<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                ----------------

                                    FORM 10-K

(MARK ONE)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the fiscal year ended DECEMBER 31, 1997
                          -----------------

                                       OR
[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 NO [FEE REQUIRED]

For the transition period from __________ to __________

                         Commission file number 0-24568
                              INNKEEPERS USA TRUST
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                 Maryland                                        65-0503831
                 --------                                        ----------
         (State or other jurisdiction                         (I.R.S. employer
   of incorporation or organization)                         identification no.)

306 Royal Poinciana Way, Palm Beach, Florida                        33480
--------------------------------------------                        -----
  (Address of principal executive offices)                       (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE  (561) 835-1800
                                                    ---------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

Title of each class              Name of each exchange on which registered
-------------------              -----------------------------------------
      None                                 None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                   COMMON SHARES, par value of $.01 per share
                                (Title of Class)

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

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

    The number of shares outstanding of the registrant's only class of common
stock, $.01 par value per share, as of March 23, 1998, was 33,113,211. The
aggregate market value of the common stock held by nonaffiliates of the
registrant as of March 23, 1998 was approximately $510,000,000.

                       Documents Incorporated by Reference

    Portions of the 1997 Innkeepers USA Trust Annual Report to Shareholders to
be filed with the Securities and Exchange Commission are incorporated by
reference into Parts I and II hereof. Portions of the 1998 Innkeepers USA Trust
Proxy Statement to be filed with the Securities and Exchange Commission within
120 days after the year covered by this Form 10-K with respect to the Annual
Meeting of Shareholders to be held on May 6, 1998 are incorporated by reference
into Part III hereof.


<PAGE>   2



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
    ITEM NO.
    --------
                                                       PART I

<S>               <C>                                                                                            <C>
    Item 1.       Business......................................................................................  1
    Item 2.       Properties.................................................................................... 23
    Item 3.       Legal Proceedings............................................................................. 26
    Item 4.       Submission of Matters to a Vote of Security Holders .......................................... 26



                                                      PART II

    Item 5.       Market for the Registrant's Common Equity and Related Shareholder
                  Matters....................................................................................... 26
    Item 6.       Selected Financial Data....................................................................... 26
    Item 7.       Management's Discussion and Analysis of Financial Condition and
                  Results of Operations......................................................................... 27
    Item 7A.      Quantitative and Qualitative Disclosures About Market Risk.................................... 30
    Item 8.       Financial Statements and Supplementary Data................................................... 30
    Item 9.       Changes in and Disagreements With Accountants on Accounting and
                  Financial Disclosure.......................................................................... 45

                                                     PART III

    Item 10.      Directors and Executive Officers of the Registrant............................................ 45
    Item 11.      Executive Compensation........................................................................ 45
    Item 12.      Security Ownership of Certain Beneficial Owners and Management................................ 45
    Item 13.      Certain Relationships and Related Transactions................................................ 45

                                                      PART IV

    Item 14.      Exhibits, Financial Statements, Schedules
                  and Reports on Form 8-K....................................................................... 45
</TABLE>



<PAGE>   3



         THIS REPORT CONTAINS AND INCORPORATES BY REFERENCE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
INCLUDING, WITHOUT LIMITATION, STATEMENTS CONTAINING THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND WORDS OF SIMILAR IMPORT. SUCH FORWARD-LOOKING
STATEMENTS RELATE TO FUTURE EVENTS AND THE FUTURE FINANCIAL PERFORMANCE OF THE
COMPANY, AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY
TO BE MATERIALLY DIFFERENT FROM THE RESULTS OR ACHIEVEMENTS EXPRESSED OR IMPLIED
BY SUCH FORWARD-LOOKING STATEMENTS. ATTENTION SHOULD BE PAID TO THE VARIOUS
FACTORS IDENTIFIED OR INCORPORATED BY REFERENCE IN THIS REPORT WHICH COULD CAUSE
ACTUAL RESULTS TO DIFFER, INCLUDING BUT NOT LIMITED TO THOSE DISCUSSED IN THE
SECTIONS ENTITLED "INTERNAL GROWTH STRATEGY," "ACQUISITION STRATEGY,"
"COMPETITION", "BUSINESS RISKS,""LEVERAGE," "ENVIRONMENTAL MATTERS," "TAX
STATUS" AND "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS." THE COMPANY IS NOT OBLIGATED TO UPDATE ANY SUCH FACTORS
OR TO REFLECT THE IMPACT OF ACTUAL FUTURE EVENTS OR DEVELOPMENTS ON SUCH
FORWARD-LOOKING STATEMENTS.

                                     PART I

ITEM 1.  BUSINESS

(a) GENERAL

         OVERVIEW

         Innkeepers USA Trust ("Innkeepers") is a self-administered real estate
investment trust ("REIT"), which commenced operations on September 30, 1994.
Innkeepers initially acquired an 87.7% equity interest in Innkeepers USA Limited
Partnership (with its subsidiary partnerships, the "Partnership" and
collectively with Innkeepers, the "Company") which owned seven hotels with an
aggregate of 851 rooms. At December 31, 1997, Innkeepers owned interests in 56
hotels with an aggregate of 6,703 rooms (the "Hotels") through its 82.1%
interest in the Partnership.

         The Company has implemented a strategy of utilizing multiple lessees
and hotel management companies for its hotel properties. The Company leases 47
of the Hotels to JF Hotel, Inc. (or other entities under common ownership,
collectively the "JF Lessee") and leases nine Hotels to affiliates of
Summerfield Hotel Corporation (the "Summerfield Lessee" and, together with the
JF Lessee, the "Lessee") pursuant to percentage leases (the "Percentage
Leases"). The Percentage Leases allow the Company to participate in increased
revenue from the Hotels by providing for the payment of rent based on
percentages of room revenues. The JF Lessee has entered into management
contracts with Residence Inn by Marriott, Inc., a subsidiary of Marriott
International, Inc. ("Marriott"), the largest operator of upscale extended-stay
hotels in the United States, to manage 20 of the Residence Inn Hotels and with
another third-party manager to manage two of the Hotels. The Summerfield Lessee
has entered into management contracts with another affiliate of Summerfield to
manage the nine Summerfield Hotels.



<PAGE>   4



         UPSCALE EXTENDED-STAY SEGMENT

         The Company's acquisition strategy focuses primarily on upscale
extended-stay hotels. Smith Travel Research ("Smith Travel") defines the upscale
extended-stay hotel segment as those extended-stay hotels having an average
daily rate ("ADR") of $85 or greater.

         Upscale extended-stay hotels are distinguishable from mid-priced,
economy and budget extended-stay hotels generally as follows:

                              EXTENDED-STAY HOTELS

<TABLE>
<CAPTION>
                                        MID-PRICED, ECONOMY AND BUDGET                    UPSCALE
                                        ------------------------------                    -------

<S>                                     <C>                                     <C>
Principal Customer Base. . .            Independent business                    Corporations for executive
                                        travelers; government                   training and consulting;
                                        workers; families                       project assignment; corporate
                                                                                relocations.

Services/Amenities. . . . . . .         Minimal meeting space;                  Complimentary breakfast and
                                        limited lobby space; limited            evening cocktails; meeting
                                        on-site food; limited front             space; daily linen and room
                                        desk hours; weekly maid                 cleaning service; 24-hour
                                        service and twice-weekly                front desk; guest grocery
                                        linen service                           services; 24-hour security and
                                                                                maintenance; on-site conve-
                                                                                nience store

Physical Facilities . . . . . . .       Smaller rooms; fewer kitchen            Larger rooms; higher quality
                                        amenities; limited facility             construction; higher level of
                                        amenities                               kitchen amenities; higher
                                                                                level of room furnishings;
                                                                                pool; exercise facilities
</TABLE>


         The Company believes the demand for upscale extended-stay rooms
substantially exceeds the available supply in its market, which the Company
expects will allow its Hotels to continue to provide attractive returns to the
Company in the near term. Over the longer term, the Company believes that new
supply will continue to be limited in its target markets by the relatively high
barriers to entry in those markets. High barriers to entry include scarcity and
high cost of land, extensive permit and approval requirements, the relatively
long lead time required to develop an upscale extended-stay hotel, particularly
in the New England and Pacific coast states, and the relatively high costs
associated with such development.


                                        2

<PAGE>   5



         The upscale extended-stay hotel concept was developed by Jack P. DeBoer
and Rolf E. Ruhfus, Trustees of the Company, who co-founded both the Residence
Inn and Summerfield Suites brands. The Company believes its relationships with
Marriott, Summerfield and Messrs. DeBoer and Ruhfus, affiliates of each of which
own equity interests in the Company, have provided and will provide the Company
with attractive opportunities to acquire additional upscale extended-stay
hotels.

         RELATIONSHIPS

         To implement its multi-lessee/operator strategy, the Company has formed
relationships with the owners and operators of two of the premier brands in the
upscale extended-stay segment, Marriott and Summerfield.

         Marriott. The Company currently owns 38 Residence Inn hotels, including
20 that are managed by Marriott. Marriott's management of Company-owned Hotels
enables the Company to realize the benefits of Marriott's resources and hotel
operations experience and enhances the Company's ability to grow. The Company
believes that its relationship with Marriott has and may, in the future, provide
the Company access to Residence Inn developers and potential sellers to which it
might not otherwise have meaningful access. The Company expects that Marriott
will manage certain additional Residence Inn hotels that may be acquired in the
future, although no assurance can be given in this regard. Marriott currently
owns 298,334 Common or Preferred Units.

         Summerfield. The Company currently owns nine Summerfield brand hotels
(including six Summerfield Suites hotels, two Sierra Suites hotels, and one
Sunrise Suites hotel), all of which are leased and managed by Summerfield. Mr.
Ruhfus, Chairman of the Board of Summerfield, is also a Trustee of the Company.
The Company also has a right of first refusal to acquire certain Summerfield
Suites or Sierra Suites Hotels developed in the future by Summerfield. Under
that arrangement, the Company has retained Summerfield to develop a 113 room
Sierra Suites hotel in Westborough, Massachusetts. The total estimated cost of
development of this hotel is approximately $7,900,000 and the development is
expected to be completed in the first half of 1998. Affiliates of Summerfield
currently own 1,937,947 Common Units.



                                        3

<PAGE>   6



         THE HOTELS

         The following charts set forth certain information with respect to the
Hotels at December 31, 1997:

<TABLE>
<CAPTION>
                                                                        Number of
Franchise Affiliation                              Number of Hotels   Rooms/Suites
---------------------                              ----------------   ------------

<S>                                                       <C>             <C>
Upscale Extended-Stay
         Residence Inn                                    32              3,649
         Summerfield Suites                                6                759*
         Sunrise Suites                                    1                 96
                                                       -----              -----
                                                          39              4,504
                                                       -----              -----
Mid-Priced Extended-Stay
         Sierra Suites                                     2                202
                                                       -----              -----

Mid-Priced
         Hampton Inn                                      12              1,527
         Comfort Inn                                       1                127
         Holiday Inn Express                               1                204
                                                       -----              -----
                                                          14              1,848
                                                       -----              -----
Full-Service
         Sheraton Inn                                      1                139
                                                       -----              -----
                                                          56              6,703
                                                       =====              =====
</TABLE>

----------
* Contains a total of 1,057 bedrooms






                                        4

<PAGE>   7







<TABLE>
<CAPTION>
                                       Number         Number of          Percentage of
    State                            of Hotels      Suites/Rooms         Suites/Rooms
    -----                            ---------      ------------         ------------

<S>                                     <C>            <C>                   <C>
California                              10             1,472                 22.0%
Florida                                  5               603                  9.0
Texas                                    4               544                  8.1
Michigan                                 4               404                  6.0
Georgia                                  3               399                  6.0
Illinois                                 3               368                  5.5
Pennsylvania                             3               357                  5.3
New York                                 3               319                  4.8
New Jersey                               3               308                  4.6
Massachusetts                            2               304                  4.5
Colorado                                 2               284                  4.2
Connecticut                              2               192                  2.9
Maryland                                 1               176                  2.6
Kentucky                                 2               176                  2.6
Indiana                                  2               168                  2.5
Minnesota                                1               126                  1.9
Arizona                                  1               113                  1.7
North Carolina                           1                88                  1.3
Virginia                                 1                80                  1.2
Ohio                                     1                80                  1.2
Maine                                    1                78                  1.2
Kansas                                   1                64                  0.9
                                     -----             -----                -----
                                        56             6,703                100.0%
                                     =====             =====                =====
</TABLE>


RECENT DEVELOPMENTS

         On December 30, 1997, the Company purchased a portfolio of eight
Residence Inn hotels for an aggregate purchase price of $59,500,000. The hotels
purchased are as follows: Altamonte Springs, Florida (128 rooms), Ontario,
California (200 rooms), Columbus (East), Ohio (80 rooms), Fort Wayne, Indiana
(80 rooms), Indianapolis, Indiana (88 rooms), Lexington, Kentucky (80 rooms),
Louisville, Kentucky (96 rooms) and Winston-Salem, North Carolina (88 rooms).
The Company funded the purchase with available cash and the Line of Credit.

         On January 11, 1998, the Company purchased a 120-room Residence Inn
hotel located in Bothell (Seattle Northeast), Washington, for a cash purchase
price of $11,750,000. The purchase price was funded through the Company's Line
of Credit.


                                        5

<PAGE>   8



         On January 14, 1998, the Company purchased a portfolio of five
Residence Inn hotels for an aggregate purchase price of $83,000,000. The hotels
purchased are as follows: Bellevue, Washington (120 rooms); Lynnwood, Washington
(120 rooms); Tukwila, Washington (144 rooms); Vancouver, Washington (120 rooms);
and Lake Oswego (Portland South), Oregon (112 rooms). The Company assumed
existing indebtedness of $59,320,000 and funded the balance of the purchase
price through the Line of Credit.

         On February 19, 1998, the Company obtained a new line of credit (the
"Line of Credit"). The Line of Credit is uncollateralized and has a maximum
borrowing amount of $250,000,000. The interest rate on the Line of Credit is
LIBOR plus 122.5 to 162.5 basis points, a reduction from the LIBOR plus 175
basis points interest rate on the old line of credit. The old line of credit was
extinguished. The Company was amortizing loan origination fees and costs
incurred in connection with the old line of credit over its original three-year
term. When the old line of credit was extinguished and replaced with the Line of
Credit, those loan origination fees and costs were expensed immediately and
recognized as an extraordinary loss of approximately $2,750,000.

         On February 19, 1998, the Company refinanced $40,000,000 of borrowings
outstanding under the Line of Credit with a new term loan (the "Third Term
Loan"), which bears interest at a 7.02% fixed annual rate. The Third Term Loan
has scheduled principal amortization over a twenty year term, with equal monthly
payments of $292,467 commencing on April 11, 2000. Interest on the outstanding
balance of the Third Term Loan will accrue at 12.02% if the outstanding
principal balance is not paid in full by March 11, 2010. The Company anticipates
repaying the remaining balance of the Third Term Loan on or before March 11,
2000. Seven Hotels collateralize the Third Term Loan.

         In connection with obtaining the (uncollateralized) Line of Credit, the
Hotels securing the old line of credit were released. At February 19, 1998, 28
of the Company's hotel properties collateralized its other long-term debt,
including the Third Term Loan.

