UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

Commission file number 0-23732

WINSTON HOTELS, INC.

(919) 510-6019
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ Noo

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

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes þ Noo

     The aggregate market value of the registrant’s Common Stock, $0.01 par value per share, at June 30, 2004, held by those persons deemed by the registrant to be non-affiliates was approximately $258,235,088.

     As of March 1, 2005, there were 26,513,427 shares of the registrant’s Common Stock, $0.01 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

WINSTON HOTELS, INC.

Form 10-K Annual Report
INDEX

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PART I.

ITEM 1. BUSINESS

General Development of Business

          Winston Hotels, Inc., (the “Company”) headquartered in Raleigh, North Carolina, owns hotel properties and interests in hotel properties through joint ventures, provides loans to the hotel industry, and provides hotel development and asset management services. The Company conducts substantially all of its operations through its operating partnership, WINN Limited Partnership, (the “Partnership”). The Company and the Partnership (together with the Partnership’s wholly-owned subsidiaries, Barclay Hospitality Services Inc. (“Barclay”), Winston SPE, LLC, Winston SPE II, LLC, and Winston Finance LLC), are collectively referred to as the “Company”. As of December 31, 2004, the Company’s ownership in the Partnership was 95.31%. The Company operates so as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes.

          During 2004, the Company acquired one hotel, sold two hotels, and invested in three additional hotels through joint ventures. During 2004, the Company also made five loans to hotel owners in connection with acquisitions, developments and redevelopments. As of December 31, 2004, the Company owned or was invested in, through its equity interests in joint venture entities, 52 hotel properties in 15 states having an aggregate of 7,320 rooms. This included 45 wholly-owned properties with an aggregate of 6,397 rooms, a 49% ownership interest in one joint venture hotel with 118 rooms, a 48.78% ownership interest in one joint venture hotel with 147 rooms, and a 13.05% ownership interest in five joint venture hotels with an aggregate of 658 rooms. The Company also had issued loans to owners of eight hotels having an aggregate of 1,573 rooms. The Company does not hold an ownership interest in any of the hotels for which it has provided mezzanine financing. All of the Company’s hotels are operated under franchises from nationally recognized franchisors including Marriott International, Inc., Hilton Hotels Corporation, Intercontinental Hotels Group PLC, (formerly Six Continents PLC) and Choice Hotels International.

Narrative Description of Business

Growth Strategies

          The Company’s primary growth strategies are designed to enhance shareholder value by increasing cash available for distribution per share of Common Stock through:

	•	improving existing hotel operations;
	•	acquiring, either directly or through joint ventures, additional hotels, or ownership interests in hotels, that meet the Company’s investment criteria;
	•	developing hotels on selected sites; and
	•	financing activities whereby the Company provides loans to third party hotel owners in connection with acquisitions and developments.

Improve Existing Hotel Operations

          The Company seeks to increase operating cash flow and profit through aggressive asset management and the strategic investment of capital in its portfolio. The Company works closely with each hotel manager to continually find ways to improve operating results by increasing revenues and decreasing expenses. The Company’s hotel managers are trained in all aspects of hotel operations, including customer service improvement strategies, rate negotiations with corporate and other clients, direct hotel sales and marketing techniques. Additionally, hotel managers seek to take advantage of all available advertising and marketing programs, both national and regional, with the franchisors of the Company’s hotels. The Company maintains strong, strategic relationships with both its franchisors and managers and focuses on selecting the best, most appropriate franchisor and manager for each property. Over the past four years, the Company has spent approximately $32.9 million upgrading and renovating existing wholly-owned hotels in order to enhance their competitive position and improve cash flow. This is in addition to approximately $27.3 million spent on repairs and maintenance items during that same period.

Operations and Property Management. As of December 31, 2004, Alliance managed 42 of the Company’s 52 hotels, Concord managed four hotels, Hilton managed three hotels, and New Castle, Prism, and Noble each managed one hotel. One wholly-owned property was operated under a long-term lease with Prime until March 2004, when the Company negotiated the transfer of this lease to Barclay.

