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

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM 10-K

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

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

For the fiscal year ended December 31, 2008

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

COMMISSION FILE NUMBER 33-11096

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

CRI HOTEL INCOME PARTNERS, L.P.

Delaware 52-1500621
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

11200 Rockville Pike, Rockville, Maryland 20852

(301) 468-9200

Securities registered under Section 12(g) of the
Exchange Act:

UNITS OF LIMITED PARTNER INTEREST

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

Indicate by check mark if the Registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes |_| No |X|

Indicate by check mark if the Registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act.
Yes |_| No |X|

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

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

Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |_| Accelerated filer |_| Non-accelerated filer |_|
Smaller reporting company |X|

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes |_| No |X|

The units of limited partner interest of the Registrant are not traded in any
market. Therefore, the units of limited partner interest had neither a market
selling price nor an average bid or asked price.

DOCUMENTS INCORPORATED BY REFERENCE

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

CRI HOTEL INCOME PARTNERS, L.P.

2008 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

Page

PART I

Item 1. Business.......................................................... I-1
Item 2. Properties........................................................ I-2
Item 3. Legal Proceedings................................................. I-2
Item 4. Submission of Matters to a Vote of Security Holders............... I-2

PART II

Item 5. Market for the Registrant's Beneficial Assignee Certificates
and Related Partnership Matters ............................... II-1
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... II-3
Item 8. Financial Statements............................................. II-8
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure......................... II-8
Item 9A. Controls and Procedures.......................................... II-9
Item 9B. Other Information................................................ II-9

PART III

Item 10. Directors and Executive Officers of the Registrant............... III-1
Item 11. Executive Compensation........................................... III-1
Item 12. Security Ownership of Certain Beneficial Owners and Management... III-2
Item 13. Certain Relationships and Related Transactions................... III-3
Item 14. Principal Accountant Fees and Services........................... III-3

PART IV

Item 15. Exhibits and Financial Statements................................ IV-1

PART I
------

ITEM 1. BUSINESS
--------

Development and Description of Business
- ---------------------------------------

CRI Hotel Income Partners, L.P. (the Partnership) is a limited partnership
which was formed under the Delaware Revised Uniform Limited Partnership Act as
of September 23, 1986 and will continue until December 31, 2016, unless
dissolved earlier in accordance with the Partnership Agreement. The Partnership
was formed for the purpose of investing in hotels that were acquired from Days
Inns of America, Inc. The Partnership's primary objectives continue to be cash
flow growth and capital appreciation. However, the attainment of these
objectives is principally dependent on the hotels' operations. The hotels are or
had been operated by Bryanston Group, Inc. d/b/a Buckhead Hotel Management
Company, Inc., formerly known as Days Inns Management Company, Inc., under the
nationally recognized franchise name of Days Inns. The Partnership entered into
new management contracts with Oak Hotels, Inc., which will continue to be
operated as Days Inns.

The General Partner of the Partnership is CRICO Hotel Associates I, L.P.
(CRICO Associates), a Delaware limited partnership, the general partner of which
is C.R.I., Inc. (CRI), a Delaware corporation. The General Partner has authority
in the overall management and control of the Partnership. The Assignor Limited
Partner of the Partnership is CRICO Hotel Fund, Inc. (CRICO Hotel Fund).

The Registration Statement of the Partnership was declared effective by the
Securities and Exchange Commission (SEC) on April 17, 1987, and a prospectus of
the same date was printed. The Partnership registered a total of 6,000,000
Beneficial Assignee Certificates (BACs), at $25 per BAC, with the SEC. BACs
represent beneficial assignments of the limited partner interests held by CRICO
Hotel Fund. BACs were to be offered in series, with Series A having a minimum of
196,000 BACs, or $4,900,000, and a maximum of 2,344,000 BACs, or $58,600,000.
The Partnership terminated the Series A offering on March 31, 1988 with 868,662
BACs, or gross proceeds of $21,716,550, and does not intend to offer another
series.

The number of BACs sold, along with debt instruments issued by the
Partnership, generated sufficient proceeds to purchase five hotels and one
leasehold interest. As of December 31, 2008, the Partnership remained invested
in four hotels and one leasehold interest, as discussed below.

Employees
- ---------

The Partnership has no employees. Services are performed by CRI, the
General Partner of the General Partner, and agents retained by it. See the notes
to the financial statements for additional information concerning these
services.

I-1

PART I
------

ITEM 2. PROPERTIES
----------

A schedule of the hotels and the leasehold interest owned by the
Partnership as of December 31, 2008, follows.

NAME AND LOCATION NO. OF ROOMS DATE ACQUIRED PURCHASE PRICE
------------------------ ------------ ------------- ----------------

Clearwater Days Inn 117 04/01/88 $3,750,000
Clearwater, Florida

Minneapolis Days Inn 130 11/01/87 $4,800,000
Minneapolis, Minnesota

Plymouth Days Inn 113 12/30/87 $4,000,000
Plymouth, Minnesota

Roseville Days Inn 114 03/01/88 $4,200,000
Roseville, Minnesota

Scottsdale Days Inn 167 07/01/88 $2,000,000
Scottsdale, Arizona
(leasehold interest)

See Item 6, Management's Discussion and Analysis of Financial Condition and
Results of Operations - Financing, for information concerning the mortgage
financing of the first four hotels listed above.

ITEM 3. LEGAL PROCEEDINGS
-----------------

On September 2, 2008, a complaint was filed against CRI Hotel Income
Partners, L.P., in the Circuit Court of the Sixth Judicial Circuit, in and for
Pinellas County, Florida. The Plaintiffs claimed damages of $15,000, exclusive
of interest and cost as a result of being bitten by bed bugs while staying at
the Days Inn Clearwater on or about July 16, 2008. The complaint was submitted
to Wausau Insurance Company, Claim #PX415-008254-01. On January 21, 2009, the
defense counsel retained by Wausau requested that the plaintiff make a demand
for settlement of this lawsuit so as to avoid protracted litigation. A response
is expected during the first quarter of 2009 to the request. Any damages will be
covered by Wausau under the hotel's insurance policy.

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

No matters were submitted to a vote of security holders during the fourth
quarter of 2008.

I-2

PART II
-------

ITEM 5. MARKET FOR THE REGISTRANT'S BENEFICIAL ASSIGNEE
-----------------------------------------------
CERTIFICATES AND RELATED PARTNERSHIP MATTERS
--------------------------------------------

(a) There is no established market for the purchase and sale of BACs,
although various informal secondary market services exist. Due to the
limited markets, however, investors may be unable to sell or otherwise
dispose of their BACs.

On April 2, 2007, MacKenzie Patterson Fuller L.P. and numerous
affiliated entities (MacKenzie) initiated a registered tender offer to
purchase all of the outstanding BACs at a price of $12.50 per BAC. The
offer expired on May 4, 2007. MacKenzie is not affiliated with the
Partnership or the General Partner. The price offered was determined
solely at the discretion of MacKenzie and does not necessarily
represent the fair market value of each BAC. In response to the
MacKenzie registered tender offer, on April 11, 2007, the General
Partner filed a Schedule 14D-9. In that filing, the General Partner
recommended that BAC holders reject the MacKenzie offer because the
offer price was far lower than MacKenzie's own estimated liquidation
value of the Partnership and it believed that current BAC holders
could realize that difference in value themselves by choosing to hold
their investments for several more years until the Partnership's
assets are liquidated.

A number of investors have sold their BACs to other investors. If more
than two percent of the total outstanding BACs are transferred due to
sale in any one calendar year (not counting certain exempt transfers),
the Partnership could be taxed as a "publicly traded partnership,"
with potentially severe tax implications for the Partnership and its
investors. Section 7704 of the Internal Revenue Code defines the term
"publicly traded partnership" as any partnership for federal income
tax purposes, the interests of which are readily traded on an
established securities market, or readily tradable on a secondary
market or the substantial equivalent thereof. If the Partnership is
classified as a "publicly traded partnership" or otherwise fails to
qualify as a partnership for federal income tax purposes in any
taxable year, it would then be subject to federal income tax on any
taxable income in that taxable year at regular corporate rates. A BAC
holder could not then take into account the BAC holder's distributive
share of the Partnership's income and would be subject to tax on the
BAC holder's share of the Partnership's income to the extent
distributed either as dividends out of current or accumulated earnings
and profits or as taxable gain in excess of the tax basis of the
investor's BACs. A BAC holder could also have to file amended income
tax returns. If the Partnership were taxed as a corporation, the BAC
holder's cash flow, return on investment and the value of the
investor's BACs would be significantly reduced. Also, the income and
losses from the Partnership would no longer be considered a passive
activity.

II-1

PART II
-------

ITEM 5. MARKET FOR THE REGISTRANT'S BENEFICIAL ASSIGNEE
-----------------------------------------------
CERTIFICATES AND RELATED PARTNERSHIP MATTERS - Continued
--------------------------------------------

aware that the percentage of trades significantly exceeded the safe
harbor in 2006, when Treasury Regulations applicable to the
Partnership reduced the safe harbor amount from five percent to two
percent, and in 2007, when a re-calculation of the non-exempt
transfers reflected a total transfer of 2.21%. However, if transfers
in connection with known tender offers are not counted, the percentage
of sale transfers is reduced to well under two percent. The
Partnership's tax attorneys issued an opinion to the effect that the
transfers pursuant to the tender offers were not the type of regular
and ongoing trading activities contemplated as constituting public
trading and that therefore it was more likely than not that such
trading would not result in the Partnership being treated as a
publicly traded partnership under Section 7704. However, there can be
no assurance that the Internal Revenue Service will agree with the
Partnership's position and take no action to treat it as a publicly
traded partnership.

