<PAGE>   1
                                                                   Exhibit 13.1

                                                        INNKEEPERS USA TRUST 11

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

GENERAL
   Innkeepers USA Trust (the "Company") commenced operations on September 30,
1994. The Company owns an 81.9% equity interest in Innkeepers USA Limited
Partnership (with its subsidiary partnerships, the "Partnership") at December
31, 1996 and has elected to be taxed as a real estate investment trust ("REIT").
The Partnership owns 32 Hotels (the "Hotels") in 14 states at December 31, 1996.
The 32 Hotels are comprised of 20 Residence Inn by Marriott, 8 Hampton Inns, 2
Comfort Inns, 1 Sheraton Inn and 1 Holiday Inn Express.
   The Partnership leases the Hotels to JF Hotel, Inc. (or other entities under
common ownership, collectively the "Lessee") pursuant to leases which provide
for rent based, in substantial part, on the room revenues of the Hotels
("Percentage Leases"). The Lessee operates 21 of the Hotels, Residence Inn by
Marriott, Inc., a wholly-owned subsidiary of Marriott International, Inc.
operates nine of the hotels, and an unaffiliated party manages two of the
hotels. The 11 managed hotels are managed under management agreements between
the respective manager and the Lessee. The non Marriott-managed hotels operate
under franchise licenses held by the Lessee, the cost of obtaining which was
paid for by the Partnership. The right to operate the nine Marriott-managed
Hotels as Residence Inns is contained in the Marriott management agreements.
Continuing franchise and management fees are paid by the Lessee.
   The Company acquired the following hotel properties during the year ended
December 31, 1996:

<TABLE>
<CAPTION>

                                                     Number of
Hotel                                             Suites/Rooms
---------------------------------------------------------------------
<S>                                                        <C>
Holiday Inn Express - Lexington, MA                        164
Residence Inn - Cherry Hill, NJ                             96
Residence Inn - Harrisburg, PA                              80
Comfort Inn - Woburn, MA (A)                               100
Residence Inn - Atlanta (Downtown), GA                     160
Hampton Inn - Norcross, GA                                 150
Residence Inn - San Mateo, CA                              159
Residence Inn - Silicon Valley I, CA                       231
Residence Inn - Silicon Valley II, CA                      247
Residence Inn - Denver (Downtown), CO                      156
Residence Inn - Wichita (East), KS                          64
Residence Inn - East Lansing, MI                            60
Residence Inn - Grand Rapids, MI                            96
Residence Inn - Portland, ME                                78

(A) To be converted to a Hampton Inn.
</TABLE>

Hotels
   The following chart summarizes information regarding the Hotels at December
31, 1996.

<TABLE>
<CAPTION>

                                                   Number of       Number of
Franchise Affiliation                       Hotel Properties           Rooms
----------------------------------------------------------------------------

<S>                                                       <C>          <C>
Extended stay hotels:
   Residence Inn                                          20           2,323
----------------------------------------------------------------------------
Limited service hotels:
   Hampton Inn                                             8           1,059
   Comfort Inn                                             2             227
   Holiday Inn Express                                     1             164
----------------------------------------------------------------------------
                                                          11           1,450
Full service hotels:
   Sheraton Inn                                            1             139
----------------------------------------------------------------------------
Total                                                     32           3,912
============================================================================
</TABLE>

   Pro forma revenue per available room ("REVPAR") for the Hotels, presented as
if the acquisition of the Hotels had occurred at the beginning of the periods
presented, increased 10.5% for the year ended December 31, 1996 as compared to
the year ended December 31, 1995. Results were excluded for such comparison for
the Residence Inn -- Atlanta (Downtown), Georgia, the Residence Inn -- Portland,
Maine, and the Hampton Inn -- Norcross, Georgia, each of which was initially
opened in mid or late 1996, and the Comfort Inn -- Woburn, Massachusetts, which
was closed for renovation during a portion of 1996. Management believes the
growth in REVPAR at the Hotels reflects the results of the Company's focused
acquisition strategy, the continued implementation of professional management
techniques by the Lessee and third party management and improving industry
conditions. The following table sets forth pro forma information with respect to
occupancy, average daily rate ("ADR") and REVPAR for the year ended December 31,
1996 as compared to the year ended December 31, 1995. No assurance can be given
that the trends reflected in the following table will continue or that
occupancy, ADR and REVPAR will not decrease due to changes in national or local
economic, hospitality or other industry conditions.

<TABLE>
<CAPTION>

                       For the             For the
                     Year Ended          Year Ended     Percentage
              December 31, 1996   December 31, 1995         Change
------------------------------------------------------------------
<S>                      <C>                 <C>              <C>
Occupancy                 82.49%              79.74%           3.5%
ADR                      $82.28              $77.05            6.8%
REVPAR                   $67.87              $61.45           10.5%
</TABLE>

Results of Operations
   The following is a discussion of the results of operations for the Company.
The Company commenced operations on September 30, 1994. Consequently, comparison
of the actual results for the year ended December 31, 1995 to the period
September 30, 1994 (inception) through December 31, 1994 is not meaningful.

<PAGE>   2

12 INNKEEPERS USA TRUST

The Company -- Actual
Comparison of the Year Ended December 31, 1996 ("1996") to the Year Ended
December 31, 1995 ("1995")
   The Company had revenues of $28,377,000, consisting of $27,466,000 of
Percentage Lease revenue from the Lessee and $911,000 of other revenue for 1996
compared with $11,465,000, $11,268,000 and $197,000, respectively, for 1995.
Depreciation and amortization, amortization of loan origination fees, and
amortization of unearned trustees' compensation ("Depreciation and
Amortization") were $8,424,000 in the aggregate for 1996 compared with
$3,661,000 for 1995. Real estate and personal property taxes and property
insurance were $2,803,000 for 1996 compared with $1,105,000 for 1995. Interest
expense for 1996 was $5,839,000 compared with $1,989,000 for 1995. Interest
expense for 1996 consisted primarily of interest incurred on borrowings
outstanding under the Company's $70 million line of credit ("Line of Credit")
and $30 million term loan ("Term Loan"). Interest expense for 1995 consisted
primarily of interest incurred on borrowings outstanding under the Line of
Credit and a mortgage note collateralized by one hotel property located in
Florida (the "Florida Mortgage Note"). Net income before minority interest was
$9,749,000, or $0.65 per share, for 1996 compared with $3,864,000, or $0.57 per
share, for 1995. Funds from Operations (income before minority interest and
depreciation) was $17,170,000, or $1.18 (weighted average) per share, for 1996
compared with $7,015,000, or $1.03 per share, for 1995.
   Percentage Lease revenue, Depreciation and Amortization, interest expense and
real estate and personal property taxes and property insurance increased
substantially for 1996 compared with 1995, primarily due to the number of hotels
owned increasing from seven at January 1, 1995 to 18 at January 1, 1996 and to
32 at December 31, 1996.