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          The information below, regarding the hotel managers of the Company’s hotels, is as of December 31, 2004:

          Alliance, a hotel management company, operated 42 of the Company’s hotels.

          Concord, a hotel development and management company, operated a total of 43 hotels in ten states and Canada.

          Hilton, a New York Stock Exchange listed company, is a developer, owner, manager or franchisor of 2,216 hotels, resorts and vacation ownership properties. Its portfolio includes many of the world’s best known and most highly regarded hotel brands, including Hilton, Doubletree, Embassy Suites Hotels, Hampton Inn, Hampton Inn & Suites, Homewood Suites by Hilton, Hilton Garden Inn, Hilton Grand Vacation Company and Conrad.

          Prism, a hotel management company, operated a total of 29 hotels in 10 states.

          Noble, a hotel development and management company, operated 23 upscale, full service, mid-market and all-suites hotels in six states. Noble holds a 79% ownership interest in Alliance.

          New Castle Hotels & Resorts, a hotel management company, operated a total of 20 hotels in seven states and Canada.

Franchise Agreements. All of the Company’s hotels operate under franchise licenses from national hotel franchisors including Marriott International, Inc., Hilton Hotels Corporation, Intercontinental Hotels Group PLC, (formerly Six Continents PLC) and Choice Hotels International. The Company anticipates that most of the additional hotel properties in which it invests will be operated under franchise licenses with these same franchisors. Franchisors provide a variety of benefits for franchisees including national advertising, publicity and other marketing programs designed to increase brand awareness, training of personnel, continuous review of quality standards and centralized reservation systems.

          The hotel franchise licenses generally specify certain management, operational, record keeping, accounting, reporting and marketing standards and procedures with which the Company must comply. The franchise licenses obligate the Company to comply with the franchisors’ standards and requirements with respect to training of operational personnel, safety, insurance, the types of services and products ancillary to guest room services that may be provided, display of signs, and the type, quality and age of furniture, fixtures and equipment included in guest rooms, lobbies and other common areas.

          As of December 31, 2004, of the 52 hotels’ franchise licenses, including seven joint venture hotels, one expires in 2006, two expire in 2007, four expire in 2008, three expire in 2009, two expire in 2010, three expire in 2011, one expires in 2013, one expires in 2015, two expire in 2016, 13 expire in 2017, eight expire in 2018, one expires in 2020, four expire in 2022, two expire in 2023, four expire in 2024 and one expires in 2025. The franchise agreements provide for termination at the franchisor’s option upon the occurrence of certain events, including the Company’s failure to pay royalties and fees or perform its other covenants under the franchise agreement, bankruptcy, abandonment of the franchise, commission of a felony, assignment of the franchise without the consent of the franchisor, or failure to comply with applicable law or maintain applicable standards in the operation and condition of the relevant hotel. The franchise agreements will not renew automatically upon expiration. The Company is responsible for making all payments under the franchise agreements to the franchisors. Under the franchise agreements, the Company pays a franchise fee generally between 4% and 5% of room revenues, plus additional fees that amount to between 3% and 4% of room revenues from the hotels.

          The Company’s franchisors periodically inspect the Company’s hotels to ensure that they meet certain brand standards primarily pertaining to the condition of the property and its guest service scores. In connection with these routine reviews, as of June 30, 2004, the Company had received default notices from the franchisor for two of its hotels. As of December 31, 2004, both of these properties have been reinspected. One has received an acceptable rating. The other hotel passed the reinspection for all product improvement issues, but received an unacceptable rating due to its customer service scores falling below brand standards. We believe this decline in customer service scores was due, in part, to the ongoing construction to comply with the brand’s product improvement requirements. The Company expects to cure this deficiency to comply with the franchisor’s standards and expects to receive an acceptable rating for the hotel. Since June 30, 2004, the Company has received default notices from the franchisor for five other hotels. Four of these notices pertain to low guest service scores while the other notice was received for failure to complete a product improvement plan on schedule. The Company is currently in the process of curing these deficiencies to comply with the franchisor’s standards and expects to receive an acceptable rating for all hotels.