(b) As of March 24, 2009, there were 867 registered holders of BACs in the
Partnership.

(c) Cash available for distribution, as defined in the Partnership
Agreement, is intended to be distributed on a quarterly basis within
sixty days after the end of each calendar quarter. A distribution in
the amount of $221,597 ($0.25 per BAC) was declared and paid to BAC
holders of record and to the General Partner for the first quarter of
2007 in the amounts of $217,165 and $4,432, respectively. A
distribution in the amount of $221,598 ($0.25 per BAC) was declared
and paid to BAC holders of record, to the General Partner and to the
state of Minnesota for withholding for the second quarter of 2007 in
the amounts of $212,021, $4,432 and $5,145, respectively. A
distribution in the amount of $221,597 ($0.25 per BAC) was declared
and paid to BAC holders of record and to the General Partner and to
the state of Minnesota for withholding for the third quarter of 2007
in the amounts of $212,020, $4,432 and $5,145, respectively. The
Partnership did not declare a distribution for the fourth quarter of
2007. The Partnership did not declare a distribution in 2008. See Part
II, Item 6, Management's Discussion and Analysis of Financial
Condition and Results of Operations, for additional information
concerning the distributions during these years, and for a discussion
of factors which may affect future distribution levels.

II-2

PART II
-------

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

CRI Hotel Income Partners, L.P.'s (the Partnership) Management's Discussion
and Analysis of Financial Condition and Results of Operations section is based
on the financial statements, and contains information that may be considered
forward looking, including statements regarding the effect of governmental
regulations. Actual results may differ materially from those described in the
forward looking statements and will be affected by a variety of factors
including seasonality with respect to the hotel industry, national and local
economic conditions, the general level of interest rates, governmental
regulations affecting the Partnership and interpretations of those regulations,
the competitive environment in which the Partnership operates, and the
availability of working capital.

Critical Accounting Policies
----------------------------

The Partnership has disclosed its selection and application of significant
accounting policies in Note 1 of notes to financial statements included in this
annual report on Form 10-K at December 31, 2008. Property and equipment are
depreciated or amortized over their useful lives or remaining lease terms,
ranging from one to thirty years using the straight-line method. The calculation
requires three amounts for each asset; (1) the purchase price, (2) the estimated
useful life, (3) the estimated residual value at the end of the asset's useful
life. Of these three amounts, two are estimates that require significant
management judgment. In order to determine the appropriate allocation,
management periodically reviews the particular asset's historical or current
replacement cost, useful economic life, and residual value, and updates this
information as necessary. Depreciation and amortization expense is a significant
expense of the Partnership and a change in the estimate of useful life or
residual value of its assets could significantly impact the statement of
operations.

Travel and the Economy
----------------------

The hotel industry in the fourth quarter 2008 is continuing to feel the
effects of a sagging economy with decreased demand and lower occupancies, which
had a negative impact at all of the five hotels owned by the Partnership. The
Partnership's ability to pay operating expenses and current liabilities, and to
pay distributions to BAC holders, is primarily dependent upon the performance of
the underlying hotels. The General Partner is currently unable to estimate the
impact the future state of the economy could have on the Partnership's
operations, liquidity, or capital resources.

Distributions
-------------

A distribution in the amount of $221,597 ($0.25 per BAC) was declared and
paid to BAC holders of record and to the General Partner for the first quarter
of 2007 in the amounts of $217,165 and $4,432, respectively. A distribution in
the amount of $221,598 ($0.25 per BAC) was declared and paid to BAC holders of
record, to the General Partner and to the state of Minnesota for withholding for
the second quarter of 2007 in the amounts of $212,021, $4,432 and $5,145,
respectively. A distribution in the amount of $221,597 ($0.25 per BAC) was
declared and paid to BAC holders of record and to the General Partner and to the
state of Minnesota for withholding for the third quarter of 2007 in the amounts
of $212,020, $4,432 and $5,145, respectively. The Partnership did not declare a
distribution for the fourth quarter of 2007. The General Partner did not declare
a distribution in 2008. The General Partner closely monitors the Partnership's
liquidity and cash flow in an effort to ensure that sufficient cash is available
for operating requirements, and for possible distributions to BAC holders.

II-3

PART II
-------

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

Financial Condition/Liquidity
-----------------------------

The General Partner expects that the hotels in the aggregate will generate
sufficient cash flow to achieve a positive cash flow after operating expenses.
In addition to the periodic replacement of fixed assets, the General Partner
determined several years ago that certain capital improvements were needed to
enhance the marketability of the hotels. Since 1997, the Partnership funded a
total of approximately $2.5 million from the working capital reserve to the
hotels for such capital improvements.

The Partnership's liquidity and future results of operations are primarily
dependent upon the performance of the underlying hotels. Hotel operations may be
materially affected by changing market conditions and by seasonality caused by
variables such as vacations, holidays and climate. The General Partner continues
to work closely with the hotels' manager to institute an aggressive marketing
campaign and stricter cost-cutting and cost-control measures in an effort to
maintain liquidity at the hotels.

For the years ended December 31, 2008 and 2007, net cash provided by the
hotels' operating activities and existing cash resources was adequate to support
investing and financing activities. The Partnership anticipates that existing
cash resources along with future cash flows from the hotels' operations, in the
aggregate, will be sufficient to pay operating expenses, accounts payable and
accrued expenses, and hotel trade payables. Accounts payable and accrued
expenses and hotel trade payables at December 31, 2008 totaled $798,608, which
represents a $128,303 decrease from the corresponding amounts in 2007. Accounts
payable and accrued expenses decreased primarily due to lower land lease
payable, lower incentive management fee payable and lower accrued audit costs
payable, partially offset by higher professional fees payable. Hotel trade
payables increased compared to December 31, 2007, primarily due to a decrease in
available cash.

Financing
---------

On December 19, 1997, the Partnership refinanced with Citicorp Real Estate,
Inc. (Citicorp) the Zero Coupon Notes which were originally issued in connection
with the Partnership's acquisition of the hotels. The loan matured January 1,
2008. On that date, a balloon payment in the amount of $7,273,441 became due.
The General Partner was unable to refinance the Partnership's mortgage debt
prior to its maturity. Although the loan was in default, the special servicer
agreed to a forbearance agreement for a period of 180 days for payment of a fee
in the amount of $72,734, plus continued monthly payments of principal, interest
(at the pre-default rate) and tax and capital improvements escrows.

On May 6, 2008, the Partnership closed three loans from General Electric
Credit Corporation ("GE") in the aggregate amount of $5,000,000 to refinance the
Plymouth and Roseville hotels in Minnesota and the Clearwater hotel in Florida.
The three loans are cross-collateralized by the three hotels. The Partnership
used the loan proceeds together with the proceeds, of a loan from Remediation
Capital Funding, LLC in the amount of $2,900,000, of which $500,000 is held by
the Lender pending resolution of the environmental matter further discussed
below, secured by the University hotel in Minnesota, to pay off the existing
debt in full.

II-4

PART II
-------

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

Action Letter with a Covenant Not to Sue, at which point it should be able to
obtain financing on the property again. NOVA, the Partnership's consultant has
prepared and submitted an additional Phase I study in accordance with the
guidelines established by the MPCA-VIC Program along with the application and
proposed scope of work for the required Phase II study. On July 16, 2008, the
MPCA approved the work plan for the Phase II study with samples of soil and
ground water scheduled to begin collection for analysis August 11, 2008. On
January 28, 2009, NOVA completed the Phase II study. Based on the results of the
solvent, petroleum, and RCRA metal impacts above action or guidance levels that
were detected in the soil, soil vapor and groundwater samples collected at the
site, with the exception of the petroleum impacts, the compounds detected at the
site appear to be associated with regional up gradient off-site areas of
contamination located to the northeast and possibly to the north of the site. It
does not appear that the historical uses of the site are the source of the
solvent, soil vapor and groundwater impacts detected at the site. NOVA has
submitted these results and requests that the MPCA issue an Off-Site
Determination letter and No Further Action letter for the site. The Partnership
has been advised that the VIC Program process will likely take from nine months
to eighteen months.

The three new GE loans bear interest at the rate of 6.79% per annum and
mature on January 1, 2016 with balloon payments due as set forth below:

Plymouth $887,269
Roseville $2,083,122
Clearwater $887,269

The new loan with Remediation Capital bears interest at the rate of 14% per
annum and matures on May 6, 2009, although the Partnership has two options, at
its sole discretion, to extend the loan for six months each time. It is
contemplated that this loan will be refinanced after the environmental issues at
the University hotel have been resolved.