September 30, 1994 (Inception) Through December 31, 1994
   For the period September 30, 1994 through December 31, 1994, the Company had
revenues of $1,519,000, consisting of $1,480,000 of Percentage Lease revenue
from the Lessee and $39,000 of other revenue. Depreciation and Amortization were
$663,000. Real estate and personal property taxes and property insurance were
$159,000. Interest expense was $61,000, which consisted solely of interest on
the Florida Mortgage Note. Net income before minority interest was $420,000, or
$0.08 per share. Funds from Operations was $900,000, or $0.17 per share.

The Company -- Pro Forma
   The following pro forma information is presented as if the acquisition of the
Hotels had occurred at the beginning of the periods presented.

Comparison of 1996 to 1995
   Pro forma Percentage Lease revenue increased by approximately $5,650,000, or
14.8%, from $38,300,000 in 1995 to $43,950,000 in 1996 (including base rent of
$2,565,000, but no percentage rent, under the Percentage Leases for the three
newly developed Hotels and one Hotel closed for a portion of 1996 due to
renovation). The increase was primarily due to a 6.8% increase in ADR and a 3.5%
increase in occupancy at the Hotels. As a percentage of total revenue, total pro
forma expenses decreased from 72.0% for 1995 to 62.9% for 1996 as a result of
expenses remaining relatively constant while pro forma total revenue increased.

Liquidity and Capital Resources
   The Company's principal source of liquidity is rent payments from the Lessee
under the Percentage Leases, and the Company is dependent on the Lessee to make
such payments to provide cash for additional hotel investment, debt service,
distributions, capital expenditures on its hotels, and working capital. The
Company believes that its cash provided by operations will be adequate to meet
its liquidity needs, which primarily include funding distributions and paying
operating expenses. The Company also currently expects to fund its growth
objectives in part by accessing the capital markets and exchanging equity for
hotel properties as necessary and as market conditions permit.
   Cash and cash equivalents at December 31, 1996 were $44,739,000, including
approximately $287,000 which the Partnership is required, under the Percentage
Leases, to make available to the Lessee for the replacement and refurbishment of
furniture, fixtures and equipment. Additionally, cash and cash equivalents
includes approximately $4,100,000 that is held in escrow to pay for insurance,
taxes, and capital expenditures pertaining primarily to the thirteen Hotels that
collateralize the Line of Credit and the eight Hotels that collateralize the
Term Loan.
   Net cash provided by operating activities for the year ended December 31,
1996 was $17,194,000.
   Net cash used in investing activities was $109,714,000 for the year ended
December 31, 1996. This was comprised primarily of the Company acquiring a
Holiday Inn Express Hotel in Lexington, Massachusetts for approximately
$7,000,000 in cash, Residence Inn Hotels in Cherry Hill, New Jersey and
Harrisburg, Pennsylvania for an aggregate of approximately $16,800,000 in cash,
a Comfort Inn Hotel (to be reflagged as a Hampton Inn after the completion of
renovations) in Woburn, Massachusetts for approximately $3,000,000 in cash, a
Residence Inn Hotel in Atlanta (Downtown), Georgia and a Hampton Inn in
Norcross, Georgia for an aggregate of approximately $27,800,000 in cash, and
seven Residence Inn Hotels ("DeBoer Residence Inns") (San Mateo, California,
Silicon Valley I, California, Silicon Valley II, California, Denver (Downtown),
Colorado, Wichita (East), Kansas, East Lansing, Michigan and Grand Rapids,
Michigan) for approximately $38,367,000 in cash.
<PAGE>   3