Acquisitions of Additional Hotels

          One of the Company’s primary growth strategies is the acquisition of additional hotels. The Company is continually looking for acquisition opportunities to either wholly-own additional hotels or to own additional interests in hotels through joint ventures. The Company focuses on acquiring additional hotels, or ownership interests in hotels, with strong national franchise affiliations in the

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“mid-scale without food and beverage”, “upscale”, and “upper upscale” market segments, or hotel properties with the potential to obtain these franchise affiliations. In particular, the Company will consider acquiring mid-scale without food and beverage hotels, such as Hampton Inn, Hampton Inn & Suites, Holiday Inn, and Fairfield Inn by Marriott; upscale hotels such as Hilton Garden Inn, Courtyard by Marriott, Homewood Suites by Hilton, Residence Inn by Marriott, SpringHill Suites by Marriott and Staybridge by Holiday Inn; and upper upscale hotels such as full service Marriott, Hilton, Embassy Suites and Sheraton.

          The Company intends to consider investments in hotel properties that meet one or more of the following criteria:

	•	properties in locations with relatively high demand for rooms, a relatively low supply of hotel properties and relatively high barriers to entry into the hotel business, such as a scarcity of suitable sites or zoning restrictions;
	•	successful hotels available at favorable prices;
	•	newly developed hotels;
	•	hotels that could benefit from repositioning;
	•	hotels that could benefit from substantial rehabilitation; and
	•	hotels that could benefit from new management and additional hotel capital.

          The Company believes that its relationships with its managers and franchisors will provide additional potential investment opportunities.

Direct Hotel Investment. In December 2004, the Company acquired the Courtyard by Marriott hotel in Roanoke, VA for $12.1 million. Also in December 2004, the Company acquired an historic residential building in Kansas City, MO for $3.1 million. The property will undergo extensive renovations and is expected to be converted to a Courtyard by Marriott hotel in the second quarter of 2006, with an expected total cost of $16.7 million, net of tax credits totaling $7.7 million.

          As the Company acquires hotels, or interests in hotels, the Company also continually evaluates its portfolio and considers selling hotels that no longer meet its long-term investment objectives. The Company sold two hotels in 2004 for gross proceeds, in the aggregate, totaling approximately $10.9 million.

Investment in Hotels Through Joint Ventures. The Company currently has investments in the following joint ventures:

	•	The Company owns 49% of the Marsh Landing joint venture that owns the 118-room Hampton Inn in Ponte Vedra, FL.
	•	The Company owns an indirect 13.05% interest in the WCC Project Company LLC joint venture that owns four hotels:

	•	the 102-room Fairfield Inn & Suites in West Des Moines, IA;
	•	the 113-room Courtyard by Marriott in Beachwood, OH;
	•	the 190-room SpringHill Suites by Marriott in Houston, TX; and
	•	the 95-room Quality Suites in West Des Moines, IA that is in the process of being renovated and is expected to be converted to a SpringHill Suites by Marriott during the second quarter of 2005.

	•	The Company owns an indirect 13.05% interest in the WNC Project Company LLC joint venture that owns one hotel, the 158-room Courtyard by Marriott in Shelton, CT. The joint venture completed its renovations and conversion of this hotel to a Courtyard by Marriott during the first quarter of 2005.
	•	The Company owns 48.78% of the Chapel Hill joint venture that owns a 147-room Courtyard by Marriott in Chapel Hill, NC that opened in September of 2004.