         On March 4, 1998, the Company's Board of Trustees declared a first
quarter distribution of $0.28 per common share to shareholders of record on
March 27, 1998. The distribution is payable on April 21, 1998. The 1998 first
quarter distribution represents a $0.02, or 7.7%, increase over the 1997 fourth
quarter distribution.

(b)      FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

         The Company is in the business of acquiring equity interests in hotel
properties. See the Consolidated Financial Statements and notes thereto included
in Item 8 on this Form 10-K for certain financial information required to be
included in response to this Item 1.


                                        6

<PAGE>   9



(c)      NARRATIVE DESCRIPTION OF BUSINESS

         GENERAL

         The Company is a self-administered Maryland REIT which owned equity
interests in the 56 Hotels with an aggregate of 6,703 rooms as of December 31,
1997. A wholly-owned subsidiary of Innkeepers owns an approximate 82.1% interest
in and is the sole general partner of Innkeepers USA Limited Partnership. The
Hotels are owned both by Innkeepers USA Limited Partnership directly and by
various subsidiary partnerships.

         INTERNAL GROWTH STRATEGY

         The Percentage Leases are designed to allow the Company to participate
in growth in room revenue at the Hotels by providing for the payment of rent
based upon percentages of room revenues ("Percentage Rent"). Under the
Percentage Leases, once room revenues at a Hotel reach a specified level (a
"Revenue Break Point"), the Company receives between 68% and 70% of incremental
room revenues. For the year ended December 31, 1997, room revenues from each of
the Hotels exceeded the Revenue Break Point for the payment of the higher tier
of Percentage Rent under the applicable Percentage Lease. Each Percentage Lease
also provides for a fixed annual base rent ("Base Rent"). The Percentage Leases
generally provide that annual Base Rent and the Revenue Break Points for the
payment of Percentage Rent will be adjusted annually based on changes in the
CPI.

         For the hotels leased by the JF Lessee, the Company earned Percentage
Rent in excess of Base Rent on all of the hotels except the Residence Inn in
Atlanta, Georgia. For the hotels leased by the Summerfield Lessee, the Company
earned Percentage Rent in excess of Base Rent on the Sierra Suites hotels
located in Atlanta, Georgia and Phoenix, Arizona. The Summerfield Lessee agreed
that for 1997 and 1998, the Base Rent payable for the six Summerfield Suites and
the Sunrise Suites hotel shall be an amount equal to the Percentage Rent that
would be payable under the formulas set forth in the applicable Percentage
Leases if such respective hotels achieved the room revenues budgeted for such
periods. In 1999 and subsequent years, Base Rent for these hotels shall be
reduced from the levels applicable in 1997 and 1998, but the Percentage Rent
formula will remain the same (subject to certain adjustments based on increases
in the CPI). In addition, during the remainder of 1997 and 1998, the Base Rent
payable for five of the Summerfield hotels (which excludes the Summerfield
Suites - West Hollywood, California, the Sunrise Suites - Tinton Falls, New
Jersey and the two Sierra Suites hotels) is the aggregate of the Base Rent
amounts set forth in the Percentage Leases for such five hotels for the period
on a consolidated basis, to the effect that any rent paid in excess of Base Rent
for any of these five hotels shall be credited to the aggregate Base Rent
payable for any or all of the other hotels in the group.

         The Company seeks to increase Percentage Lease payments through the
following; (i) employing asset managers to work with the Lessee and operators to
direct marketing programs and sales management policies at the Hotels, (ii)
selective renovation of the Hotels, (iii) the possible



                                        7

<PAGE>   10



development of new hotels on a selected basis, and (iv) the rebranding and
repositioning of existing hotels on a limited and selected basis.

         Sales Management

         The JF Lessee uses market-oriented sales management programs to
coordinate, direct and manage the sales activities of personnel located at each
Hotel it operates or oversees. Weekly sales reports are generated by each
salesperson through the daily input of data that identifies all sales related
activities which have taken place during the day (e.g., appointments, sales
calls, direct mailings, incoming calls) and the results of such actions (e.g.,
appointments made, literature sent, rooms reserved). Each salesperson also
inputs any comments made by prospective or existing customers, the potential for
new or continued business and the timing of the follow-up action required.
Additionally, sales reports permit management to promptly evaluate a
salesperson's productivity as measured by the quantity of sales calls, sales
call results and number of group bookings. These sales reports also allow
comparisons of the ongoing sales efforts at the applicable Hotel to the
marketing and business plan established for each Hotel and allow management to
adapt the marketing and business plan accordingly. The third-party managers,
including Marriott, use focused, well-developed sales management programs at the
Hotels operated by those managers. The JF Lessee employs six regional managers
to oversee sales and marketing efforts at the Lessee-operated Hotels, and to
review those efforts at Hotels managed by third-parties, including Marriott.

         Capital Improvements, Renovation and Refurbishment

         The Percentage Leases require the Lessee to maintain the Hotels in a
condition that complies with their respective Franchise Licenses and the
Marriott Management Agreements, among other requirements. In addition, the
Company may upgrade the Hotels as needed to meet competitive conditions and
preserve asset quality and will renovate Hotels when the Company believes the
investment in renovations will provide an attractive return to the Company
through increased revenue under the Percentage Leases or is otherwise in the
best interests of the Company.

         This strategy is designed to enhance internal revenue growth, to
preserve and increase the value of each Hotel and to maintain or increase each
Hotel's market share. The Company will schedule renovations to the Hotels in
order to implement this strategy and as otherwise may be required by a
particular franchisor in accordance with the applicable Franchise License or by
Marriott pursuant to the Marriott Management Agreements.

         The Percentage Leases obligate the Company generally to make available
to the Lessee an amount equal to 4% or 5% of room revenue, on a monthly basis,
for use by the Lessee (or Marriott, under the Marriott Management Agreements) to
repair or replace furniture and equipment at the Hotels. The Company's
obligation is cumulative and carries forward to the extent that such amounts are
not used by the Lessee (or Marriott).



                                        8

<PAGE>   11




         ACQUISITION STRATEGY

         The Company has developed a multi-brand upscale extended-stay
acquisition focus which has positioned the Company as a leading owner of upscale
extended-stay hotels in the Company's target markets. The Company's primary
acquisition strategy includes acquiring hotels that are (i) upscale
extended-stay hotels, (ii) located in markets with relatively high barriers to
entry or strong demand characteristics and (iii) located near other hotels owned
by the Company thereby allowing the Lessee to enhance revenue by capitalizing on
local knowledge and directing overflow business to Company-owned hotels. The
Company also seeks to selectively acquire under-performing hotels to which the
Company can add value through repositioning in the market, reflagging to premium
hotel brands or renovation. The Company has increasingly emphasized the
acquisition of hotel portfolios in order to capitalize on the Company's
efficiency and experience in acquisition analysis and transaction structuring.
This emphasis has enabled the Company to more rapidly expand its hotel
portfolio.

         Acquisition of Upscale Extended-Stay Hotels

         The Company focuses on acquiring upscale extended-stay hotels because
of the strong performance of that segment, which has resulted primarily from
(i) the prevailing social and economic changes that are increasing the demand
for upscale extended-stay hotels, including the increasing tendency of
businesses to conduct on- and off-site training to employees, corporate
out-sourcing and the use of consultants, and the general increased mobility of
the United States workforce, (ii) the ability to generate a more consistent
revenue stream than traditional hotels due to higher average occupancies and
longer average stays, and (iii) the demand for hotel rooms by guests who stay
longer than five consecutive room nights has substantially exceeded the number
of currently existing extended-stay hotel rooms, according to industry sources.
The Company also believes that its relationships, particularly with Marriott,
will provide it with opportunities to acquire desirable hotel properties,
primarily in the upscale, extended-stay segment, through noncompetitive bid
situations on terms that may be generally more favorable than those available in
traditional brokered transactions.

         Target Markets

         The Company's focus is on markets that have high barriers to entry,
such as in New England and the Pacific coast states, which are characterized by
scarcity or high cost of available land, extensive permit approval requirements,
restrictive zoning, stringent local development laws, a relatively long lead
time required to develop an upscale extended-stay hotel and the high costs
associated with such development. In addition, the Company seeks out submarkets
within favorable regions that have multiple fast-growing demand generators, such
as major office or manufacturing complexes, airports, major colleges and
universities and medical centers with convenient access to major thoroughfares.
The Company believes that its focus on



                                        9

<PAGE>   12



these target markets has been a major factor in the Hotels achieving occupancy,
ADR and RevPAR that exceed industry averages. Additionally, the Company seeks
Hotels in proximity to the Company's existing Hotels, where the Company may draw
upon its knowledge of local market conditions, develop certain economies of
scale and cross market among the Hotels in the cluster.

         Acquisition of Under-performing Hotels

         Although the primary focus of the Company is on the upscale
extended-stay segment, the Company will from time to time consider acquisition
of under-performing mid-priced and full service hotels that have the potential
for strategic repositioning in the market, reflagging to a premium franchise
brand or renovation. Generally, hotels that meet the Company's investment
criteria include (i) poorly managed hotels that have the potential for increased
performance following the introduction of a quality management team, (ii) hotels
in deteriorated physical condition that could benefit significantly from
renovations, or (iii) hotels in attractive locations that the Company believes
could benefit significantly by changing franchises to a brand the Company
believes is superior, such as Hampton Inn or Courtyard by Marriott.

         Development

         The Company has retained a Summerfield affiliate to develop a Sierra
Suites hotel in Westborough, Massachusetts. The Company has committed to fund
the development costs of this hotel which are estimated to be approximately
$7,900,000. The Company expects the development to be completed in the first
half of 1998. A Summerfield affiliate will lease the hotel under a Percentage
Lease with terms substantially similar to the leases for the Company's two
current Sierra Suites hotels. A Summerfield affiliate will retain an interest in
the hotel which entitles it to a payment equal to 15% of the excess of the value
of the hotel two years after it opens over its development cost. The fee is
expected to be paid in Common Units.

         The Company may pursue the development and construction of additional
hotels in accordance with the Company's development and underwriting policies.
Risks associated with additional development and construction activities may
include: the abandonment of development opportunities explored by the Company;
construction costs of a hotel may exceed original estimates due to increased
materials, labor or other expenses, which could make completion of the hotel
uneconomical; operating results at a newly completed hotel are dependant on a
number of factors, including market and general economic conditions, competition
and market acceptance; financing may not be available on favorable terms for the
development of a hotel; and construction and stabilization may not be completed
on schedule, resulting in increased debt service expense and construction costs.
Development activities are also subject to risks relating to the inability to
obtain, or delays in obtaining, all necessary zoning, land-use, building,
occupancy, and other required governmental permits and authorizations. The
occurrence of any of the events described above could adversely affect the
Company's ability to achieve its projected yields on hotels under development
and could adversely affect the Company's ability to make expected distributions.




                                       10

<PAGE>   13



         The Company will also seek to obtain certain of the benefits of
development without incurring certain of the risks of development, by (a)
acquiring newly-developed hotels or (b) contracting with developers to build
hotels that the Company will buy upon completion.

         PROPERTY OPERATIONS

         The JF Lessee

         The Company believes that the quality of the on-site hotel operators is
important to the future growth in Percentage Lease revenue from the Hotels. The
JF Lessee leases 47 of the Hotels pursuant to the Percentage Leases and operates
25 of the Hotels. Marriott operates 20 Residence Inn hotels pursuant to the
Marriott Management Agreements. Marriott is the largest operator of upscale
extended-stay hotels in the U.S. The Company believes that Marriott's management
of Hotels will enable the Company to realize the benefits of Marriott's
resources and broad-based hotel operations experience in order to enhance the
Company's ability to grow.

         The JF Lessee is owned by Mr. Fisher and Mr. Shaw (the Chairman and
Chief Operating Officer, respectively, of the Company) and employs currently
approximately 1,150 people. Under the Percentage Leases, the JF Lessee generally
is required to perform or provide for all operational and management functions
necessary to operate the Hotels. Such functions include accounting, periodic
reporting, ordering supplies, advertising and marketing, maid service, laundry,
and repair and maintenance. The JF Lessee employs six regional managers who
oversee the operation of all of the Hotels. The Lessee is entitled to all
revenue from the Hotels after payment of rent under the Percentage Leases and
other operating expenses, including any management fees payable to third-party
managers.

     The JF Lessee-leased Hotels not operated under Marriott Management
Agreements are operated under franchise agreements and are licensed as Hampton
Inn, Residence Inn, Sheraton Inn, Comfort Inn or Holiday Inn Express hotels. The
Company has paid or will pay the cost of obtaining or transferring certain
franchise license agreements to the JF Lessee. For the hotels which do not
require a franchise transfer fee, the Company has advanced to the JF Lessee the
working capital deposit required under the JF Lessee's management agreements
with Marriott. The franchise and management agreements require the payment of
fees based on a percentage of hotel revenue. These fees are paid by the JF
Lessee. The franchisors periodically inspect their licensed hotels to confirm
adherence to their operating standards. See "Properties -- The Percentage
Leases" for further information on the Percentage Leases.

         Marriott Management

         The Marriott Management Agreements allow the hotels subject thereto to
be operated as Residence Inn hotels for an initial term of 13 years, provided
that the hotels maintain the standards of the Residence Inn system. The Marriott
Management Agreements may be extended by Marriott for an additional term if the
Company has achieved a specified return on its initial investment. Marriott may
terminate one or more of the Marriott Management Agreements upon the occurrence



                                       11

<PAGE>   14



of certain events, including the JF Lessee's failure to make any payment or
perform other covenants under the Marriott Management Agreements or a bankruptcy
of the JF Lessee or the Company. If a Marriott Management Agreement is
terminated for any reason other than a default by Marriott, the hotel to which
the agreement relates will not be entitled to operate thereafter as a Residence
Inn. Marriott may be terminated as manager of a hotel if certain performance
criteria set forth in the relevant Marriott Management Agreement are not met in
any two consecutive years beginning with the third anniversary of the
acquisition of the hotel, subject to certain exceptions and cure rights. In that
event, the JF Lessee may enter into a then-current form of Residence Inn
franchise license and, subject to Residence Inn system requirements and to the
JF Lessee being a then-approved franchisee, continue to operate the hotel as a
Residence Inn hotel.

         The JF Lessee is responsible for making all payments to Marriott under
the Marriott Management Agreements, and the Company is secondarily liable for
certain of the JF Lessee's obligations. Under each Marriott Management
Agreement, the JF Lessee is required to pay to Marriott a base management fee, a
system fee and a marketing fee equal to specified percentages of certain
revenues at the relevant Hotel, and an incentive management fee equal to a
specified percentage of the JF Lessee's annual net operating income with respect
to the Hotel, after payment of Rent under the Percentage Lease for the Hotel.

         DeBoer Hotels

         On November 1, 1996, the Company completed the acquisition of seven
Residence Inn hotels ("the DeBoer Hotels") from affiliates of Jack P. DeBoer
(the "DeBoer Group"). The DeBoer Hotels were acquired from the DeBoer Group for
a total purchase price of approximately $108.5 million, consisting of (i)
approximately 4,063,329 Preferred Units, with a value of $11.00 per Preferred
Unit at the time of issuance, (ii) the assumption and immediate repayment of
approximately $38.4 million of outstanding mortgage indebtedness and (iii) the
assumption of the approximately $24.9 million of assumed indebtedness.
Additionally, in connection with the acquisition of the DeBoer Hotels by the
Company, Marriott received Common Units having a deemed value of $500,000 (the
"Release Units") in exchange for releasing the existing management contracts
relating to such Hotels.