                                                        INNKEEPERS USA TRUST 13

The total purchase price for the DeBoer Residence Inns was $108,500,000 and also
consisted of the assumption of approximately $24,936,000 in long-term
indebtedness and the issuance of approximately $44,697,000 of preferred units of
limited partnership interest in the partnership ("Preferred Units") and $500,000
of common units of limited partnership interest in the partnership ("Common
Units"). Lastly, a Residence Inn Hotel in Portland, Maine was acquired for
approximately $5,300,000 in cash and $859,000 in Common Units. The Company
agreed with the sellers of the DeBoer Residence Inns that the Company would
maintain for a period of up to ten years after the closing outstanding
indebtedness of at least approximately $40 million, subject to reduction upon
the occurrence of certain events, including certain redemptions or taxable
transfers of Preferred Units. In the event that the Company fails to maintain
the required indebtedness, the Company may be liable for the resulting income
tax liabilities incurred by the sellers. In addition, the Company agreed
generally not to dispose of any DeBoer Residence Inn in a taxable transaction
for ten years after the closing.
   Net cash provided by financing activities was $135,166,000 for the year ended
December 31, 1996, reflecting proceeds from long-term debt of $46,307,000,
including $32,475,000 in borrowings under the Line of Credit, to (a) purchase
the Holiday Inn Express Hotel in Lexington, Massachusetts, Residence Inn Hotels
in Cherry Hill, New Jersey and Harrisburg, Pennsylvania and the Comfort Inn
Hotel in Woburn, Massachusetts and (b) make deposits toward the purchase of the
Residence Inn Hotel in Atlanta (Downtown), Georgia and the Hampton Inn in
Norcross, Georgia. The Company also completed a 11,500,000 common share
follow-on offering ("Offering"), receiving net proceeds of $117,038,000. A
portion of the Offering proceeds were used to acquire the DeBoer Residence Inns
and to complete the acquisition of the Residence Inn Hotels in Portland, Maine
and Atlanta (Downtown), Georgia and the Hampton Inn in Norcross, Georgia. The
Offering proceeds were also used to pay down the Line of Credit in the amount of
approximately $11,800,000, and the remainder was invested in cash and cash
equivalents.
   The Company (and the Partnership) paid an aggregate of $11,025,000 in
distributions to holders of Common Shares, Common Units and Preferred Units
during the year ended December 31, 1996. The Company paid distributions of $0.90
per Common Share and Common Unit in 1996. Annual preferred distributions of
$1.10 are payable on each Preferred Unit, which may increase up to $1.155 for
each Preferred Unit, based on increases in distributions payable on the Common
Shares. The Preferred Units are convertible at any time into Common Units on a
one-for-one basis. After the second anniversary of the closing of the DeBoer
Residence Inns, the holders of the Preferred Units may redeem their Units for
Common Shares of the Company or, at the election of the Company, an equivalent
value of cash. Under federal income tax law provisions applicable to a REIT, the
Company is required to distribute at least 95% of its taxable income to maintain
its status as a REIT.
   In making additional investments in hotel properties, the Company may incur,
or cause the Partnership to incur, indebtedness to make such investments. The
Company may also incur indebtedness to meet distribution requirements imposed on
a REIT under the Code to the extent that working capital and cash flow from the
Company's investments are insufficient to make such distributions. The Company's
Declaration of Trust limits aggregate indebtedness to 50% of the Company's
investment in hotel properties, at cost, after giving effect to the Company's
use of proceeds from any indebtedness (" Debt Limitation"). The Company's
consolidated indebtedness is 31% of its investment in hotels, at cost, at
December 31, 1996. At December 31, 1996, the Company had outstanding
indebtedness of approximately $100,740,000. Approximately 48% of the Company's
indebtedness at December 31, 1996 bore interest at a fixed rate.
   The Company's long-term debt at December 31, 1996 consisted of (a) the
Florida Mortgage Note, and mortgage notes collateralized by one hotel property
located in California (the "California Mortgage Note") and two hotel properties
located in Michigan (the "Michigan Mortgage Note"), (b) outstanding borrowings
under the Line of Credit and (c) the Term Loan. Twenty-five of the 32 hotels
owned by the Company at December 31, 1996 collateralized this indebtedness.
   The Florida Mortgage Note is payable in equal monthly installments of
$23,526 including interest at a fixed rate of  5.0% per annum through January
2002, at which time all outstanding principal and interest is due. The
outstanding principal balance on the Florida Mortgage Note was approximately
$3.6 million and $3.7 million at December 31, 1996 and 1995, respectively.
   The California Mortgage Note is payable in equal monthly installments of
$141,331 including interest at a fixed rate of 10.35% per annum through June
2010, at which time all outstanding principal and interest is due. The
outstanding principal balance on the California Mortgage Note was approximately
$14.9 million at December 31, 1996.
   The Michigan Mortgage Note is payable in monthly interest only payments, at a
variable interest rate based upon the 30-day yield of tax exempt securities
selected by an independent party, through December 1, 2014, at which time all
outstanding principal and interest is due. The Michigan Mortgage Note is also
collateralized by irrevocable letters of credit collateralized by two hotel
properties located in Michigan. The interest rate and outstanding principal
balance on the Michigan Mortgage Note was 3.9% and $10.0 million, respectively,
at December 31, 1996.
   Outstanding borrowings under the Line of Credit bear interest at the 30-day
LIBOR rate plus 175 basis points. The interest rate on borrowings under the Line
of Credit at December 31, 1996 was 7.1% and the Line of Credit expires March
1997. The outstanding principal balance on the Line of Credit was approximately
$42.2 million and $11.9 million at December 31, 1996 and 1995, respectively.



<PAGE>   4


14 INNKEEPERS USA TRUST

   The Company has negotiated and obtained from the Line of Credit lender a
commitment for an amended and expanded line of credit, which is expected to
close on or about April 1, 1997. The Company's Line of Credit will be increased
to $190 million (from $70 million), of which $40 million will be
uncollateralized. The maturity date on the amended Line of Credit would be
extended to March 2001. The interest rate on the amended Line of Credit would
remain at 175 basis points over the 30-day LIBOR rate for the collateralized
portion and would be 195 basis points over the 30-day LIBOR rate for the
uncollateralized portion.
   The Term Loan, obtained from the Line of Credit lender, matures in twenty
years and bears interest at an 8.17% fixed annual rate. The Term Loan has
scheduled principal amortization over a twenty-year term commencing on the
second-year anniversary of the Term Loan. Interest on the outstanding principal
balance of the Term Loan will accrue at 13.17% if the outstanding principal
balance is not paid in full by the 12th year of the Term Loan. The Term Loan may
be prepaid in full without penalty on and after the 12th anniversary of the
closing of the loan, when the Company expects to pay off the loan in full. The
outstanding principal balance on the Term Loan was $30 million at December 31,
1996 and 1995. The Term Loan is collateralized by eight Residence Inn Hotels.
   In March 1997, the Company fixed the interest rate on $42,000,000 of
borrowings previously outstanding under the variable interest rate Line of
Credit by refinancing such amounts as a Term Loan from the Line of Credit lender
("Second Term Loan"). The Second Term Loan bears interest at an 8.15% fixed
annual rate. Interest on the outstanding principal balance of the Second Term
Loan will begin to accrue at 13.15% if the outstanding principal balance is not
paid in full beginning after the 12th anniversary of the closing of the Second
Term Loan. The Second Term Loan may be prepaid in full without penalty on or
after the 12th anniversary of the closing of the loan, when the Company expects
to pay off the loan in full. The Second Term Loan has scheduled principal
amortization over a twenty-year term commencing on the second anniversary of the
closing of the loan. The Second Term Loan is collateralized by mortgages on
eight hotels, including five hotels previously collateralizing the line of
credit and three previously unencumbered hotels. Upon the closing of the Second
Term Loan, the Company had fixed the interest rate on substantially all of its
total outstanding indebtedness at that time.
   The Company, in the future, may seek to increase the amount of its credit
facilities, negotiate additional credit facilities, or issue corporate debt
instruments, all in compliance with the Debt Limitation. Any debt incurred or
issued by the Company may be secured or unsecured, short-term or long-term,
fixed or variable interest rate and may be subject to such other terms as the
Board of Trustees of the Company deems prudent.
   The Percentage Leases require the Partnership to make available to the Lessee
an amount equal to 4.0% of room revenues from all of the Hotels, on a monthly
basis, for the periodic replacement or refurbishment of furniture, fixtures and
equipment at the Hotels. The Partnership made available to the Lessee
approximately $6,412,000 for hotel renovations from September 30, 1994 to
December 31, 1996. The Second Term Loan requires that the Partnership make
available for such purposes at the Hotels collateralizing that loan 5% of room
revenues from such Hotels. The Company intends to cause the expenditure of
amounts in excess of such obligated amounts if necessary to comply with the
reasonable requirements of any franchise agreement and otherwise to the extent
that the Company deems such expenditures to be in the best interests of the
Company.
   Management believes that the amounts required to be made available by the
Partnership will be sufficient to meet required expenditures for furniture,
fixtures and equipment at the Hotels. The Company currently intends to pay for
the cost of capital improvements and any additional furniture, fixture and
equipment requirements from undistributed cash or, to the extent that
undistributed cash is insufficient to pay such costs, the Line of Credit.
Provisions comparable to those described above in the Percentage Leases for the
Hotels are expected to be included in the Percentage Lease for any other hotel
in which the Company invests.
   In January 1996, the Company completed certain renovations to convert its
Germantown, Maryland hotel to a Hampton Inn. The Company is in the process of
converting the Comfort Inn Hotel in Woburn, Massachusetts to a Hampton Inn and
has expended $439,000 at December 31, 1996 for such conversion. The Company
anticipates that the Hotel will reopen as a Hampton Inn in May 1997.