          Under the terms of the joint ventures, the Company has provided property development and purchasing services and will continue to provide ongoing asset management services for additional fees. The Company receives cash distributions of the joint venture’s operating profits, if any, on a quarterly basis.

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Developing Hotels on Selected Sites

          The Company has the in-house capability to develop hotels. Since its initial public offering in 1994, the Company has developed several of its wholly-owned hotels, and has completed major renovations for certain hotels owned through joint ventures and for certain hotels for which the Company has provided financing. As noted above, the Company owns 48.78% of the Chapel Hill joint venture that owns a 147-room Courtyard by Marriott in Chapel Hill, NC that opened in September of 2004. The Company developed this hotel for the joint venture and earned development fees totaling $0.7 million during construction. Also in December 2004, the Company acquired an historic residential building in Kansas City, MO for $3.1 million. The property will undergo extensive renovations and is expected to be converted to a Courtyard by Marriott hotel in the second quarter of 2006, with an expected total cost of $16.7 million, net of tax credits totaling $7.7 million. The Company typically earns development fees for its services provided to develop joint venture hotels. The Company is continually looking to develop additional hotel properties, either to wholly-own or to own through joint ventures, which meet its investment criteria.

Hotel Financing

          As of December 31, 2004, the Company had issued eight loans to third party hotel owners with an aggregate outstanding principal balance totaling approximately $30.8 million. The Company issued five of these loans totaling $25.8 million during 2004. The Company plans to continue to expand its hotel lending business in the future. The Company’s lending program is designed to provide loans to the hotel industry, primarily by either originating single loans, or through the purchase of the first loss piece of collateralized mortgage backed securities (“CMBS”) transactions which typically contain multiple hotel properties. However, the Company may also issue whole loans and then potentially sell the senior portion of the loan. The Company’s loan amount is typically 10% to 25% of the project’s all-in cost, ranging from approximately $1 million to approximately $15 million. The Company will primarily provide financing between 60% and 85% of the lesser of the project’s all-in cost or fair market value. Loans will typically be issued for hotels with between 100 and 450 rooms. We continue to seek additional prudent financing opportunities where the Company can capitalize on its hotel underwriting and development expertise. The Company expects to use a portion of the availability under its $155 million line of credit with General Electric Capital Corporation (“GECC”) and the $50 million line of credit with Marathon Structured Finance Fund, LP to provide loans to the hotel industry.

Recent Developments

Hotel Sales

          The Company sold two hotels during January 2005. The Chester, VA Comfort Inn was sold for $5.2 million in cash, net of closing costs. The Greenville, SC Comfort Inn was sold for $1.8 million, net of closing costs, of which the Company received approximately $0.4 million in cash proceeds and a note receivable for $1.425 million. The note requires fixed principal payments over five years and bears interest at a rate of prime plus 1.5%. Both of these properties were held for sale as of December 31, 2004. Estimated impairment losses have been recorded during 2004 and 2003 on these two hotels such that no material gain or loss will be recognized in 2005 related to these sales.

Hotel Loans

          Albany, NY Hampton Inn & Suites. In February 2005, the Company issued a $3.375 million mezzanine loan to finance the development of a 165-room Hampton Inn & Suites in Albany, NY. M&T Realty provided an $11.5 million first mortgage loan. The Company’s loan is subordinate to the M&T Realty first mortgage loan. The term of the Company’s loan is 6.5 years. During the term of the loan, interest will be payable at 30-day LIBOR plus 9.41%. In addition during this period, interest in the amount of 4.00% shall accrue and be added to the outstanding principal balance thereof, and shall be due and payable upon repayment of the loan. Interest will not be paid on the accrued interest.