The Partnership made installments of principal and interest aggregating
$802,042 and $804,589 for the years ended December 31, 2008 and 2007. The
Partnership's aggregate balance on the current loans was $7,341,231 as of
December 31, 2008. The Partnership's balance on the former loan was $7,273,441
as of December 31, 2007.

Capital Improvements, Real Estate Tax Reserves Held by Servicer
---------------------------------------------------------------
and Intercompany Transactions
-----------------------------

In addition to the monthly loan installments under its former mortgage
loan, as discussed above, the Partnership also made monthly payments which were
escrowed for capital improvements and estimated annual real estate taxes. During
the years ended December 31, 2008 and 2007, the Partnership made escrow deposits
aggregating $77,458 and $232,374, respectively, for capital improvements, and
$130,622 and $389,142, respectively, for estimated annual real estate taxes. As
of December 31, 2008 and December 31, 2007, the servicer held reserves of $0 and
$197,736, respectively, for capital improvements, and $0 and $117,849,
respectively, for real estate taxes. This loan was refinanced on May 6, 2008.
The Partnership was reimbursed by the former servicer in June 2008 for the
remaining balances in the escrowed capital improvement and real estate tax
accounts. Under the new mortgage, the Partnership will pay directly for real
estate taxes and capital improvements.

In 2008, the Partnership contributed $83,640 to the Clearwater hotel for
capital improvements. In 2007, the Partnership contributed $31,835, $56,880,
$39,636 and $145,725 to the Clearwater hotel, Plymouth hotel, Roseville hotel
and Minneapolis hotel, respectively, for capital improvements.

II-5

PART II
-------

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

Working Capital Reserve
-----------------------

The working capital reserve of $2,333,266 and $1,582,408 as of December 31,
2008 and 2007, respectively, represents all cash and cash equivalents, as
defined in Note 1.d. of the accompanying financial statements, maintained as
working capital for the Partnership. The working capital reserve may be
increased or reduced by the General Partner as it deems appropriate.

Distributions to BAC holders
----------------------------

A distribution in the amount of $221,597 ($0.25 per BAC) was declared and
paid to BAC holders of record and to the General Partner for the first quarter
of 2007 in the amounts of $217,165 and $4,432, respectively. A distribution in
the amount of $221,598 ($0.25 per BAC) was declared and paid to BAC holders of
record, to the General Partner and to the state of Minnesota for withholding for
the second quarter of 2007 in the amounts of $212,021, $4,432 and $5,145,
respectively. A distribution in the amount of $221,597 ($0.25 per BAC) was
declared and paid to BAC holders of record and to the General Partner and to the
state of Minnesota for withholding for the third quarter of 2007 in the amounts
of $212,020, $4,432 and $5,145, respectively. The Partnership did not declare a
distribution for the fourth quarter of 2007. The Partnership did not declare a
distribution in 2008.

Results of Operations - Partnership
-----------------------------------

2008 versus 2007
- ----------------

The Partnership's net income for the year ended December 31, 2008,
decreased compared to December 31, 2007, primarily due to decreases in gross
operating income, interest and other income and increased interest expense,
partially offset by a decrease in unallocated operating expenses. Gross
operating income decreased primarily due to lower rooms revenue as a result of
lower occupancy. Interest and other income decreased as the restaurant on the
Minneapolis hotel property is not leased; and lower interest rates in 2008.
Interest expense increased as the mortgage loans were refinanced. Unallocated
operating expenses decreased due to lower depreciation and amortization
expenses, marketing expense, building lease expense, management fees and
professional fees, partially offset by higher general and administrative
expenses and property operations and maintenance expenses. General and
administrative expenses increased primarily due to higher reimbursed payroll
costs and the forbearance agreement fee. Building lease expense decreased due to
lower revenues at Scottsdale Days Inn. Marketing expense decreased due to lower
payroll and lower frequent guest program expense. Management fees decreased due
to lower revenues.

Results of Operations - Hotels
------------------------------

Analysis of each hotel's operating results for the year 2008 versus the
year 2007 follows.

Operating statistics
- --------------------

The hotels' results of operations are affected by changing market
conditions and by seasonality caused by variables such as vacations, holidays
and climate. Based on the hotels' operating budgets and historical trends, the
following months should provide the highest net cash flow to the Partnership
from each of the hotels.

II-6

PART II
-------

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

Hotel Location Peak Months
-------------- -------------------

Clearwater, FL January through April
Minneapolis, MN March through November
Plymouth, MN April through October
Roseville, MN April through October
Scottsdale, AZ January through April; and
October and November

The hotels' results of operations set forth below may not be consistent
with longer-term historical trends.

The Partnership's statements of operations include operating results for
each of the hotels as summarized below. Gross Operating Income represents total
revenue from rooms, rental and other, telephone, and food and beverage, less the
related departmental expenses. Operating Income represents Gross Operating
Income less unallocated operating income and expenses. The results of operations
and average occupancy for the hotels for the years ended December 31, 2008 and
2007, follow.

Gross Operating Income
----------------------------------
Hotel Location 2008 2007
-------------- ----------- -----------

Clearwater, FL $ 706,887 $ 878,090
Minneapolis, MN 2,157,018 2,067,131
Plymouth, MN 845,549 770,239
Roseville, MN 1,084,843 1,081,000
Scottsdale, AZ 2,376,799 2,708,112
----------- -----------

Total $ 7,171,096 $ 7,504,572
=========== ===========

Operating (Loss) Income
----------------------------------
Hotel Location 2008 2007
-------------- ----------- -----------

Clearwater, FL $ (28,330) $ 60,197
Minneapolis, MN 1,193,772 1,130,057
Plymouth, MN 281,841 218,879
Roseville, MN 454,559 446,553
Scottsdale, AZ 360,443 509,800
Depreciation and net Partnership
operating expenses (1,570,437) (1,301,366)
----------- -----------

Total $ 691,848 $ 1,064,120
=========== ===========

Average Occupancy
----------------------------------
Hotel Location 2008 2007
-------------- ----------- -----------

Clearwater, FL 49% 56%
Minneapolis, MN 79% 84%
Plymouth, MN 66% 66%
Roseville, MN 68% 72%
Scottsdale, AZ 72% 83%

2008 versus 2007
- ----------------

Clearwater, Florida: Gross operating income and operating income for the year
ended December 31, 2008, decreased compared to 2007 primarily due to decreases
in rooms revenue, telephone revenue and rental and other revenue and increased
property tax expense, partially offset by decreases in rooms expense, telephone
expense, rental and other expense, general and administrative expenses,
marketing expense, energy expense, repair and maintenance expenses, management

II-7

PART II
-------

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

fees and insurance expense. Occupancy decreased due to higher fuel prices and a
decrease in the housing and construction markets. These factors combined with a
highly active hurricane season, lead to the overall reduction in occupancy.

Minneapolis, Minnesota: Gross operating income and operating income for the year
ended December 31, 2008, increased compared to 2007 primarily due to increased
rooms revenue, as a result of higher room rates, and decreases in rental and
other expense, marketing expense and property tax expense, partially offset by
decreases in telephone revenue and rental and other revenue and increases in
rooms expense, telephone expense, general and administrative expenses, energy
expense, repair and maintenance expenses, management fees and insurance expense.
Occupancy decreased due to lack of market demand mostly in the fourth quarter.
The entire Twin Cities market was affected.

Plymouth, Minnesota: Gross operating income and operating income for the year
ended December 31, 2008, increased compared to 2007 primarily due to increased
rooms revenue, as a result of higher room rates, and decreases in rooms expense,
telephone expense, rental and other expense, general and administrative expenses
and marketing expense, partially offset by decreases in telephone revenue and
rental and other revenue and increases in energy expenses, repair and
maintenance expenses, management fees, insurance expense and property tax
expense. Occupancy was flat to last year.

Roseville, Minnesota: Gross operating income and operating income for the year
ended December 31, 2008, increased compared to 2007 primarily due to increased
rooms revenue, as a result of higher room rates, and decreases in telephone
expense, rental and other expense, general and administrative expenses and
marketing expense, partially offset by decreases in telephone revenue and rental
and other revenue and increases in rooms expense, energy expense, repair and
maintenance expenses, management fees, insurance expense and property tax
expense. Occupancy decreased in all market segments with a sharp decline in
walk-in business, as a direct result of the sluggish economy.

Scottsdale, Arizona: Gross operating income and operating income for the year
ended December 31, 2008, decreased compared to 2007 primarily due to decreases
in rooms revenue, food and beverage revenue, telephone revenue and rental and
other revenue and increases in telephone expense, rental and other expense,
marketing expense, energy expense and insurance expense, partially offset by
decreases in rooms expense, food and beverage expense, general and
administrative expenses, repair and maintenance expenses, management fees,
property tax expense and land lease expense. Occupancy decreased in all market
segments, mostly impacted by the economy, with the exception of tour and travel.
The increase in the tour and travel market was a direct result of additional
international travel due to the current exchange rates.

ITEM 8. FINANCIAL STATEMENTS
--------------------

The information required by this item is contained in Part IV.

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

None.