         The Preferred Units are convertible at any time into Common Units on a
one-for-one basis and, beginning in November 1998, may be redeemed for an amount
of cash equal to the then-trading value of a common share or, at the option of
the Company, one common share. Assuming full redemption of all Common Units and
Preferred Units and the issuance of common shares in exchange therefor, the
DeBoer Group would own approximately 10% of the common shares currently
outstanding. Following the acquisition of the DeBoer Hotels, Jack P. DeBoer
joined the Company's Board of Trustees. Marriott has the right, on or after the
first anniversary of the issuance of the Release Units, to redeem each Release
Unit for an amount of cash equal to the then-trading value of a Common Share on
the NYSE or, at the option of the Company, one common share.




                                       12

<PAGE>   15



         Annual preferred distributions of $1.10 are payable on each Preferred
Unit, which may increase to up to $1.155 for each Preferred Unit, based on
increases in dividends payable on the common shares. Due to the potential
adverse tax consequences to members of the DeBoer Group that may result from a
sale of the DeBoer Hotels, the Company has agreed with the DeBoer Group that for
a period of up to ten years following the closing of the acquisition of the
DeBoer Hotels, (i) any taxable sale of a DeBoer Hotel will require the consent
of the applicable members of the DeBoer Group and (ii) the Company will maintain
at all times 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 by the applicable members of
the DeBoer Group. In the event that the Company fails to maintain the required
level of indebtedness, the Company will be liable for any resulting income tax
liabilities incurred by the applicable members of the DeBoer Group.

         COMPETITION

         For Guests

         The hotel industry, and the upscale extended-stay and mid-price
segments of the lodging market in which the Company operates, is highly
competitive. Competitive factors within the industry include room rates, quality
of accommodations, name recognition, service levels, reputation, reservation
systems, convenience of location and the supply and availability of alternative
lodging. The Hotels compete with other existing and new hotels in their
geographic markets. The extended-stay and mid-price segments of the hotel
industry have become more competitive recently, as several new competitors have
entered the market. Many of the Company's competitors have substantially greater
marketing and financial resources than the Company and the Lessee. Each of the
Hotels is located in a developed area that includes other hotels, many of which
are competitive with the Hotels in their locality. The number of competitive
hotels in a particular area could have a material adverse effect on the revenues
derived from the Hotels or hotels acquired in the future. Further, there can be
no assurance that new or existing competitors will not significantly reduce
their rates or offer greater convenience, services or amenities or significantly
expand or improve their hotels in the market in which the Company competes or
markets in which it will compete, thereby materially adversely affecting the
Company's business and results of operations.

         For Acquisitions

         Competition exists for investment opportunities in upscale
extended-stay and mid-price hotels from entities organized for purposes
substantially similar to the Company's objectives as well as other purchasers of
hotels. The Company may be competing for such hotel investment opportunities
with entities that have substantially greater financial resources than the
Company or better relationships with franchisors, sellers or lenders. These
entities may also generally be able to accept more risk than the Company
prudently can manage. Competition may generally reduce



                                       13

<PAGE>   16



the number of suitable hotel investment opportunities offered to the Company and
increase the bargaining power of property owners seeking to sell, thereby
increasing prices.

         BUSINESS RISKS

         Dependence on Payments under Percentage Leases; Lack Of Control

         Certain rules relating to the qualification of a REIT prohibit a REIT
from operating hotels. Therefore, the Company leases the Hotels to the Lessee
pursuant to the Percentage Leases. The Company's primary source of revenue is
rent payments under the Percentage Leases. The Company must rely on the Lessee
and any third-party managers retained by the Lessee, such as Marriott and
Summerfield, to operate effectively the Hotels in a manner that generates
sufficient cash flow to enable the Lessee to make the rent payments under the
Percentage Leases. Ineffective operation of the Hotels may result in the Lessee
being unable to pay rent to the Company, including the higher tier percentage
rent necessary for the Company to fund its current level of distributions to
shareholders.

         The Company cannot operate the Hotels or participate in the decisions
affecting the daily operations of the Hotels. Other than as set forth in the
applicable Percentage Lease, the Company does not have the authority to require
a Hotel to be operated in a particular manner, or to govern any particular
aspect of its operation (e.g., setting room rates). Thus, even if the Company's
management believes a hotel is being operated inefficiently or in a manner that
does not result in a maximization of rent to the Company, the Company cannot
require a change in the method of operation. The Company is limited to seeking
redress only if the Lessee violates the terms of the Percentage Leases, and then
only to the extent of the remedies set forth therein.




                                       14

<PAGE>   17



         Risk of Rapid Growth; Dependence on Lessees and Third-Party Managers

         The Company's ability to grow depends upon the ability of the Lessee
and any third-party manager retained by the Lessee, such as Marriott or
Summerfield Suites Management Company, L.P. (the "Summerfield Manager"), to
manage effectively the Hotels, as well as any additional hotels in which the
Company invests. The Lessee's or any third-party managers' ability to operate
additional hotels under Percentage Leases or management agreements, as
applicable, with current staffing levels and office locations, may diminish as
the Company acquires additional hotels. Such growth may require the Lessee or
managers to hire additional personnel, engage additional third-party managers
and operate in new geographic locations. In order to qualify as a REIT, the
Company cannot operate the Hotels or participate in decisions affecting the
daily operations of the Hotels. The Lessee has limited assets and generally the
Lessee must generate sufficient cash flow from the operation of the Hotels,
after payment of all operating expenses, to fund the Lessee's rent obligations
under the Percentage Leases. There can be no assurance that the Lessee or their
third-party managers will effectively operate the Hotels. In the event that the
Lessee and their third-party managers fail to effectively operate the Hotels,
the Company's internal growth strategy and acquisition strategy would be more
difficult to achieve and, therefore, cash available for distribution could be
adversely affected.

         Availability of Capital

     The ability of the Company to implement its growth strategy depends on
access to capital necessary to invest in additional hotels through the use of
borrowings, subsequent issuances of common shares or other securities or
operating cash flow. Access to capital, and in particular equity capital, may be
negatively affected by recession or negative perceptions about the performance
of or prospects for the real estate industry in general, the hotel industry
specifically and, more particularly, the Company.

         Operating Costs and Capital Expenditures; Hotel Renovation

         Hotels in general, including the Hotels, have an ongoing need for
renovations and other capital improvements, particularly in older structures,
including periodic replacement of furniture and equipment at the hotels. Under
the terms of the Percentage Leases, the Company is obligated to pay the cost of
certain capital expenditures at the Hotels and pay for furniture, fixtures and
equipment. If these expenses exceed the Company's estimate, the additional cost
could have an adverse effect on the cash available for distribution to
shareholders. In addition, the Company may acquire hotels in the future that
require significant renovation. Renovation of hotels involves certain risks,
including construction cost overruns and delays, uncertainties as to market
demand



                                       15

<PAGE>   18



or deterioration in market demand after commencement of renovation and the
emergence of unanticipated competition in the local geographic market.

         Operating Risks

         The Hotels are subject to all operating risks common to the hotel
industry. The hotel industry has experienced volatility in the past, as have the
Hotels, and there can be no assurance that such volatility will not occur in the
future. These risks include, among other things, economic recessions;
competition from other hotels; over-building in the hotel industry which has
adversely affected occupancy, ADR and RevPAR; increases in operating costs due
to inflation and other factors, which increases have not in recent years been,
and may not necessarily in the future be, offset by increased room rates;
dependence on business and commercial travelers and tourism; strikes and other
labor disturbances of hotel employees for hotels acquired by the Company in the
future; increases in energy costs and other expenses of travel; and adverse
effects of general and local economic conditions. These factors could decrease
room revenue of the Hotels and adversely affect the Lessee's ability to make
payments of rent under the Percentage Leases to the Company, including payments
at the higher tier Percentage Rent levels.

         Risks of Operating Hotels under Franchise Licenses and Marriott
         Management Agreements

         The continuation of the franchise licenses under which certain of the
Hotels are operated is subject to specified operating standards and other terms
and conditions. The franchisors that have issued or will issue the franchise
licenses periodically inspect their licensed hotels to confirm adherence to
their operating standards. The failure of the Company or the Lessee to maintain
such standards respecting a Hotel or to adhere to such other terms and
conditions could result in the loss or cancellation of a franchise license. The
Marriott Management Agreements will allow the Hotels subject thereto to be
operated as Residence Inn hotels so long as the Company does not breach its
obligations under the Percentage Leases relating to such Hotels. Continued
operation of such Hotels as Residence Inn hotels also requires the Company to
make capital improvements as required by Marriott to maintain the hotel in
accordance with system standards. It is possible that a franchisor or Marriott,
as applicable, could condition the continuation of a franchise license or a
Marriott Management Agreement, as applicable, on the completion of capital
improvements which management or the Board of Trustees determines are too
expensive or otherwise not economically feasible in light of general economic
conditions or the operating results or prospects of the affected hotel. In that
event, the management or the Board of Trustees may elect to allow the franchise
license or Marriott Management Agreement to lapse or be terminated. In addition,
when the term of a franchise license or a Marriott Management Agreement expires,
the franchisor or Marriott has no obligation to issue a new franchise license or
management agreement, as applicable, for the hotel. The loss of a franchise
license or a Marriott Management Agreement could have a material adverse effect
upon the operations or the underlying value of the Hotel covered by the
franchise license or a Marriott Management Agreement because of the loss of
associated name recognition, marketing support and centralized reservation
systems provided by the franchisor or Marriott. The loss of a franchise license
or Marriott Management Agreement



                                       16

<PAGE>   19



for one or more of the Hotels could also have a material adverse effect on rent
under the Percentage Leases and cash available for distribution to shareholders.

         Investment Concentration in Single Industry; Emphasis on Upscale
         Extended-Stay Market Segment; and Emphasis on Residence Inn and Hampton
         Inn Hotels

         The Company's current growth strategy is to acquire operating hotels,
primarily upscale extended-stay hotels. The Company will not seek to invest in
assets selected to reduce the risks associated with an investment in the hotel
industry, and is subject to risks inherent in concentrating investments in a
single industry and in a single market segment within that industry. The Company
intends to emphasize the acquisition of Residence Inn hotels in its acquisition
strategy. The Company will be subject to risks inherent in concentrating
investments in any franchise brand, in particular the Residence Inn, Summerfield
Suites and the Hampton Inn brands, such as a reduction in business following any
adverse publicity related to a brand, which could have an adverse effect on the
Company's Rent under the Percentage Leases and cash available for distribution
to shareholders.

         Concentration of Investments in California, Florida, Washington, Texas
         and Michigan

         Ten of the 56 Hotels are located in California, five are located in
each of Florida and Washington and four are located in each of Texas and
Michigan. The concentration of the Company's investments in California, Florida,
Washington, Texas and Michigan could result in adverse events, or conditions
which affect those areas in particular, such as economic recessions and natural
disasters, having a more significant negative effect on the operations of the
combined Hotels, and ultimately cash distributions to shareholders of the
Company, than if the Company's investments were more geographically diverse.

         Ownership Limitation

         In order for the Company to maintain its qualification as a REIT, not
more than 50% in value of its outstanding shares of beneficial interest may be
owned, directly or indirectly, by five or fewer individuals (as defined in the
Internal Revenue Code to include certain entities). Furthermore, if any
shareholder or group of shareholders of the Lessee owns, actually or
constructively, 10% or more of the shares of beneficial interest of the Company,
the Lessee could become a related-party tenant of the Company and the
Partnership, which likely would result in loss of REIT status for the Company.
For the purpose of preserving the Company's REIT qualification, the Company's
Declaration of Trust prohibits direct or indirect ownership (taking into account
applicable ownership provisions of the Code) of more than 9.8% of the
outstanding common shares or any other class of outstanding shares of beneficial
interest by any shareholder or group (including affiliates of Mr. Fisher)
subject to adjustment under certain circumstances (the "Ownership Limitation").
Generally, the shares of beneficial interest owned by related or affiliated
owners will be aggregated for purposes of the Ownership Limitation. Any transfer
of shares of beneficial interest that would prevent the Company from continuing
to qualify as a REIT



                                       17

<PAGE>   20



under the Code will be void ab initio, the intended transferee of such shares
will be deemed never to have had an interest in such shares, and such shares
will be designated "Shares-in-Trust." Further, the Company shall be deemed to
have been offered Shares-in-Trust for purchase at the lesser of the market price
(as defined in the Declaration of Trust) on the date the Company accepts the
offer and the price per share in the transaction that created such
Shares-in-Trust (or, in the case of a gift, devise or non-transfer event (as
defined in the Declaration of Trust), the market price on the date of such gift,
devise or non-transfer event). Therefore, the record holder of shares of
beneficial interest in excess of the Ownership Limitation will experience a
financial loss when such shares are redeemed, if the market price falls between
the date of purchase and the date of redemption.

         General Risks of Investing in Real Estate

         The Hotels are subject to varying degrees of risk generally incident to
the ownership of real property. Income from the Hotels may be adversely affected
by adverse changes in national economic conditions, adverse changes in local
market conditions due to changes in general or local economic conditions and
neighborhood characteristics, competition from other hotels, changes in interest
rates and in the availability, cost and terms of mortgage funds, the impact of
present or future environmental legislation and compliance with environmental
laws, the ongoing need for capital improvements, particularly in older
structures, changes in real estate tax rates and other operating expenses,
adverse changes in governmental rules and fiscal policies, civil unrest, acts of
God, including earthquakes, hurricanes and other natural disasters (which may
result in uninsured losses), acts of war, adverse changes in zoning laws, and
other factors which are beyond the control of the Company.

         Real estate investments are relatively illiquid. The ability of the
Company to vary its portfolio in response to changes in economic and other
conditions is limited. In particular, the Company may not sell any of the DeBoer
Hotels in a taxable transaction for a period of up to ten years following the
closing of the Offering, without the consent of the applicable members of the
DeBoer Group. Certain provisions of the Marriott Management Agreement may also
limit or delay the Company's ability to sell or refinance the Hotels subject to
such agreement.

         Each Percentage Lease specifies comprehensive insurance to be
maintained on each of the Hotels, including liability, property and casualty and
extended coverage. Management of the Company believes that such specified
coverage is of the type and amount customarily obtained by owners of hotels
similar to the Hotels. Percentage Leases for subsequently acquired hotels will
contain similar provisions. However, there are certain types of losses,
generally of a catastrophic nature, such as earthquakes, floods and hurricanes,
that may be uninsurable or not economically insurable and which may impact
certain of the Hotels.

         All ten of the Hotels in California are located in areas that are
subject to earthquake activity. These Hotels are located in areas of high
seismic risk and some were constructed under pre-1985 building codes. No
assurance can be given that an earthquake would not render



                                       18

<PAGE>   21



significant damage to the Hotels that have been constructed in compliance with
more recent building codes, or are in areas of lower seismic risk. Additionally,
areas in Florida where five of the Hotels are located may experience hurricane
or high-wind activity. The Company has earthquake insurance policies on the
Hotels located in California and hurricane insurance policies on the Hotels
located in Florida. The Company's management and Board of Trustees has used and
will use its discretion in determining amounts, coverage limits and
deductibility provisions for insurance, with a view to maintaining appropriate
insurance coverage on the Company's investments at a reasonable cost and on
suitable terms, and may from time to time elect not to carry earthquake or
hurricane insurance. This may result in insurance coverage that, in the event of
a substantial loss, would not be sufficient to pay the full current market value
or current replacement cost of the Company's lost investment. Inflation, changes
in building codes and ordinances, environmental considerations, and other
factors also might make it not feasible to use insurance proceeds to replace a
hotel after it has been damaged or destroyed. Under such circumstances, the
insurance proceeds received by the Company might not be adequate to restore its
economic position with respect to a Hotel.

