(State or other jurisdiction

of incorporation or organization)

Class

Common Shares of Beneficial Interest ($0.01 par value)

10 ¹/4 % Series A Cumulative Redeemable Preferred Shares ($0.01 par value)

8 ³/8% Series B Cumulative Redeemable Preferred Shares ($0.01 par value)

Financial Information

Item 1.

Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

Other Information

Item 1.

Legal Proceedings

Item 2.

Changes in Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Submission of Matters to a Vote of Security Holders

Item 5.

Other Information

Item 6.

Exhibits and Reports on Form 8-K

Signatures

Assets:

Investment in hotel properties, net (Note 2)

Property under development (Note 2)

Investment in joint venture (Note 2)

Cash and cash equivalents

Restricted cash reserves (Note 6)

Rent receivable

Notes receivable

Hotel receivables (net of allowance for doubtful accounts of approximately $405 and $261, respectively)

Deferred financing costs, net

Deferred tax asset

Prepaid expenses and other assets

Assets held for sale or disposed of, net (Note 3)

Total assets

Liabilities and Shareholders’ Equity:

Borrowings under credit facilities (Note 5)

Bonds payable (Note 5)

Mortgage loans (including unamortized premium of zero and $2,015, respectively) (Note 5)

Accounts payable and accrued expenses (Note 6)

Advance deposits

Accrued interest

Distributions payable

Liabilities of assets held for sale or disposed of (Note 3)

Total liabilities

Minority interest in LaSalle Hotel Operating Partnership, L.P. (Note 7)

Minority interest in other partnerships

Commitments and contingencies (Note 6)

Shareholders’ Equity:

Preferred shares, $.01 par value, 20,000,000 shares authorized,

10 1/4 % Series A - 3,991,900 shares issued and outstanding at March 31, 2004 and December 31, 2003, respectively (Note 7)

8 3/8 % Series B - 1,100,000 shares issued and outstanding at March 31, 2004 and December 31, 2003, respectively (Note 7)

Common shares of beneficial interest, $.01 par value, 100,000,000 shares authorized, 24,617,395 and 24,140,855 shares issued and 24,543,208 and 24,140,855 shares outstanding at March 31, 2004 and December 31, 2003, respectively (Note 7)

Additional paid-in capital, including offering costs of $28,483 and $28,461 at March 31, 2004 and December 31, 2003, respectively

Deferred compensation

Accumulated other comprehensive loss

Distributions in excess of retained earnings

Common shares held in treasury, 74,187 and zero shares outstanding at March 31, 2004 and December 31, 2003, respectively (Note 7)

Total shareholders’ equity

Total liabilities and shareholders’ equity

Revenues:

Hotel operating revenues:

Room revenue

Food and beverage revenue

Other operating department revenue

Total hotel operating revenues

Participating lease revenue

Other income (Note 6)

Total revenues

Expenses:

Hotel operating expenses:

Room

Food and beverage

Other direct

Other indirect (Note 10)

Total hotel operating expenses

Depreciation and other amortization

Real estate taxes, personal property taxes and insurance

Ground rent (Note 6)

General and administrative

Amortization of deferred financing costs

Other expenses

Total operating expenses

Operating loss

Interest income

Interest expense

Loss before income tax benefit, minority interest, equity in earnings of unconsolidated entities and discontinued operations

Income tax benefit (Note 11)

Loss before minority interest, equity in earnings of unconsolidated entities and discontinued operations

Minority interest in LaSalle Hotel Operating Partnership, L.P.

Loss before equity in earnings of unconsolidated entities and discontinued operations

Equity in earnings of unconsolidated entities (Note 2)

Loss before discontinued operations

Discontinued operations (Note 3):

Income from operations of property disposed of

Income from operations of property held for sale

Minority interest, net of tax

Income tax benefit (Note 11)

Net income from discontinued operations

Net loss

Distributions to preferred shareholders

Net loss applicable to common shareholders

Earnings per Common Share - Basic:

Loss applicable to common shareholders before discontinued operations and after dividends paid on unvested restricted shares

Discontinued operations

Net loss applicable to common shareholders after dividends paid on unvested restricted shares

Earnings per Common Share - Diluted:

Loss applicable to common shareholders before discontinued operations

Discontinued operations

Net loss applicable to common shareholders

Weighted average number common shares outstanding:

Basic

Diluted

Cash flows from operating activities:

Net loss

Adjustments to reconcile net income to net cash flow provided by operating activities:

Depreciation and other amortization

Amortization of deferred financing costs

Minority interest in LaSalle Hotel Operating Partnership, L.P.

Gain on extinguishment of debt

Income tax benefit

Deferred compensation

Equity in income of joint venture

Changes in assets and liabilities:

Rent receivable

Hotel receivables

Deferred tax asset

Prepaid expenses and other assets

Mortgage loan premium amortization

Accounts payable and accrued expenses