II-8

PART II
-------

ITEM 9A. CONTROLS AND PROCEDURES
-----------------------

In January 2009, representatives of the Managing General Partner of the
Partnership carried out an evaluation of the effectiveness of the design and
operation of the Partnership's disclosure controls and procedures, pursuant to
Exchange Act Rules 13a-15 and 15d-15. The Managing General Partner does not
expect that the Partnership's disclosure controls and procedures will prevent
all error and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple error or mistake. The design of any system of
controls also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions. Over time,
controls may become inadequate because of changes in conditions, or the degree
of compliance with the policies or procedures may deteriorate. Because of the
inherent limitations in a cost-effective control system, misstatements due to
error or fraud may occur and not be detected. Based on such evaluation, our
principal executive officer and principal financial officer have concluded that
as of December 31, 2008, our disclosure controls and procedures were effective
to ensure that (i) the information required to be disclosed by us in the reports
filed or submitted by us under the Securities Exchange Act of 1934, as amended,
was recorded, processed, summarized or reported within the time periods
specified in the SEC's rules and forms and (ii) such information was accumulated
and communicated to management, including our principal executive officer and
principal financial officer, to allow timely decisions regarding required
disclosure. In addition, there have been no significant changes in the
Partnership's internal controls over financial reporting that occurred during
the Partnership's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Partnership's internal controls over
financial reporting.

ITEM 9B. OTHER INFORMATION
-----------------

There has not been any information required to be disclosed in a report on
Form 8-K during the quarter ended December 31, 2008, but not reported, whether
or not otherwise required by this Form 10-K at December 31, 2008.

Certain states may assert claims against the Partnership for failure to
withhold and remit state income tax on operating profit or where the sale(s) of
property in which the Partnership was invested failed to produce sufficient cash
proceeds with which to pay the state tax and/or to pay statutory partnership
filing fees. The Partnership is unable to quantify the amount of such potential
claims at this time. The Partnership has consistently advised its Partners that
they should consult with their tax advisors as to the necessity of filing
non-resident returns in such states with respect to their proportional taxes
due.

II-9

PART III
--------

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------

(a) and (b)

The Partnership has no directors, executive officers or significant
employees of its own.

(a) and (b)

The names, ages and business experience of the directors and executive
officers of C.R.I., Inc. (CRI), the General Partner of the
Partnership, follow.

William B. Dockser, 72, has been the Chairman of the Board and a Director of CRI
since 1974. Prior to forming CRI, he served as President of Kaufman and Broad
Asset Management, Inc., an affiliate of Kaufman and Broad, Inc., which managed
publicly held limited partnerships created to invest in low and moderate income
multifamily apartment properties. Prior to joining Kaufman and Broad, he served
in various positions at HUD, culminating in the post of Deputy FHA Commissioner
and Deputy Assistant Secretary for Housing Production and Mortgage Credit, where
he was responsible for all federally insured housing production programs. Before
coming to the Washington, D. C. area, Mr. Dockser was a practicing attorney in
Boston and served as a special Assistant Attorney General for the Commonwealth
of Massachusetts. He holds a Bachelor of Laws degree from Yale University Law
School and a Bachelor of Arts degree, cum laude, from Harvard University.

H. William Willoughby, 62 has been President, Secretary and a Director of CRI
since January 1990 and was Senior Executive Vice President, Secretary and a
Director of CRI from 1974 to 1989. Effective May 7, 2005, he assumed the duties
of Principal Financial Officer and Principal Accounting Officer of CRI. He is
principally responsible for the financial management of CRI and its associated
partnerships. Prior to joining CRI in 1974, he was Vice President of Shelter
Corporation of America and a number of its subsidiaries dealing principally with
real estate development and equity financing. Before joining Shelter
Corporation, he was a senior tax accountant with Arthur Andersen & Co. He holds
a Juris Doctor degree, a Master of Business Administration degree and a Bachelor
of Science degree in Business Administration from the University of South
Dakota.

(d) Involvement in certain legal proceedings.

None.

ITEM 11. EXECUTIVE COMPENSATION
----------------------

(a), (b), (c), (d), (e), (f), (g), and (h)

The Partnership has no officers or directors. However, in accordance
with the Partnership Agreement, and as disclosed in the public
offering, various types of compensation and fees were paid or are
payable to the General Partner and its affiliates. Additional
information required by Item 10 is incorporated herein by reference to
Note 9 of the notes to financial statements contained in Part III.

III-1

PART III
--------

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
-----------------------------------------------
AND MANAGEMENT
--------------

(a) Security ownership of certain beneficial owners.

The following table sets forth certain information concerning any
person (including any "group") who is known to the Partnership to be
the beneficial owner of more than five percent of the issued and
outstanding BACs at March 24, 2009.

% of total
Name and Address Amount and Nature BACs issued
of Beneficial Owner of Beneficial Ownership and outstanding
------------------- ----------------------- ---------------

CMG Advisors LLC, et.al. 108,489 BACs 12.5%
1000 Second Avenue
Suite 3950
Seattle, WA 98104

Equity Resource
Investments, LLC 51,293 BACs 5.9%
1280 Massachusetts Avenue
4th Floor
Cambridge, MA 02138

MacKenzie, Patterson
Fuller, LLP 71,185 BACs 8.2%
1640 School Street
Suite 100
Morgan, CA 94556

Peachtree Partners 71,990 BACs 8.3%
3116 E. Shea Boulevard
PMB 191
Phoenix, AZ 85028

(b) Security ownership of management.

The following table sets forth certain information concerning all BACs
beneficially owned, as of March 24, 2009, by each director and by all
directors and officers as a group of the managing general partner of
the Partnership's General Partner.

% of total
Name of Amount and Nature BACs issued
Beneficial Owner of Beneficial Ownership and outstanding
---------------- ----------------------- ---------------

William B. Dockser None 0.0%
H. William Willoughby None 0.0%
All Directors and Officers
as a Group (2 persons) None 0.0%

There exists no arrangement known to the Partnership, the operation of
which may, at a subsequent date, result in a change in control of the
Partnership. There is a provision in the Partnership Agreement which
allows, under certain circumstances, the ability to change control.

III-2

PART III
--------

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------

(a) and (b)

Transactions with management and others.

The Partnership has no directors or officers. In addition, the
Partnership has had no transactions with individual officers or
directors of the managing general partner of the General Partner of
the Partnership other than any indirect interest such officers and
directors may have in the amounts paid to the General Partner or its
affiliates by virtue of either their interest in the General Partner
or their stock ownership in CRI. Item 10 of this report, which
contains a discussion of the fees and other compensation paid or
accrued by the Partnership to the General Partner or its affiliates,
is incorporated herein by reference. Note 9 of the notes to financial
statements, which contains disclosure of related party transactions,
is also incorporated herein by reference.

The Partnership's response to Item 12(a) is incorporated herein by
reference. In addition, the Partnership has no business relationship
with entities of which the managing general partner of the General
Partner of the Partnership is an officer, director or equity owner
other than as set forth in the Partnership's response to Item 12(a).

(d) Transactions with promoters.

Not applicable.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
--------------------------------------

During the years ended December 31, 2008 and 2007, the Partnership retained
Grant Thornton LLP to provide services as follows.

Year Ended December 31,
----------------------------
2008 2007
-------- --------

Audit fees (1) $185,750 $173,100
Audit-related fees -- --
Tax fees (2) 14,000 16,500
All other fees -- --
-------- --------

Total billed $199,750 $189,600
======== ========

(1) Includes quarterly reviews of Forms 10-Q and 10-QSB.
(2) Preparation of Partnership federal and state tax returns.

The Partnership has no directors or officers. The Board of Directors of the
General Partner of the General Partner of the Partnership, serving as the audit
committee, has approved in advance 100% of the fees paid to, and services
provided by, Grant Thornton LLP. Prior to approving Grant Thornton LLP's
providing any non-audit services, the Board of Directors of the General Partner
of the General Partner of the Partnership would assess whether the provision of
those services would compromise Grant Thornton LLP's independence. No such
services were provided by Grant Thornton LLP during the years ended December 31,
2008 and 2007.

III-3

PART IV
-------

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS
---------------------------------

1. Financial Statements

a. The following documents are included as part of this report:

(1) Financial Statements

Report of Independent Registered Public Accounting Firm
Balance Sheets
Statements of Operations
Statements of Changes in Partners' (Deficit) Capital
Statements of Cash Flows
Notes to Financial Statements

(2) Financial Statement Schedules

None.

(3) Exhibits

Index of Exhibits. (Listed according to the number assigned in the
table in Item 601 of Regulation S-K.)

Exhibit No. 1 - Underwriting Agreement.

a. Forms of Sales Agency Agreement. (Incorporated by reference to
the Registration Statement on Form S-1 filed on December 24,
1986.)
b. Forms of Selected Dealer Agreements. (Incorporated by reference
to the Registration Statement on Form S-1 filed on December 24,
1986.)

Exhibit No. 3 - Articles of Incorporation and Bylaws.

a. Certificate of Limited Partnership dated as of September 23, 1986
of CRI Hotel Income Partners, L.P. (formerly named CRI Hotel
Income Fund, L.P.). (Incorporated by reference to the
Registration Statement on Form S-1 filed on December 24, 1986.)