         Conflicts of Interest

         Conflicts of interest exist between the Company, the JF Lessee and
Messrs. Fisher (Chairman of the Board of Trustees, Chief Executive Officer and
President of the Company and the majority shareholder of the JF Lessee) and Shaw
(Executive Vice-President and Chief Operating Officer of the Company and the
minority shareholder in the JF Lessee) with respect to the negotiation and
enforcement of the terms of the Percentage Leases with the JF Lessee. Conflicts
also exist related to possible adverse tax consequences to Mr. Fisher and his
affiliates upon a sale, refinancing or prepayment of indebtedness secured by
certain Hotels contributed to the Company by his affiliates. Additionally, the
Company relies substantially on Mr. Fisher and conflicting demands on his time
occur, which could lead to decisions which do not reflect solely the interests
of the Company's shareholders. Mr. Fisher and his affiliates may develop new
hotels, subject to certain limitations, which may materially affect the amount
of time Mr. Fisher has available to devote to the affairs of the Company. Hotels
developed by Mr. Fisher and his affiliates could compete with the Hotels or
hotels acquired in the future by the Company. Mr. Shaw also has conflicting
demands on his time, including serving as President of the JF Lessee and
spending significant time in that capacity.

         Mr. DeBoer, who is one of the largest shareholders of the Company, on a
fully diluted basis, and who serves as a Trustee of the Company, and certain of
his affiliates have in the past, and continue to be, involved in the development
of hotels, including extended-stay hotels. Mr. DeBoer is the President, Chairman
of the Board and a major shareholder of Candlewood Hotel Company, Inc.
("Candlewood"), a public hotel company that is the owner, operator and
franchisor of Candlewood hotels, an economy extended-stay hotel chain founded by
Mr. DeBoer. Hotels developed by Mr. DeBoer and his affiliates, including
Candlewood hotels, may compete with the Company's hotels for guests, and other
hotel companies with which Mr. DeBoer is affiliated, including Candlewood, may
compete with the Company for acquisition opportunities.



                                       19

<PAGE>   22



Accordingly, the interests of the Company and Mr. DeBoer could be different in
connection with matters relating to the Company's Hotels or proposed
acquisitions that are competitive with hotels owned or being considered for
acquisition or development by Mr. DeBoer and his Affiliates.

         Due to the potential adverse tax consequences to the DeBoer Group that
may result from the sale of or refinancing or prepayment of indebtedness
associated with the DeBoer Hotels, the Company has agreed with the DeBoer Group
that, for a period of up to ten years following the closing of the acquisition
of the DeBoer Hotels, (i) any taxable sale of a DeBoer Hotel will require the
consent of the applicable members of the DeBoer Group, which may cause the
Company to be unable to sell some or all of the DeBoer Hotels in circumstances
in which it would be advantageous to do so, and (ii) the Company will maintain
the Required Indebtedness.

         Messrs. Fisher and Shaw and Mr. Ruhfus are the principal equity owners
of the JF Lessee and the Summerfield Lessee, respectively. There is a conflict
of interest with respect to the enforcement, termination or extension of the
Percentage Leases and the negotiation of the terms of any future percentage
leases between the Lessee and the Company. The economic interests of Messrs.
Fisher and Shaw and Mr. Ruhfus in the Lessee may result in decisions relating to
the Company's enforcement of its rights under the Percentage Leases that do not
solely reflect the interests of the Company's shareholders.

         Mr. Ruhfus is a Trustee of the Company and an equity owner of the
Summerfield Lessee and the Summerfield Manager, and certain of his affiliates
have in the past been, and continue to be, involved in the development of
hotels, including extended stay hotels. Mr. Ruhfus is Chairman of the Board and
a principal shareholder of Summerfield, which is the developer and franchisor of
Summerfield Suites and Sierra Suites hotels. Hotels developed by Mr. Ruhfus and
his affiliates, including Summerfield Suites and Sierra Suites hotels, may
compete with the Hotels for guests, and other hotel companies with which Mr.
Ruhfus is affiliated may compete with the Company for acquisition opportunities.
Accordingly, the interests of the Company, Mr. Ruhfus and Summerfield could
differ with respect to the Hotels or proposed acquisitions that are competitive
with hotels owned or being considered for acquisition or development by Mr.
Ruhfus and his affiliates.

         LEVERAGE

         To the extent the Company continues to incur debt, its debt service
requirements will reduce cash available for distribution to shareholders.
Variable rate debt, such as the Line of Credit, creates higher debt service
requirements if interest rates increase, which may decrease cash available for
distribution to shareholders. There can be no assurances that the Company will
be able to meet its debt service obligations. To the extent that it cannot meet
its debt service obligations, the Company risks the loss of some or all of its
assets to foreclosure or forced sale. Changes in economic
conditions could result in higher interest rates on variable rate debt,
including borrowings under the Line of Credit, reduce the availability of debt
financing generally or at rates deemed favorable to the Company, reduce cash
available for



                                       20

<PAGE>   23



distribution to shareholders and increase the risk of loss upon a sale or
foreclosure. The Company also may obtain one or more forms of interest rate
protection on variable rate debt (e.g., swap agreements or interest rate cap
contracts) and will consider additional long-term fixed-rate financing to
further hedge against the possible adverse effects of interest rate
fluctuations. Adverse economic conditions could cause the terms on which
borrowings become available to be less favorable than at present. In such
circumstances, if the Company is in need of capital to repay indebtedness in
accordance with its terms or otherwise, it could be required to liquidate one or
more investments in Hotels or lose one or more Hotels to foreclosure, either of
which could result in a material financial loss to the Company.

         ENVIRONMENTAL MATTERS

         Under various federal, state and local laws and regulations, an owner
or operator of real estate may be liable for the costs of removal or remediation
of certain hazardous or toxic substances on such property. Such laws often
impose such liability without regard to whether the owner knew of, or was
responsible for, the presence of hazardous or toxic substances. Furthermore, a
person that arranges for the disposal or transports for disposal or treatment of
a hazardous substance at a property owned by another may be liable for the costs
of removal or remediation of hazardous substances released into the environment
at that property. The costs of remediation or removal of such substances may be
substantial, and the presence of such substances, or the failure to promptly
remediate such substances, may adversely affect the owner's ability to sell real
estate or to borrow using such real estate as collateral. In connection with the
ownership and operation of the Hotels, the Company, the Partnership or the
Lessee, as the case may be, may be potentially liable for any such costs.

         Phase I environmental site assessments ("ESAs") generally are obtained
on hotels acquired by the Company. The Company generally intends to obtain an
ESA on any other hotel acquired in the future. The ESAs are and were intended to
identify potential environmental contamination for which the Hotels may be
responsible. The ESAs included historical reviews of the Hotels, reviews of
certain public records, preliminary investigations of the sites and surrounding
properties, screening for the presence of hazardous substances, toxic substances
and underground storage tanks, and the preparation and issuance of a written
report. The ESAs did not include invasive procedures, such as soil sampling or
ground water analysis.

         The ESAs have not revealed any environmental liability or compliance
concerns that the Company believes would have a material adverse effect on the
Company's business, assets, results of operations or liquidity, nor is the
Company aware of any such liability. Nevertheless, it is possible that these
ESAs do not reveal all environmental liabilities or that there are material
environmental liabilities or compliance concerns of which the Company is
unaware. Moreover, no assurances can be given that (i) future laws, ordinances
or regulations will not impose any material environmental liability, or (ii) the
current environmental condition of the Hotels will not be affected by the
condition of the properties in the vicinity of the Hotels (such as the presence
of



                                       21

<PAGE>   24



leaking underground storage tanks) or by third parties unrelated to the
Partnership, the Lessee or the Company.

         TAX STATUS

         The Company has elected to be taxed as a REIT under Sections 856-860 of
the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its
short taxable year ended December 31, 1994. If the Company qualifies for
taxation as a REIT, with certain exceptions, the Company will not be subject to
federal income tax at the Company level on its taxable income that is
distributed to its shareholders. A REIT is subject to a number of organizational
and operational requirements, including a requirement that it currently
distribute at least 95% of its annual taxable income. Failure to qualify as a
REIT will render the Company subject to federal income tax (including any
applicable minimum tax) on its taxable income at regular corporate rates and
distributions to the holders of Common Shares in any such year will not be
deductible by the Company. If the Internal Revenue Service were to challenge
successfully the tax status of the Partnership as a partnership for federal
income tax purposes, the Partnership would be taxable as a corporation. In such
event, the Company would likely cease to qualify as a REIT for a variety of
reasons. Although the Company does not intend to request a ruling from the
Service as to its REIT status or the partnership status of the Partnership, the
Company has, in the past, obtained the opinion of its legal counsel that, as of
the date of the opinion, the Company qualifies as a REIT. The opinion was based
on certain assumptions and representations and is not binding on the Service or
any court. Even if the Company qualifies for taxation as a REIT, the Company may
be subject to certain federal, state and local taxes on its income and property.



                                       22

<PAGE>   25



ITEM 2.  PROPERTIES

         The following tables set forth certain information with respect to the
Hotels that were owned by the Company as of December 31, 1997.

<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31, 1997
                                                             ---------------------------------------------------
                                                  NUMBER OF
                                           YEAR    SUITES/     ROOM         LEASE
                                          OPENED    ROOMS     REVENUE      PAYMENT   OCCUPANCY      ADR     REVPAR
                                          ------    -----     -------      -------   ---------      ---     ------
                                                               (1)          (2)         (3)        (3)       (3)
<S>                                        <C>      <C>      <C>          <C>          <C>          <C>       <C>
Residence Inn:
    Addison, TX........................... 1996     150      3,657,610    1,855,790    80.40%       $89.74    $72.15
    Altamonte Springs, FL................. 1985     128         38,633        8,951    84.15         91.41     76.92

    Arlington, TX......................... 1995     114      2,915,043    1,398,900    86.11         89.09     76.72
    Atlanta (Downtown), GA................ 1996     160      3,387,525    1,260,000    65.17         88.78     57.86
    Binghamton, NY........................ 1987      72      2,045,215      945,465    89.78         86.69     77.82
    Cherry Hill, NJ....................... 1989      96      2,994,016    1,368,612    87.43         97.73     85.45
    Columbus East, OH..................... 1986      80         12,745        4,879    87.93         74.21     65.25
    Denver (Downtown), CO................. 1982     156      4,611,644    2,049,498    90.15         89.86     81.02
    Denver (South), CO.................... 1981     128      3,738,994    1,835,942    88.14         90.83     80.06
    East Lansing, MI...................... 1984      60      1,435,598      600,767    79.86         82.16     65.62
    Eden Prairie, MN...................... 1985     126      3,382,383    1,565,100    83.56         88.15     73.66
    Fort Wayne, IN........................ 1985      80         12,998        5,053    84.59         66.27     56.06
    Fremont, CA........................... 1985      80      2,960,031    1,424,010    86.79        116.80    101.37
    Grand Rapids, MI...................... 1984      96      2,074,085      876,857    79.67         74.46     59.32
    Harrisburg, PA........................ 1988      80      2,157,416      925,337    83.76         88.21     73.88
    Indianapolis, IN...................... 1984      88         11,298        5,303    76.20         79.23     60.38

    Lexington, KY......................... 1985      80         11,838        7,195    89.29         77.48     69.19
    Louisville, KY........................ 1984      96         29,809       10,147    90.29         91.13     82.28
    Mountain View (Palo Alto), CA......... 1985     112      5,149,068    3,030,320    91.85        137.14    125.96
    Ontario, CA........................... 1986     200         48,845       12,597    71.87         79.89     57.42
    Portland, ME.......................... 1996      78      2,067,674      936,718    88.03         82.58     72.69
    Richmond, VA.......................... 1986      80      2,305,938    1,047,921    85.98         91.85     78.97
    San Jose, CA.......................... 1986      80      3,396,691    1,720,939    92.64        125.57    116.33
    San Mateo, CA......................... 1985     159      6,413,031    3,393,001    90.14        122.86    110.75
    Shelton, CT........................... 1988      96        574,220      295,618    88.39        112.94     99.83
    Silicon Valley I, CA.................. 1983     231      8,938,913    5,011,801    87.98        120.69    106.19
    Silicon Valley II, CA................. 1985     247      9,881,207    5,652,561    87.46        125.48    109.74
    Troy (Central), MI.................... 1986     152      4,543,278    2,343,605    87.31         93.79     81.89
    Troy (Southeast), MI.................. 1985      96      2,685,023    1,276,259    84.49         90.69     76.63
    Wichita East, KS...................... 1981      64      1,493,835      551,448    82.50         77.61     64.02
    Windsor, CT........................... 1986      96      2,684,077    1,118,599    82.83         92.48     76.60
    Winston-Salem, NC..................... 1986      88         14,512        5,875    84.71         79.35     67.22

Summerfield Suites
    Addison, TX........................... 1996     132      2,055,636      995,078    77.72        104.63     81.32
    Belmont, CA........................... 1995     132      2,865,736    1,390,601    83.91        129.76    108.88
    El Segundo, CA........................ 1995     122      2,191,886      998,003    83.28        106.93     89.06
    Irving (Las Colinas), TX.............. 1996     148      2,435,604    1,304,156    74.32        115.20     85.61
    Mount Laurel, NJ...................... 1996     116      1,914,181      874,852    78.45        104.36     81.88
    West Hollywood, CA.................... 1993     109      2,075,329      975,156    81.64        118.86     97.03

Hampton Inn:
    Albany/Latham, NY..................... 1990     126      2,185,443    1,082,009    66.18         71.89     47.58
    Germantown, MD........................ 1987     176      2,692,636    1,275,570    58.75         71.34     41.92
    Islandia (Long Island), NY............ 1988     121      2,658,768    1,246,803    73.33         82.10     60.20
    Lombard (Chicago), IL................. 1987     128      1,080,380      476,715    64.22         67.04     43.05
    Naples, FL............................ 1990     107      1,933,644      836,876    71.87         68.89     49.51
    Norcross, GA.......................... 1996     150      1,877,901      688,161    53.63         64.38     34.53
    Schaumburg (Chicago), IL.............. 1986     128      1,244,288      632,264    71.24         69.89     49.79
</TABLE>



                                       23

<PAGE>   26
<TABLE>
<S>                                        <C>       <C>     <C>            <C>        <C>           <C>       <C>
    Tallahassee, FL....................... 1993      93      1,741,363      869,411    80.24         63.93     51.30
    West Palm Beach, FL................... 1986     136      2,085,771      783,782    69.98         60.04     42.02
    Westchester (Chicago), IL............. 1988     112      1,140,010      578,084    72.65         72.04     52.34
    Willow Grove (Philadelphia), PA....... 1991     150      3,622,972    1,975,696    79.91         82.81     66.17
    Woburn, MA............................ 1981     100      1,727,252      887,136    77.90         93.32     72.70

Sierra and Sunrise Suites
    Atlanta (Cumberland), GA.............. 1996      89        778,768      377,495    78.85         54.77     43.18
    Phoenix (Camelback), AZ............... 1997     113        859,271      404,537    68.15         67.18     45.78
    Eatontown (Tinton Falls), NJ.......... 1993      96      1,353,161      467,295    75.99         87.94     66.82

Comfort Inn:
    Allentown, PA......................... 1990     127      2,048,290    1,061,219    75.00         58.92     44.19

Holiday Inn Express:
    Lexington, MA......................... 1971     204      3,155,994    1,572,185    58.69         78.59     46.13
Sheraton Inn:
    Fort Lauderdale, FL................... 1988     139      2,483,082    1,134,527    76.29          65.76    50.17
Consolidated Total/
Weighted average..........................        6,703   $133,880,557  $65,432,679    79.60%(4)     $93.74(4) $74.60(4)
                                                  =====   ============  ===========
</TABLE>
------------------------

(1)      Represents the hotels' room revenue from the
         date of acquisition by the Company.
(2)      Represents Percentage Lease revenue
         from the Lessee to the Company calculated in accordance with the
         Percentage Leases.
(3)      Represents the occupancy, ADR and RevPAR of the Hotels for the
         year including the period, if any, prior to ownership by the Company.
(4)      Excludes results from the following eight Residence Inn hotels acquired
         December 30, 1997: Altamonte Springs, FL; Fort Wayne, IN; Indianapolis,
         IN; Lexington, KY; Louisville, KY; Ontario, CA; Winston-Salem, NC;
         Columbus East, OH.

