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<SEC-DOCUMENT>0000912057-01-519931.txt : 20010615
<SEC-HEADER>0000912057-01-519931.hdr.sgml : 20010615
ACCESSION NUMBER:		0000912057-01-519931
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20010430
FILED AS OF DATE:		20010614

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INNSUITES HOSPITALITY TRUST
		CENTRAL INDEX KEY:			0000082473
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				346647590
		STATE OF INCORPORATION:			OH
		FISCAL YEAR END:			0131

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		
		SEC FILE NUMBER:	001-07062
		FILM NUMBER:		1661073

	BUSINESS ADDRESS:	
		STREET 1:		INNSUITES HOTELS CENTRE
		STREET 2:		1625 E NORTHERN AVE STE 201
		CITY:			PHOENIX
		STATE:			AZ
		ZIP:			85020
		BUSINESS PHONE:		2166220046

	MAIL ADDRESS:	
		STREET 1:		925 EUCLID AVENUE
		STREET 2:		SUITE 1750
		CITY:			CLEVELAND
		STATE:			OH
		ZIP:			44115

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	REALTY REFUND TRUST
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a2051880z10-q.txt
<DESCRIPTION>10-Q
<TEXT>

<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

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

                                QUARTERLY REPORT
                         PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2001

                          Commission File Number 1-7062

                           INNSUITES HOSPITALITY TRUST
             (Exact name of registrant as specified in its charter)


                Ohio                                 34-6647590
 (State or other jurisdiction of       (I.R.S. Employer Identification Number)
 incorporation or organization)

                             InnSuites Hotels Centre
                        1615 E. Northern Ave., Suite 102
                                Phoenix, AZ 85020
                    (Address of principal executive offices)

Registrant's telephone number, including area code: (602) 944-1500

         Indicate by check mark whether the registrant: (l) has filed all
reports required to be filed by Section 13 or l5(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 [ ]

         Number of outstanding Shares of Beneficial Interest, without par value,
as of June 12, 2001:  2,148,284



<PAGE>



                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS.

                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     APRIL 30, 2001        JANUARY 31, 2001
                                                                     --------------        ----------------
                                                    ASSETS             (UNAUDITED)
<S>                                                                  <C>                   <C>
Hotel Properties, net                                                  $62,358,620            62,591,376
Cash and Cash Equivalents                                                1,402,557               415,390
Accounts Receivable, net of $114,243 and $0 allowance,                     833,365                    --
  respectively
Rent Receivable from Affiliates, net of $0 and $5,251,861
   allowance respectively                                                       --                    --

Interest Receivable and Other Assets                                       755,100               898,795
                                                                     --------------        ----------------

TOTAL ASSETS                                                           $65,349,642            63,905,561
                                                                     ==============        ================

                                    LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Mortgage Notes Payable                                                  36,178,122             25,628,572
Notes Payable to Banks                                                   2,284,876             11,300,000
Notes Payable to Related Parties                                           573,110                631,409
Advances Payable to Related Parties                                      6,669,917              6,840,298
Other Notes Payable                                                        132,003                125,021
Accounts Payable and Accrued Expenses                                    3,004,779              1,251,237
                                                                     --------------        ----------------

TOTAL LIABILITIES                                                       48,842,807             45,776,537

MINORITY INTEREST IN PARTNERSHIP                                        12,629,529             13,091,117

SHAREHOLDERS' EQUITY
Shares of beneficial interest, without par value; unlimited
   authorization; 2,149,384 and 2,126,484 shares issued and
   outstanding at April 30 and January 31, 2001, respectively            5,386,252              6,532,348

Treasury Stock                                                         (1,508,946)            (1,494,441)
                                                                     --------------        ----------------

TOTAL SHAREHOLDERS' EQUITY                                               3,877,306              5,037,907
                                                                     --------------        ----------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                             $65,349,642             63,905,561
                                                                     ==============        ================
</TABLE>

                       See accompanying notes to unaudited
                        consolidated financial statements

                                       2

<PAGE>



                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                      FOR THE THREE MONTHS ENDED APRIL 30,
                                                                            2001                    2000
                                                                       -----------              ---------
<S>                                                                  <C>                      <C>
DEPARTMENTAL REVENUES
  Rent Revenue from Affiliate                                         $         --              3,319,046
  Rooms                                                                  8,066,155                     --
  Food and Beverage                                                        490,561                     --
  Telecommunications                                                        88,250                     --
  Interest and Other                                                       222,630                  2,263
                                                                       -----------              ---------
TOTAL DEPARTMENTAL REVENUES                                           $  8,867,596              3,321,309
                                                                       -----------              ---------
OPERATING EXPENSES
  Rooms                                                               $  1,909,842                     --
  Food and Beverage                                                        434,851                     --
  Telecommunications                                                       112,350                     --
  Other                                                                    126,020                     --
  General and Administrative                                             1,529,581                468,886
  Sales and Marketing                                                      560,313                     --
  Repairs and Maintenance                                                  477,427                     --
  Hospitality                                                              404,014                     --
  Utilities                                                                466,589                     --
  Expenses Incurred in Acquiring Lessee                                  1,608,482                     --
                                                                       -----------              ---------
TOTAL OPERATING EXPENSES                                              $  7,629,469                468,886
                                                                       -----------              ---------
INCOME BEFORE FIXED CHARGES                                           $  1,238,127              2,852,423
FIXED CHARGES
  Real Estate Depreciation                                            $    755,993                665,706
  Real Estate and Personal Property Taxes,
    Insurance and Ground Rent                                              427,655                342,852
  Interest on Mortgage Notes Payable                                       652,236                548,412
  Interest on Notes Payable to Banks                                       228,272                245,897
  Interest on Notes Payable and Advances
    to Related Parties                                                     112,097                 49,306
  Interest on Other Notes Payable                                           11,529                 13,477
                                                                       -----------              ---------

TOTAL FIXED CHARGES                                                   $  2,187,782              1,865,650
                                                                       -----------              ---------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND MINORITY INTEREST         $  (949,655)                986,773
EXTRAORDINARY ITEM:
  Loss on Early Extinguishment of Debt                                   (576,842)                     --
                                                                       -----------              ---------
INCOME BEFORE MINORITY INTEREST                                        (1,526,497)                986,773
LESS: MINORITY INTEREST                                                  (319,294)                594,284
                                                                       -----------              ---------
NET INCOME ATTRIBUTABLE TO SHARES OF BENEFICIAL INTEREST              $(1,207,203)                392,489
                                                                       ===========              =========
EARNINGS PER SHARE - (Basic)
  Income Before Extraordinary Item                                    $     (0.44)                   0.16
  Extraordinary Item                                                        (0.13)                    --
                                                                       -----------              ---------
NET INCOME                                                            $     (0.57)                   0.16
                                                                       ===========              =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - (Basic)                  2,131,078              2,474,377
                                                                       ===========              =========
EARNINGS PER SHARE - (Diluted)
  Income Before Extraordinary Item                                     $     (0.11)                  0.10
  Extraordinary Item                                                         (0.06)                    --
                                                                       -----------              ---------
NET INCOME                                                             $     (0.17)                  0.10
                                                                       ===========              =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - (Diluted)                8,966,252              9,733,222
                                                                       ===========              =========
</TABLE>

                       See accompanying notes to unaudited
                        consolidated financial statements

                                         3
<PAGE>

                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                       FOR THE THREE MONTHS ENDED APRIL 30,
                                                                             2001                 2000
                                                                         -----------         ------------
<S>                                                                      <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)                                                        $(1,207,203)             392,489
Adjustments to Reconcile Net Income to Net Cash Provided by
Operating Activities, excluding effects of acquiring Lessee
Stock Option Compensation Expense                                             13,129               13,129
Expenses Incurred in Acquiring Lessee                                      1,608,482                   --
Minority Interest                                                           (319,294)             594,284
Depreciation and Amortization                                                804,236              681,971
Decrease in Accounts Receivables                                             340,356                   --
Increase in Rent Receivable from Affiliates                                       --             (255,158)
Provision for Uncollectible Receivable from Affiliate                             --              255,158
(Increase) Decrease in Interest Receivable and Other Assets                 (313,162)               6,084
Decrease in Accounts Payable and Accrued Expenses                           (693,810)            (357,805)
                                                                         -----------         ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                $   232,734            1,330,152
                                                                         -----------         ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Lessee                                                        (11,531)                  --
Cash acquired from Lessee                                                     85,294                   --
Improvements and Additions to Hotel Properties                              (523,237)            (311,494)
                                                                         -----------         ------------
NET CASH USED IN INVESTING ACTIVITIES                                    $  (449,474)            (311,494)
                                                                         -----------         ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Payments on Notes Payable to Banks                                     $(9,015,124)                  --
  Payments of Mortgage Notes Payable                                        (208,726)            (180,572)
  Refinancing of Mortgage Notes Payable                                    5,658,276                   --
  Borrowings on Mortgage Notes Payable                                     5,100,000                   --
  Repurchase of Partnership Units                                            (25,838)             (73,822)
  Repurchase of Stock                                                        (14,504)            (150,120)
  Payment of Dividends                                                            --              (26,407)
  Other Distributions to Owners                                              (68,480)                  --
  Payments on Notes Payable to Related Parties                               (58,299)                  --
  Advances from Related Parties                                              428,000                   --
  Payments on Advances from Related Parties                                 (598,380)            (345,000)
  Borrowings on Other Notes Payable                                           25,839                   --
  Payments on Other Notes Payable                                            (18,857)            (225,000)
                                                                         -----------         ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                      $ 1,203,907           (1,000,921)
                                                                         -----------         ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                $   987,167               17,737
CASH AT BEGINNING OF PERIOD                                              $   415,390              208,109
                                                                         -----------         ------------
CASH AT END OF PERIOD                                                    $ 1,402,557              225,846
                                                                         ===========         ============
</TABLE>

                       See accompanying notes to unaudited
                       consolidated financial statements.