Seasonality of Hotel Business
   The hotel industry is seasonal in nature. The Hotels' operations historically
reflect higher occupancy rates and ADR during the second and third quarters for
the 28 Hotels located outside of Florida and higher occupancy rates and ADR
during the first and fourth quarters for three of the four Hotels located in
Florida. To the extent that cash flow from operating activities from the Hotels
for a quarter is insufficient to generate Percentage Lease revenue necessary to
fund all of the distributions for such quarter, the Company may maintain the
annual distribution rate by funding seasonal-related shortfalls with available
cash or borrowings under the Line of Credit.

Inflation
   Operators of hotels, including the Lessee and any third-party manager
retained by the Lessee, in general possess the ability to adjust room rates
quickly. However, competitive pressures have limited and may in the future limit
the ability of the Lessee and any third-party manager retained by the Lessee to
raise room rates in response to inflation.



<PAGE>   5


                                                        INNKEEPERS USA TRUST 15

<TABLE>
<CAPTION>
                (in thousands, except share and per share data

December 31,                                                         1996                1995
---------------------------------------------------------------------------------------------
ASSETS
<S>                                                             <C>                 <C>
Investment in hotel properties:
   Land                                                         $  42,565           $  17,380
   Buildings and improvements                                     251,411             112,899
   Furniture and equipment                                         32,644              16,245
---------------------------------------------------------------------------------------------
                                                                  326,620             146,524
   Accumulated depreciation                                       (17,560)            (10,137)
---------------------------------------------------------------------------------------------
   Net investment in hotel properties                             309,060             136,387

Cash and cash equivalents                                          44,739               2,093
Due from Lessee                                                     3,541               2,048
Deferred expenses, net                                              2,718               2,300
Other assets                                                          299                 511
---------------------------------------------------------------------------------------------
       Total assets                                             $ 360,357           $ 143,339
=============================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Long-term debt                                                  $ 100,740           $  45,636
Accrued expenses -- public offering                                     0                 415
Accounts payable and other accrued expenses                           915                 431
Distributions payable                                               5,217               2,487
Minority interest in Partnership                                   45,880               6,124
--------------------------------------------------------------------------------------------
       Total liabilities                                          152,752              55,093
=============================================================================================

Commitments and contingencies (Note 6)

Shareholders' equity:
   Preferred Shares, $0.01 par value, 20,000,000 shares
     authorized, no shares issued or outstanding                        0                   0
   Common Shares, $0.01 par value, 100,000,000 shares
     authorized, 22,322,498 and 10,817,883 shares issued
     and outstanding at December 31, 1996 and December 31,
     1995, respectively                                               223                 108
   Additional paid-in capital                                     213,692              90,659
   Unearned trustees' compensation                                   (138)               (185)
   Distributions in excess of net earnings                         (6,172)             (2,336)
---------------------------------------------------------------------------------------------
       Total shareholders' equity                                 207,605              88,246
---------------------------------------------------------------------------------------------
       Total liabilities and shareholders' equity               $ 360,357           $ 143,339
=============================================================================================
</TABLE>

             The accompanying notes are an integral part of these
                      consolidated financial statements.


<PAGE>   6

16 INNKEEPERS USA TRUST


                 (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                                             For the Period
                                                                                              September 30,
                                                                                                      1994
                                                                 Year                Year        (Inception)
                                                                Ended               Ended           Through
                                                         December 31,        December 31,      December 31,
                                                                 1996                1995              1994
-----------------------------------------------------------------------------------------------------------
Revenue:
<S>                                                      <C>                 <C>                <C>
   Percentage lease revenue                              $     27,466        $    11,268        $     1,480
   Other revenue                                                  911                197                 39
-----------------------------------------------------------------------------------------------------------
       Total revenue                                           28,377             11,465              1,519
-----------------------------------------------------------------------------------------------------------

Expenses:
   Depreciation and amortization                                7,510              3,182                500
   Ground rent                                                    376                336                 83
   Interest expense                                             5,839              1,989                 61
   Amortization of loan origination fees                          867                439                148
   Real estate and personal property
     taxes and property insurance                               2,803              1,105                159
   General and administrative                                   1,186                510                133
   Amortization of unearned trustees' compensation                 47                 40                 15
-----------------------------------------------------------------------------------------------------------
       Total expenses                                          18,628              7,601              1,099
-----------------------------------------------------------------------------------------------------------

Income before minority interest                                 9,749              3,864                420
Minority interest, common                                        (531)              (397)               (52)
Minority interest, preferred                                     (729)                 0                  0
===========================================================================================================
Net income                                               $      8,489        $     3,467        $       368
===========================================================================================================

Net income per common share                              $       0.65        $      0.57        $      0.08
===========================================================================================================
Weighted average number of common shares
   and common share equivalents outstanding                13,828,831          6,835,534          5,382,600
===========================================================================================================
</TABLE>

                  The accompanying notes are an integral part of these
                      consolidated financial statements.