THE PERCENTAGE LEASES

         Each Percentage Lease contains provisions similar to those described
below, and the Company intends that future percentage leases with respect to
additional hotels it may acquire will contain similar provisions.

         Percentage Lease Terms. Each Percentage Lease has a non-cancelable term
of at least ten years, subject to earlier termination upon the occurrence of
defaults thereunder and certain other events described in the Percentage Lease.
Certain of the Percentage Leases contain renewal terms of up to 15 years, at the
Lessee's option.

         Amounts Payable Under the Percentage Leases. During the term of each
Percentage Lease, the Lessee is obligated to pay to the Partnership (i) the
greater of a fixed annual Base Rent or Percentage Rent, and (ii) certain other
amounts, including interest accrued on any late payments or charges (the
"Additional Charges"). Percentage Rent is based on percentages of room revenues
for each of the Hotels. For all Percentage Leases, both the Base Rent and the
Revenue Break Point in each Percentage Rent formula are (a) adjusted annually
for inflation and (b) in the case of the certain of the Hotels managed by
Marriott, increased to specified levels (not tied to inflation) in the first
years after execution. With respect to adjustments for inflation, the adjustment
will be calculated at the beginning of each calendar year based upon the change
in the CPI during the prior calendar year. The Company receives between 30% and
36.5% of room revenue up to the Revenue Break Point and between 68% and 70% of
room revenue in excess of the Revenue Break Point. The Base Rent for seven of
the Hotels leased to the Summerfield Lessee reduces in 1999, as described in
"Internal Growth Strategy" above, and beginning in 2000 will adjust annually for
inflation.



                                       24

<PAGE>   27



         Other than real estate and personal property taxes, ground lease rent
(where applicable), the cost of certain furniture and equipment and certain
capital expenditures, and property and casualty insurance (for the hotels leased
by the JF Lessee), which are obligations of the Company, the Percentage Leases
require the Lessee to pay Base Rent, Percentage Rent, Additional Charges and the
operating expenses of the Hotels (including insurance, utility and other charges
incurred in the operation of the Hotels) during the terms of the Percentage
Leases. The Percentage Leases also provide for rent reductions and abatements in
the event of damage or destruction or a partial taking of any Hotel.

         Maintenance and Modifications. Under the Percentage Leases, the Company
is required to pay for capital improvements at each Hotel. In addition, the
Percentage Leases obligate the Company to make available to the Lessee for the
repair, replacement and refurbishment of furniture and equipment in the Hotels,
when and as deemed necessary by the Lessee, an amount equal to 4% or 5% of room
revenues, per month on a cumulative basis. The Company's obligation is carried
forward to the extent that the Lessee has not expended such amount, and any
unexpended amounts remain the property of the Company upon termination of the
Percentage Leases. In addition, the Company intends to cause the expenditure of
amounts in excess of the obligated amounts if necessary to comply with the
reasonable requirements of any franchise license or Marriott Management
Agreement and otherwise to the extent that the Company deems such expenditures
to be in the best interests of the Company. Otherwise, the Lessee is required,
at its expense, to (i) maintain the Hotels in good order and repair, (ii) pay
for all operating expenses of the Hotels and (iii) comply with the requirements
of any Company loan agreement (to the extent applicable to property operations
or cash management), any franchise agreement and the Marriott Management
Agreements.

         The Lessee, at its expense, may make non-capital and capital additions,
modifications or improvements to the Hotels, provided that such action does not
significantly alter the character or purposes of the Hotels or significantly
detract from the value or operating efficiencies of the Hotels. All such
alterations, replacements and improvements shall be subject to all the terms and
provisions of the Percentage Leases and become the property of the Company upon
termination of the Percentage Leases. The Company owns, with respect to the
Hotels, substantially all personal property (other than inventory, linens and
other nondepreciable personal property) not affixed to, or deemed a part of, the
real estate or improvements thereon, except to the extent that ownership of such
personal property would cause the rent under a Percentage Lease not to qualify
as "rents from real property" for REIT income test purposes.



                                       25

<PAGE>   28



ITEM 3.           LEGAL PROCEEDINGS

         The Company is not presently involved in any material litigation, nor,
to its knowledge, is any material litigation threatened against the Company or
its properties, other than routine litigation arising in the ordinary course of
business and which is expected to be covered by the Company's liability
insurance.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.


                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
         MATTERS

         The information called for in this item is incorporated by reference
from the "Corporate Information" section of the Company's 1997 Annual Report,
filed as Exhibit 13.1 to this Form 10-K.

ITEM 6.  SELECTED FINANCIAL DATA

         The information called for in this item with respect to the Company and
its predecessor is incorporated by reference from the "Selected Financial Data"
section of the 1997 Annual Report filed as Exhibit 13.1 to this Form 10-K.


         With respect to the JF Lessee, the following table sets forth selected
historical financial data for the years ended December 31, 1997, 1996 and 1995
and the period September 30, 1994 (inception) through December 31, 1994. The
following selected financial information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included, or incorporated by reference, herein.



                                       26

<PAGE>   29



                                    JF LESSEE
                       SELECTED HISTORICAL FINANCIAL DATA
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                     Years Ended December 31,                Period from
                                                     ------------------------              September 30, 1994
                                                                                              (Inception)
                                           1997              1996              1995        December 31, 1994
                                         --------          --------          --------      ------------------

<S>                                      <C>               <C>               <C>               <C>
OPERATING DATA:
Room revenue                             $117,170          $ 58,501          $ 24,412          $  3,404
Other revenue                               7,333             4,222             1,895               372
                                         --------          --------          --------          --------
Total revenue                             124,503            62,723            26,307             3,776
Hotel operating expenses                   61,320            32,274            13,696             2,041
                                         --------          --------          --------          --------

Income before Lessee overhead
   and Percentage Lease expense            63,183            30,449            12,611             1,735
Percentage Lease expense                   57,486            27,466            11,268             1,480
Lessee overhead                             2,210             2,273               952               132
                                         --------          --------          --------          --------

Net income (1)                           $  3,487          $    710          $    391          $    123
                                         ========          ========          ========          ========
</TABLE>


(1)      The JF Lessee has elected status as a Subchapter S corporation for
         federal income tax purposes and, generally, pays no corporate level tax
         on its net income.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The information called for in this item with respect to the Company and
its predecessor is incorporated by reference from the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" section of the
1997 Annual Report, filed as Exhibit 13.1 to this Form 10-K.


         The following is a discussion of the results of operations for the JF
Lessee.

         Comparison of Year Ended December 31, 1997 ("1997") to the Year Ended
         December 31, 1996 ("1996")

         The JF Lessee had total revenue for 1997 of $124,503,000, consisting of
$117,170,000 of room revenue and $7,333,000 of other revenue. Room revenue
increased by $58,669,000, or 100% from $58,501,000 for 1996. This increase was
primarily due to the number of Hotels leased increasing from 18 at January 1,
1996 to 32 at January 1, 1997 and to 47 at December 31, 1997.




                                       27

<PAGE>   30



         Percentage Lease payments and hotel operating expenses for 1997 were
$57,486,000 and $61,320,000, respectively. Percentage Lease payments and hotel
operating expenses increased by $30,020,000 or 109% and $29,046,000 or 90%,
respectively from $27,466,000 and $32,274,000 for 1996, respectively. These
increases were primarily due to the number of Hotels leased increasing from 18
at January 1, 1996 to 32 at January 1, 1997 and to 47 at December 31, 1997. Net
income for 1997 was $3,487,000. Net income increased $2,777,000, or 391%, from
$710,000 for 1996.

         Departmental profit as a percentage of gross operating revenue
increased to 79.2% in 1997 from 77.2% in 1996. Net income as a percentage of
gross operating revenue increased to 2.8% in 1977 from 1.1% in 1996. These
increases were due primarily to operational efficiencies achieved in 1997.

         Comparison of Year Ended December 31, 1996 ("1996") to the Year Ended
         December 31, 1995 ("1995")

         The JF Lessee had total revenue for 1996 of $62,723,000, consisting of
$58,501,000 of room revenue and $4,222,000 of other revenue. Room revenue
increased by $34,089,000, or 139.6% from $24,412,000 for 1995. This increase was
primarily due to the number of Hotels leased increasing from seven at January 1,
1995 to 18 at January 1, 1996 and to 32 at December 31, 1996.

         Percentage Lease payments, hotel operating expenses and overhead
expenses for 1996 were $27,466,000, $32,274,000, and $2,273,000, respectively.
Percentage Lease payments, hotel operating expense and overhead expenses
increased by $16,198,000 or 143.8%, $18,578,000 or 135.7%, and $1,321,000 or
138.8%, respectively from $11,268,000, $13,696,000 and $952,000 for 1995,
respectively. These increases were primarily due to the number of Hotels leased
increasing from seven at January 1, 1995 to 18 at January 1, 1996 and to 32 at
December 31, 1996. Net income for 1996 was $710,000. Net income increased
$319,000, or 81.6%, from $391,000 for 1995.

         Departmental profit as a percentage of gross operating revenue remained
relatively constant at 77.2% and 76.2% for 1996 and 1995, respectively. Net
income as a percentage of gross operating revenue remained relatively constant
at 1.1% and 1.5% for 1996 and 1995, respectively.

         Liquidity and Capital Resources

         The JF Lessee's principal source of revenue is the revenue derived from
the hotels it operates under lease from the Company. The JF Lessee is dependent
on this revenue to provide cash for the payment of its operating expenses,
insurance, overhead and Percentage Lease payments. The JF Lessee is dependent
upon the cash flow from operating activities to meet substantially all of its
liquidity needs, including working capital and distributions to its
shareholders. The JF Lessee does not currently have any established borrowing
facilities. The JF Lessee believes that its cash flow provided by operating
activities will be sufficient to meet its liquidity needs.



                                       28

<PAGE>   31



         Net cash flow from operating activities was $4,656,000 in 1997. Net
cash flow used in investing activities was $118,000 in 1997, which consisted
primarily of the collection of affiliate advances and the purchase of marketable
securities. Net cash flow used in financing activities was $2,226,000 in 1997,
which consisted of distributions paid to its shareholders.

         Seasonality of Hotel Business

         The hotel industry is seasonal in nature. Historically, the operations
of the Hotels have generally reflected higher occupancy rates and ADR during the
second and third quarters.

         Inflation

         Operators of hotels, including the JF Lessee and any third-party
managers retained by the JF 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 JF Lessee and any third-party manager retained
by the JF Lessee to raise room rates in response to inflation.

         Impact of Year 2000

         The year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any computer
program that has date sensitive software may recognize a date using "00" as the
year 1900 rather than as the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in a similar normal business activities.

         The JF Lessee has recently assessed its internal computer systems and
believes that the current systems used will properly utilize dates beyond
December 31, 1999. The JF Lessee has been informed that its third party managers
are in the process of studying the year 2000 issue, including inquiries of their
vendors. Upon completion of the management companies' studies, which is expected
in late 1998, the JF Lessee will determine the extent to which it is vulnerable
to the third parties' failure to remediate their own year 2000 issues and the
costs associated with resolving this issue.

         Forward Looking Statements

         Management's discussion and analysis of financial condition and results
of operations contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, including, without limitation, statements
containing the words "believes," "anticipates," "expects" and words of similar
import. Such forward-looking statements relate to future events and the future
financial performance of the JF Lessee, and involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the JF Lessee to be materially different from the results or
achievements expressed or implied by such forward-looking statements. The JF
Lessee is not obligated to update any such factors



                                       29

<PAGE>   32



or to reflect the impact of actual future events or developments on such
forward-looking statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Pursuant to the General Instructions to Item 305 of Regulation S-K, the
quantitative and qualitative disclosure called for by this Item 7A. and by Item
305 of Regulation S-K are inapplicable to the Company at this time.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The following financial statements are incorporated by reference from
the Financial Statements included in the 1997 Annual Report, filed as Exhibit
13.1 to this Form 10-K.

INNKEEPERS USA TRUST

     Report of Independent Accountants

     Consolidated Balance Sheets at December 31, 1997
       and 1996

     Consolidated Statements of Income for the years ended
      December 31, 1997, 1996 and 1995

     Consolidated Statements of Shareholders' Equity for
      the years ended December 31, 1997, 1996 and 1995

     Consolidated Statements of Cash Flows for the years ended
      December 31, 1997, 1996 and 1995

     Notes to Consolidated Financial Statements



                                       30

<PAGE>   33





     The following financial statements are included herein on the pages
indicated.

<TABLE>
<S>                                                                                                             <C>
JF HOTEL, INC., JF HOTEL II, INC. AND JF HOTEL III, INC.

     Report of Independent Accountants...........................................................................32

     Combined Balance Sheets at December 31, 1997 and
      December 31, 1996..........................................................................................33

     Combined Statements of Income for the years ended
      December 31, 1997, 1996 and 1995 ..........................................................................34

     Combined Statements of Shareholders' Equity for the
      years ended December 31, 1997, 1996 and 1995 ..............................................................35

     Combined Statements of Cash Flows for the years ended
      December 31, 1997, 1996 and 1995 ..........................................................................36

     Notes to Combined Financial Statements......................................................................37

FINANCIAL STATEMENT SCHEDULES

     Report of Independent Accountants...........................................................................41

     Schedule 3 - Real Estate and Accumulated Depreciation
       at December 31, 1997......................................................................................42
</TABLE>


                                       31

<PAGE>   34



REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders
JF Hotel

We have audited the combined balance sheets of JF Hotel (as described in Note 1)
as of December 31, 1997 and 1996, and the related combined statements of income,
shareholders' equity and cash flows for the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Companies' 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 combined financial position of JF Hotel as of
December 31, 1997 and 1996, and the results of their operations and their cash
flows for the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.

                                              Coopers & Lybrand L.L.P.