                                        4
<PAGE>



                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
          AS OF AND FOR THE THREE MONTHS ENDED APRIL 30, 2001 AND 2000

1.       NATURE OF OPERATIONS AND BASIS OF PRESENTATION

InnSuites Hospitality Trust (the "Trust") is a real estate investment trust
("REIT") that owns, directly or indirectly, eleven hotels with 1,751 suites in
Arizona, southern California and New Mexico. The hotels operate as InnSuites
Hotels.

Until January 31, 1998, the Trust, formerly known as Realty ReFund Trust,
specialized in mortgage financing as its investment vehicle, refinancing
existing income producing commercial, industrial and multi-unit residential real
property by supplementing or replacing existing financing. The primary
refinancing technique that the Trust employed was wrap-around mortgage lending.

On January 31, 1998, the Trust contributed $2,081,000 to RRF Limited Partnership
(the "Partnership"), a Delaware limited partnership, in exchange for a 13.6%
general partnership interest therein. The Trust is the sole general partner of
the Partnership. The Partnership issued limited partnership interests
representing 86.4% of the Partnership to acquire six hotel properties from
various entities. In addition, in order to acquire a seventh hotel property,
through a wholly-owned subsidiary, RRF Sub Corp., the Trust issued 647,231
Shares of Beneficial Interest in exchange for all of the outstanding shares of
Buenaventura Properties, Inc. which owned a hotel located in Scottsdale, Arizona
("InnSuites Hotels Scottsdale"). These seven hotels are collectively referred to
as the "Initial Hotels." The Initial Hotels, together with subsequent hotel
acquisitions, are referred to herein as the "Hotels." The Hotels are leased to
InnSuites Hotels, Inc., formerly known as Realty Hotel Lessee Corp. (the
"Lessee"), pursuant to leases, which contain provisions for rent based on the
revenues of the Hotels (the "Percentage Leases"). Each Percentage Lease
obligates the Lessee to pay rent equal to the greater of the minimum rent ("Base
Rent") or a percentage rent based on the gross revenues of each Hotel. The
Lessee holds the franchise agreement for each Hotel. As of February 1, 2001, the
Trust acquired 100% ownership interest of the Lessee, which was owned 9.8% by
InnSuites Innternational Hotels, Inc., an entity owned by James F. Wirth,
Chairman, President and Chief Executive Officer of the Trust ("Wirth") and his
spouse.

The Trust's general partnership interest in the Partnership was 48.48% on April
30, 2001, and the weighted average for the three months ended April 30, 2001 was
48.26%.

PARTNERSHIP AGREEMENT

The Partnership Agreement of the Partnership provides for the issuance of two
classes of limited partnership units, Class A and Class B. Such classes are
identical in all respects, except that each Class A limited partnership unit in
the Partnership shall be convertible into a like number of Shares of Beneficial
Interest of the Trust, at any time at the option of the particular limited
partner, if the Trust determines that such conversion would not cause the Trust
to fail to qualify as a REIT. As of April 30, 2001, a total of 1,580,323 Class A
limited partnership units were issued and outstanding. Additionally, a total of
5,226,364 Class B limited partnership units were outstanding to Wirth and his
affiliates, in lieu of the issuance of Class A limited partnership units. If all
of the Class A and B limited partnership units were to be converted, the limited
partners in the Partnership would receive 6,806,687 Shares of Beneficial
Interest of the Trust. The Class B limited partnership units may only become
convertible with the approval of the Board of Trustees, in its sole discretion.

                                        5
<PAGE>

BASIS OF PRESENTATION

As sole general partner of the Partnership, the Trust exercises unilateral
control over the Partnership and owns 100% of all the outstanding stock
of the Lessee, InnSuites Hotels, Inc. Therefore, the financial statements
of the Partnership and the Lessee are consolidated with the Trust, and all
significant intercompany transactions and balances have been eliminated.

These consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and with the instructions for Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete consolidated financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended April 30, 2001 are not
necessarily indicative of the results that may be expected for the year ended
January 31, 2002. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Trust's Annual Report on Form
10-K as of and for the year ended January 31, 2001.

2.       USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

3.       REVENUE RECOGNITION

Trust revenues are recognized as earned. Ongoing credit evaluations are
performed and an allowance for potential credit losses is provided, if needed,
against the portion of accounts receivable which is estimated to be
uncollectible. Such losses have been minimal and within management's
expectations.

4.       EARNINGS PER SHARE

Basic and diluted earnings per share have been computed based on the
weighted-average number of shares outstanding during the periods and potentially
dilutive securities.

For the three months ended April 30, 2001 and 2000, there were Class A and Class
B limited partnership units outstanding, which are convertible to Shares of
Beneficial Interest of the Trust. Assuming conversion, the aggregate
weighted-average of these Shares of Beneficial Interest would be 6,835,174 and
7,258,845 for the first quarters of fiscal 2002 and 2001, respectively.

For the three months ended April 30, 2001 and 2000, 331,400 and 365,100 stock
options, respectively, were not included in the computation of diluted earnings
per share since the option exercise prices were greater than the average market
price of the Shares of Beneficial Interest.

                                        6
<PAGE>

5.       ACQUISITION

In December 2000, the Lessee and the Trust established independent review groups
to consider altering the current structure of the management and operations of
the Hotels pursuant to the provisions of the REIT Modernization Act (the "RMA").
The RMA, among other things, permits the Trust to own the stock of a taxable
REIT subsidiary ("TRS") that may engage in businesses previously prohibited by
the Trust, including leasing hotels, provided that such hotels are managed and
operated by independent third parties. Therefore, effective February 1, 2001,
the Trust acquired all of the common and preferred equity stock of the Lessee
for $11,531 in cash consideration. The Lessee was owned 23% by Marc E. Berg,
Executive Vice President, Secretary, Treasurer and Trustee of the Trust, and
9.8% by InnSuites Innternational, an affiliate of Mr. Wirth.

Following the acquisition, the Lessee elected to be treated as a TRS under
the RMA. As a result, the management contracts relating to the Hotels between
the Lessee and InnSuites Innternational were terminated effective January 31,
2001 and new management contracts were entered into on substantially similar
terms with Suite Hospitality Management, Inc. (the "New Management Company"),
which qualifies as an independent third party manager and operator of the
Hotels under the RMA. In connection with the acquisition, the rate structures
of the Percentage Leases for the Hotels were also amended to reflect current
economic and market conditions and employees of the Lessee became employees
of the New Management Company. The benefits to the Trust are a more direct
relationship between the Hotels and the Trust, the inclusion of Lessee
revenues in excess of required rent payments in the Trust's consolidated
financial reports, the elimination of potential conflicts of interest and the
reduction of certain administrative costs relative to the operation of the
Hotels and the administration of the Percentage Leases.

In connection with the acquisition of the Lessee, the Trust paid $11,531 for
all of the outstanding classes of stock of the Lessee. The $1.6 million
difference between the market value of the Shares of Beneficial Interest issued
to the owners of the Lessee and the estimated value of the net liabilities
assumed was recorded as "Expenses Incurred in Acquiring Lessee" (a non-recurring
expense) in the Trust's unaudited consolidated Statements of Operations. Since
the Lessee did not have significant operations other than the management of the
Hotels and its assets, the transaction did not qualify as the acquisition of a
"business" for purpose of applying APB Opinion No. 16 - Business Combinations.
Consequently, the market value of the Shares of Beneficial Interest issued to
the owners of the Lessee in excess of the fair value of the net tangible assets
acquired was recorded as an operating expense rather than capitalized goodwill.

The management team of the Lessee has become employees of the New Management
Company and continues to oversee and manage all activities of the Hotels.