<PAGE>   7


                                                        INNKEEPERS USA TRUST 17

For the Years Ended December 31, 1996, 1995 and for the Period September 30,
1994 (Inception) Through December 31, 1994
               (in thousands, except shares and per share data)

<TABLE>
<CAPTION>

                                                  Common Shares         Additional       Unearned  Distributions           Total
                                             ------------------------      Paid-in      Trustees'   in Excess of   Shareholders'
                                                Shares      Par Value      Capital   Compensation   Net Earnings          Equity
--------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                  <C>     <C>            <C>            <C>             <C>
Balance at September 30, 1994
   (inception)                              4,723,883            $ 47    $  39,742      $    (300)     $       0       $  39,489
Amortization of unearned
   trustees' compensation                           0               0            0             15              0              15
Distribution declared                               0               0            0              0           (915)           (915)
Accrued expenses-- public offering                  0               0          (62)             0              0             (62)
Forfeiture of Trustee common shares            (6,000)              0          (60)           600              0
Net income                                          0               0            0              0            368             368
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994                4,717,883              47       39,620           (547)        38,895
================================================================================================================================
Amortization of unearned
   trustees' compensation                           0               0            0             40              0              40
Distributions declared                              0               0            0              0         (5,256)         (5,256)
Accrued expenses-public offering                    0               0         (394)             0              0            (394)
Common share offering                       6,100,000              61       51,433              0              0          51,494
Net Income                                          0               0            0              0          3,467           3,467
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995               10,817,883             108       90,659           (185)        (2,336)         88,246
================================================================================================================================

Amortization of unearned
   trustees' compensation                           0               0            0             47              0              47
Distributions declared                              0               0            0              0        (12,325)        (12,325)
Accrued expenses-public offering                    0               0          (18)             0              0             (18)
Common share offering                      11,500,000             115      116,923              0              0         117,038
Dividend reinvestment and
   share purchase plan, net                       804               0          (38)             0              0             (38)
Conversion of common units                      3,811               0            0              0              0               0
Allocation from minority interest                   0               0        6,166              0              0           6,166
Net income                                          0               0            0              0          8,489           8,489
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996               22,322,498   $         223      213,692      $    (138)     $  (6,172)      $ 207,605
================================================================================================================================
</TABLE>

   The accompanying notes are an integral part of these consolidated financial
statements.


<PAGE>   8

18 INNKEEPERS USA TRUST


        (in thousands, except supplemental non-cash financing activities)

<TABLE>
<CAPTION>

                                                                                                      For the Period
                                                                    Year            Year          September 30, 1994
                                                                   Ended           Ended                 (Inception)
                                                            December 31,    December 31,                     Through
                                                                    1996            1995           December 31, 1994
--------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>             <C>                         <C>
Cash flows from operating activities:
   Net income                                                    $ 8,489         $ 3,467                     $   368
   Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization                               7,557           3,222                         515
       Amortization of loan origination fees                         867             439                         148
       Minority interest, common and preferred                     1,260             397                          52
   Change in operating assets and liabilities:
     (Increase) decrease in:
       Due from lessee                                            (1,493)         (1,955)                        (93)
       Deferred expenses, net                                       (182)             49                          76
       Other assets                                                  212             (75)                       (393)
     Increase (decrease) in:
       Advances                                                        0               0                        (700)
       Accounts payable and other accrued expenses                   484            (619)                        697
--------------------------------------------------------------------------------------------------------------------
     Net cash provided by operating activities         $          17,194 $         4,925                     $   670
--------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
   Investment in hotel properties                               (109,104)        (90,485)                       (172)
   Payments paid for franchise fees                                 (610)           (344)                          0
   Deposit on Acquisition Hotels                                       0            (100)                          0
--------------------------------------------------------------------------------------------------------------------
     Net cash used in investing activities                     $(109,714)       $(90,929)                    $  (172)
--------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
   Payments due to affiliates                                          0               0                        (571)
   Proceeds from long-term debt                                   46,307          53,842                           0
   Payments on long-term debt                                    (16,139)        (11,978)                        (23)
   Payments for dividend reinvestment plan                           (38)              0                           0
   Payments on accrued expenses -- public offering                  (397)             (4)                     (1,170)
   Common distributions paid                                     (10,296)         (4,397)                          0
   Preferred distributions paid                                     (729)              0                           0
   Proceeds from common share offering, net                      117,038          51,494                           0
   Loan origination fees paid                                       (580)         (2,315)                          0
--------------------------------------------------------------------------------------------------------------------
     Net cash provided by (used in) financing activities       $ 135,166        $ 86,642                     $(1,764)
--------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents           $  42,646        $    638                     $(1,266)
Cash and cash equivalents at beginning of period                   2,093           1,455                       2,721
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                     $  44,739        $  2,093                     $ 1,455
====================================================================================================================
Supplemental cash flow information:
   Interest paid                                               $   5,704        $  1,884                     $    14
</TABLE>


SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:
   The Company incurred $62,000 of accrued expenses -- public offering which was
   recorded in additional paid in capital for the period September 30, 1994
through December 31, 1994.
      The Company incurred $394,000 of accrued expenses public offering which
      was recorded in additional paid in capital for the year ended December
      31, 1995.
      The Company incurred $18,000 of accrued expenses -- public offering
      which was recorded in additional paid in capital for the year ended
      December 31, 1996.
      The Company issued 91,991 Common Units aggregating $850,000 for the
      acquisition of a hotel property for the year ended December 31, 1995.
      The Company issued 119,473 of Common Units aggregating $1,359,000 and
      4,063,329 of preferred units aggregating $44,697,000 for the acquisition
      of 8 hotel properties for the year ended December 31, 1996.
      The Company assumed $24,936,000 of long-term indebtedness in the
      acquisition of 3 hotel properties for the year ended December 31,
      1996.

                  The accompanying notes are an integral part of these
consolidated financial statements.


<PAGE>   9


                                                        INNKEEPERS USA TRUST 19


1. SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES

ORGANIZATION
   Innkeepers USA Trust (the "Company") commenced operations on September 30,
1994. The Company owns an 81.9% equity interest in Innkeepers USA Limited
Partnership (with its subsidiary partnerships, the "Partnership") at December
31, 1996 and has elected to be taxed as a real estate investment trust ("REIT").
The Partnership owns 32 Hotels (the "Hotels") in 14 states at December 31, 1996.
The 32 Hotels are comprised of 20 Residence Inn by Marriott, 8 Hampton Inns, 2
Comfort Inns, 1 Sheraton Inn and 1 Holiday Inn Express.
   The Partnership leases the Hotels to JF Hotel, Inc. (or other entities
under common ownership, collectively the "Lessee") pursuant to leases which
provide for rent based, in substantial part, on the room revenues of the Hotels
("Percentage Leases").
   An officer and shareholder of the Company is also an officer and principal
shareholder of the Lessee.