Memphis, Tennessee
March 23, 1998


                                       32

<PAGE>   35



JF HOTEL
COMBINED BALANCE SHEETS
December 31, 1997 and 1996
(in thousands, except share data)



<TABLE>
<CAPTION>
                                                                                      1997             1996
                                                                                     -------          -------
                                                      ASSETS
<S>                                                                                  <C>              <C>
Current assets:
  Cash and cash equivalents                                                          $ 7,863          $ 5,551
  Marketable securities                                                                1,775            1,161
  Accounts receivable, net                                                             3,090            2,393
  Due from affiliates                                                                                     298
  Inventory                                                                               23               67
  Prepaid expenses                                                                       351              233
                                                                                     -------          -------

      Total current assets                                                            13,102            9,703

Other assets                                                                             180              252
                                                                                     -------          -------

      Total assets                                                                   $13,282          $ 9,955
                                                                                     =======          =======

                                       LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
  Accounts payable                                                                   $ 3,061          $ 2,150
  Accrued expenses                                                                     2,055            1,545
  Payable to Manager                                                                   2,025            1,634
  Other liabilities                                                                      585              785
  Due to Partnership                                                                   3,791            3,541
                                                                                     -------          -------

      Total current liabilities                                                       11,517            9,655
                                                                                     -------          -------

Commitments and contingencies (Note 4)

Shareholders' equity:

  Common shares, $1 par value, 3,000 shares authorized,
     3,000 shares issued and outstanding at
     December 31, 1997 and 1996                                                            3                3
  Unrealized gain on marketable securities                                               562              358
  Retained earnings (deficit)                                                          1,200              (61)
                                                                                     -------          -------

      Total shareholders' equity                                                       1,765              300
                                                                                     -------          -------

      Total liabilities and shareholders' equity                                     $13,282          $ 9,955
                                                                                     =======          =======
</TABLE>





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



                                       33

<PAGE>   36



JF HOTEL
COMBINED STATEMENTS OF INCOME
For the years ended December 31, 1997, 1996 and 1995
(in thousands)






<TABLE>
<CAPTION>
                                                       1997               1996               1995
                                                    ---------           --------           --------

<S>                                                 <C>                 <C>                <C>
Gross operating revenue:
   Rooms                                            $ 117,170           $ 58,501           $ 24,412
   Food and beverage                                      636                687                626
   Telephone                                            4,167              2,231                743
   Other                                                2,530              1,304                526
                                                    ---------           --------           --------
      Gross operating revenue                         124,503             62,723             26,307

Departmental expenses:
   Rooms                                               22,637             12,404              5,132
   Food and beverage                                      583                583                596
   Telephone                                            1,480                850                381
   Other                                                1,148                470                166
                                                    ---------           --------           --------
      Total departmental profit                        98,655             48,416             20,032
                                                    ---------           --------           --------

Unallocated operating expenses:
   General and administrative                           8,754              3,943              1,598
   Franchise and marketing fees                         8,833              4,492              1,941
   Advertising and promotions                           4,204              2,305                894
   Utilities                                            5,204              3,235              1,505
   Repairs and maintenance                              5,443              3,073              1,195
   Management fees                                      2,255                540                 49
                                                    ---------           --------           --------
      Total unallocated operating expenses             34,693             17,588              7,182
                                                    ---------           --------           --------

      Gross profit                                     63,962             30,828             12,850

      Insurance                                          (779)              (379)              (239)
      Lessee overhead                                  (2,210)            (2,273)              (952)
      Percentage lease expense                        (57,486)           (27,466)           (11,268)
                                                    ---------           --------           --------

        Net income                                  $   3,487           $    710           $    391
                                                    =========           ========           --------
</TABLE>


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



                                       34

<PAGE>   37



JF HOTEL
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended December 31,1997, 1996 and 1995
(in thousands, except share data)



<TABLE>
<CAPTION>
                                                           Common Shares         Unrealized
                                                       ----------------------      Gain On         Retained          Total
                                                                                  Marketable       Earnings       Shareholders'
                                                       Shares       Par Value     Securities       (Deficit)         Equity
                                                       ------       ---------     ----------       ---------         ------


<S>                                                   <C>            <C>           <C>             <C>               <C>
Balance at December 31, 1994                             1,000          $  1                        $    48           $    49

   JF Hotel II, Inc. issuance of common shares           1,000             1                                                1

   Net income                                                                                           391               391

   Distributions paid                                                                                  (439)             (439)
                                                         -----          ----          ----          -------           -------

Balance at December 31, 1995                             2,000             2                                                2

   JF Hotel III, Inc. issuance of common shares          1,000             1                                                1

   Net income                                                                                           710               710

   Change in unrealized gain on marketable
      securities                                                                      $358                                358

   Distributions paid                                                                                  (771)             (771)
                                                         -----          ----          ----          -------           -------

   Balance at December 31, 1996                          3,000             3           358              (61)              300

   Net income                                                                                         3,487             3,487

   Change in unrealized gain on marketable
      securities                                                                       204                                204

   Distributions paid                                                                                (2,226)           (2,226)
                                                         -----          ----          ----          -------           -------


Balance at December 31, 1997                             3,000          $  3          $562          $ 1,200           $ 1,765
                                                         =====          ====          ====          =======           =======
</TABLE>





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



                                       35

<PAGE>   38



JF HOTEL
COMBINED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1997, 1996 and 1995
(in thousands)







<TABLE>
<CAPTION>
                                                       1997         1996         1995
                                                      -------      -------      -------
<S>                                                   <C>          <C>          <C>
Cash flows from operating activities:
   Net income                                         $ 3,487      $   710      $   391
   Adjustments to reconcile net income to
     net cash provided by operating activities:
     Depreciation                                          45           28
     Changes in operating assets and liabilities:
       Accounts Receivable                               (697)        (853)      (1,306)
       Inventory                                           44          (40)         (11)
       Prepaid expenses                                  (118)         (14)         (55)
       Other Assets                                        33          (45)
       Accounts payable                                   911          127          (91)
       Accrued expenses                                   510          483        1,443
       Payable to Manager                                 391        1,634          758
       Other Liabilities                                 (200)         785
       Due to Partnership                                 250        1,493        1,955
                                                      -------      -------      -------

     Net cash provided by operating activities          4,656        4,308        3,084
                                                      -------      -------      -------

Cash flows from investing activities:
   Advances to affiliates                                             (298)
   Affiliate advances collected                           298
   Purchase of equipment                                   (6)         (81)
   Purchase of marketable securities                     (410)        (548)        (255)
                                                      -------      -------      -------

     Net cash used in investing activities               (118)        (927)        (255)
                                                      -------      -------      -------

Cash flows from financing activities:
   Distributions paid                                  (2,226)        (771)        (439)
   Advances (payments) to shareholders                                  40          (40)
   Issuance of common shares                                             1            1
                                                      -------      -------      -------

     Net cash used in financing activities             (2,226)        (730)        (478)
                                                      -------      -------      -------

   Net increase in cash and cash equivalents            2,312        2,651        2,351

   Cash and cash equivalents at beginning of year       5,551        2,900          549
                                                      -------      -------      -------

   Cash and cash equivalents at end of year           $ 7,863      $ 5,551      $ 2,900
                                                      =======      =======      =======
</TABLE>




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


                                       36

<PAGE>   39


JF HOTEL
NOTES TO COMBINED FINANCIAL STATEMENTS

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

JF Hotel, Inc., JF Hotel II, Inc. and JF Hotel III, Inc. (collectively "JF
Hotel" or the "JF Lessee") are under common control and were formed primarily to
lease and operate hotels owned by Innkeepers USA Trust ("Innkeepers") through
Innkeepers USA Limited Partnership and its subsidiaries (collectively the
"Partnership," and together with Innkeepers, the "Company"). As of December 31,
1997, approximately 82.1% of the Partnership was owned by the Company. The
principal shareholders of the JF Lessee are Jeffrey H. Fisher, who is the
President, Chief Executive Officer and Chairman of the Company, and Frederic M.
Shaw, who is the Executive Vice-President and Chief Operating Officer of the
Company. The JF Lessee commenced the leasing and operation of seven hotels (the
"Initial Hotels") on September 30, 1994 and at December 31, 1997 leased 47
hotels (the "JF Leased Hotels") from the Company.

The Lessee operates 25 of the Hotels, Residence Inn by Marriott, Inc. ("RIBM", a
wholly-owned subsidiary of Marriott International, Inc.) operates 20 of the
Hotels, and an unaffiliated party operates two of the Hotels. The financial
statements of the 20 hotels operated by RIBM are maintained on a 52/53 week
period basis. The 1996 fiscal year ended on January 3, 1997 and the 1997 fiscal
year ended on January 2, 1998.

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.

The carrying amount of cash and cash equivalents approximates fair value.

MARKETABLE SECURITIES

Marketable securities, which primarily consist of 113,950 and 83,050 shares of
the Company's common stock at December 31, 1997 and 1996, respectively, are
classified as available for sale and are carried at market value. The
appreciation in value of the marketable securities, since purchase, is recorded
in shareholders' equity until realized.

INVENTORY

Inventory, consisting of food and beverage, is stated at the lower of cost
(generally, first-in, first-out) or market. Linens and uniforms are expensed as
incurred.

PREPAID EXPENSES

Prepaid expenses consist primarily of prepaid insurance.

REVENUE RECOGNITION

Revenue is recognized as earned. Credit evaluations are performed and an
allowance for doubtful accounts is provided against accounts receivable which
are estimated to be uncollectible.

FRANCHISE FEES

The cost of obtaining franchise licenses, for hotels subject to such licenses,
is paid by the Company, and the continuing franchise fees (generally a
percentage of room revenue) are paid by the JF Lessee.


                                       37

<PAGE>   40


JF HOTEL
NOTES TO COMBINED FINANCIAL STATEMENTS

ADVERTISING COSTS

Advertising costs are expensed as incurred. Included in franchise and marketing
fees are fees (generally a percentage of room revenue) payable to marketing
funds of the franchisors which were $3,303,000, $1,728,000, and $868,000 for the
years ended December 31, 1997, 1996 and 1995, respectively.

PERCENTAGE LEASE EXPENSE

Each JF Leased Hotel is leased by the Company to the JF Lessee under a
percentage lease agreement ("Percentage Lease"). The Percentage Lease for each
JF Leased Hotel provides for the payment to the Company of monthly percentage
rent based on fixed percentages of gross room revenue in excess of certain
specified levels. The Percentage Lease for each JF Leased Hotel provides for
minimum base rents in the event that percentage rents do not exceed base rents.

Percentage lease expense is recognized as due to the Company under the
Percentage Leases from lease inception.

INCOME TAXES

The JF Lessee has elected S corporation status under the Internal Revenue Code.
Accordingly, the shareholders of the JF Lessee are taxed on an individual basis
on their proportionate share of the JF Lessee's taxable income. Consequently, no
provision for income taxes has been reflected in the financial statements.

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

2.   DUE FROM AFFILIATES

At December 31, 1996, Due From Affiliates consisted of unreimbursed capital
expenditures and principal payments due from the Partnership and amounts owed to
partnerships controlled by the shareholders of the JF Lessee. These amounts were
repaid in 1997.

3.   SHARE APPRECIATION RIGHTS

In 1994, the JF Lessee granted to certain officers an aggregate of 70,000 share
appreciation rights ("SARs") based on the performance of the Company's common
shares. The SARs' vest over a four year period, have been granted at an exercise
price of $10.00 and have a maximum term of ten years. In 1997, the JF Lessee
granted to certain employees and officers an aggregate of 300,000 SARs, which
vest over four or five year periods, have an exercise price of $13.25 and a
maximum term of ten years. No SARs have been exercised as of December 31, 1997.
At December 31, 1997 and 1996, the JF Lessee has recognized $196,000 and
$234,000, respectively, in compensation cost related to the SARs, which is
included in Lessee Overhead in the accompanying combined statements of income.

4.   COMMITMENTS AND RELATED PARTY TRANSACTIONS

The JF Lessee has future lease commitments for office space through 1998.
Minimum future rental payments under those noncancelable operating leases is
approximately $135,000 in 1998.


                                       38

<PAGE>   41


JF HOTEL
NOTES TO COMBINED FINANCIAL STATEMENTS

4.  COMMITMENTS AND RELATED PARTY TRANSACTIONS, CONTINUED

Rent expense, excluding Percentage Lease expense, was $135,000, $219,000, and
$40,700 for the years ended December 31, 1997, 1996 and 1995, respectively.

The JF Lessee has future minimum base lease commitments under the Percentage
Lease agreements to the Company through 2012. Minimum future base lease payments
under the Percentage Lease agreements are as follows (in thousands):


<TABLE>
<CAPTION>
         YEAR                                                     AMOUNT
         ----                                                     ------
<S>                                                             <C>
         1998                                                   $ 33,067
         1999                                                     33,067
         2000                                                     33,067
         2001                                                     33,067
         2002                                                     33,067
         Thereafter                                              170,882
                                                                --------
                                                                $336,217
                                                                ========
</TABLE>

The JF Lessee paid base rents of $25,580,000, $10,212,000 and $4,793,000, and
percentage rent, in excess of base rents, of $31,906,000, $17,254,000 and
$6,475,000 for the years ended December 31, 1997, 1996 and 1995, respectively.

RIBM operates 20 of the Hotels under management agreements with the JF Lessee
(the "RIBM Management Agreements"). The RIBM Management Agreements, generally,
have an initial term of 13 years and provide for a base fee of 2% of gross
revenues at the managed hotels and an incentive fee which is 50% of available
cash flow, as defined. For seven of the Hotels only, the RIBM Management
Agreement provides for an incentive fee of 65% of available cash flow up to 3.5%
of gross revenue and 50% of available cash flow thereafter. The agreement also
contains penalties for early termination. Amounts due to RIBM under the RIBM
Management Agreements are included in Payable to Manager in the accompanying
combined balance sheet. The right to operate the 20 hotels as Residence Inns is
contained in the RIBM Management Agreement. In lieu of a franchise fee, the RIBM
Management Agreements provide for a system fee of 5% of gross revenues at the
RIBM managed hotels. The system fee is included in franchise and marketing fees
in the accompanying combined statements of income.

Two of the JF Leased Hotels are operated under management agreements with an
unaffiliated party with terms of 5 years and providing for a base fee of 2% of
gross revenues and an incentive fee based on the performance of the hotels
managed.

The Company has reimbursed the JF Lessee $100,000, $100,000, and $40,000 for the
use of office facilities for the years ended December 31, 1997, 1996 and 1995,
respectively. The Company has advanced to the JF Lessee the working capital
deposit required under the RIBM Management Agreements. These advances are
included in other liabilities in the accompanying combined balance sheet.
Percentage Lease expense due to the Company, which remains unpaid at December
31, 1997 and 1996, is included in Due to Partnership in the accompanying
combined balance sheet. The Company has also guaranteed the JF Lessee's
obligations under its franchise licenses (and is liable for certain of the JF
Lessee's obligations under the Marriott Management Agreements), generally in
exchange for certain rights to substitute a replacement lessee as the franchisee
(or as the parties to the Marriott Management Agreement) if the Company
terminates the related Percentage Lease.


                                       39

<PAGE>   42


JF HOTEL
NOTES TO COMBINED FINANCIAL STATEMENTS


5.  EMPLOYEE BENEFIT PLAN

In July 1996, the JF Lessee began sponsoring a defined contribution employee
benefit plan (the "Plan"). Substantially all employees who are age 21 or older
and have at least one year of service, as defined, are eligible to participate
in the Plan. Employees may contribute up to 15% of their compensation to the
Plan, subject to certain annual limitations. The JF Lessee currently does not
contribute to the Plan. The JF Lessee absorbs certain administrative expenses of
the Plan.