                   INNSUITES HOSPITALITY TRUST AND SUBSIDIARY
                           PRO FORMA INCOME STATEMENT

                                  (in thousands)

<TABLE>
<CAPTION>
                                                               FOR THE THREE MONTHS ENDED APRIL 30,
                                                                   2001                    2000
                                                               ------------             ----------
<S>                                                            <C>                      <C>
  Total Revenue                                                    $ 8,868                  9,209
  Total Operating Expenses                                          (6,021)                (7,269)
  Total Fixed Charges                                               (2,188)                (1,904)
                                                               ------------             ----------

  Income Before Extraordinary Item and
     Minority Interest                                               $ 659                     36
  Extraordinary Item                                                  (577)                    --
                                                               ------------             ----------

  Income Before Minority Interest                                       82                     36
  Less:  Minority Interest                                            (319)                   594
                                                               ------------             ----------

  Net Income Attributable to Shares of Beneficial
     Interest                                                        $ 401                   (558)
                                                               ============             ==========
  EARNINGS PER SHARE- (Basic)
  Income Before Extraordinary Item                                    0.32                  (0.23)
  Extraordinary Item                                                 (0.13)                    --
                                                               ------------             ----------

  NET INCOME                                                          0.19                  (0.23)
                                                               ============             ==========

  EARNINGS PER SHARE - (Diluted)
  Income Before Extraordinary Item                                    0.07                     --
</TABLE>

                                        7
<PAGE>

<TABLE>
<S>                                                            <C>                      <C>
  Extraordinary Item                                                  (0.06)                    --
                                                               ------------             ----------
  NET INCOME                                                        $  0.01                     --
                                                               ============             ==========
</TABLE>


The Pro Forma information provided for the three months ended April 30, 2000
was derived by consolidating the actual statements of operations of the Trust
and the Lessee and eliminating all intercompany transactions. In addition, the
Expenses Incurred in Acquiring Lessee of $1.6 million was recorded in the
three months ended April 30, 2000 pro forma information assuming these costs
would have been incurred in the prior year.

6.       CREDIT FACILITY

On April 16, 1998, the Trust obtained a $12 million Credit Facility from Pacific
Century Bank to assist in its funding of the acquisition and development of
additional hotels and for certain other business purposes. Borrowings under the
Credit Facility were secured by first mortgages on three of the Hotels. By its
terms, the Credit Facility expired on April 16, 2001.

In order to replace the liquidity provided by the Credit Facility, the Trust
actively sought individual loans on the Tucson Oracle, Flagstaff and Scottsdale
properties that secure the Credit Facility. On April 18, 2001, the Trust
refinanced its Ontario property and utilized $4.2 million of the net proceeds to
reduce the outstanding balance of the Credit Facility from $11.3 million to $7.1
million. On April 27, 2001, the Trust closed the financing of its Tucson Oracle
property and used $4.8 million of the net proceeds to reduce the outstanding
balance of the Credit Facility to approximately $2.3 million.

Effective May 16, 2001, Pacific Century Bank modified the terms of the Credit
Facility extending its maturity date to July 20, 2001 and decreasing the
available limit to $2,284,876, with an interest rate equal to the published
prime rate plus 0.5%. The Credit Facility is secured by the Flagstaff and
Scottsdale properties. The Trust may submit a written request together with
an $11,300 deposit for the lender to consider converting the revolving Credit
Facility to a term loan. The terms of the replacement term loan are subject
to review and approval by Pacific Century Bank. If, for any reason, Pacific
Century Bank does not issue the replacement term loan, the Trust believes it
has sufficient unencumbered equity in the Flagstaff and Scottsdale properties
to refinance the $2.3 million balance of the Credit Facility with another
lending institution and therefore satisfy the Credit Facility. In the
unlikely event that Pacific Century Bank forecloses on the Flagstaff and
Scottsdale properties, management believes that the unencumbered equity will
be sufficient to prevent a loss at a foreclosure sale. Pacific Century Bank
has agreed to waive all covenants relating to the Credit Facility, except as
noted below.

The modified terms of the Credit Facility requires the Trust to maintain a
minimum tangible net worth (combined with minority interest) of not less than $5
million and a minimum interest coverage of 1.1 to 1.0.

7.       PERCENTAGE LEASE AGREEMENTS:

With the purchase of the Lessee effective February 1, 2001, the financial
statements of the Lessee are consolidated with those of the Trust. Therefore,
all intercompany transactions are eliminated including rent revenues and
expenses that are calculated pursuant to the percentage lease agreements.


                                        8
<PAGE>


8.       RELATED PARTY TRANSACTIONS:

The Partnership is responsible for all expenses incurred by the Trust in
accordance with the Partnership Agreement.

The Initial Hotels were acquired by the Partnership from entities in which Wirth
and his affiliates had substantial ownership interests. Wirth and his affiliates
received 4,017,361 Class B limited partnership units and 647,231 Shares of
Beneficial Interest in the Trust in exchange for their interests in the Initial
Hotels. As of April 30, 2001 and 2000 Wirth and his affiliates held 5,226,364
Class B limited partnership units. As of April 30, 2001 and 2000 Wirth and his
affiliates held 630,713 and 834,613, respectively, Shares of Beneficial Interest
in the Trust.

At April 30, 2001, the Trust owned a 48.48% interest in the eleven hotels (the
"Hotels") through its sole general partner's interest in the Partnership.

                                        9
<PAGE>

The Trust paid interest on related party notes to Mr. Wirth and his affiliates
in the amounts of $218,985 and $143,597 for the three months ended April 30,
2001 and 2000, respectively.

The expenses of the Trust consist primarily of property taxes, insurance,
corporate overhead, interest on mortgage debt, professional fees, and
depreciation of the Hotels. Under the terms of its Partnership Agreement, the
Partnership is required to reimburse the Trust for all such expenses.

Notes and advances payable to related parties consists of funds provided by
James F. Wirth and other related parties to repurchase Partnership units and to
fund working capital and capital improvement needs. The aggregate amounts
outstanding were approximately $7.2 million and $7.5 million as of April 30,
2001 and January 31, 2001, respectively. The loans payable to related party are
as follows:

         Wirth made an unsecured loan to the Trust in the amount of $2 million,
         bearing interest at 7% per year, effective March 15, 1999. Interest
         only payments were due annually beginning March 15, 2000. The unpaid
         principal balance and accrued interest is due on March 15, 2004. The
         Trust used the proceeds to purchase general partner units in the
         Partnership. The balance as of April 30, 2001 was $2,000,000.

         Wirth received an unsecured promissory note that consolidated four
         outstanding unsecured loans to the Trust totaling $600,000. The loan
         amounts consolidated were $200,000, $120,000, $30,000 and $250,000, all
         bearing interest at 7% per year with varying maturities. Interest on
         these four notes through July 31, 2000 was approximately $41,999 which
         was subsequently paid on August 15, 2000 according to the unsecured
         consolidated promissory note. The loans were used to fund operations,
         to pay down the outstanding loan to the Partnership and to pay
         dividends declared October 12, 1999. The unsecured consolidated
         promissory note from the Trust in the amount of $600,000, bearing
         interest at 7% per year, became effective August 1, 2000. The unpaid
         principal balance and accrued interest on the unsecured consolidated
         promissory note is due on May 15, 2001. The balance as of April 30,
         2001 was $600,000.

         Wirth made nine unsecured loans to the Trust in the total amount of
         $2,066,000, all bearing interest at 7% per year, with effective
         dates varying from August 15, 2000 to April 27, 2001. The unpaid
         principal balances and accrued interest are due ranging from May 15
         to July 1, 2001. The Trust used the proceeds to acquire the
         Albuquerque, New Mexico hotel and to fund operations. The balance as
         of April 30, 2001 was $1,347,000.

         On July 27, 2000, the Partnership repurchased 300,000 of the Trust's
         shares from Wirth and/or affiliates, owned directly or indirectly by
         Wirth, issuing 10 secured promissory notes in the aggregate amount of
         $720,000 and $3,000 cash. The promissory notes are secured by the
         repurchased shares. The secured promissory notes in the aggregate
         amount of $720,000 bear interest at 7% per year, effective July 27,
         2000. The unpaid principal balances and accrued interest are due at
         various dates ranging from August 27, 2000 to July 27, 2003. All
         payments have been made as scheduled. The balance on April 30, 2001 was
         $524,918.

         On July 27, 2000, the Trust purchased 311,326 of the Partnership's
         Class A limited partnership units from Steve Robson, Trustee of the
         Trust, for $750,000. The Trust made an initial payment of $5,000 and
         issued a promissory note in the amount of $745,000. The promissory note
         is secured by the purchased Partnership units. The secured promissory
         note bears interest

                                        10
<PAGE>

         at 7% per year, effective July 27, 2000. The unpaid principal
         balance and accrued interest is amortized over 36 months. The final
         payment is due August 27, 2003. All payments have been made as
         scheduled. The balance as of April 30, 2001 was $573,110.

         Rare Earth Development Company, owned directly or indirectly by Wirth,
         made four unsecured loans to the Trust in the total amount of
         $2,494,000 all bearing interest at 7% per year, effective on dates
         ranging from December 29, 2000 through April 27, 2001. The unpaid
         principal balances and accrued interest are due on July 15, 2001. The
         Trust used the proceeds to fund operations. The balance as of April 30,
         2001 was $2,094,000

         Suite Hotels Limited Liability Company, owned directly or indirectly by
         Wirth, made an unsecured loan to the Trust in the total amount of
         $104,000 bearing interest at 7% per year, effective on April 23, 2001.
         The unpaid principal balance and accrued interest are due on July 1,
         2001. The Trust used the proceeds to fund operations. The balance as of
         April 30, 2001 was $104,000.

9.       STATEMENTS OF CASH FLOWS, SUPPLEMENTAL DISCLOSURES

The Trust repurchased 6,100 Shares of Beneficial Interest and 12,304 partnership
units valued at $40,342.