PRINCIPLES OF CONSOLIDATION
   The consolidated financial statements include the accounts of the Company and
the Partnership after elimination of all significant intercompany accounts and
transactions.

INVESTMENT IN HOTEL PROPERTIES
   Hotel properties are recorded at cost and are depreciated using the
straight-line method over the estimated useful lives of the assets of 5 and 40
years. Asset and accumulated depreciation accounts are relieved for dispositions
with resulting gains or losses recorded in the Statements of Income. Maintenance
and repairs are the responsibility of the Lessee. Major additions and
improvements are capitalized. The Company periodically evaluates the carrying
value of hotel properties to measure and recognize the possible impairment of
these assets. The Company believes that no such impairment existed on these
assets at December 31, 1996.

CASH AND CASH EQUIVALENTS
   All highly liquid investments with a maturity of three months or less when
purchased are considered to be cash equivalents. Cash equivalents are placed
with reputable institutions and the balances may at times exceed federal
depository insurance limits.

DEFERRED EXPENSES
   Deferred expenses consist primarily of loan origination fees and franchise
fees and are recorded at cost. Amortization is computed using the straight-line
method over the original lives of the franchise agreements which range from
approximately 3 to 13 years. Loan origination fees are amortized using the
interest method over the original term of the Company's $70 million line of
credit ("Line of Credit") and $30 million term loan ("Term Loan") which is 3 and
12 years, respectively.

MINORITY INTEREST
   Minority interest in the Partnership represents the limited partners'
proportionate share in the equity of the Partnership. Income is allocated to
minority interests based on the weighted average percentage ownership throughout
the year.

REVENUE RECOGNITION
   Percentage Lease revenue is recognized as earned from the Lessee under each
Percentage Lease agreement. The Company must rely on the Lessee to generate
sufficient cash flow from the operation of the Hotels to enable the Lessee to
meet the rent obligations under the Percentage Leases. The obligations of the
Lessee under the Percentage Leases are unsecured. The Lessee has only nominal
assets, other than working capital, and has met all rent obligations under the
Percentage Leases.

NET INCOME PER COMMON SHARE
   Net income per Common Share is computed by dividing income before minority
interest less preferred unit distributions, if applicable, by the weighted
average number of Common Shares and Common Share equivalents outstanding. Common
units of limited partnership interest in the Partnership ("Common Units") and
common share options are considered Common Share equivalents. The preferred
units are not considered Common Share equivalents and are not included in the
computation of net income per common share because of their antidilutive effect
on net income per common share.

DISTRIBUTIONS
   The Company intends to pay regular quarterly distributions which are
dependent upon receipt of distributions from the Partnership.

INCOME TAXES
   The Company has elected to be taxed as a real estate investment trust under
the Internal Revenue Code commencing with its taxable period ended December 31,
1994. Accordingly, no provision for federal income taxes has been reflected in
the financial statements. Earnings and profits, which will determine the
taxability of distributions to shareholders, will differ from net income
reported for financial reporting purposes primarily due to the differences for
federal tax purposes in the estimated useful lives used to compute depreciation.
   For the year ended December 31, 1995, $0.69 of the total distribution
declared of $0.84 is ordinary income and $0.15 is a return of capital. For the
year ended December 31, 1996, $0.71 of the total distribution declared of $0.90
is ordinary income and $0.19 is a return of capital.

USE OF ESTIMATES
   The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial

<PAGE>   10

20 INNKEEPERS USA TRUST

statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. CASH AND CASH EQUIVALENTS
   Cash and cash equivalents consist of approximately $4.4 million and $1.4
million that is required to be held in escrow accounts as specified primarily by
the terms of the Company's Line of Credit and Term Loan at December 31, 1996 and
December 31, 1995, respectively. The restricted cash and cash equivalents is to
be used to pay for insurance, taxes, furniture, fixtures, equipment and capital
expenditures pertaining to the thirteen Hotels that collateralize the Line of
Credit and the eight Hotels that collateralize the Term Loan.

3. LONG-TERM DEBT
   Long-term debt consists of (a) mortgage notes collateralized by one hotel
property located in Florida (the "Florida Mortgage Note"), one hotel property
located in California (the "California Mortgage Note") and two hotel properties
located in Michigan (the "Michigan Mortgage Note"), (b) outstanding borrowings
under the Line of Credit, and (c) the Term Loan.
   The Florida Mortgage Note is payable in equal monthly installments of $23,526
including interest at a fixed rate of 5.0% per annum through January 2002 at
which time all outstanding principal and interest is due. The outstanding
principal balance on the Florida Mortgage Note was approximately $3.6 million
and $3.7 million at December 31, 1996 and 1995, respectively.
   The California Mortgage Note is payable in equal monthly installments of
$141,331, including interest at a fixed rate of 10.35% per annum through June
2010, at which time all outstanding principal and interest is due. The
outstanding principal balance on the California Mortgage Note was approximately
$14.9 million at December 31, 1996.
   The Michigan Mortgage Note is payable in monthly interest only payments at a
variable interest rate based upon the 30- day yield of tax exempt securities
selected by an independent party through December 1, 2014, at which time all
outstanding principle and interest is due. The Michigan Mortgage Note is also
collateralized by irrevocable letters of credit collateralized by the same two
hotel properties located in Michigan. The interest rate and outstanding
principal balance on the Michigan Mortgage Note is 3.9% and $10.0 million,
respectively, at December 31, 1996.
   Outstanding borrowings under the Line of Credit bear interest at the 30-day
LIBOR rate plus 175 basis points. The interest rate on borrowings under the Line
of Credit at December 31, 1996 was 7.1% and the Line of Credit expires March
1997. The outstanding principal balance on the Line of Credit was approximately
$42.2 million and $11.9 million at December 31, 1996 and 1995, respectively.
   The Term Loan matures in twenty years and bears interest at an 8.17% fixed
annual rate. The Term Loan has scheduled principal amortization over a
twenty-year term commencing on the second year anniversary of the Term Loan.
Interest on the outstanding principal balance of the Term Loan will accrue at
13.17% if the outstanding principal balance is not paid in full by the twelfth
year of the Term Loan. The outstanding principal balance on the Term Loan was
$30 million at December 31, 1996 and 1995.
    Substantially all of the Company's assets at December 31, 1996, other
than the hotel properties collateralizing the Florida, California and Michigan
Mortgage Notes and seven unencumbered hotel properties, are pledged as
collateral on the Line of Credit and Term Loan.
    The approximate scheduled principal payments to be made in future years
are as follows (in thousands)(see Note 9):