1. Amendment dated as of March 12, 1987.
2. Amendment dated as of April 17, 1987.

Exhibit No. 10 - Material Contracts.

a. Sale/Purchase Agreement, dated as of October 9, 1986, by and
between Days Inns of America, Inc. (DIA), Days Inns Corp. (DID),
Days Inns Management Company, Inc. (DIM), and CRI Hotel Income
Fund, L.P., and six modifications thereto. (Incorporated by
reference to the Registration Statement on Form S-1 filed on
December 24, 1986.)
b. Form of Management Agreement by and between DIM and CRI Hotel
Income Fund, L.P. (Incorporated by reference to the Registration
Statement on Form S-1 filed on December 24, 1986.)
c. Form of Beneficial Assignee Certificate. (Incorporated by
reference to the Registration Statement on Form S-1 filed on
December 24, 1986.)

IV-1

PART IV
-------

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS - Continued
---------------------------------

d. Forms of Amendment to Hotel Management Agreement by and between
CRI Hotel Income Partners, L.P. and Buckhead Hotel Management
Company, Inc. (Incorporated by reference to the 1994 Annual
Report on Form 10-K filed on March 15, 1995.)

Exhibit No. 10.1 - Form of Management Agreement dated March 1, 2008,
between Registrant and Oak Hotels, Inc. for the
University, Plymouth and Roseville hotels,
April 1, 2008 for the Clearwater Hotel and July
1, 2008 for the Scottsdale Hotel.

Exhibit No. 31.1 - Certification of Principal Executive Officer,
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.

Exhibit No. 31.2 - Certification of Principal Financial Officer,
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

Exhibit No. 32 - Certification of Principal Executive Officer and
Principal Financial Officer, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.

IV-2

SIGNATURES
----------

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

CRI HOTEL INCOME PARTNERS, L.P.
-----------------------------------------------------
(Registrant)

by: CRICO Hotel Associates I, L.P.
------------------------------------------------
General Partner

by: C.R.I., Inc.
-------------------------------------------
its General Partner

March 24, 2009 by: /s/ William B. Dockser
- -------------- --------------------------------------
DATE William B. Dockser,
Director, Chairman of the Board,
and Treasurer
(Principal Executive Officer)

In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

March 24, 2009 by: /s/ H. William Willoughby
- -------------- --------------------------------------
DATE H. William Willoughby,
Director, President, Secretary,
Principal Financial Officer and
Principal Accounting Officer

IV-3

CRI HOTEL INCOME PARTNERS, L. P.

INDEX TO FINANCIAL STATEMENTS

Page
----

Financial Statements of CRI Hotel Income Partners, L.P.

Report of Independent Registered Public Accounting Firm................. IV-5
Balance Sheets as of December 31, 2008 and 2007......................... IV-6
Statements of Operations for the Years Ended
December 31, 2008, 2007 and 2006..................................... IV-7
Statements of Changes in Partners' (Deficit) Capital for the Years
ended December 31, 2008, 2007 and 2006................................ IV-8
Statements of Cash Flows for the Years Ended
December 31, 2008, 2007 and 2006..................................... IV-9
Notes to Financial Statements........................................... IV-10

IV-4

Report of Independent Registered Public Accounting Firm

Partners
CRI Hotel Income Partners, L.P.

We have audited the accompanying balance sheets of CRI Hotel Income Partners,
L.P. (a Delaware limited partnership) (the Partnership) as of December 31, 2008
and 2007, and the related statements of operations, changes in partners'
(deficit) capital, and cash flows for each of the three years in the period
ended December 31, 2008. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Partnership is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Partnership's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CRI Hotel Income Partners, L.P.
as of December 31, 2008 and 2007, and the results of its operations, and its
cash flows for each of the three years in the period ended December 31, 2008 in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Grant Thornton LLP

McLean, Virginia
March 24, 2009

IV-5

CRI HOTEL INCOME PARTNERS, L.P.

BALANCE SHEETS

ASSETS

December 31,
----------------------------
2008 2007
------------ ------------

Property and equipment - at cost:
Land ............................................................................ $ 1,574,490 $ 1,574,490
Buildings and site improvements ................................................. 14,382,485 14,265,485
Furniture, fixtures and equipment ............................................... 4,214,546 3,721,657
Leasehold improvements .......................................................... 1,431,234 1,431,234
------------ ------------

21,602,755 20,992,866
Less: accumulated depreciation and amortization ................................. (14,542,003) (13,703,827)
------------ ------------

7,060,752 7,289,039

Hotel operating cash .............................................................. 156,805 576,809
Working capital reserve ........................................................... 2,333,266 1,582,408
Capital improvements and real estate tax reserves held by servicer ................ -- 315,585
Receivables and other assets, net of allowance for doubtful accounts
of $37,215 and $34,096, respectively ............................................ 406,899 329,260
Acquisition fees, principally paid to related parties,
net of accumulated amortization of $740,175 and $697,296, respectively .......... 279,928 322,807
Property purchase costs,
net of accumulated amortization of $134,870 and $126,274, respectively .......... 47,397 55,993
Loan refinancing costs,
net of accumulated amortization of $97,148 ...................................... 173,152 --
Deposit ........................................................................... -- 18,000
------------ ------------

Total assets .................................................................. $ 10,458,199 $ 10,489,901
============ ============

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable and accrued expenses ............................................. $ 524,350 $ 698,514
Hotel trade payables .............................................................. 274,258 228,397
Mortgages payable ................................................................. 7,341,231 7,273,441
------------ ------------

Total liabilities ............................................................. 8,139,839 8,200,352
------------ ------------

Partners' (deficit) capital:
General Partner ................................................................. (342,418) (342,994)
Beneficial Assignee Certificates (BACs) Series A;
868,662 BACs issued and outstanding ........................................... 2,660,778 2,632,543
------------ ------------

Total partners' capital ....................................................... 2,318,360 2,289,549
------------ ------------

Total liabilities and partners' capital ....................................... $ 10,458,199 $ 10,489,901
============ ============

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

IV-6

CRI HOTEL INCOME PARTNERS, L.P.

STATEMENTS OF OPERATIONS

For the years ended
December 31,
--------------------------------------------
2008 2007 2006
------------ ------------ ------------

Revenue:
Rooms ............................................. $ 9,769,097 $ 10,134,740 $ 9,724,276
Rental and other .................................. 249,537 297,050 325,777
Food and beverage ................................. 41,100 48,382 50,680
Telephone ......................................... 37,764 47,336 56,931
------------ ------------ ------------

10,097,498 10,527,508 10,157,664
------------ ------------ ------------

Departmental expenses:
Rooms ............................................. (2,759,440) (2,840,633) (2,744,806)
Rental and other .................................. (65,110) (77,702) (102,452)
Telephone ......................................... (70,290) (66,547) (66,108)
Food and beverage ................................. (31,562) (38,054) (34,386)
------------ ------------ ------------

(2,926,402) (3,022,936) (2,947,752)
------------ ------------ ------------

Gross operating income .............................. 7,171,096 7,504,572 7,209,912
------------ ------------ ------------

Unallocated operating income (expenses):
Interest and other income ......................... 88,267 176,308 177,020
General and administrative ........................ (1,439,750) (1,273,968) (1,170,269)
Depreciation and amortization ..................... (986,799) (1,005,778) (994,029)
Marketing ......................................... (864,701) (935,595) (900,973)
Property operations and maintenance ............... (704,062) (689,112) (677,429)
Energy ............................................ (674,224) (674,686) (677,479)
Building lease .................................... (666,250) (755,942) (685,667)
Property taxes .................................... (540,817) (508,610) (513,415)
Management fees ................................... (365,935) (417,238) (372,255)
Professional fees ................................. (231,227) (262,081) (193,529)
Base asset management fee ......................... (93,750) (93,750) (93,750)
------------ ------------ ------------

(6,479,248) (6,440,452) (6,101,775)
------------ ------------ ------------

Operating income .................................... 691,848 1,064,120 1,108,137

Interest expense .................................... (663,037) (578,855) (595,797)
------------ ------------ ------------

Net income .......................................... $ 28,811 $ 485,265 $ 512,340
============ ============ ============

Net income allocated to General Partner (2%) ........ $ 576 $ 9,705 $ 10,247
============ ============ ============

Net income allocated to BAC holders (98%) ........... $ 28,235 $ 475,560 $ 502,093
============ ============ ============

Net income per BAC, based on 868,662 BACs outstanding $ 0.03 $ 0.55 $ 0.58
============ ============ ============

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

IV-7

CRI HOTEL INCOME PARTNERS, L.P.

STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL

Beneficial
Assignee
General Certificate
Partner Holders Total
----------- ----------- -----------

Partners' (deficit) capital, January 1, 2006 . $ (338,836) $ 2,836,270 $ 2,497,434

Net income ................................. 10,247 502,093 512,340

Distribution of $0.61 per BAC holders
and General Partner ........................ (10,814) (529,884) (540,698)
----------- ----------- -----------

Partners' (deficit) capital, December 31, 2006 (339,403) 2,808,479 2,469,076
----------- ----------- -----------

Net income ................................. 9,705 475,560 485,265

Distribution of $0.75 per BAC holders
and General Partner ........................ (13,296) (651,496) (664,792)
----------- ----------- -----------

Partners' (deficit) capital, December 31, 2007 (342,994) 2,632,543 2,289,549
----------- ----------- -----------

Net income ................................. 576 28,235 28,811
----------- ----------- -----------

Partners' (deficit) capital, December 31, 2008 $ (342,418) $ 2,660,778 $ 2,318,360
=========== =========== ===========

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

IV-8

CRI HOTEL INCOME PARTNERS, L.P.