          Florida Hotels. In March 2005, the Company purchased from Lehman Brothers $2.8 million of B-notes for $2.3 million. The fixed-rate notes are secured by second mortgages on three hotels with a weighted average yield at the time of purchase of 9.3%, and have a remaining term of approximately six years. The three B-Notes, which are debt subordinated to the first mortgage “A” note, are cross-collateralized. The A note is secured by the first mortgages on each of the three assets, which are held in a CMBS trust. The loans are secured by a 146-room Springhill Suites and a 91-room TownePlace Suites, both in Boca Raton, FL, and a 95-room TownePlace Suites in Fort Lauderdale, FL.

GECC Line of Credit

          On March 11, 2005, the Company, through its wholly-owned subsidiary, Winston SPE II LLC (“SPE II”), entered into a five-year credit facility with GECC (the “GE Line”). The Company subsequently borrowed funds under the GE Line on March 14, 2005

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and used these funds to pay off all outstanding debt under the Company’s previous $125 million line of credit, terminating this prior credit facility. The GE Line provides for revolving loan commitments and letters of credit up to $155 million. The GE Line bears interest at rates from LIBOR plus 1.75% to 2.50%, based on the ratio of the underwritten net operating income of the hotels that collateralize the GE Line to the outstanding principal debt balance. The current rate is LIBOR plus 2.00%.

Competition

          The hotel industry is highly competitive with various participants competing on the basis of price, level of service and geographic location. The Company’s hotels compete with other hotel properties in their geographic markets. Some of the Company’s competitors may have greater marketing and financial resources than the Company and the managers of the Company’s hotels. Several of the Company’s hotels are located in areas in which they may compete with other Company hotels for business. The Company competes for acquisition opportunities with entities that may have greater financial resources than the Company. These entities may generally be able to accept more risk than the Company can prudently manage, including risks with respect to the creditworthiness of a hotel manager.

Employees

          The Company had 17 employees as of March 1, 2005. We believe that our relations with our employees are good.

Environmental Matters

          Under various federal, state and local laws and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on such property. Such laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of hazardous or toxic substances. Furthermore, a person that arranges for the disposal or transports for disposal or treatment of a hazardous substance at another property may be liable for the costs of removal or remediation of hazardous substances released into the environment at that property. The costs of remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to promptly remedy such substances, may adversely affect the owner’s ability to use or sell such real estate or to borrow using such real estate as collateral. Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos-containing materials (“ACMs”) released into the air, and third parties may seek recovery from owners or operators of real properties for personal injury or property damage associated with exposure to released hazardous substances, including ACMs. In connection with the ownership and operation of its hotels, the Company or the property managers, as the case may be, may be potentially liable for such costs.

          Phase I environmental site assessments (“ESAs”) were obtained on all of the Company’s hotels. The Phase I ESAs were intended to identify potential sources of contamination for which the hotels may be responsible and to identify readily apparent environmental regulatory compliance concerns. The Phase I ESAs included historical reviews of the hotels, reviews of certain public records, preliminary investigations of the sites and surrounding properties, screening for the presence of asbestos, PCBs (polychlorinated biphenyls) and underground storage tanks, and the preparation and issuance of a written report. The Phase I ESAs did not include invasive procedures, such as soil sampling or ground water analysis. The Phase I ESA reports have not revealed any environmental condition, liability or compliance concern that the Company believes would have a material adverse effect on the Company’s business, assets or results of operations, nor is the Company aware of any such condition, liability or compliance concern. Nevertheless, it is possible that these reports do not reveal all environmental conditions, liabilities or compliance concerns or that there are material environmental conditions, liabilities or compliance concerns that arose at a hotel after the related Phase I ESA report was completed of which the Company is unaware. Moreover, no assurances can be given that (i) future laws, ordinances or regulations will not impose any material environmental liability for existing conditions at the Company’s hotels, or (ii) the current environmental condition of the hotels will not be affected by the condition of the properties in the vicinity of the hotels (such as the presence of leaking underground storage tanks) or by third parties unrelated to the Company.