On October 1, 1997, the JF Lessee established a self-insured health plan for its
employees. The JF Lessee has made a provision for reported and unreported claims
incurred as of December 31, 1997. The JF Lessee also maintains individual and
aggregate stop loss policies.

6.  SUBSEQUENT EVENTS

In January 1998, the Company acquired and leased six hotels to the JF Lessee
under Percentage Leases.


                                       40

<PAGE>   43





REPORT OF INDEPENDENT ACCOUNTANTS


Our report on the consolidated financial statements of Innkeepers USA Trust is
included in Exhibit 13.1 of this Form 10-K. In connection with our audits of
such financial statements, we have also audited the related financial statement
schedule on pages 41 through 43 of this Form 10-K.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.


                                                Coopers & Lybrand L.L.P.


Memphis, Tennessee
March 23, 1998





                                       41

<PAGE>   44
                              INNKEEPERS USA TRUST
              SCHEDULE 3 - REAL ESTATE AND ACCUMULATED DEPRECIATION
                              AT DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                                         Cost Capitalized
                                                                           Subsequent to         Gross Amounts of Which
                                                    Initial Cost            Acquisition         Carried at Close of Period
                                              -----------------------   ---------------------   --------------------------
                                                        Buildings and           Buildings and               Buildings and
    Description         Encumbrances          Land       Improvement    Land     Improvement      Land        Improvement
    -----------         ------------          ----       -----------    ----     -----------      ----        -----------

<S>                                        <C>           <C>            <C>      <C>           <C>           <C>
Residence Inn:
Addison, TX                                $ 1,000,000   $ 11,913,050   $    0   $         0   $ 1,000,000   $ 11,913,050
Altamonte Springs,                           1,329,300      7,085,660        0             0     1,329,300      7,085,660
   FL
Arlington, TX                                  860,000      8,432,997        0             0       860,000      8,432,997
Atlanta (Downtown),                          1,550,000     14,926,908        0         3,540     1,550,000     14,930,448
   GA
Binghamton, NY                 4               720,000      5,293,910        0       124,302       720,000      5,418,212
Cherry Hill, NJ                4             1,000,000      7,998,153        0       229,148     1,000,000      8,227,301
Columbus East, OH                              724,800     3,861,606         0             0       724,800      3,861,606
Denver (Downtown),             4             1,210,000      7,989,641        0        46,248     1,210,000      8,035,889
   CO
Denver (South), CO             3             1,105,000      7,714,756        0       360,531     1,105,000      8,075,287
East Lansing, MI               2               385,000      3,830,424        0        52,453       385,000      3,882,877
Eden Prairie, MN                             1,240,000      9,248,876        0         6,737     1,240,000      9,255,613
Fort Wayne, IN                                 751,650      3,998,805        0             0       751,650      3,998,805
Fremont, CA                    3             1,000,000      4,675,247        0       124,111     1,000,000      4,799,358
Grand Rapids, MI               2               770,000      6,432,820        0        36,806       770,000      6,469,626
Harrisburg, PA                 1               770,000      5,662,329        0       121,318       770,000      5,783,647
Indianapolis, IN                               789,150      4,195,834        0             0       789,150      4,195,834
Lexington, KY                                1,069,350      5,694,871        0             0     1,069,350      5,694,871
Louisville, KY                               1,509,600      8,028,532        0             0     1,509,600      8,028,532
Mountain View                  3             3,700,000     12,283,463        0       129,910     3,700,000     12,413,373
  (Palo Alto), CA
Ontario, CA                                  1,876,650      9,963,981        0             0     1,876,650      9,963,981
Portland, ME                                   520,000      4,996,765        0           300       520,000      4,997,065
Richmond, VA                   3               600,000      5,154,740        0        65,172       600,000      5,219,912
San Jose, CA                   3             1,350,000      5,808,270        0       105,994     1,350,000      5,914,264
San Mateo, CA                                4,600,000     15,148,774        0        55,320     4,600,000     15,204,094
Shelton, CT                                  1,560,000      8,143,530        0             0     1,560,000      8,143,530
Silicon Valley I, CA           4             6,330,000     23,232,485        0        68,090     6,330,000     23,300,575
Silicon Valley II, CA          2             5,450,000     25,292,711        0        79,559     5,450,000     25,372,270
Troy (Central), MI             3             1,290,000      4,891,360        0       274,779     1,290,000      5,166,139
Troy (Southeast), MI           3               760,000      7,245,716        0       226,060       760,000      7,471,776
Wichita East, KA               4               525,000      3,429,683        0        48,436       525,000      3,478,119
Windsor, CT                    3             1,150,000      4,712,293        0       216,999     1,150,000      4,929,292
Winston-Salem, NC                              874,500      4,647,510        0             0       874,500      4,647,510
</TABLE>



<TABLE>
<CAPTION>
                                                                                                        Life Upon
                                                                                                          Whick
                                                                                                     Depreciation In
                                            Accumulated         Net         Date of      Date of       Statement Is
                                   Total    Depreciation     Book Value  Construction  Acquisition       Computed
                                   -----    ------------     ----------  ------------  -----------       --------

<S>                            <C>            <C>           <C>              <C>             <C>             <C>
Residence Inn:

Addison, TX                    $ 12,913,050   $   223,171   $ 12,689,879     1996            1997            40
Altamonte Springs,                8,414,960             0      8,414,960       19            1997            40
   FL
Arlington, TX                     9,292,997       157,802      9,135,195     1995            1997            40
Atlanta (Downtown),              16,480,448       435,614     16,044,834     1996            1996            40
   GA
Binghamton, NY                    6,138,212       452,448      5,685,764     1987            1994            40
Cherry Hill, NJ                   9,227,301       314,386      8,912,915     1989            1996            40
Columbus East, OH                 4,586,406             0      4,586,406       19            1997            40
Denver (Downtown),                9,245,889       234,204      9,011,685     1982            1996            40
   CO
Denver (South), CO                9,180,287       524,986      8,655,301     1981            1995            40
East Lansing, MI                  4,267,877       110,156      4,157,721     1984            1996            40
Eden Prairie, MN                 10,495,613       173,343     10,322,270     1985            1997            40
Fort Wayne, IN                    4,750,455             0      4,750,455       19            1997            40
Fremont, CA                       5,799,358       291,722      5,507,636     1985            1995            40
Grand Rapids, MI                  7,239,626       187,548      7,052,078     1984            1996            40
Harrisburg, PA                    6,553,647       220,014      6,333,633     1988            1996            40
Indianapolis, IN                  4,984,984             0      4,984,984       19            1997            40
Lexington, KY                     6,764,221             0      6,764,221       19            1997            40
Louisville, KY                    9,538,132             0      9,538,132       19            1997            40
Mountain View                    16,113,373       721,546     15,391,827     1985            1995            40
  (Palo Alto), CA
Ontario, CA                      11,840,631             0     11,840,631       19            1997            40
Portland, ME                      5,517,065       145,678      5,371,387     1996            1996            40
Richmond, VA                      5,819,912       302,019      5,517,893     1986            1995            40
San Jose, CA                      7,264,264       349,238      6,915,026     1986            1995            40
San Mateo, CA                    19,804,094       444,023     19,360,071     1985            1996            40
Shelton, CT                       9,703,530        33,931      9,669,599       19            1997            40
Silicon Valley I, CA             29,630,575       679,229     28,951,346     1983            1996            40
Silicon Valley II, CA            30,822,270       738,437     30,083,833     1985            1996            40
Troy (Central), MI                6,456,139       341,858      6,114,281     1986            1995            40
Troy (Southeast), MI              8,231,776       455,799      7,775,977     1985            1995            40
Wichita East, KA                  4,003,119       103,444      3,899,675     1981            1996            40
Windsor, CT                       6,079,292       311,329      5,767,963     1986            1995            40
Winston-Salem, NC                 5,522,010             0      5,522,010       19            1997            40
</TABLE>
                                       42

<PAGE>   45
<TABLE>
<CAPTION>
                                                                         Cost Capitalized
                                                                           Subsequent to         Gross Amounts of Which
                                                    Initial Cost            Acquisition         Carried at Close of Period
                                              -----------------------   ---------------------   --------------------------
                                                        Buildings and           Buildings and               Buildings and
    Description         Encumbrances          Land       Improvement    Land     Improvement      Land        Improvement
    -----------         ------------          ----       -----------    ----     -----------      ----        -----------

<S>                             <C>          <C>           <C>               <C>           <C>   <C>           <C>
Summerfield Suites:
Addison, TX                     5            1,470,000     11,918,869        0             0     1,470,000     11,918,869
Belmont, CA                     5            2,900,000     16,318,056        0             0     2,900,000     16,318,056
El Segundo                      5            1,970,000     11,395,769        0             0     1,970,000     11,395,769
Las Colinas, TX                 5            2,263,000     15,581,927        0             0     2,263,000     15,581,927
Mount Laurel, NJ                5              400,000     11,200,995        0             0       400,000     11,200,995
West Hollywood, CA              5              969,000     12,689,650        0             0       969,000     12,689,650

Hampton Inn:
Albany/Latham, NY               1              850,000      7,974,632        0       214,735       850,000      8,189,367
Germantown, MD                  1              920,000      4,811,562        0     1,928,131       920,000      6,739,693
Islandia (Long Island),         4              920,000      4,854,980        0       122,910       920,000      4,977,890
  NY
Lombard, IL                     1              600,000      6,602,047        0             0       600,000      6,602,047
Naples, FL                      4              690,000      4,782,493        0       266,682       690,000      5,049,175
Norcross, GA                                 1,200,000      7,711,883        0         9,267     1,200,000      7,721,150
Schaumburg, IL                  1              572,000      4,211,770        0             0       572,000      4,211,770
Tallahassee, FL                 4              500,000      4,242,469        0        14,171       500,000      4,256,640
West Palm Beach, FL             2                    0      3,936,536        0       510,751             0      4,447,287
Westchester, IL                 1              572,000      4,640,531        0             0       572,000      4,640,531
Willow Grove                    1            1,110,000      8,375,236        0        41,856     1,110,000      8,417,092
   (Philadelphia), PA
Woburn, MA                      1                    0      2,645,776        0     2,824,385             0      5,470,161

Sierra and Sunrise
Suites:
Atlanta, GA                     5              985,000      3,518,144        0             0       985,000      3,518,144
Phoenix, AZ                     5            1,288,000      5,149,588        0             0     1,288,000      5,149,588
Tinton Falls, NJ                5              750,000      4,625,441        0             0       750,000      4,625,441

Comfort Inn:
Allentown, PA                   1              715,000      6,045,158        0       128,662       715,000      6,173,820

Holiday Inn Express:
Lexington, MA                   1              875,000      5,434,073        0     2,691,545       875,000      8,125,618

Sheraton Inn:
Fort Lauderdale, FL             1                    0      7,779,311        0       270,187             0      8,049,498

Vacant land                                    618,883              0        0             0       618,883              0
Corporate                                            0              0        0        31,547             0         31,547
                                           -----------   ------------   ------   -----------   -----------   ------------

                                           $71,507,883   $438,382,596   $    0   $11,430,642   $71,507,883   $449,813,238
                                           -----------   ------------   ------   -----------   -----------   ------------
</TABLE>

<TABLE>
<CAPTION>
                                                                                                        Life Upon
                                                                                                          Whick
                                                                                                     Depreciation In
                                            Accumulated         Net         Date of      Date of       Statement Is
                                   Total    Depreciation     Book Value  Construction  Acquisition       Computed
                                   -----    ------------     ----------  ------------  -----------       --------

<S>                              <C>              <C>         <C>            <C>             <C>             <C>
Summerfield Suites:
Addison, TX                      13,388,869       148,270     13,240,599     1996            1997            40
Belmont, CA                      19,218,056       203,369     19,014,687     1995            1997            40
El Segundo                       13,365,769       141,796     13,223,973     1995            1997            40
Las Colinas, TX                  17,844,927       194,312     17,650,615     1996            1997            40
Mount Laurel, NJ                 11,600,995       139,683     11,461,312     1996            1997            40
West Hollywood, CA               13,658,650       157,874     13,500,776     1993            1997            40

Hampton Inn:
Albany/Latham, NY                 9,039,367       722,011      8,317,356     1990            1994            40
Germantown, MD                    7,659,693       986,474      6,673,219     1987            1995            40
Islandia (Long Island),           5,897,890       561,776      5,336,114     1988            1992            40
  NY
Lombard, IL                       7,202,047        82,017      7,120,030     1987            1997            40
Naples, FL                        5,739,175       486,893      5,252,282     1990            1990            40
Norcross, GA                      8,921,150       226,336      8,694,814     1996            1996            40
Schaumburg, IL                    4,783,770        52,249      4,731,521     1986            1997            40
Tallahassee, FL                   4,756,640       293,213      4,463,427     1993            1995            40
West Palm Beach, FL               4,447,287     1,263,737      3,183,550     1986            1986            40
Westchester, IL                   5,212,531        57,602      5,154,929     1988            1997            40
Willow Grove                      9,527,092     1,163,063      8,364,029     1991            1991            40
   (Philadelphia), PA
Woburn, MA                        5,470,161       445,893      5,024,268     1981            1996            40

Sierra and Sunrise
Suites:
Atlanta, GA                       4,503,144        43,446      4,459,698     1996            1997            40
Phoenix, AZ                       6,437,588        63,713      6,373,875     1997            1997            40
Tinton Falls, NJ                  5,375,441        57,571      5,317,870     1993            1997            40

Comfort Inn:
Allentown, PA                     6,888,820       449,792      6,439,028     1989            1995            40

Holiday Inn Express:
Lexington, MA                     9,000,618       564,787      8,435,831     1971            1996            40

Sheraton Inn:
Fort Lauderdale, FL               8,049,498     1,806,436      6,243,062     1988            1988            40

Vacant land                         618,883             0        618,883   N/A               1997            N/A
Corporate                            31,547         1,164         30,383                                     40
                               ------------   -----------   ------------

                               $521,321,121   $18,265,402   $503,055,719
                               ------------   -----------   ------------
</TABLE>

                                       43
<PAGE>   46

Notes to Schedule 3 - Real Estate and Accumulated Depreciation



1.  Collateral for the $190 million Line of Credit.
2.  Collateral for various mortgage notes.
3.  Collateral for the $30 million First Term Loan.
4.  Collateral for the$42 million Second Term Loan.
5.  Collateral for the Interim Loan.





                                       44
<PAGE>   47

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Incorporated herein by reference from the Company's definitive proxy
statement to be filed with the Securities and Exchange Commission within 120
days after the year covered by this Form 10-K with respect to its Annual Meeting
of Shareholders to be held on May 6, 1998.


ITEM 11. EXECUTIVE COMPENSATION

         Incorporated herein by reference from the Company's definitive proxy
statement to be filed with the Securities and Exchange Commission within 120
days after the year covered by this Form 10-K with respect to its Annual Meeting
of Shareholders to be held on May 6, 1998.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Incorporated herein by reference from the Company's definitive proxy
statement to be filed with the Securities and Exchange Commission within 120
days after the year covered by this Form 10-K with respect to its Annual Meeting
of Shareholders to be held on May 6, 1998.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Incorporated herein by reference from the Company's definitive proxy
statement to be filed with the Securities and Exchange Commission within 120
days after the year covered by this Form 10-K with respect to its Annual Meeting
of Shareholders to be held on May 6, 1998.