The Trust issued 29,000 Shares of Beneficial Interest during the three months
ended April 30, 2001 valued at $60,900 in exchange for Class A limited
partnership units.

The Trust paid $1,154,000 and $974,000 in cash for interest for the three months
ended April 30, 2001 and 2000, respectively.

10.      EXTRAORDINARY ITEM

The Trust refinanced its Ontario, California property paying $576,842 in
prepayment penalties on April 18, 2001. Following the provisions of SFAS 4
"Reporting Gains and Losses From Early Extinguishment of Debt" the Trust
classified the transaction as an extraordinary item.

                                        11
<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

GENERAL

         The following discussion should be read in conjunction with the
InnSuites Hospitality Trust consolidated financial statements and notes thereto
appearing elsewhere in this Quarterly Report.

         The Trust is a real estate investment trust which owns the sole general
partner interest in the Partnership. In order for the Trust to qualify as a REIT
under prior provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), neither the Trust nor the Partnership could operate the Hotels.
Therefore, each of the Hotels was leased to, and operated by, the Lessee
pursuant to a Percentage Lease. Each Percentage Lease obligates the Lessee to
pay rent equal to the greater of a minimum rent or a percentage rent based on
the gross revenues of each Hotel. The Lessee also holds the franchise agreement
for each Hotel. Prior to February 1, 2001, the Lessee was owned 9.8% by
InnSuites Innternational Hotels, Inc., an entity owned by Mr. Wirth and his
wife. Effective February 1, 2001, however, the Lessee became a wholly-owned
subsidiary of the Trust. See Note 5 - Acquisition.

         The Trust's principal source of cash flows is distributions from the
Partnership, which are dependent upon lease payments from the Lessee pursuant to
the Percentage Leases. The Lessee's ability to make payments to the Partnership
pursuant to the Percentage Leases is dependent primarily upon the operations of
the Hotels. As a result of the Trust's acquisition of the Lessee as of February
1, 2001, any profits earned by the Lessee in its operation of the Hotels will
be recorded by the Trust in consolidation.

         At April 30, 2001, the Trust owned a 48.48% interest in the Hotels
through its sole general partner's interest in the Partnership.


                                        12
<PAGE>

         The expenses of the Trust consist primarily of property taxes,
insurance, corporate overhead, interest on mortgage debt, professional fees and
depreciation of the Hotels. Under the terms of its Partnership Agreement, the
Partnership is required to reimburse the Trust for all such expenses. The
Percentage Leases provide for the payment of base rent and percentage rent. For
the three months ended April 30, 2001, base rent and percentage rent in the
aggregate amount of $2.3 million was earned by the Trust. The principal
determinant of percentage rent is the Lessee's room revenues at the Hotels, as
defined by the Percentage Leases. Therefore, management believes that a review
of the historical performance of the operations of the Hotels, particularly with
respect to occupancy, average daily rate ("ADR"), calculated as total room
revenue divided by number of rooms sold, and revenue per available room,
calculated as total room revenue divided by number of rooms available (known as
"REVPAR"), is appropriate for understanding revenue from the Percentage Leases.
ADR decreased $2.95 to $71.54 for the first quarter of fiscal 2002 from $74.49
for the first quarter of fiscal 2001 due primarily to a slow winter season and
an oversupply of rooms in the Arizona markets. Occupancy decreased 3.2% to 71.8%
for the first quarter of fiscal 2002 from 75.0% for the first quarter of fiscal
2001. This resulted in a decrease in REVPAR of $4.89 to $51.38 for the first
quarter of fiscal 2002 from $56.27 for the first quarter of fiscal 2001.

         The following table shows certain historical financial and other
information for the periods indicated.

<TABLE>
<CAPTION>
                                                                              FOR THE THREE MONTHS ENDED
                                                                                       APRIL 30,
                                                                          ------------------------------------
                                                                               2001                   2000
                                                                          -------------          -------------
<S>                                                                       <C>                    <C>
OCCUPANCY                                                                        71.8%                  75.0%
AVERAGE DAILY RATE (ADR)                                                        $71.54                  74.49
REVENUE PER AVAILABLE ROOM (REVPAR)                                             $51.38                  56.27
</TABLE>

No assurance can be given that the trends reflected in this data will not
continue or that Occupancy, ADR and REVPAR will not continue to decrease as a
result of changes in national or local economic or hospitality industry
conditions.

Results of Operations of the Trust for the three months ended April 30, 2001
compared to the three months ended April 30, 2000.

         As of February 1, 2001, the financial statements of the Lessee are
consolidated with those of the Trust. Therefore, all intercompany transactions
and balances have been eliminated including rent revenue for the Trust and rent
expense for the Lessee. See Note 5 - Acquisition.

         For the three months ended April 30, 2001 compared to the three
months ended April 30, 2000, Trust revenues increased more than $5.5 million
to $8.9 million from $3.3 million, respectively, primarily due to the
acquisition of the Lessee. Rent revenue from affiliate for the first quarter
of fiscal year 2002 decreased $3.3 million to zero compared to the prior year
quarter due to the consolidation and elimination of percentage rent from the
Lessee. Percentage rent earned and paid to the Trust by the Lessee for the
quarter ended April 30, 2001 was $2.3 million which was eliminated in
consolidation. When comparing actual total revenues for the three months ended
April 30, 2001 with pro forma data for the prior year period, total revenues
decreased by $342,000 or 3.7% to $8.9 million from $9.2 million primarily due
to decreased occupancy in the Arizona hotels.

         Total expenses increased $7.5 million to $9.8 million from $2.3
million primarily due to the acquisition of the Lessee which includes the $1.6
million incurred in expenses to acquire the Lessee. For the three months ended
April 30, 2001 and 2000, total operating expenses increased $7.2 million to
$7.6 million primarily due to the acquisition of the Lessee.

         Real estate depreciation for the three months ended April 30, 2001
compared to the three months ended April 30, 2000 increased $90,000, or 13.6%,
to $756,000 from $666,000, respectively. The increase was primarily due to the
acquisition of

                                        13
<PAGE>

the Albuquerque hotel, $42,000, and increased depreciation expense due to
shorter useful life categories for assets purchased after October 31, 1999.

         For the three months ended April 30, 2001 and 2000, real estate and
personal property taxes, insurance and ground rent increased $85,000 or 24.7% to
$428,000 from $343,000. The increase was due to the acquisition of the
Albuquerque hotel, $41,000, and increased insurance costs.

         Total interest expense increased $147,000, or 17.2%, to $1.0 million
from $857,000 comparing the three months ended April, 2001 and 2000,
respectively. Interest on mortgage notes payable increased $104,000, or 18.9%,
to $652,000 from $548,000 comparing the three months ended April 30, 2001 and
2000, respectively. The increase was primarily due to the refinancing of the San
Diego, California property, the refinancing of the Ontario, California property
and the addition of interest expense attributable to the Albuquerque, New Mexico
hotel acquired in fiscal 2001. Interest on notes payable to banks decreased
$18,000, or 7.2%, to $228,000 from $246,000 comparing the three months ended
April 30, 2001 and 2000, respectively. The decrease was primarily due to a
decrease in the variable rate paid on the $12 million Credit Facility. Interest
on notes and advances payable to related parties increased $63,000 to $112,000
from $49,000 due to additional loans from Wirth and his affiliates during the
second half of fiscal 2001 and the first three months of fiscal 2002 and the
purchase of Steve Robson's partnership units.

         Expenses Incurred in Acquiring the Lessee for the current quarter
relates to the acquisition costs incurred in the purchase of the Lessee. These
are one-time expenses associated with becoming a self-managed REIT. These costs
were not included in fiscal year 2001.

Funds from Operations (FFO)

         The Trust notes that industry analysts and investors use Funds From
Operations ("FFO") as another tool to evaluate and compare equity REITs. The
Trust also believes it is meaningful as an indicator of net income excluding
most non-cash items and provides information about the Trust's cash available
for distributions, debt service and capital expenditures. The Trust follows the
March 1995 interpretation of the National Association of Real Estate Investment
Trusts ("NAREIT") definition of FFO, as amended January 1, 2000, which is
calculated (in the Trust's case) as net income (computed in accordance with
accounting principles generally accepted in the United States ("GAAP")),
excluding gains (or losses) from sales of property, depreciation and
amortization on real estate property and extraordinary items. FFO does not
represent cash flow from operating activities in accordance with GAAP and is
not indicative of cash available to fund all of the Trust's cash needs. FFO
should not be considered as an alternative to net income or any other GAAP
measure as an indicator of performance and should not be considered as an
alternative to cash flows as a measure of liquidity. In addition, the Trust's
FFO may not be comparable to other companies' FFO due to differing methods of
calculating FFO and varying interpretations of the NAREIT definition.

Comparable FFO is defined as FFO before one-time items (the purchase of the
Lessee).