<TABLE>
<S>                       <C>
1997                      $    600
1998                         1,100
1999                         1,900
2000                         2,400
2001                         2,400
Thereafter                  92,340
----------------------------------
                          $100,740
==================================
</TABLE>

4. SHARE OPTION PLAN
   The Company has adopted a share option plan which covers employees and
officers of the Company. The Company has reserved 800,000 Common Shares for
issuance upon the exercise of options under the plan. The plan provides for the
granting of incentive share options, non-qualified options and restricted common
shares. The option price of share options may not be less than the fair market
value of the Common Shares at the date of grant. The Company has granted 110,000
incentive share options and 140,000 non-qualified options to an officer of the
Company, who is also a trustee, at an exercise price of $10.00 per share. In
February 1996, the Company granted an additional 156,000 non-qualified options
to the officer at an exercise price of $9.75. The incentive share options vest
over a ten-year period and the non-qualified options vest over a five-year
period, except for the 156,000 non-qualified options granted in February 1996,
of which 32,000 vest in each of September 1996, 1997 and 1998, and 60,000 vest
in September 1999. The Company has also granted 20,000 incentive share options
to an officer of the Company at an exercise price of $8.875, which vest over a
three-year period. No options were exercised as of December 31, 1996.
   The Company has also adopted a share incentive plan which covers non employee
trustees and provides for the granting of incentive share options and restricted
common shares ("Restricted Common Shares").
   The Company has issued 7,500 Restricted Common Shares to each of its four
independent trustees, which shares vest over five years at a rate of 1,500
shares per year beginning in 1994. The common shares are subject to forfeiture
if the trustee does not remain a trustee of the Company for the
<PAGE>   11

                                                        INNKEEPERS USA TRUST 21

specified vesting period. Due to the resignation of a trustee, effective
December 19, 1994, 6,000 Restricted Common Shares have been forfeited.
Additionally, the Company has granted an aggregate of 15,000 non-qualified
options to three of its non-employee trustees at an exercise price of $10.00 per
share.
   The following unaudited pro forma net income and net income per common share
of the Company is presented as if compensation cost for the Company's share
option grants were recorded in the statements of income. The pro forma net
income and net income per common share is not necessarily indicative of the
operating results of the Company nor does it purport to represent the results of
operations of future periods.
   The fair value of each share option granted is estimated on the date of grant
using the Black-Scholes Option-Pricing Model with the following assumptions: (1)
dividend of 6.7%, (2) expected volatility of approximately 23%, (3) risk-free
interest rate of 5.5% to 6.9%, and (4) expected life of 7 years. Compensation
cost is generally recognized as the fair value of each share option granted
minus the exercise price of each share option granted and, on a pro forma basis
was $60,000 and $6,000 for the years ended December 31, 1996 and 1995,
respectively.

<TABLE>
<CAPTION>

                           For the Years Ended December 31,
                           --------------------------------
                             1996                   1995
----------------------------------------------------------------------
                   As Reported  Pro Forma As Reported  Pro Forma
----------------------------------------------------------------------
<S>                                <C>       <C>     <C>        <C>
Net Income                         $8,489    $8,429  $ 3,467    $3,461
Net Income Per
   Common Share                     $0.65     $0.65  $  0.57    $ 0.56
</TABLE>

5. ACQUISITIONS
   In February 1996, the Partnership acquired an existing hotel from an
unaffiliated party for approximately $7,000,000 in cash. In May 1996, the
Partnership acquired two existing hotels from an unaffiliated party for an
aggregate of approximately $16,800,000 in cash.
   In August 1996, the Partnership acquired an existing hotel from an
unaffiliated party for approximately $3,000,000 in cash.
   In October 1996, the Partnership acquired two newly-constructed hotels
from an unaffiliated party for an aggregate of approximately $27,800,000 in
cash.
   In November 1996, the Partnership acquired seven existing hotels in a single
transaction from seven separate but affiliated sellers which were unaffiliated
from the Company for a purchase price of $108,500,000. The purchase price
consisted of approximately $38,367,000 in cash, the assumption of approximately
$24,936,000 in long-term indebtedness and the issuance of approximately
$44,697,000 of preferred units (4,063,329 preferred units) and $500,000 in
Common Units (43,956 Common Units).
   In November 1996, the Partnership acquired a newly-constructed hotel from
an unaffiliated party for approximately $5,300,000 in cash, and $859,000 in
Common Units (75,517 Common Units).

6. COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS

   Pursuant to the Partnership's Partnership Agreement, limited partners who
hold Common Units at December 31, 1996 have redemption rights ("Redemption
Rights") which enable them to redeem their Common Units in exchange for Common
Shares on a one-for-one basis or, at the Company's option, an equivalent amount
of cash at any time after September 30, 1995 or, in the case of 91,991 Common
Units after October 7, 1997 and 119,473 Common Units, after October 1997. The
aggregate number of Common Shares issuable upon exercise of the such redemption
rights is 866,370 at December 31, 1996.
   Additionally, limited partners who hold preferred units of limited
partnership interest in the Partnership ("Preferred Units") at December 31, 1996
have Redemption Rights which enable them to redeem their Preferred Units in
exchange for Common Shares on a one-for-one basis or, at the Company's option,
an equivalent amount of cash at any time after November 1, 1998. The aggregate
number of Common Shares issuable upon exercise of such Redemption Rights is
4,063,324 at December 31, 1996.
   Annual preferred distributions of $1.10 are payable on each Preferred Unit,
which may increase up to $1.155 for each Preferred Unit, based on increases in
dividends payable on the Common Shares. The Preferred Units have a preference
value of $11.00 per unit and will be converted into Common Units on the tenth
anniversary of the Preferred Units issuance unless previously converted.
   The Hotels are operated under franchise or management agreements as Hampton
Inn, Residence Inn by Marriott, Sheraton Inn, Holiday Inn Express or Comfort Inn
hotels. The Partnership has paid the cost of obtaining or transferring franchise
license agreements to the Lessee. The franchise and management agreements
require the payment of fees based on a percentage of hotel revenue. These fees
are paid by the Lessee, which holds any franchise licenses.
   The Partnership is obligated to pay the costs of certain capital
improvements, real estate and personal property taxes and property insurance.
Additionally, the Partnership must make available to the Lessee on a monthly
basis an amount equal to 3.0% of room revenues through December 31, 1994 and
4.0% of room revenues thereafter, for the periodic replacement or refurbishment
of furniture, fixtures and equipment at the Hotels. The amount of cash and cash
equivalents allocated for availability to the Lessee is approximately $287,000
and $98,000 at December 31, 1996 and December 31, 1995, respectively.
   The Partnership earned Percentage Lease revenue of $27,466,000, $11,268,000
and $1,480,000 for the years ended December 31, 1996 and 1995 and for the period
September 30, 1994 (inception) through December 31, 1994, respectively. The
Lessee owed the Company approximately $4,209,000 and $2,182,000 in Percentage
Lease revenue under the Percentage Leases at December 31, 1996 and December 31,
1995, respectively. The Company evaluated


