Balance at end of period                               19,535     18,525


Limited Partners:
 Balance at beginning of year                         3,085,712  3,052,200
 Net income (loss)                                      101,883     35,447
 Less: Cash distributions                                     0          0
                                                      ---------  ---------
  Balance at end of period                            3,187,595  3,087,647
                                                      ---------  ---------

  Total balance at end of period                     $3,207,130 $3,106,172
                                                      =========  =========


























 The accompanying notes are an integral part of the financial statements.

                                          -4-
 <PAGE>

                           SUPER 8 MOTELS III, LTD.
                     (A California Limited Partnership)
                        STATEMENT OF PARTNERS' EQUITY
           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
           -----------------------------------------------------

                                                         1995       1994
                                                      ---------  ---------
Cash Flows From Operating Activities:
  Received from motel revenues                       $1,250,043 $1,282,248
  Expended for motel operations
   and general and administrative expenses             (996,827)(1,129,885) 
  Interest received                                       5,063      6,188
  Interest paid                                         (24,290)   (37,420)
                                                      ---------  ---------
    Net cash provided (used) by operating activities    233,989    121,131
                                                      ---------  ---------

Cash Flows From Investing Activities:
  Purchases of property and equipment                    (9,020)   (13,931)
  Proceeds from sale of equipment                           300          0
                                                       ---------  ---------
    Net cash provided (used) by investing activities     (8,720)   (13,931)
                                                       ---------  ---------

Cash Flows From Financing Activities:
  Payments on notes payable                            (193,060)  (124,731)
  Distributions paid to Limited Partners                      0          0
                                                      ---------  ---------
    Net cash provided (used) by financing activities   (193,060)  (124,731)
                                                      ---------  ---------

    Net increase (decrease) in cash
      and temporary investments                          32,209    (17,531)

Cash and temporary investments:
  Beginning of year                                     370,107    403,176
                                                      ---------  ---------
  End of period                                      $  402,316 $  385,645
                                                      =========  =========

Reconciliation of Net Income to Net Cash Provided by Operating Activities:

   Net income (loss)                                 $  102,912 $   35,805
                                                      ---------  ---------
   Adjustments to reconcile net income to
    net cash provided by operating activities:
     Depreciation and amortization                      123,372    110,630
     (Increase) decrease in accounts receivable          10,679     (2,047)
     (Increase) decrease in prepaid expenses             (5,414)    (8,875)
     Increase (decrease) in accounts payable
      and accrued liabilities                             2,740    (14,382)
                                                      ---------  ---------
        Total adjustments                               131,377     85,326
                                                      ---------  ---------

        Net cash provided by operating activities    $  234,289 $  121,131
                                                      =========  =========



 The accompanying notes are an integral part of the financial statements

                                          -5-
<PAGE>


                           SUPER 8 MOTELS III, LTD.
                      (A California Limited Partnership)
                        NOTES TO FINANCIAL STATEMENTS
                              SEPTEMBER 30, 1995
                      -----------------------------------

Note 1:
-------
The attached interim financial statements include all adjustments which are, in 
the opinion of management, necessary to a fair statement of the results for the 
period presented.

Users of these interim financial statements should refer to the audited 
financial statements for the year ended December 31, 1994 for a complete 
disclosure of significant accounting policies and practices and other detail 
necessary for a fair presentation of the financial statements.

In accordance with the partnership agreement, the following information is 
presented related to fees paid to the General Partners or affiliates for the 
period.

            Property Management Fees              $   61,325

            Franchise Fees                        $   24,032

Partnership management fees and subordinated incentive distributions are 
contingent in nature and none have been accrued or paid during the current 
period.

Note 2:
-------
The following table summarizes the major components of motel operating costs 
for the periods reported:
                                   Three      Nine       Three      Nine
                                   Months     Months     Months     Months
                                   Ended      Ended      Ended      Ended
                                  9/30/95    9/30/95    9/30/94    9/30/94
                                ---------  ---------  ---------  ---------
Salaries and related costs     $  113,228 $  339,359 $  131,079 $  394,597
Utilities                          43,385     97,711     46,519    103,152
Allocated costs, mainly
  indirect salaries                45,053    131,867     42,369    122,868
Other operating expenses          111,041    318,027    117,077    375,439
                                ---------  ---------  ---------  ---------
Total motel operating expense  $  312,707 $  886,964 $  337,044 $  996,056
                                =========  =========  =========  =========

The following additional material contingencies are required to be restated in 
interim reports under federal securities law:  None.







                                         -6-
<PAGE>
                          SUPER 8 MOTELS III, LTD.
                     (A California Limited Partnership)
                     MANAGEMENT DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATION
                           SEPTEMBER 30, 1995      
              -----------------------------------------------               
                                                             
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

        The Partnership's current assets of $493,656 exceed its current 
liabilities of $160,975 by $332,681. This excess of current assets over current
liabilities exceeds the $297,050 operating reserve requirement in the 
Partnership Agreement.  The Partnership had a positive cash flow of $32,209 
during the nine month period covered by this report.  During that period the
Partnership has made $150,000 in mortgage principal payments in excess of those 
required under the mortgage as discussed in the next paragraph.