<TABLE>
<CAPTION>
                                                                            FUNDS FROM OPERATIONS
                                                                     FOR THE THREE MONTHS ENDED APRIL 30,
                                                                                 (UNAUDITED)
                                                                            (AMOUNTS IN THOUSANDS)
                                                                         2001                   2000
<S>                                                                    <C>                    <C>
Net income attributable to common stockholders                         $  (1,207)                392
Depreciation                                                                 756                 666
Extraordinary item                                                           577                  --
Minority interest share of depreciation and
   extraordinary item                                                       (690)               (366)
                                                                       ---------               -----
Funds from operations (FFO)                                            $    (564)                692
                                                                       =========               =====
One-time lessee purchase charge                                            1,608                  --
                                                                       ---------               -----
Comparable FFO                                                             1,044                 692
                                                                       =========               =====
- ------------------------------------------------------------------------------------------------------
</TABLE>

         Comparable FFO increased to approximately $1,044,000 from
approximately $692,000 when comparing the first three months of fiscal 2002
and 2001, respectively. The increase of approximately $352,000, or 51%, was
a combination of higher general and administrative expenses for the Trust
during the three-month period ended April 30, 2000, the acquisition of the
Lessee and a greater ownership interest in the Partnership.

                                        14
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         The Trust's principal source of cash to meet its cash requirements,
including distributions to its shareholders, is its share of the Partnership's
cash flow. The Partnership's principal source of revenue is rent payments under
the Percentage Leases. The Lessee's obligations under the Percentage Leases are
unsecured and its ability to make rent payments to the Partnership under the
Percentage Leases, and the Trust's liquidity, including its ability to make
distributions to its shareholders, will depend upon the ability of the Lessee to
generate sufficient cash flow from hotel operations. As a result of the Trust's
acquisition of the Lessee as of February 1, 2001, any profits earned by the
Lessee in its operation of the Hotels may be distributed to the Trust. See Note
5 - Acquisition.

         On April 18, 2001, the Trust refinanced its Ontario property and
utilized $4.2 million of the net proceeds to reduce the outstanding balance of
the Credit Facility from $11.3 million to $7.1 million. On April 27, 2001, the
Trust closed the financing of its Tucson Oracle property and used $4.8 million
of the net proceeds to reduce the outstanding balance of the Credit Facility to
approximately $2.3 million.

         Effective May 16, 2001, Pacific Century Bank modified the terms of
the Credit Facility extending the maturity date to July 20, 2001 and
decreasing the available limit to $2,284,876, the principal balance at that
date, with an interest rate equal to the published prime rate plus 0.5%. The
Credit Facility is secured by the Flagstaff and Scottsdale properties. The
Trust may submit a written request together with an $11,300 deposit for the
lender to consider converting the revolving Credit Facility to a term loan.
The terms of the term loan are subject to review and approval by Pacific
Century Bank. If, for any reason, Pacific Century Bank does not issue the
term loan, the Trust believes it has sufficient unencumbered equity in the
Flagstaff and Scottsdale properties to refinance the $2.3 million outstanding
balance of the Credit Facility with another lending institution and therefore
satisfy the outstanding balance of the Credit Facility. In the unlikely event
that Pacific Century Bank forecloses on the Flagstaff and Scottsdale
properties, management believes that the unencumbered equity will be
sufficient to prevent a loss at a foreclosure sale. Pacific Century Bank has
agreed to waive all covenants relating to the Credit Facility, except that
the Trust must maintain a minimum tangible net worth (combined with minority
interest) of not less than $5 million and a minimum interest coverage of 1.1
to 1.0.

         On April 28, 2001, the mortgage note payable to Bank One on the
Tucson St. Mary's hotel matured. The outstanding principal balance was
$3,762,839. Bank One has extended the term of the mortgage note until June
27, 2001 to process a new loan with Bank One or another lender. The Trust
notified Bank One that for the three months ended April 30, 2001 the Trust
did not comply with certain covenants. The Trust and Bank One are working
together to insure future compliance. If, for any reason, Bank One does not
extend the mortgage note, the Trust has sufficient unencumbered equity in the
Tucson St. Mary's property to refinance the outstanding balance (and satisfy
the balance due to Bank One) with another lending institution. In the
unlikely event that Bank One forecloses on the property, management believes
the unencumbered equity will be sufficient to prevent a loss at a foreclosure
sale.

         The Trust has approximately $4.3 million due and payable in fiscal year
2002 under notes and advances payable to Wirth and his affiliates. To the extent
the Trust cannot satisfy these amounts as they come due, Wirth has agreed to
extend the terms of these borrowings to future dates.

         As of April 30, 2001, the Trust has no commitments for capital
expenditures beyond a 4% reserve for refurbishment and replacements set aside
annually, as described below.

                                        15
<PAGE>

         The Trust intends to acquire and develop additional hotels and expects
to incur indebtedness to fund those acquisitions and developments. The Trust may
also incur indebtedness to meet distribution requirements imposed on a REIT
under the Code to the extent that working capital and cash flow from the Trust's
investments are insufficient to make the required distributions.

         The Trust may seek to negotiate additional credit facilities or issue
debt instruments. Any debt incurred or issued by the Trust may be secured or
unsecured, long-term, medium-term or short-term, bear interest at a fixed or
variable rate and be subject to such other terms as the Trust considers prudent.

         The Trust will acquire or develop additional hotels only as suitable
opportunities arise, and the Trust will not undertake acquisition or
redevelopment of properties unless adequate sources of financing are available.
Funds for future acquisitions or development of hotels are expected to be
derived, in whole or in part, from borrowings or from the proceeds of additional
issuances of Shares of Beneficial Interest or other securities. However, there
can be no assurance that the Trust will successfully acquire or develop
additional hotels.

         On August 30, 2000, Albuquerque Suite Hospitality, LLC, an 100% owned
subsidiary of the Partnership, purchased the 122-suite Albuquerque Best Western
Airport Inn located in Albuquerque, New Mexico for $2.1 million. The funds
utilized for the purchase price were secured by a first mortgage in the amount
of $1,575,000 and the remaining amount was loaned by Wirth and his affiliates.

         The Partnership continues to contribute to a Capital Expenditures Fund
(the "Fund") from the rent paid under the Percentage Leases, an amount equal to
4% of the Lessee's revenues from operation of the Hotels. The Fund is intended
to be used for capital improvements to the Hotels and refurbishment and
replacement of furniture, fixtures and equipment, in addition to other uses of
amounts in the Fund considered appropriate from time to time. The Partnership
anticipates making similar arrangements with respect to future hotels that it
may acquire or develop. During the three months ended April 30, 2001, the Hotels
spent approximately $523,000 for capital expenditures. These amounts have been
capitalized and are being depreciated over their estimated useful lives. The
Lessee also spent approximately $477,000 during the three months ended April
30, 2001 on repairs and maintenance and these amounts have been charged to
expense as incurred.

INFLATION

         The Trust's revenues are based on the Percentage Leases which result in
changes in the Trust's revenues based on changes in the underlying Hotel
revenues. Therefore, the Trust relies entirely on the performance of the Hotels
and the Lessee's ability to increase revenues to keep pace with inflation.
Operators of hotels in general, and the Lessee in particular, can change room
rates quickly, but competitive pressures may limit the Lessee's ability to raise
rates faster than inflation.

SEASONALITY

         The Hotels' operations historically have been seasonal. The six
southern Arizona hotels experience their highest occupancy in the first fiscal
quarter and, to a lesser extent, the fourth fiscal quarter. The second fiscal
quarter tends to be the lowest occupancy period at those six southern Arizona
hotels. This seasonality pattern can be expected to cause fluctuations in the
Trust's quarterly lease revenue under the Percentage Leases. The hotels located
in northern Arizona, California and New Mexico historically experience their
most profitable periods during the second and third fiscal quarters (the summer
season), providing some balance to the general seasonality of the hotel
business. To the extent that cash flow from operations is insufficient during
any quarter, because of temporary or

                                        16
<PAGE>

seasonal fluctuations in lease revenue, the Trust may utilize other cash on
hand or borrowings to make distributions to its shareholders. No assurance
can be given that the Trust will make distributions in the future.

FORWARD-LOOKING STATEMENTS

         Certain statements in this Form 10-Q constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The Trust intends that such
forward-looking statements be subject to the safe harbors created by such Acts.
Those forward-looking statements include statements regarding the intent, belief
or current expectations of the Trust, its Trustees or its officers in respect of
(i) the declaration or payment of dividends; (ii) the leasing, management or
operation of the Hotels; (iii) the adequacy of reserves for renovation and
refurbishment; (iv) the Trust's financing plans; (v) the Trust's position
regarding investments, acquisitions, developments, financings, conflicts of
interest and other matters; (vi) the Trust's continued qualification as a REIT;
and (vii) trends affecting the Trust's or any Hotel's financial condition or
results of operations. The words and phrases "looking ahead", "we are
confident", "should be", "will be", "predicted", "believe", "expect",
"anticipate" and similar expressions identify forward-looking statements.