          In addition to the ESAs, the Company also obtained asbestos surveys for the Holiday Inn Select in Garland (Dallas), Texas and the Courtyard by Marriott in Houston, Texas. In the asbestos surveys, the consultants discovered the presence of ACMs. The Company is monitoring the presence of the ACMs with the assistance of its consultants.

          During 2002, the Company invested in the Beachwood, OH Courtyard by Marriott hotel, which is currently owned by WCC Project Company LLC. The Company’s current indirect ownership interest in this hotel is 13.05%. Prior to making its initial investment, the Company knew that black mold existed at the hotel and engaged consultants with expertise in black mold remediation and performed extensive research to satisfy itself that the black mold condition could be eradicated through renovation and repair procedures. Following the completion of such remediation procedures, the Company believes that all of the black mold has been removed from this hotel, which opened for business in April 2003. Because black mold is a naturally occurring fungus, the spores of

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which can be transported by outside air currents, there can be no assurance that black mold will not again enter and grow in this hotel or that it will not be found in the Company’s other hotel properties.

          Portions of the soil and groundwater under the Durham, NC Hampton Inn have been contaminated by one or more leaking underground storage tanks from an adjacent property owned by a third-party. The North Carolina Department of Environmental and Natural Resources classified the adjacent property as “low risk” and issued a “No Further Action” determination in November 2003. A Phase II ESA file review was conducted in February 2005 to review and obtain regulatory files related to the leaking underground tanks on the adjacent property. The Phase II indicated that the Durham, NC Hampton Inn is restricted from use of groundwater and recommended additional investigation to determine the extent of contamination, if any, from the leaking tanks. We expect to conduct such additional investigation in the near future. We believe liability for future cleanup, if any, of this subsurface contamination most likely would be imposed on the third-party owner of the leaking underground storage tanks and not us. We could, however, be responsible for cleanup of this site if, for instance, the owner of the leaking tanks refused or were financially unable to conduct a cleanup. In addition to the costs of cleanup, environmental contamination can affect the value of a property and, therefore, an owner’s ability to borrow funds using the property as collateral or to sell the property. The costs to clean up a contaminated property, to defend against a claim, or to comply with environmental laws could be material and could adversely affect the funds available for distribution to our shareholders. We can make no assurances that (1) future laws or regulations will not impose material environmental liabilities or (2) the current environmental condition of our hotel properties will not be affected by the condition of the properties in the vicinity of our hotel properties (such as the presence of leaking underground storage tanks) or by third parties unrelated to us.

          The Company believes that its hotels have been operated in compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances and other environmental matters. The Company has not been notified by any governmental authority of any material noncompliance, liability or claim relating to hazardous or toxic substances or other environmental substances in connection with any of its properties.

Tax Status

          The Company elected to be taxed as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended, effective for its short taxable year ended December 31, 1994. The Company believes that it qualifies for taxation as a REIT, and with certain exceptions, the Company will not be subject to tax at the corporate level on its taxable income that is distributed to the shareholders of the Company. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its annual taxable income. Failure to qualify as a REIT will render the Company subject to federal income tax (including any applicable minimum tax) on its taxable income at regular corporate rates and distributions to the shareholders in any such year will not be deductible by the Company.

Seasonality

          The Company’s operations historically have been seasonal in nature, reflecting higher revenue per available room (“RevPAR”) during the second and third quarters. This seasonality can be expected to cause fluctuations in the Company’s quarterly operating profits. To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenue, the Company expects to utilize cash on hand or borrowings under the line of credit to make distributions to its equity holders.

Executive Officers of the Company

          The following table lists the executive officers of the Company:

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          Charles M. Winston. Charles Winston has served as Chairman of the Board of Directors since March 15, 1994. Mr. Winston is a native of North Carolina and a graduate of the University of North Carolina at Chapel Hill with an A.B. degree. Mr. Winston has more than 40 years of experience in developing and operating full service restaurants and hotels. Mr. Winston is Robert Winston’s father and brother of James Winston, a director of the Company.