<PAGE>   12





22 INNKEEPERS USA TRUST

the creditworthiness of the Lessee and has determined that an allowance for
doubtful accounts is not warranted. The Company has not incurred any losses
pertaining to Percentage Lease receivables for the year ended December 31, 1996.
    The Lessee has future minimum base lease commitments under the Percentage
Lease agreements to the Partnership through the year 2006. Minimum future base
lease revenue, under the Percentage Lease agreements, are as follows
(in thousands):

<TABLE>
<CAPTION>

Year                            Amount
--------------------------------------
<C>                            <C>
1997                           $21,925
1998                            21,925
1999                            21,925
2000                            21,925
2001                            21,925
Thereafter                      92,000
</TABLE>

   At December 31, 1996, the Company's Declaration of Trust limited the
consolidated indebtedness of the Company to 50.0% of the Company's investment in
hotels, at cost, after giving effect to the Company's use of proceeds from any
indebtedness. The Company's consolidated indebtedness is approximately 31% of
its investment in hotels, at cost, at December 31, 1996.
    The Partnership has two fifty-year term leases expiring July 2034 and
May 2035, respectively, and a 98-year term lease expiring October 2083, on the
land underlying three of its hotel properties. Minimum annual rent payable under
these leases is approximately $442,000 in the aggregate.
    The Company has paid $100,000, $40,000 and $10,000 to the Lessee for
usage of office facilities for the years ended December 31, 1996 and 1995 and
for the period September 30, 1994 (inception) through December 31, 1994,
respectively. This amount has been recorded in general and administrative
expense in the Statements of Income.

7. FAIR VALUE OF FINANCIAL INSTRUMENTS
   The carrying amount of cash and cash equivalents approximates fair value due
to the short maturity of these instruments.
   The fair value of long-term debt approximates the carrying amount and is
estimated based on current rates offered to the Company for similar debt.

9. SUBSEQUENT EVENTS

ACQUISITIONS
   In January 1997, the Partnership acquired an existing hotel from an
unaffiliated party for approximately $10,630,000 in cash and approximately
$620,000 in Common Units.
   In February 1997, the Partnership acquired an existing hotel for $10,500,000
 in cash and a newly developed hotel for approximately $10,200,000 in cash and
approximately $4,300,000 in Common Units, from an unaffiliated party.

LINE OF CREDIT
   In March 1997, the Company has obtained a commitment to increase its Line of
Credit to $190 million (from $70 million), of which $40 million is
uncollateralized. The maturity date on the line of credit was also extended to
March 2001. The interest rate on the Line of Credit is 175 basis points over the
30-day LIBOR rate for the collateralized portion and is 195 basis points over
the 30-day LIBOR rate for the uncollateralized portion. Additionally, in March
1997, $42,000,000 of the outstanding principal balance on the Line of Credit was
refinanced as a term loan ("Second Term Loan"). The Second Term Loan matures in
twenty years and bears interest at an 8.15% fixed annual rate. The Second Term
Loan has scheduled principal amortization over a twenty-year term commencing on
the second-year anniversary of the Second Term Loan.

10. PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

   The unaudited pro forma condensed statement of operations and financial
information of the Company is presented as if the acquisition of the Hotels had
occurred on January 1, 1995. The unaudited pro forma statement of operations and
financial information is not necessarily indicative of the operating results of
the Company that would have occurred if the transactions had been completed as
of such dates, nor does it purport to represent the results of operations for
future periods.

<TABLE>
<CAPTION>

For the Years Ended December 31,           1996              1995
-------------------------------------------------------------------
Operating Data:
   <S>                                  <C>                <C>
   Percentage lease revenue             $ 43,950(A)        $ 38,300(A)
   Total revenue                        $ 44,450           $ 38,800
-------------------------------------------------------------------
   Depreciation and amortization          13,300             13,300
   Interest expense                        8,000              8,000
   Real estate and personal property
     taxes and property insurance          4,100              4,100
   Total expenses                         27,950             27,950
-------------------------------------------------------------------
Income before minority interest           16,500             10,850
Minority interest, common                   (611)              (401)
Minority interest, preferred              (4,470)            (4,470)

Net income                              $ 11,419           $  5,979
Net income per common share             $   0.52           $   0.28
===================================================================
Weighted average number of
   Common Shares and Common
   Share equivalents outstanding          23,189             23,189
</TABLE>

(A)  Includes base rent of $2,565,000, but not percentage rent, under the
     Percentage Leases for three newly developed hotels and one hotel closed for
     a portion of 1996 due to renovation.

<PAGE>   13


                                                         INNKEEPERS USA TRUST 23

Report of Independent Accountants

To the Board of Directors and Shareholders
Innkeepers USA Trust


   We have audited the accompanying consolidated balance sheets of Innkeepers
USA Trust as of December 31, 1996 and 1995, and the related consolidated
statements of income, shareholders' equity and cash flows for the years ended
December 31, 1996 and 1995, and the period September 30, 1994 (inception)
through December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
   We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
   In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Innkeepers USA
Trust as of December 31, 1996 and 1995, and the consolidated results of their
operations and their cash flows for the years ended December 31, 1996 and 1995,
and the period September 30, 1994 (inception) through December 31, 1994 in
conformity with generally accepted accounting principles.





/s/ Coopers & Lybrand L.L.P.





West Palm Beach, Florida
March 14, 1997