         These forward-looking statements reflect the Trust's current views in
respect of future events and financial performance, but are subject to many
uncertainties and factors relating to the operations and business environment of
the Hotels which may cause the actual results of the Trust to differ materially
from any future results expressed or implied by such forward-looking statements.
Examples of such uncertainties include, but are not limited to: fluctuations in
hotel occupancy rates; changes in room rental rates which may be charged by the
Lessee in response to market rental rate changes or otherwise; interest rate
fluctuations; changes in federal income tax laws and regulations; competition;
any changes in the Trust's financial condition or operating results due to
acquisitions or dispositions of hotel properties; real estate and hospitality
market conditions; hospitality industry factors; and local or national economic
and business conditions, including, without limitation, conditions which may
affect public securities markets generally, the hospitality industry, or the
markets in which the Trust operates or will operate. The Trust does not
undertake any obligation to update publicly or revise any forward-looking
statements whether as a result of new information, future events or otherwise.
Pursuant to Section 21E(b)(2)(E) of the Securities Exchange Act of 1934, the
qualifications set forth hereinabove are inapplicable to any forward-looking
statements in this Form 10-Q relating to the operations of the Partnership.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Trust is exposed to interest rate risk primarily as a result of its
mortgage notes payable, notes payable to banks and other notes payable. Proceeds
from these loans were used to maintain liquidity, fund capital expenditures and
expand the Trust's real estate investment portfolio and operations. The Trust's
interest rate risk management objective is to limit the impact of interest rate
changes on earnings and cash flows and to lower its overall borrowing costs. To
achieve its objectives, the Trust borrows using fixed rate debt, when possible.
There have been no significant changes in the Trust's debt structure during the
three months ended April 30, 2001.

                                        17
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                         EXHIBIT
       ------                                         -------
<S>                       <C>
        10.1              Promissory Note dated April 23, 2001 by RRF Limited Partnership in favor of
                          Suite Hotels LLC.

        10.2              Promissory Note dated April 27, 2001 by InnSuites Hospitality Trust in favor of
                          James F. Wirth.

        10.3              Promissory Note dated April 27, 2001 by RRF Limited Partnership in favor of Rare
                          Earth Development Company
</TABLE>

(b)      REPORTS ON FORM 8-K.


         No Current Reports on Form 8-K were filed by the Trust during the
fiscal quarter ended April 30, 2001.






                                        18
<PAGE>

                                   SIGNATURES

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


Dated:  June 14, 2001          INNSUITES HOSPITALITY TRUST (Registrant)

                               By: /s/ Anthony B. Waters
                               ------------------------------------------
                               Anthony B. Waters, Chief Financial Officer










                                        19
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>a2051880zex-10_1.txt
<DESCRIPTION>EX-10.1
<TEXT>

<PAGE>

EXHIBIT 10.1

                                 PROMISSORY NOTE


$104,000.00                                                  Phoenix, Arizona
- -----------                                                  April 23, 2001
                                                             Note Doc. 042301104


FOR VALUED RECEIVED, and legally bound hereby, RRF LIMITED PARTNERSHIP
("Maker"), a Delaware partnership, InnSuites Hospitality Trust, General Partner,
an Ohio real estate investment trust, having an office at 1625 East Northern
Avenue, Suite 201, Phoenix, Arizona 85020 hereby promises to pay to the order of
Suite Hotels Limited Liability Company ("Payee"), an Arizona corporation, 1625
East Northern Avenue, Suite 201, Phoenix, Arizona 85020 or a such other place as
the holder hereof may from time to time designate in writing, the principal sum
of ONE HUNDRED FOUR THOUSAND AND 00/100 DOLLARS ($104,000.00), with interest on
the unpaid principal balance thereon from time to time outstanding, at the rate
of seven percent (7.00%) per annum, computed on a three hundred sixty (360)-day
year, to be due and payable in installments of principal and interest as
follows:

         (A)      Commencing on July 1, 2001, one annual payment of accrued but
                  unpaid interest on the outstanding principal balance
                  hereunder; and on July 1, 2001 (the "Maturity date"), one
                  payment in the amount of the then unpaid principal balance
                  hereunder and all sums and charges due and unpaid by Maker
                  (collectively, the "Note").

Payments shall be applied first to any charges or sums (other than principal and
interest) due and payable by Maker, second to accrued and unpaid interest on the
principal balance hereof, and then to further reduce the principal balance of
this Note.

Maker shall gave the right any time during the term of this Note to repay all or
part of the unpaid principal amount of the Note, together with any accrued and
unpaid interest thereon any other sums or charges due hereunder without any
prepayment premium or penalty.

Maker hereby waives for itself and, to the fullest extent not prohibited by
applicable law, for any subsequent lienor, any right Maker may now or hereafter
have under the doctrine of marshaling of assets or otherwise which would require
Payee to proceed against certain property before proceeding against any other
property.

Maker hereby agrees that in the event part of principal or interest is not paid
when due or the entire Note is not paid when due, then the rate of interest on
this Note shall, at the election of Payee upon ten (10) days prior written
notice, each of which is hereby expressly waived, be increased to nine and
00/100 percent (9.00%) per annum or the highest rate for which the parties may
agree under applicable law, whichever is less (the "Default Rate"). Maker shall
be obligated thereafter to pay interest on the then unpaid principal balance of
the Note at the Default Rate, both before and after judgment, to be computed
from the due date through and including the date of actual receipt of the
overdue payment, whether a payment of interest or the entire Note. Nothing
herein shall be construed as an agreement or privilege to extend the date of the
payment or any installment or the entire Note, or as a wavier of any other right
or remedy accruing to Payee.

In the event that any regular payment of interest herein provided shall not be
received by Payee on the date such payment is due, Payee shall have the right to
assess Maker a late payment charge in the amount of two percent (2.0%) of such
overdue quarterly installment, which shall become immediately due to Payee for
the additional cost agreed compensation to Payee for the additional costs and
expenses reasonable expected to be incurred by Payee by reason of such
nonpayment. Maker acknowledges that the exact amount of such cost and expenses
may be difficult, if not impossible, to determine with certainty, and further
acknowledges and confesses the amount of such charge to be a consciously
considered, good faith estimate of the actual damage to Payee by reason of such
default. The Default Rate will only accrue for periods of delinquent
installments except for such when Payee accepts late payments of installments
accompanied by a late payment charge as specified above.

                                        20
<PAGE>

Upon any of the following Events of Default, at the election of Payee, the
entire unpaid principle balance of the Note, together with all accrued but
unpaid interest thereon at the Default Rate and all other sums or changes due
hereunder, shall become due and payable:

         (a)      Maker's failure to pay when due any installment required to be
                  paid hereunder, on or before the tenth (10th) day following
                  the applicable due date;

         (b)      Maker's failure to pay when due any other payment required to
                  be under this Note, subject to any notice and applicable grace
                  period, if any;

         (c)      Maker's breach of any other covenant or agreement herein and
                  such breach remains uncorrected at the expiration of any
                  applicable grace period expressly provided for herein;

         (d)      Any creditor's proceeding in which Maker consents to the
                  appointment or a receiver or trustee for any of its property;

         (e)      if any order, judgment or decree shall be entered, without the
                  consent of Maker, upon an application of a creditor approving
                  the appointment of a receiver or trustee for any of its
                  property, and such order, judgment, decree, or appointment is
                  not dismissed or stayed with an appropriate appeal bond within
                  sixty (60) days following the entry or rendition thereof; or

         (f)      if Maker (i) makes a general assignment for the benefit of
                  creditors, (ii) fails to pay its debts generally as such debts
                  become due, (iii) is found to be insolvent by a court of
                  competent jurisdiction, (iv) voluntarily files a petition in
                  bankruptcy or a petition or answer seeking readjustment of
                  debts under any state or federal bankruptcy or like law, or
                  (v) any such petition is filed against Maker and is not
                  vacated or dismissed within sixty (60) days after filling
                  thereof.

Notice of such election by Payee is hereby expressly waived as part of the
consideration for this loan. Nothing contained herein shall be construed to
restrict the exercise of any other rights or remedies granted to Payee hereunder
upon the failure of Maker to perform any provision hereof.

If this Note is not paid when due, whether at maturity or by acceleration, Maker
promises to pay all costs incurred by Payee, including without limitation
reasonable attorney's fees to the fullest extent not prohibited by law, and all
expenses incurred in connection with the protection or realization of any
collateral, whether or not suit is filed hereon or on any instrument granted a
security interest.

Maker hereby expressly acknowledges and represents that the indebtedness is for
a business purpose and not consumer or household purposes.

Maker hereby waves demand, presentment for payment, protest, notice of protest,
notice of non-payments and any and all lack of diligence or delays in collection
or enforcement of this Note, and expressly consents to any extension of time of
payment hereof, release of any party primarily or secondarily liable hereunder
or any of the security for this Note, acceptance of other parties to be liable
for any of the Note or of other security therefore, or any other indulgence or
forbearance which may be made, without notice to any party and without in any
way affecting the liability of any party.

No failure by Payee to exercise any right hereunder shall be construed as a
waiver of the right to exercise the same or any other right any time or from
time to time thereafter.

                                        21
<PAGE>

This Note shall be construed and enforced according to, and governed by the laws
of the State of Arizona.