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(a)      FINANCIAL STATEMENTS

         The following Financial Statements are included in this report on the
pages indicated.



                                       45
<PAGE>   48




                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                                                                             <C>
JF HOTEL, INC., JF HOTEL II, INC. AND JF HOTEL III, INC.

     Report of Independent Accountants...........................................................................32

     Combined Balance Sheets at December 31, 1997 and 1996 ......................................................33

     Combined Statements of Income for the years ended
       December 31, 1997, 1996 and 1995 .........................................................................34

     Combined Statement of Shareholders' Equity for the years
       ended December 31, 1997, 1996 and 1995....................................................................35

     Combined Statement of Cash Flows for the years ended
       December 31, 1997, 1996 and 1995..........................................................................36

     Notes to Combined Financial Statements......................................................................37

FINANCIAL STATEMENT SCHEDULES

     Report of Independent Accountants...........................................................................41

     Schedule 3 - Real Estate and Accumulated Depreciation
       at December 31, 1997......................................................................................42
</TABLE>

All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the consolidated financial
statements and notes thereto.

With the exception of the consolidated financial statements and the accountants'
report thereon listed in the above index, the information referred to in Items
1,5, 6 and 7, and the supplementary quarterly financial information referred to
in Item 8, all of which is included in the 1997 Annual Report to Shareholders of
Innkeepers USA Trust and incorporated by reference into this Form 10-K Annual
Report, the 1997 Annual Report to Shareholders is not to be deemed "filed" as
part of this report.

(b)      REPORTS ON FORM 8-K

         None.




                                       46
<PAGE>   49




(c)      EXHIBITS

LIST OF EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER            DESCRIPTION OF EXHIBITS
------            -----------------------

<S>               <C>
 3.1              Amended and Restated Declaration of Trust of the Registrant (previously filed as
                  Exhibit 3.1 to the Company's Registration Statement on Form S-11, Registration
                  No. 33-81362 and incorporated herein by reference).

 3.2              Bylaws of the Registrant (previously filed as Exhibit 3.2 to the Company's
                  Registration Statement on Form S-11, Registration No. 33-81362 and incorporated
                  herein by reference).

 4.1              Form of Common Share Certificate (previously filed as Exhibit 4.1 to the
                  Company's Registration Statement on Form S-11, Registration No. 33-81362 and
                  incorporated herein by reference).

10.1              Second Amended and Restated Agreement of Limited Partnership of Innkeepers
                  USA Limited Partnership (previously filed as Exhibit 10.1-A to the Company's
                  Annual Report on Form 10-K for the year ended December 31, 1996).

10.2              Form of Percentage Lease (previously filed as Exhibit 10.11 to the Company's
                  Registration Statement on Form S-11, Registration No. 33-81362 and incorporated
                  herein by reference).

10.3              Form of Right of First Refusal and Option to Purchase (previously filed as Exhibit
                  10.12 to the Company's Registration Statement on Form S-11, Registration No. 33-
                  81362 and incorporated herein by reference).

10.4              Innkeepers USA Trust 1994 Share Incentive Plan.

10.5              Innkeepers USA Trust Non-Employee Trustees' Share Option Plan.

10.6              Form of Employment Agreement (previously filed as Exhibit 10.16 to the
                  Company's Registration Statement on Form S-11, Registration
                  No. 33-81362 and incorporated herein by reference).

10.7              Form of Exclusive Hotel Development Agreement and Covenant Not to Compete
                  (previously filed as Exhibit 10.17 to the Company's Registration Statement on
                  Form S-11, Registration No. 33-81362 and incorporated herein by reference).
</TABLE>



                                       47
<PAGE>   50


<TABLE>
<CAPTION>
EXHIBIT
NUMBER            DESCRIPTION OF EXHIBITS
------            -----------------------

<S>               <C>
10.8              Percentage Lease Agreement between Innkeepers USA Limited Partnership and JF
                  Hotel, Inc. for the Hampton Inn - West Palm Beach, Florida (previously filed as
                  Exhibit 10.4 to the Company's registration statement on Form S-11, Registration
                  No. 33-95622 and incorporated herein by reference).

10.9              Consolidated Percentage Lease Agreement between Innkeepers USA Limited
                  Partnership and JF Hotel, Inc. for certain hotels (previously filed as Exhibit 10.5
                  to the Company's registration statement on Form S-11, Registration No. 33-95622
                  and incorporated herein by reference).

10.10             Credit Agreement, dated as of February 17, 1998, among Innkeepers USA Trust,
                  Innkeepers USA Limited Partnership, Nationsbanc, N.A., Nomura Asset Capital
                  Corporation and the lenders named therein.

10.11             Employment Agreement between David Bulger and the Company (previously filed
                  as Exhibit 10.10 to the Company's registration statement on Form S-11,
                  Registration No. 33-95622 and incorporated herein by reference).

10.12             Seven Contribution Agreements, each dated as of September 16, 1996, between
                  various partnerships and Innkeepers USA Limited Partnership for the seven
                  DeBoer Hotels (previously filed as Exhibits 2.1 - 2.7 to the Company's Form 8-K
                  filed on November 22, 1996 and incorporated herein by reference).

10.13             Form of Contribution Agreement between a partnership subsidiary of Innkeepers
                  USA Trust and a Summerfield partnership (previously filed as Exhibit 10.1 to the
                  Company's Form 8-K filed on July 18, 1997 and incorporated herein by reference).

10.14             Form of percentage lease agreement for Summerfield acquisition hotels (previously
                  filed as Exhibit 10.2 to the Company's Form 8-K filed on July 18, 1997 and
                  incorporated herein by reference).

10.15             Agreement on Franchise-Related matters between the Innkeepers acquisition
                  partnership, Innkeepers USA Limited Partnership and Summerfield Suites
                  Management Company, L.P., dated as of June 20, 1997 (previously filed as
                  Exhibit 10.3 to the Company's Form 8-K filed on July 18, 1997 and incorporated
                  herein by reference).

10.16             Lease Master Agreement between the Innkeepers acquisition partnerships,
                  Innkeepers USA Limited Partnership and Summerfield Suites Lease Company,
                  L.P., dated as of June 20, 1997 (previously filed as Exhibit 10.4 to the Company's
                  Form 8-K filed on July 18, 1997 and incorporated herein by reference).
</TABLE>




                                       48
<PAGE>   51


<TABLE>
<CAPTION>
EXHIBIT
NUMBER            DESCRIPTION OF EXHIBITS
------            -----------------------

<S>               <C>
10.17             Voting Agreement among Jeffrey H. Fisher, Innkeepers USA Trust, Innkeepers
                  USA Limited Partnership, the Summerfield Contributing partnerships, and the
                  beneficial holders of Summerfield Units, dated June 20, 1997 (previously filed as
                  Exhibit 10.5 to the Company's Form 8-K filed on July 18, 1997 and incorporated
                  herein by reference).

10.18             Redemption and Registration Rights Agreement between Innkeepers USA Trust,
                  Innkeepers USA Limited Partnership, the Summerfield Contributing Partnerships
                  and the beneficial holders or the Summerfield Units dated as of June 20, 1997
                  (previously filed as Exhibit 10.6 to the Company's Form 8-K filed on July 18,
                  1997 and incorporated herein by reference).

13.1              1997 Annual Report to Shareholders.

21.1              List of Subsidiaries of the Registrant.

23.1              Consent of Coopers & Lybrand L.L.P.

27                Financial Data Schedule (SEC use only)
</TABLE>

(d)               FINANCIAL STATEMENT SCHEDULES

                  Schedule 3 - Real Estate and Accumulated Depreciation at
December 31, 1997.


                                       49
<PAGE>   52




                                   SIGNATURES

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

                                        INNKEEPERS USA TRUST



March 26, 1998                          /s/ Jeffrey H. Fisher
                                        ----------------------------------------
                                        Chairman of the Board and President



March 26, 1998                          /s/ David Bulger
                                        ----------------------------------------
                                        Treasurer
                                        (Principal Financial Officer)



March 26, 1998                          /s/ Gregory M. Fay
                                        ----------------------------------------
                                        Vice-President of Accounting
                                        (Principal Accounting Officer)




                                       50
<PAGE>   53




                  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
               SIGNATURE                                   TITLE                               DATE
               ---------                                   -----                               ----


<S>                                         <C>                                           <C>
   /s/ Jeffrey H. Fisher                    Chairman of the Board and                     March 26, 1998
--------------------------------------      President (Principal
           Jeffrey  H. Fisher               Executive Officer)


 /s/ Miles Berger                           Trustee                                       March 26, 1998
---------------------------------------
              Miles Berger

 /s/ C. Gerald Goldsmith                    Trustee                                       March 24, 1998
---------------------------------------
           C. Gerald Goldsmith

 /s/ Bruce Zenkel                           Trustee                                       March 25, 1998
---------------------------------------
              Bruce Zenkel

 /s/ Jack P. DeBoer                         Trustee                                       March 26, 1998
---------------------------------------
             Jack P. DeBoer

                                            Trustee                                       March ___, 1998
---------------------------------------
             Thomas Crocker

 /s/ David Bulger                           Treasurer                                     March 26, 1998
---------------------------------------     (Principal Financial Officer)
            David Bulger


 /s/ Gregory M. Fay                         Vice President of                             March 26, 1998
-------------------------------------       Accounting (Principal
            Gregory M. Fay                  Accounting Officer)



/s/ Rolf E. Ruhfus                           Trustee                                       March 30, 1998
-------------------------------------
           Rolf E. Ruhfus
</TABLE>





<PAGE>   54



LIST OF EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER            DESCRIPTION OF EXHIBITS
------            -----------------------

<S>               <C>
 3.1              Amended and Restated Declaration of Trust of the Registrant (previously filed
                  as Exhibit 3.1 to the Company's Registration Statement on Form S-11,
                  Registration No. 33-81362 and incorporated herein by reference).

 3.2              Bylaws of the Registrant (previously filed as Exhibit 3.2 to the Company's
                  Registration Statement on Form S-11, Registration No. 33-81362
                  and incorporated herein by reference).

 4.1              Form of Common Share Certificate (previously filed as Exhibit 4.1 to the
                  Company's Registration Statement on Form S-11, Registration No. 33-81362
                  and incorporated herein by reference).

10.1              Second Amended and Restated Agreement of Limited Partnership of Innkeepers
                  USA Limited Partnership (previously filed as Exhibit 10.1-A to the Company's
                  Annual Report on Form 10-K for the year ended December 31, 1996).

10.2              Form of Percentage Lease (previously filed as Exhibit 10.11 to the Company's
                  Registration Statement on Form S-11, Registration No. 33-81362 and
                  incorporated herein by reference).

10.3              Form of Right of First Refusal and Option to Purchase (previously filed as
                  Exhibit 10.12 to the Company's Registration Statement on Form S-11,
                  Registration No. 33-81362 and incorporated herein by reference).

10.4              Innkeepers USA Trust 1994 Share Incentive Plan.

10.5              Innkeepers USA Trust Non-Employee Trustees' Share Option Plan.

10.6              Form of Employment Agreement (previously filed as Exhibit 10.16 to the
                  Company's Registration Statement on Form S-11, Registration No. 33-81362
                  and incorporated herein by reference).

10.7              Form of Exclusive Hotel Development Agreement and Covenant Not to
                  Compete (previously filed as Exhibit 10.17 to the Company's Registration
                  Statement on Form S-11, Registration No. 33-81362 and incorporated herein by
                  reference).
</TABLE>




<PAGE>   55

<TABLE>
<CAPTION>
EXHIBIT
NUMBER            DESCRIPTION OF EXHIBITS
------            -----------------------

<S>               <C>
10.8              Percentage Lease Agreement between Innkeepers USA Limited Partnership and
                  JF Hotel, Inc. for the Hampton Inn - West Palm Beach, Florida (previously filed
                  as Exhibit 10.4 to the Company's registration statement on Form S-11,
                  Registration No. 33-95622 and incorporated herein by reference).

10.9              Consolidated Percentage Lease Agreement between Innkeepers USA Limited
                  Partnership and JF Hotel, Inc. for certain hotels (previously filed as
                  Exhibit 10.5 to the Company's registration statement on Form S-11,
                  Registration No. 33-95622 and incorporated herein by reference).

10.10             Credit Agreement, dated as of February 17, 1998, among Innkeepers USA
                  Trust, Innkeepers USA Limited Partnership, Nationsbanc, N.A., Nomura Asset
                  Capital Corporation and the lenders named therein.

10.11             Employment Agreement between David Bulger and the Company (previously
                  filed as Exhibit 10.10 to the Company's registration statement on Form S-11,
                  Registration No. 33-95622 and incorporated herein by reference).

10.12             Seven Contribution Agreements, each dated as of September 16, 1996, between
                  various partnerships and Innkeepers USA Limited Partnership for the seven
                  DeBoer Hotels (previously filed as Exhibits 2.1 - 2.7 to the Company's Form 8-
                  K filed on November 22, 1996 and incorporated herein by reference).

10.13             Form of Contribution Agreement between a partnership subsidiary of
                  Innkeepers USA Trust and a Summerfield partnership (previously filed as
                  Exhibit 10.1 to the Company's Form 8-K filed on July 18, 1997 and
                  incorporated herein by reference).

10.14             Form of percentage lease agreement for Summerfield acquisition hotels
                  (previously filed as Exhibit 10.2 to the Company's Form 8-K filed on July 18,
                  1997 and incorporated herein by reference).

10.15             Agreement on Franchise-Related matters between the Innkeepers acquisition
                  partnership, Innkeepers USA Limited Partnership and Summerfield Suites
                  Management Company, L.P., dated as of June 20, 1997 (previously filed as
                  Exhibit 10.3 to the Company's Form 8-K filed on July 18, 1997 and
                  incorporated herein by reference).

10.16             Lease Master Agreement between the Innkeepers acquisition partnerships,
                  Innkeepers USA Limited Partnership and Summerfield Suites Lease Company,
                  L.P., dated as of June 20, 1997 (previously filed as Exhibit 10.4 to the
</TABLE>


<PAGE>   56


<TABLE>
<CAPTION>
EXHIBIT
NUMBER            DESCRIPTION OF EXHIBITS
------            -----------------------

<S>               <C>
                  Company's Form 8-K filed on July 18, 1997 and incorporated
                  herein by reference).

10.17             Voting Agreement among Jeffrey H. Fisher, Innkeepers USA Trust, Innkeepers
                  USA Limited Partnership, the Summerfield Contributing partnerships, and the
                  beneficial holders of Summerfield Units, dated June 20, 1997 (previously filed
                  as Exhibit 10.5 to the Company's Form 8-K filed on July 18, 1997 and
                  incorporated herein by reference).

10.18             Redemption and Registration Rights Agreement between Innkeepers USA Trust,
                  Innkeepers USA Limited Partnership, the Summerfield Contributing
                  Partnerships and the beneficial holders or the Summerfield Units dated as of
                  June 20, 1997 (previously filed as Exhibit 10.6 to the Company's Form 8-K
                  filed on July 18, 1997 and incorporated herein by reference).

13.1              1997 Annual Report to Shareholders.

21.1              List of Subsidiaries of the Registrant.

23.1              Consent of Coopers & Lybrand L.L.P.

27                Financial Data Schedule (SEC use only)
</TABLE>