        The Partnership's Bakersfield Motel is encumbered by a mortgage calling 
for a $108,215 balloon payment on September 11, 1997. Rather than accumulate 
funds to make this balloon payment,  the General Partners have decided to make 
additional principal payments on the mortgage, thus saving on interest expense. 
The General Partners have also decided to suspend quarterly distributions to 
the Limited Partners in order to accumulate the funds necessary for these extra 
principal payments. 

        The Partnership has no major commitments for capital expenditures.  The 
Partnership has a replacement and renovation target equal to 3% of guest room 
revenue.  During the nine months ended September 30, 1995, the Partnership has 
expended $31,671 in such expenditures ($9,020 of which was capitalized) which 
is equal to 2.6% of guest room revenue.   The General Partners anticipate that 
renovation and repair expenditures will not substantially exceed 3% of guest 
room revenue during the current fiscal year.

NEW ACCOUNTING STANDARDS
------------------------
                        
        SFAS No. 121,  Accounting for the Impairment of Long-Lived Assets and 
for Long-Lived Assets to be Disposed OF,  requires the Partnership to disclose 
information about potential impairment to the value of  long-lived assets.  The 
Partnership is not required to adopt and does not currently plan to adopt SFAS 
No. 121 until its fiscal year ending December 31, 1996. The Partnership does 
not expect to make any disclosures about impairment of long-lived assets under 
SFAS No. 121.










                                     -7-
<PAGE>


                          SUPER 8 MOTELS III, LTD.
                     (A California Limited Partnership)
                     MANAGEMENT DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATION
                              (Continued)
                           SEPTEMBER 30, 1995      
              -----------------------------------------------               


RESULTS OF OPERATIONS
---------------------

        The following is a comparison of the first nine months of the
fiscal year ending December 31, 1995 with the corresponding
period of the preceding fiscal year.  

  

                               Occupancy Percentage                 
                            1995                   1994
                 Current        Year      Current         Year 
                 Quarter       to Date    Quarter       to Date 

San Bernardino    56.6%         59.5%      59.9%         61.1% 
Bakersfield       88.0%         88.1%      87.2%         90.8% 

Combined          73.2%         74.6%      74.3%         76.8% 


                                 Average Room Rate                        
                            1995                   1994
                 Current        Year      Current       Year 
                 Quarter       to Date    Quarter     to Date 

San Bernardino   $40.18        $40.21     $42.09       $41.38 
Bakersfield      $31.41        $31.04     $31.08       $31.26 

Combined         $34.63        $34.51     $35.29       $35.08 


        Total revenues decreased $46,056 (or 3.6%) for the nine month period 
covered by this report as compared to the previous fiscal year.  The decrease 
in total revenue was due primarily to a $55,185 or 4.4% decrease in room 
revenue.   The San Bernardino lodging market conditions are the least favorable 
in the country according to current industry trade magazines.  The declines in
both revenue and room rates at the Bakersfield motel are associated with a 
reduction in patronage by Amtrak train crews.  Amtrak has reduced the crew size 
and number of trains at its Bakersfield facility, thus reducing the demand for 
rooms, and it has insisted that the Partnership match a competing bid to house
its crews, thereby reducing the room rates received by the Partnership for such 
business from $22  to $20 per room night.  

        The Partnership's expenses decreased $113,163 or 9.0% . The Partnership 
achieved the expenses reductions by a vigorous cost control program in addition 
to the savings from reduced occupancy.



                                    -8-
<PAGE>



                          SUPER 8 MOTELS III, LTD.
                     (A California Limited Partnership)
                     MANAGEMENT DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATION
                              (Continued)
                           SEPTEMBER 30, 1995      
              -----------------------------------------------               

FUTURE TRENDS
--------------
        
        The General Partners expect that overall occupancy for the fiscal year 
ending December 31, 1995 will be equal to or less than that achieved in 1994.  
The General Partners expect income for the current fiscal year to be equal to 
the previous fiscal year or to reflect a slight decrease.  However, due to 
expense reductions, discussed above, the General Partners anticipate net income 
equal to the previous fiscal year or slightly better than that achieved in the 
previous fiscal year.

        In the opinion of management, these financial statements reflect all 
adjustments which were necessary to a fair statement of results for the interim 
periods presented.  All adjustments are of a normal recurring nature.

































                                        -9-
<PAGE>





                        PART II.   OTHER INFORMATION
                        ----------------------------


     Item 1.                  Legal Proceedings
                              -----------------
                                 None

     Item 2.                  Changes in Securities
                              ---------------------
                                 None

     Item 3.                  Defaults upon Senior Securities
                              -------------------------------
                                 None

     Item 4.                  Submission of Matters 
                              ---------------------
                                 None

     Item 5.                  Other Information
                              -----------------
                                 None

     Item 6.                  Exhibits and Reports on Form 8-K
                              --------------------------------
                                 None

























                                   -10-

<PAGE>                                                    





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









                              SUPER 8 MOTELS III, LTD


              11-13-95         By /S/ David P. Grotewohl
                              -------------------------
               Date           David P. Grotewohl,
                              President of Grotewohl
                              Management Services, Inc.,
                              Managing General Partner







              11-13-95         By /S/ David P. Grotewohl 
                              -------------------------
               Date           David P. Grotewohl,
                              Chief Financial Officer





















                                  -11-