Any notice required hereunder shall be in writing, and shall be given to the
receiving party the notice by personal delivery or be certified mail, postage
prepaid, return receipt requested, as follows:

         if to Payee, then addressed to Payee at 1625 East Northern Avenue Suite
201, Phoenix, Arizona 85020, (Tel.(602) 944-1500, Fax (602) 678-0281, with a
copy to James W. Reynolds, Esq., Dillingham Cross, P.L.C., 5080 North 40th
Street, Suite 335, Phoenix, Arizona 85018, (Tel.(602) 468-1811, Fax (602)
468-0442);

         if to Maker, then addressed to maker at 1625 East Northern Avenue,
Suite 201, Phoenix, Arizona 85020, Attn: President (Tel.(602) 944-1500, Fax
(602) 678-0281), with a copy to James B. Aronoff, Esq., Thompson Hine & Flory,
LLP, 3900 Key center, 127 Public Square, Cleveland, Ohio 44114 (Tel.(216)
566-5500, Fax (216) 566-5800).

Any party may, be given notice in writing to designate another address as a
place for service of notice. Such notices shall be deemed to be received when
delivered, if delivered in person, or seven (7) business days after deposited in
the United States mails, if mailed as herein above provided.

 By acceptance of this Note, Payee agrees that, upon payment in full of the then
unpaid principal balance of this Note, together with all unpaid interest and
other sums payable to Payee under this Note, (a) Note shall be fully satisfied,
(b) Payee shall promptly mark this Note as being paid in full, satisfied and
discharged and shall return the same to Maker.


                                RRF LIMITED PARTNERSHIP, a
                                Delaware limited partnership,
                                InnSuites  Hospitality  Trust,  General
                                Partner,  an Ohio real estate investment trust



                                By:  /s/ MARC E. BERG
                                    --------------------------------------------
                                         Name:      Marc E. Berg
                                         Title:   Executive Vice-President







                                        22

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>a2051880zex-10_2.txt
<DESCRIPTION>EX-10.2
<TEXT>

<PAGE>

EXHIBIT 10.2

                                 PROMISSORY NOTE


$30,000                                                       Phoenix, Arizona
- -------                                                       April 27, 2001
                                                              Note Doc. 04270130

FOR VALUED RECEIVED, and legally bound hereby, INNSUITES HOSPITALITY TRUST
("Maker"), an Ohio real estate investment trust, having an office at 1625 East
Northern Avenue, Suite 201, Phoenix, Arizona 85020 hereby promises to pay to the
order of James Wirth ("Payee"), 5700 East Glen Drive, Paradise Valley, Arizona
85253 or such other place as the holder hereof may from time to time designate
in writing, the principal sum of THIRTY THOUSAND 00/100 DOLLARS ($30,000), with
interest on the unpaid principal balance thereon from time to time outstanding,
at the rate of seven percent (7.00%) per annum, computed on a three hundred
sixty (360)-day year, to be due and payable in installments of principal and
interest as follows:

         (A)      Commencing on July 1, 2001, one annual payment of accrued but
                  unpaid interest on the outstanding principal balance
                  hereunder; and on July 1, 2001 (the "Maturity date"), one
                  payment in the amount of the then unpaid principal balance
                  hereunder, and all other sums and charges due and unpaid by
                  Maker (collectively, the "Note").

Payments shall be applied first to any charges or sums (other than principal and
interest) due and payable by Maker, second to accrued and unpaid interest on the
principal balance hereof, and then to further reduce the principal balance of
this Note.

Maker shall give the right any time during the term of this Note to repay all or
part of the unpaid principal amount of the Note, together with any accrued and
unpaid interest thereon any other sums or charges due hereunder without any
prepayment premium or penalty.

Maker hereby waives for itself and, to the fullest extent not prohibited by
applicable law, for any subsequent lienor, any right Maker may now or hereafter
have under the doctrine of marshaling of assets or otherwise which would require
Payee to proceed against certain property before proceeding against any other
property.

Maker hereby agrees that in the event part of principal or interest is not paid
when due or the entire Note is not paid when due, then the rate of interest on
this Note shall, at the election on Payee upon ten (10) days prior written
notice, each of which is hereby expressly waived, be increased to nine and
00/100 percent (9.00%) per annum or the highest rate for which the parties may
agree under applicable law, whichever is less (the "Default Rate"). Maker shall
be obligated thereafter to pay interest on the then unpaid principal balance of
the Note at the Default Rate, both before and after judgment, to be computed
from the due date through and including the date of actual receipt of the
overdue payment, whether a payment of interest or the entire Note. Nothing
herein shall be construed as an agreement or privilege to extend the date of the
payment or any installment of or the entire Note, or as a wavier of any other
right or remedy accruing to Payee.

In the event that any regular payment of interest herein provided shall not be
received by Payee on the date such payment is due, Payee shall have the right to
assess Maker a late payment charge in the amount of two percent (2.0%) of such
overdue quarterly installment, which shall become immediately due to Payee for
the additional cost agreed compensation to Payee for the additional costs and
expenses reasonable expected to be incurred by Payee by reason of such
nonpayment. Maker acknowledges that the exact amount of such cost and expenses
may be difficult, if not impossible, to determine with certainty, and further
acknowledges and confesses the amount of such charge to be a consciously
considered, good faith estimate of the actual damage to Payee by reason of such
default. The Default Rate will only accrue for periods of delinquent
installments except for such when Payee accepts late payments of installments
accompanied by a late payment charge as specified above.

                                       23
<PAGE>

Upon any of the following Events of Default, at the election of Payee, the
entire unpaid principle balance of the Note, together with all accrued but
unpaid interest thereon at the Default Rate and all other sums or changes due
hereunder, shall become due and payable:

         (a)      Maker's failure to pay when due any installment required to be
                  paid hereunder, on or before the tenth (10th) day following
                  the applicable due date;

         (b)      Maker's failure to pay when due any other payment required to
                  be under this Note, subject to any notice and applicable grace
                  period, if any;

         (c)      Maker's breach of any other covenant or agreement herein and
                  such breach remains uncorrected at the expiration of any
                  applicable grace period expressly provided for herein;

         (d)      Any creditor's proceeding in which Maker consents to the
                  appointment or a receiver or trustee for any of its property;

         (e)      if any order, judgment or decree shall be entered, without the
                  consent of Maker, upon an application of a creditor approving
                  the appointment of a receiver or trustee for any of its
                  property, and such order, judgment, decree, or appointment is
                  not dismissed or stayed with an appropriate appeal bond within
                  sixty (60) days following the entry or rendition thereof; or

         (f)      if Maker (i) makes a general assignment for the benefit of
                  creditors, (ii) fails to pay its debts generally as such debts
                  become due, (iii) is found to be insolvent by a court of
                  competent jurisdiction, (iv) voluntarily files a petition in
                  bankruptcy or a petition or answer seeking readjustment of
                  debts under any state or federal bankruptcy or like law, or
                  (v) any such petition is filed against Maker and is not
                  vacated or dismissed within sixty (60) days after filling
                  thereof.

Notice of such election by Payee is hereby expressly waived as part of the
consideration for this loan. Nothing contained herein shall be construed to
restrict the exercise of any other rights or remedies granted to Payee hereunder
upon the failure of Maker to perform any provision hereof.

If this Note is not paid when due, whether at maturity or by acceleration, Maker
promises to pay all costs incurred by Payee, including without limitation
reasonable attorney's fees to the fullest extent not prohibited by law, and all
expenses incurred in connection with the protection or realization of any
collateral, whether or not suit is filed hereon or on any instrument granted a
security interest.

Maker hereby expressly acknowledges and represents that the indebtedness is for
a business purpose and not consumer or household purposes.

Maker hereby waves demand, presentment for payment, protest, notice of protest,
notice of non-payments and any and all lack of diligence or delays in collection
or enforcement of this Note, and expressly consents to any extension of time of
payment hereof, release of any party primarily or secondarily liable hereunder
or any of the security for this Note, acceptance of other parties to be liable
for any of the Indebtedness or of other security therefore, or any other
indulgence or forbearance which may be made, without notice to any party and
without in any way affecting the liability of any party.

No failure by Payee to exercise any right hereunder shall be construed as a
waiver of the right to exercise the same or any other right any time or from
time to time thereafter.

This Note shall be construed and enforced according to, and governed by the laws
of the State of Arizona.

                                       24
<PAGE>

Any notice required hereunder shall be in writing, and shall be given to the
receiving party the notice by personal delivery or be certified mail, postage
prepaid, return receipt requested, as follows:

         if to Payee, then addressed to Payee at 5700 East Glen Drive, Paradise
Valley, Arizona 85253, (Tel.(602) 596-0224, Fax (602) 596-0225), with a copy to
James W. Reynolds, Esq., Dillingham Cross, P.L.C., 5080 North 40th Street, Suite
335, Phoenix, Arizona 85018, (Tel.(602) 468-1811, Fax (602) 468-0442);

         if to Maker, then addressed to Maker at 1625 East Northern Avenue,
Suite 201, Phoenix, Arizona 85020, Attn: President, (Tel.(602) 944-1500, Fax
(602) 678-0281) with a copy to James B. Aronoff, Esq., Thompson Hine & Flory,
LLP, 3900 Key center, 127 Public Square, Cleveland, Ohio 44114 (Tel.(216)
566-5500, Fax (216) 566-5800).

Any party may, be given notice in writing or designate another address as a
place for service of notice. Such notices shall be deemed to be received when
delivered, if delivered in person, or seven (7) business days after deposited in
the United States mails, if mailed as herein above provided.