STATEMENTS OF CASH FLOWS

For the years ended
December 31,
----------------------------------------
2008 2007 2006
----------- ----------- ----------

Cash flows from operating activities:
Net income .......................................................... $ 28,811 $ 485,265 $ 512,340

Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ..................................... 986,799 1,005,778 994,029

Changes in assets and liabilities:
(Decrease) increase in receivables and other assets, net ......... (77,639) 193,242 (74,522)
(Decrease) increase in accounts payable and accrued expenses ..... (174,164) 51,881 134,928
Increase (decrease) in hotel trade payables ...................... 45,861 (23,063) 32,035
----------- ----------- -----------

Net cash provided by operating activities ..................... 809,668 1,713,103 1,598,810
----------- ----------- -----------

Cash flows from investing activities:
Additions to property and equipment ................................. (609,889) (370,864) (331,128)
Net deposits to working capital reserve ............................. (750,858) (15,860) (387,508)
Net withdrawals from (deposits to) capital improvements
and real estate tax reserves held by servicer ..................... 315,585 (98,905) (33,120)
----------- ----------- -----------

Net cash used in investing activities ......................... (1,045,162) (485,629) (751,756)
----------- ----------- -----------

Cash flows from financing activities:
Distribution to BAC holders and on behalf of BAC holders ............ -- (651,496) (529,884)
Distribution to General Partners .................................... -- (13,296) (10,814)
Refinance mortgage .................................................. 7,341,231 -- --
Loan refinancing costs .............................................. (270,300) -- --
Payment of principal on mortgage payable/payoff mortgage ............ (7,273,441) (225,734) (208,792)
Decrease (increase) in deposit ...................................... 18,000 (18,000) --
----------- ----------- -----------

Net cash used in financing activities ......................... (184,510) (908,526) (749,490)
----------- ----------- -----------

Net (decrease) increase in hotel operating cash and
cash and cash equivalents ........................................... (420,004) 318,948 97,564

Hotel operating cash and cash and cash equivalents, beginning of year . 576,809 257,861 160,297
----------- ----------- -----------

Hotel operating cash and cash and cash equivalents, end of year ....... $ 156,805 $ 576,809 $ 257,861
=========== =========== ===========

Supplemental disclosure of cash flow information:
Cash paid during the year for interest .............................. $ 663,037 $ 578,855 $ 595,797
=========== =========== ===========

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

IV-9

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Organization and offering
-------------------------

CRI Hotel Income Partners, L.P. (the Partnership) is a limited
partnership which was formed under the Delaware Revised Uniform Limited
Partnership Act as of September 23, 1986 and will continue until December
31, 2016, unless dissolved earlier in accordance with the Partnership
Agreement. The Partnership was formed for the purpose of investing in
hotels that were acquired from Days Inns of America, Inc. The Partnership's
primary objectives continue to be cash flow growth and capital
appreciation. However, the attainment of these objectives is principally
dependent on the hotels' operations. The hotels had been operated by
Bryanston Group, Inc. d/b/a Buckhead Hotel Management Company, Inc.
(Buckhead), formerly known as Days Inns Management Company, Inc., under the
nationally recognized franchise name of Days Inns. The Partnership entered
into new management contracts with Oak Hotels, Inc., which will continue to
be operated as Days Inns.

The General Partner of the Partnership is CRICO Hotel Associates I,
L.P. (CRICO Associates), a Delaware limited partnership, the general
partner of which is C.R.I., Inc. (CRI), a Delaware corporation. The General
Partner has authority in the overall management and control of the
Partnership. The Assignor Limited Partner of the Partnership is CRICO Hotel
Fund, Inc. (CRICO Hotel Fund).

b. Method of Accounting
--------------------

The financial statements of the Partnership have been prepared on the
accrual basis of accounting in conformity with accounting principles
generally accepted in the United States of America (US GAAP).

c. Depreciation and amortization
-----------------------------

Depreciation is based on the estimated useful lives of depreciable
assets using the straight-line method. Salvage value has been incorporated
relating to the Scottsdale hotel. The estimated lives used in determining
depreciation follow.

Type of asset Estimated life
------------- --------------

Building and site improvements 10-30 years
Furniture, fixtures and equipment 7 years
Leasehold improvements Shorter of estimated life
(usually 7 years) or
remaining lease term

Property purchase costs and acquisition fees are being amortized over
a thirty-year period using the straight-line method, except for the
Scottsdale hotel which is being amortized over the remaining lease term.
Loan refinancing costs are being amortized over the life of the loans using
the straight-line method, which approximates the effective interest method.

IV-10

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

d. Hotel operating cash; cash and cash equivalents
-----------------------------------------------

Hotel operating cash and cash and cash equivalents consist of demand
deposits, repurchase agreements and money market funds with original
maturities when purchased of three months or less, which have not been
designated as a working capital reserve by the General Partner. Hotel
operating cash represents funds maintained at the hotels and by the hotels'
unaffiliated manager, while cash and cash equivalents represents funds
maintained at the Partnership. The Partnership has determined that the
carrying amounts for these items approximate fair value.

e. Working capital reserve
-----------------------

The working capital reserve represents all cash and cash equivalents,
as defined above, maintained as working capital for the Partnership. The
General Partner has determined that all cash and cash equivalents
maintained at the Partnership which are not currently distributable to the
BAC holders and General Partner of the Partnership shall be deemed as a
working capital reserve. The working capital reserve may be increased or
reduced by the General Partner as it deems appropriate.

f. Hotel accounts receivable
-------------------------

Hotel accounts receivable, which is included in receivables and other
assets in the accompanying balance sheets, are reviewed by the Partnership
for collectibility. Hotel accounts receivable are reflected net of
allowance for doubtful accounts of $37,215 and $34,096 as of December 31,
2008 and 2007, respectively.

g. Revenue recognition
-------------------

Revenues are recognized when services are provided. The Partnership's
revenues are derived primarily from hotel operations, including rooms
rentals, telephone usage and food and beverage sales.

h. Earnings per BAC
----------------

Income per BAC is 98% of net income divided by BACs outstanding. The
Partnership has no dilutive instruments.

i. Income taxes
------------

For federal and state income tax purposes, each partner reports on his
or her personal income tax return his or her share of the Partnership's
income or loss as determined for tax purposes. Accordingly, no provision
has been made for income taxes in these financial statements.

j. Use of estimates
----------------

In preparing financial statements in conformity with US GAAP, the
Partnership is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements, and of
revenues and expenses during the reporting periods. Actual results could
differ from those estimates.

IV-11

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

k. Fair value of financial instruments
-----------------------------------

In September 2006, the Financial Accounts Standards Board (FASB)
issued SFAS No. 157, Fair Value Measurements ("SFAS No. 157"). SFAS No. 157
establishes a formal framework for measuring fair value under US GAAP.
Although SFAS No. 157 applies (amends) the provisions of existing FASB and
AICPA pronouncements, it does not require any new fair value measurements,
nor does it establish valuation standards. SFAS No. 157 is effective for
fiscal years beginning after November 15, 2007. We adopted the recognition
and disclosure provisions of SFAS No. 157 for financial assets and
financial liabilities and for nonfinancial assets and nonfinancial
liabilities that are re-measured at least annually effective January 1,
2008. The adoption did not have a material impact on our financial
position, results of operations or cash flows. In accordance with FSP SFAS
No. 157-2, "Effective Date of FASB Statement No. 157", we are required to
adopt the provisions of SFAS No. 157 for all other nonfinancial assets and
nonfinancial liabilities effective January 1, 2009 and do not expect the
adoption to have a material impact on our financial position, results of
operations or cash flows.

SFAS No. 157 establishes a hierarchy for inputs used in measuring fair
value as follows:

1. Level 1 Inputs -- quoted prices in active markets for identical assets
of liabilities.
2. Level 2 Inputs -- observe inputs other than quoted prices in active
markets for identical assets and liabilities.
3. Level 3 Inputs -- unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into
different levels of the fair value hierarchy. In such cases, for disclosure
purposes, the level within which the fair value measurement is categorized
is based on the lowest level input that is significant to the fair value
measurement.

Except as disclosed in Note 3, the carrying amount of our financial
instruments approximates their fair value.

l. Long-lived assets
-----------------

The Partnership reviews long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be fully recoverable. Recoverability is measured by a
comparison of the carrying amount of an asset to the estimated future
undiscounted net cash flows expected to be generated by the asset. If an
asset were determined to be impaired, its basis would be adjusted to fair
value through the recognition of an impairment loss.

m. Single operating segment
------------------------

The Partnership and the chief operating decision maker consider the
hotels' operations as a single homogeneous business activity as it relates
to achieving their objectives of cash flow growth and capital appreciation.
The chief operating decision maker reviews cash flow and operating results
in the aggregate in order to determine the appropriate level of cash
available for distribution to the investors in the Partnership.
Accordingly, the Partnership considers itself to operate in a single
reportable segment in accordance with Statement of Financial Accounting
Standards No. 131, Disclosures About Segments of an Enterprise and Related
Information.