          Robert W. Winston, III. Robert Winston has served as Chief Executive Officer and Director of the Company since March 15, 1994. Mr. Winston served as the Company’s President from March 15, 1994 through January 14, 1999 and from November 9, 2002 through November 4, 2003. Mr. Winston also served as Secretary for the periods from March 1994 through May 1995 and from October 1997 until May 5, 1998. Mr. Winston is a native of North Carolina and a graduate of the University of North Carolina at Chapel Hill with a B.A. degree in economics. Mr. Winston is Charles Winston’s son and nephew of James Winston, a director of the Company.

          Joseph V. Green. Mr. Green has served as President of the Company since November 4, 2003, as Executive Vice President and Chief Financial Officer since May 18, 1999 and as Secretary since November 9, 2002. Mr. Green has also served as Executive Vice President — Acquisitions and Finance from January 1, 1998 through May 18, 1999, after having advised Winston Hospitality, Inc. on matters regarding hotel acquisitions and finance since 1993, including the initial public offering of WHI. Mr. Green is a graduate of East Carolina University, was awarded his J.D. degree from Wake Forest University School of Law and received a Master of Laws in Taxation from Georgetown University.

          Kenneth R. Crockett. Mr. Crockett has served as Chief Operating Officer of the Company since November 4, 2003. Mr. Crockett served as the Company’s Executive Vice President of Development from January 1998 through November 5, 2003 and also served as the Company’s Senior Vice President of Development from September 1995 through January 1998. Mr. Crockett is a graduate of the University of North Carolina at Chapel Hill with a B.S. degree in Business Administration. Prior to joining the Company, Mr. Crockett was an Associate Partner for project development in commercial real estate at Capital Associates, a real estate development firm located in Raleigh, North Carolina.

          Brent V. West. Mr. West was appointed Vice President and Chief Accounting Officer in October 2002. He joined the Company as Vice President and Controller in September 1997 and served as Vice President of Finance and Controller from May 1999 through October 2002. Mr. West began his career with KPMG and prior to joining the Company, held the position of Corporate Controller for Coastal Physician Group, Inc. Mr. West is a CPA and is a graduate of Plattsburgh State University College, Plattsburgh, New York, with a B.S. degree in Accounting.

          James P. Frey. Mr. Frey has served as Vice President of the Company since January 2000. Prior to joining the Company he worked for Hilton Hotels Corporation in various capacities, where his responsibilities included overseeing the construction of 35 hotels and administering annual capital refurbishment and expenditures totaling $35 million per year. Mr. Frey has over 40 years experience in the hotel industry.

Available Information

          The Company maintains a Web site, http://www.winstonhotels.com, which contains additional information concerning the Company. The Company makes available free of charge through its Web site its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. The Company’s Corporate Governance Guidelines and Code of Business Conduct and Ethics and the charters of the Audit, Compensation and Nominating and Corporate Governance Committees are also available on the Company’s Web site at www.winstonhotels.com, and are available in print to any shareholder upon request in writing to Winston Hotels, Inc., c/o Vice President and Chief Accounting Officer, 2626 Glenwood Avenue, Suite 200, Raleigh, NC 27608. Information on the Company’s Web site is neither part of nor incorporated into this report on Form 10-K.

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ITEM 2. PROPERTIES

          Our principal executive offices are located at 2626 Glenwood Avenue, Suite 200, Raleigh, North Carolina 27608. We carry out all aspects of our businesses at that location. We lease approximately 18,900 square feet at our headquarters building, of which approximately 7,900 square feet is sub-leased to other parties. We believe that our present facilities, together with current options to extend lease terms and occupy additional space, are adequate for our current and presently projected needs. As of December 31, 2004, the Company owned 45 hotels with an aggregate of 6,397 rooms. The following table sets forth, by franchise affiliation, certain unaudited information with respect to our wholly-owned hotels for the years ended December 31, 2004 and 2003.