By acceptance of this Note, Payee agrees that, upon payment in full of the then
unpaid principal balance of this Note, together with all unpaid interest and
other sums payable to Payee under this Note, (a) Note shall be fully satisfied,
(b) Payee shall promptly mark this Note as being paid in full, satisfied and
discharged and shall return the same to Maker.


                                   INNSUITES HOSPITALITY TRUST,
                                   an Ohio real estate investment trust



                                   By: /S/ MARC E. BERG
                                      ----------------------------------------
                                            Name:    Marc E. Berg
                                            Title:   Executive Vice-President








                                       25
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>a2051880zex-10_3.txt
<DESCRIPTION>EX-10.3
<TEXT>

<PAGE>

EXHIBIT 10.3

                                 PROMISSORY NOTE


$194,000.00                                                   Phoenix, Arizona
- -----------                                                   April 27, 2001
                                                              Note Doc.042701194


FOR VALUED RECEIVED, and legally bound hereby, RRF LIMITED PARTNERSHIP
("Maker"), a Delaware partnership, InnSuites Hospitality Trust, General Partner,
an Ohio real estate investment trust, having an office at 1625 East Northern
Avenue, Suite 201, Phoenix, Arizona 85020 hereby promises to pay to the order of
Rare Earth Development Company ("Payee"), an Arizona corporation, 1625 East
Northern Avenue, Suite 201, Phoenix, Arizona 85020 or a such other place as the
holder hereof may from time to time designate in writing, the principal sum of
ONE HUNDRED NINTY FOUR THOUSAND AND 00/100 DOLLARS ($194,000.00), with interest
on the unpaid principal balance thereon from time to time outstanding, at the
rate of seven percent (7.00%) per annum, computed on a three hundred sixty
(360)-day year, to be due and payable in installments of principal and interest
as follows:

         (A)      Commencing on July 15, 2001, one annual payment of accrued but
                  unpaid interest on the outstanding principal balance
                  hereunder; and on July 15, 2001 (the "Maturity date"), one
                  payment in the amount of the then unpaid principal balance
                  hereunder and all sums and charges due and unpaid by Maker
                  (collectively, the "Note").

Payments shall be applied first to any charges or sums (other than principal and
interest) due and payable by Maker, second to accrued and unpaid interest on the
principal balance hereof, and then to further reduce the principal balance of
this Note.

Maker shall gave the right any time during the term of this Note to repay all or
part of the unpaid principal amount of the Note, together with any accrued and
unpaid interest thereon any other sums or charges due hereunder without any
prepayment premium or penalty.

Maker hereby waives for itself and, to the fullest extent not prohibited by
applicable law, for any subsequent lienor, any right Maker may now or hereafter
have under the doctrine of marshaling of assets or otherwise which would require
Payee to proceed against certain property before proceeding against any other
property.

Maker hereby agrees that in the event part of principal or interest is not paid
when due or the entire Note is not paid when due, then the rate of interest on
this Note shall, at the election of Payee upon ten (10) days prior written
notice, each of which is hereby expressly waived, be increased to nine and
00/100 percent (9.00%) per annum or the highest rate for which the parties may
agree under applicable law, whichever is less (the "Default Rate"). Maker shall
be obligated thereafter to pay interest on the then unpaid principal balance of
the Note at the Default Rate, both before and after judgment, to be computed
from the due date through and including the date of actual receipt of the
overdue payment, whether a payment of interest or the entire Note. Nothing
herein shall be construed as an agreement or privilege to extend the date of the
payment or any installment or the entire Note, or as a wavier of any other right
or remedy accruing to Payee.

In the event that any regular payment of interest herein provided shall not be
received by Payee on the date such payment is due, Payee shall have the right to
assess Maker a late payment charge in the amount of two percent (2.0%) of such
overdue quarterly installment, which shall become immediately due to Payee for
the additional cost agreed compensation to Payee for the additional costs and
expenses reasonable expected to be incurred by Payee by reason of such
nonpayment. Maker acknowledges that the exact amount of such cost and expenses
may be difficult, if not impossible, to determine with certainty, and further
acknowledges and confesses the amount of such charge to be a consciously
considered, good faith estimate of the actual damage to Payee by reason of such
default. The Default Rate will only accrue for periods of delinquent
installments except for such when Payee accepts late payments of installments
accompanied by a late payment charge as specified above.

                                       26
<PAGE>

Upon any of the following Events of Default, at the election of Payee, the
entire unpaid principle balance of the Note, together with all accrued but
unpaid interest thereon at the Default Rate and all other sums or changes due
hereunder, shall become due and payable:

         (a)      Maker's failure to pay when due any installment required to be
                  paid hereunder, on or before the tenth (10th) day following
                  the applicable due date;

         (b)      Maker's failure to pay when due any other payment required to
                  be under this Note, subject to any notice and applicable grace
                  period, if any;

         (c)      Maker's breach of any other covenant or agreement herein and
                  such breach remains uncorrected at the expiration of any
                  applicable grace period expressly provided for herein;

         (d)      Any creditor's proceeding in which Maker consents to the
                  appointment or a receiver or trustee for any of its property;

         (e)      if any order, judgment or decree shall be entered, without the
                  consent of Maker, upon an application of a creditor approving
                  the appointment of a receiver or trustee for any of its
                  property, and such order, judgment, decree, or appointment is
                  not dismissed or stayed with an appropriate appeal bond within
                  sixty (60) days following the entry or rendition thereof; or

         (f)      if Maker (i) makes a general assignment for the benefit of
                  creditors, (ii) fails to pay its debts generally as such debts
                  become due, (iii) is found to be insolvent by a court of
                  competent jurisdiction, (iv) voluntarily files a petition in
                  bankruptcy or a petition or answer seeking readjustment of
                  debts under any state or federal bankruptcy or like law, or
                  (v) any such petition is filed against Maker and is not
                  vacated or dismissed within sixty (60) days after filling
                  thereof.

Notice of such election by Payee is hereby expressly waived as part of the
consideration for this loan. Nothing contained herein shall be construed to
restrict the exercise of any other rights or remedies granted to Payee hereunder
upon the failure of Maker to perform any provision hereof.

If this Note is not paid when due, whether at maturity or by acceleration, Maker
promises to pay all costs incurred by Payee, including without limitation
reasonable attorney's fees to the fullest extent not prohibited by law, and all
expenses incurred in connection with the protection or realization of any
collateral, whether or not suit is filed hereon or on any instrument granted a
security interest.

Maker hereby expressly acknowledges and represents that the indebtedness is for
a business purpose and not consumer or household purposes.

Maker hereby waves demand, presentment for payment, protest, notice of protest,
notice of non-payments and any and all lack of diligence or delays in collection
or enforcement of this Note, and expressly consents to any extension of time of
payment hereof, release of any party primarily or secondarily liable hereunder
or any of the security for this Note, acceptance of other parties to be liable
for any of the Note or of other security therefore, or any other indulgence or
forbearance which may be made, without notice to any party and without in any
way affecting the liability of any party.

No failure by Payee to exercise any right hereunder shall be construed as a
waiver of the right to exercise the same or any other right any time or from
time to time thereafter.

                                       27
<PAGE>

This Note shall be construed and enforced according to, and governed by the laws
of the State of Arizona.

Any notice required hereunder shall be in writing, and shall be given to the
receiving party the notice by personal delivery or be certified mail, postage
prepaid, return receipt requested, as follows:

         if to Payee, then addressed to Payee at 1625 East Northern Avenue Suite
201, Phoenix, Arizona 85020, (Tel.(602) 944-1500, Fax (602) 678-0281, with a
copy to James W. Reynolds, Esq., Dillingham Cross, P.L.C., 5080 North 40th
Street, Suite 335, Phoenix, Arizona 85018, (Tel.(602) 468-1811, Fax (602)
468-0442);

         if to Maker, then addressed to maker at 1625 East Northern Avenue,
Suite 201, Phoenix, Arizona 85020, Attn: President (Tel.(602) 944-1500, Fax
(602) 678-0281), with a copy to James B. Aronoff, Esq., Thompson Hine & Flory,
LLP, 3900 Key center, 127 Public Square, Cleveland, Ohio 44114 (Tel.(216)
566-5500, Fax (216) 566-5800).

Any party may, be given notice in writing to designate another address as a
place for service of notice. Such notices shall be deemed to be received when
delivered, if delivered in person, or seven (7) business days after deposited in
the United States mails, if mailed as herein above provided.

 By acceptance of this Note, Payee agrees that, upon payment in full of the then
unpaid principal balance of this Note, together with all unpaid interest and
other sums payable to Payee under this Note, (a) Note shall be fully satisfied,
(b) Payee shall promptly mark this Note as being paid in full, satisfied and
discharged and shall return the same to Maker.


                                   RRF LIMITED PARTNERSHIP, a
                                   Delaware limited partnership,
                                   InnSuites  Hospitality  Trust, General
                                   Partner, an Ohio real estate investment
                                   trust



                                   By: /S/ MARC E. BERG
                                      ---------------------------------------
                                            Name:    Marc E. Berg
                                            Title:   Executive Vice-President





                                       28
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