IV-12

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

n. Risk and uncertainties
----------------------

The hotel industry in the fourth quarter 2008 is continuing to feel
the effects of a declining economy with decreased demand and lower
occupancies, which had a negative impact at all of the five hotels owned by
the Partnership. The Partnership's ability to pay operating expenses and
current liabilities, and to pay distributions to BAC holders, is primarily
dependent upon the performance of the underlying hotels. The Partnership is
currently unable to estimate the impact the future state of the economy
could have on its operations, liquidity, or capital resources.

o. New accounting pronouncement
----------------------------

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities Including an Amendment of
FASB Statement No. 115" ("SFAS No. 159"). This standard permits entities to
choose to measure many financial instruments and certain other items at
fair value and is effective for the first fiscal year beginning after
November 15, 2007. We did not make this fair value election when we adopted
SFAS No. 159 effective January 1, 2008, and, therefore, it did not have an
impact on our financial position, results of operations, or cash flows.

2. HOTELS AND LEASEHOLD INTEREST OWNED BY THE PARTNERSHIP

As of December 31, 2008, the Partnership remained invested in four hotels
and one leasehold interest, as follows.

Hotels Date of purchase Amount of purchase
---------------------- ---------------- ------------------

Clearwater Days Inn 04/01/88 $3,750,000
Minneapolis Days Inn 11/01/87 $4,800,000
Plymouth Days Inn 12/30/87 $4,000,000
Roseville Days Inn 03/01/88 $4,200,000

Leasehold interest Date of purchase Amount of purchase
---------------------- ---------------- ------------------

Scottsdale Days Inn (A) 07/01/88 $2,000,000

(A) Included in the purchase of the Scottsdale leasehold interest was
$618,000 allocated to furniture, fixtures and equipment.

3. MORTGAGE PAYABLE

On December 19, 1997, the Partnership refinanced with Citicorp Real Estate,
Inc. (Citicorp) the Zero Coupon Notes which were originally issued in connection
with the Partnership's acquisition of the hotels. The loan matured January 1,
2008. On that date, a balloon payment in the amount of $7,273,441 became due.
The General Partner was unable to refinance the Partnership's mortgage debt
prior to its maturity. Although the loan was in default, the special servicer
agreed to a forbearance agreement for a period of 180 days for payment of a fee
in the amount of $72,734.41, plus continued monthly payments of principal,
interest (at the pre-default rate) and tax and capital improvements escrows.

IV-13

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

3. MORTGAGE PAYABLE - Continued

On May 6, 2008, the Partnership closed three loans from General Electric
Credit Corporation ("GE") in the aggregate amount of $5,000,000 to refinance the
Plymouth and Roseville hotels in Minnesota and the Clearwater hotel in Florida.
The three loans are cross-collateralized by the three hotels. The Partnership
used the loan proceeds together with the proceeds of a loan from Remediation
Capital Funding, LLC in the amount of $2,900,000, of which $500,000 is held by
the Lender pending resolution of the environmental matter further discussed
below, secured by the University hotel in Minnesota, to pay off the existing
debt in full.

The Phase I environmental study of the University hotel required by GE
revealed excess levels of three chemicals deemed hazardous in the groundwater on
the property. The contamination is not due to acts or omissions of the hotel.
Simultaneously with its refinancing efforts, the Partnership engaged a
consultant to enroll the University property in the Minnesota Pollution Control
Agency's ("MCPA") Voluntary Investigation and Cleanup ("VIC") Program and deal
with the contamination at the site. The Partnership's goal is to obtain a No
Action Letter with a Covenant Not to Sue, at which point it should be able to
obtain financing on the property again. NOVA, the Partnership's consultant, has
prepared and submitted an additional Phase I study in accordance with the
guidelines established by the MPCA-VIC Program along with the application and
proposed scope of work for the required Phase II study. On July 16, 2008, the
MPCA approved the work plan for the Phase II study with samples of soil and
ground water scheduled to begin collection for analysis August 11, 2008. On
January 28, 2009, NOVA completed the Phase II study. Based on the results of the
solvent, petroleum, and RCRA metal impacts above action or guidance levels that
were detected in the soil, soil vapor and groundwater samples collected at the
site, with the exception of the petroleum impacts, the compounds detected at the
site appear to be associated with regional up gradient off-site areas of
contamination located to the northeast and possibly to the north of the site. It
does not appear that the historical uses of the site are the source of the
solvent, soil vapor and groundwater impacts detected at the site. NOVA has
submitted these results and requests that the MPCA issue an Off-Site
Determination letter and No Further Action letter for the site. The Partnership
has been advised that the VIC Program process will likely take from nine months
to eighteen months.

The three new GE loans bear interest at the rate of 6.79% per annum and
mature on January 1, 2016 with balloon payments due as set forth below:

Plymouth $887,269
Roseville $2,083,122
Clearwater $887,269

Considerable judgment is necessary to estimate the fair value of financial
instruments. Due to current limitations on credit availability and market
conditions, the estimates of fair value presented herein are not necessarily
indicative of the amounts that could be realized upon disposition of the
financial instruments. We estimate the fair value of our mortgages payable using

IV-14

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

3. MORTGAGE PAYABLE - Continued

discounted cash flow analysis, unobservable inputs, and other internally
developed estimates that incorporate market-based assumptions to range from
$3,000,000 to $3,750,000 for the Plymouth hotel, Roseville hotel and Clearwater
hotel; and approximately $2,400,000 for the University hotel loan based on
unobservable inputs.

4. CAPITAL IMPROVEMENTS, REAL ESTATE TAX RESERVES HELD BY
SERVICER AND INTERCOMPANY TRANSACTIONS

In addition to the monthly loan installments under its former mortgage
loan, as discussed above, the Partnership also made monthly payments which were
escrowed for capital improvements and estimated annual real estate taxes. During
the years ended December 31, 2008 and 2007, the Partnership made escrow deposits
aggregating $77,458 and $232,374, respectively, for capital improvements, and
$130,622 and $389,142, respectively, for estimated annual real estate taxes. As
of December 31, 2008 and December 31, 2007, the servicer held reserves of $0 and
$197,736, respectively, for capital improvements, and $0 and $117,849,
respectively, for real estate taxes. This loan was refinanced on May 6, 2008.
The Partnership was reimbursed by the former servicer in June 2008 for the
remaining balances in the escrowed capital improvement and real estate tax
accounts. Under the new mortgages, the Partnership will pay directly for real
estate taxes and capital improvements.

In 2008, the Partnership contributed $83,640 to the Clearwater hotel for
capital improvements. In November 2007, the Partnership contributed $31,835,
$56,880, $39,636 and $145,725 to the Clearwater hotel, Plymouth hotel, Roseville
hotel and Minneapolis hotel, respectively, for capital improvements.

5. WORKING CAPITAL RESERVE

The working capital reserve of $2,333,266 and $1,582,408 as of December 31,
2008 and 2007, respectively, represents all cash and cash equivalents, as
defined in Note 1.d., maintained as working capital for the Partnership. The
working capital reserve may be increased or reduced by the General Partner as it
deems appropriate.

6. COMMITMENTS

a. Hotel Management Agreements
---------------------------

The Partnership entered into management agreements with Buckhead in
connection with operation of the hotels. The management agreements were
originally extended during 2001 to expire between November 2007 and July
2008. As the respective contracts expired, the Partnership entered into new
management contracts with Oak Hotels, Inc. under business terms
substantially similar to the former agreements. The new contracts will
expire December 31, 2016, with the exception of Scottsdale, which is
coterminous with the land lease on which that hotel is located. The
agreements provide for a base management fee of 3.5% of gross revenues from
operations for the Plymouth hotel, Rosewater hotel and Clearwater hotel and
4.5% for the Scottsdale hotel.

IV-15

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

6. COMMITMENTS - Continued

b. Lease Agreements
----------------

The Partnership assumed an existing lease agreement from Days Inns of
America, Inc. in connection with the acquisition of the leasehold interest
in the Scottsdale Days Inn. The assumption transfers the rights to operate
the property on the lease's existing terms over the remaining life of the
lease. In October 2002, the lease was extended to expire on December 31,
2008. The Partnership negotiated and executed a short term extension
through December 31, 2009 until the ground lessor decides to re-develop the
property. As of February 1, 2009, annual lease payments are equal to the
greater of $480,000 or 22% of total room revenue and 2.5% of food and
beverage revenue. Minimum lease payments of $40,000 are payable monthly
with a quarterly analysis of the actual amount due. For the years ended
December 31, 2008 and 2007, annual lease payments were $666,250 and
$755,942, respectively.

c. License Agreements
------------------

The five License Agreements pursuant to which the hotels are operated
as Days Inns have recently been assigned from the current licensee (and
former management agent), Buckhead to the Partnership as Licensee. The
business terms remained identical.

d. Legal Proceedings
-----------------

On September 2, 2008, a complaint was filed against CRI Hotel Income
Partners, L.P., in the Circuit Court of the Sixth Judicial Circuit, in and
for Pinellas County, Florida. The Plaintiffs claimed damages of $15,000,
exclusive of interest and cost as a result of being bitten by bed bugs
while staying at the Days Inn Clearwater on or about July 16, 2008. The
complaint was submitted to Wausau Insurance Company, Claim
#PX415-008254-01. On January 21, 2009, the defense counsel retained by
Wausau requested that the plaintiff make a demand for settlement of this
lawsuit so as to avoid protracted litigation. A response is expected during
the first quarter of 2009 to the request. Any damages will be covered by
Wausau under the hotel's insurance policy.

7. GROUND LEASE AGREEMENTS

The Partnership had leased a portion of the Minneapolis Days Inn property
to Vicorp Restaurants, Inc. (Vicorp), which operated a Baker's Square restaurant
on the property. Gross rental income pursuant to the lease agreement with
Vicorp, which is included in interest and other income in the accompanying
statements of operations, was $12,712 and $73,694 for 2008 and 2007,
respectively. As of March 2008, Vicorp failed to pay the monthly rent due. On
April 3, 2008, Vicorp declared bankruptcy. It rejected the lease as an executory
contract as of that date. The Partnership has engaged a broker to locate a new
tenant for the space. It has filed a proof of claim for its permitted damages in
Vicorp's bankruptcy case.

The Partnership leases an adjacent building on the Roseville Days Inn
property to India Palace, Inc., which operates a restaurant on the property. The
lease expires on September 30, 2010. The lease provides one option to extend the
lease for an additional period of five years. Gross base rental income pursuant
to the lease agreement with India Palace, which is included in interest and
other income in the accompanying statements of operations, was $30,000 for both
December 31, 2008 and 2007.

IV-16

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

8. PARTNERS' CAPITAL

The Partnership's profits and losses and distributions are allocated 98% to
the BAC holders and 2% to the General Partner. Upon reaching a non-cumulative,
annual preferred cash flow return of 12%, the Partnership's profits and losses
and distributions will be allocated 85% to the BAC holders and 15% to the
General Partner. To date, the annual preferred cash flow return has not been
achieved. Cash available for distribution, as defined in the Partnership
Agreement, is intended to be distributed on a quarterly basis within 60 days
after the end of each calendar quarter.

A distribution in the amount of $221,597 ($0.25 per BAC) was declared and
paid to BAC holders of record and to the General Partner for the first quarter
of 2007 in the amounts of $217,165 and $4,432, respectively. A distribution in
the amount of $221,598 ($0.25 per BAC) was declared and paid to BAC holders of
record, to the General Partner and to the state of Minnesota for withholding for
the second quarter of 2007 in the amounts of $212,021, $4,432 and $5,145,
respectively. A distribution in the amount of $221,597 ($0.25 per BAC) was
declared and paid to BAC holders of record and to the General Partner and to the
state of Minnesota for withholding for the third quarter of 2007 in the amounts
of $212,020, $4,432 and $5,145, respectively. The Partnership did not declare a
distribution for the fourth quarter of 2007. The Partnership did not declare a
distribution in 2008.

9. RELATED-PARTY TRANSACTIONS

In accordance with the terms of the Partnership Agreement, the Partnership
paid the General Partner a fee for services in connection with the review,
selection, evaluation, negotiation and acquisition of the hotels. The
Partnership paid $1,142,516 in acquisition fees. The acquisition fees were
capitalized and are being amortized over a thirty-year period using the
straight-line method.

In accordance with the terms of the Partnership Agreement, the Partnership
reimbursed the General Partner or its affiliates for costs incurred on behalf of
the Partnership for real estate appraisals and market studies, engineering
studies, legal consultation and accounting fees, as well as travel and
communication expenses related to the acquisition of the hotels. The Partnership
paid $233,474 in such costs. The costs were capitalized and are being amortized
over a thirty-year period using the straight-line method.

In accordance with the terms of the Partnership Agreement, the Partnership
is obligated to reimburse the General Partner or its affiliates for their direct
expenses in connection with managing the Partnership. For the years ended
December 31, 2008, 2007 and 2006, the Partnership paid $202,455, $90,942 and
$41,138, respectively, to the General Partner or its affiliates as direct
reimbursement of expenses incurred on behalf of the Partnership. Such reimbursed
expenses are included in the accompanying statements of operations as general
and administrative expenses.

In accordance with the terms of the Partnership Agreement, the Partnership
is obligated to pay the General Partner or its affiliates an annual base asset
management fee (Management Fee), equal to 0.50% of the weighted average balance
of the adjusted partnership investment during the period, as defined in the
Partnership Agreement. The Partnership paid a Management Fee of $93,750 for each
of the years ended December 31, 2008, 2007 and 2006.

C.R.I., Inc., the general partner of the General Partner, has contracted
with Capitol Hotel Group, Inc. (CHG), to perform certain asset management
services related to the oversight of the operations and management of the
hotels. The Chairman and President of C.R.I., Inc., are the Chairman and
President, respectively, of, and holders of 100% of the equity interest in, CHG.

IV-17

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

10. INCOME TAXES

A reconciliation of the Partnership's financial statement net income to
taxable income follows.

For the years ended
December 31,
-----------------------------------
2008 2007 2006
-------- -------- --------

Financial statement net income $ 28,811 $485,265 $512,340

Depreciation of buildings and site improvements
computed over 40 years for tax purposes, and over
shorter lives for financial statement purposes and
differences between financial statement net income
and taxable income 77,908 459,235 451,431
-------- -------- --------

Taxable income $106,719 $944,500 $963,771
======== ======== ========

A number of investors have sold their BACs to other investors. If more than
two percent of the total outstanding BACs are transferred due to sale in any one
calendar year (not counting certain exempt transfers), the Partnership could be
taxed as a "publicly traded partnership," with potentially severe tax
implications for the Partnership and its investors. Section 7704 of the Internal
Revenue Code defines the term "publicly traded partnership" as any partnership
for federal income tax purposes, the interests of which are readily traded on an
established securities market, or readily tradable on a secondary market or the
substantial equivalent thereof. If the Partnership is classified as a "publicly
traded partnership" or otherwise fails to qualify as a partnership for federal
income tax purposes in any taxable year, it would then be subject to federal
income tax on any taxable income in that taxable year at regular corporate
rates. A BAC holder could not then take into account the BAC holder's
distributive share of the Partnership's income and would be subject to tax on
the BAC holder's share of the Partnership's income to the extent distributed
either as dividends out of current or accumulated earnings and profits or as
taxable gain in excess of the tax basis of the investor's BACs. A BAC holder
could also have to file amended income tax returns. If the Partnership were
taxed as a corporation, the BAC holder's cash flow, return on investment and the
value of the investor's BACs would be significantly reduced. Also, the income
and losses from the Partnership would no longer be considered a passive
activity.

From January 1, 2007 through April 29, 2007, the Partnership received sale
transfer requests for approximately 2.0% of the outstanding BAC's. Accordingly,
to remain within the two percent safe harbor, effective April 30, 2007, the
General Partner halted recognition of any transfers that would exceed the safe
harbor limit through December 31, 2007. As a result, transfers of BACs due to
sale transactions were not recognized by the Partnership between April 30, 2007
and December 31, 2007. The Partnership's unaffiliated transfer agent, Registrar
& Transfer Company, informed the General Partner in late January, 2008 that it
had processed sale transfers in excess of four percent of the outstanding BACs
in early January, 2008. Accordingly, the General Partner instructed the transfer
agent to halt all further sale transfers for the rest of 2008. The Partnership
sought an opinion from its tax counsel that it is "more likely than not" that
there would be no adverse tax consequences to the Partnership in connection with
exceeding the safe harbor limitation in 2008. In supplying information requested
in connection with the opinion, the General Partner became aware that the
percentage of trades significantly exceeded the safe harbor in 2006, when
Treasury Regulations applicable to the Partnership reduced the safe harbor
amount from five percent to two percent, and in 2007, when a re-calculation of
the non-exempt transfers reflected a total transfer of 2.21%. However, if
transfers in connection with known tender offers are not counted, the percentage
of sale transfers is reduced to well under two percent. The Partnership's tax
attorneys issued an opinion to the effect that the transfers pursuant to the
tender offers were not the type of regular and ongoing trading activities
contemplated as constituting public trading and that therefore it was more
likely than not that such trading would not result in the Partnership being

IV-18

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

10. INCOME TAXES - Continued

treated as a publicly traded partnership under Section 7704. However, there can
be no assurance that the Internal Revenue Service will agree with the
Partnership's position and take no action to treat it as a publicly traded
partnership.

11. CASH CONCENTRATION RISK

Financial instruments that potentially subject the Partnership to
concentrations of risk consist primarily of cash. The Partnership maintains
sixteen cash accounts. As of December 31, 2008, the uninsured portion of the
cash balance was $2,304,255.

Number of Bank Balance Insured Uninsured
Bank Accounts 12/31/08 12/31/08 12/31/08
- ---------------------- -------- ------------ -------- ----------

Dreyfus Inst Preferred
Money Market Fund 2 $2,303,000 $0 $2,303,000

Bank of America, N.A. 7 $120,339 $120,339 $0

SunTrust Bank 2 $31,255 $30,000 $1,255

Wells Fargo 5 $15,578 $15,578 $0

# # #

IV-19