FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Quarter Ended June 30, 1997
-------------

Commission file number 33-11096
--------------

CRI HOTEL INCOME PARTNERS, L.P.
- -------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

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

11200 Rockville Pike, Rockville, Maryland 20852
- ----------------------------------------- ---------------------------
(Address of principal executive offices) (Zip Code)

(301) 468-9200
- -------------------------------------------------------------------------
(Registrant's telephone number, including area code)

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 and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

Class Outstanding at June 30, 1997
- ---------------------------- ---------------------------------
(Not applicable) (Not applicable)

CRI HOTEL INCOME PARTNERS, L.P.

INDEX TO FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 1997

Page
----

PART I. Financial Information (Unaudited)

Item 1. Financial Statements

Balance Sheets - June 30, 1997
and December 31, 1996 . . . . . . . . . . . . . . . . 1

Statements of Income - for the three and six months
ended June 30, 1997 and 1996 . . . . . . . . . . . . 2

Statement of Changes in Partners' Capital (Deficit)
- for the six months ended June 30, 1997 . . . . . . 3

Statements of Cash Flows - for the six months
ended June 30, 1997 and 1996 . . . . . . . . . . . . 4

Notes to Financial Statements . . . . . . . . . . . . . 5

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 10

PART II. Other Information

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 17

Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
---------------------

CRI HOTEL INCOME PARTNERS, L.P.

BALANCE SHEETS

ASSETS

June 30, December 31,
1997 1996
------------ ------------
(Unaudited)

Property and equipment - at cost
Land $ 1,574,490 $ 1,574,490
Buildings and site improvements 13,112,968 13,112,968
Furniture, fixtures and equipment 5,517,459 5,009,400
Leasehold improvements 1,382,000 1,382,000
------------ ------------
21,586,917 21,078,858
Less: accumulated depreciation and amortization (8,997,160) (8,546,840)
------------ ------------
12,589,757 12,532,018
Cash and cash equivalents 527,260 504,423
Working capital reserve 162,020 225,000
Receivables, reserve for replacements and other assets 715,032 596,828
Acquisition fees, principally paid to related parties, net of accumulated amortization
of $320,931 and $303,930, respectively 699,173 716,174
Property purchase costs, net of accumulated amortization of $56,993 and $53,956, respectively 125,273 128,311
------------ ------------
Total assets $ 14,818,515 $ 14,702,754
============ ============

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Current liabilities:
Accounts payable and accrued expenses $ 985,728 $ 872,421
Distributions payable 390,012 398,875
Short-term portion of notes payable 7,555,830 3,843,549
------------ ------------
Total current liabilities 8,931,570 5,114,845
------------ ------------
Long term portion of notes payable -- 3,381,018
------------ ------------
Total liabilities 8,931,570 8,495,863
------------ ------------
Commitments and contingencies
Partners' capital (deficit):
General Partner (271,041) (264,641)
Beneficial Assignee Certificates (BACs) Series A; 868,662 BACs issued and outstanding 6,157,986 6,471,532
------------ ------------
Total partners' capital 5,886,945 6,206,891
------------ ------------
Total liabilities and partners' capital $ 14,818,515 $ 14,702,754
============ ============

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

-1-

PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
---------------------

CRI HOTEL INCOME PARTNERS, L.P.

STATEMENTS OF INCOME

(Unaudited)

For the three months ended For the six months ended
June 30, June 30,
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------

Revenue:
Rooms $ 2,307,550 $ 2,303,013 $ 4,883,045 $ 4,887,891
Telephone 73,771 87,283 148,754 179,918
Rental and other 106,898 87,208 204,074 178,197
Food and beverage 31,737 32,162 56,840 43,548
------------ ------------ ------------ ------------
2,519,956 2,509,666 5,292,713 5,289,554
------------ ------------ ------------ ------------
Departmental expenses:
Rooms (687,569) (713,213) (1,342,703) (1,384,719)
Telephone (27,944) (25,593) (52,457) (56,551)
Rental and other (35,353) (20,858) (78,880) (42,602)
Food and beverage (23,425) (24,820) (43,855) (36,813)
------------ ------------ ------------ ------------
(774,291) (784,484) (1,517,895) (1,520,685)
------------ ------------ ------------ ------------
Gross operating income 1,745,665 1,725,182 3,774,818 3,768,869
------------ ------------ ------------ ------------
Unallocated operating income (expenses):
Interest and other income 19,718 18,332 37,168 38,576
General and administrative (267,843) (235,904) (580,631) (528,943)
Building lease expense (161,182) (153,555) (437,652) (404,650)
Marketing (226,872) (247,955) (447,406) (473,332)
Depreciation and amortization (242,310) (222,371) (478,268) (443,520)
Energy (124,689) (120,639) (264,225) (260,470)
Property taxes (136,091) (128,010) (272,308) (266,124)
Property operations and maintenance (141,450) (148,841) (281,115) (279,223)
Management fees (89,169) (87,747) (186,178) (184,916)
Base asset management fee, paid to related parties (23,437) (23,438) (46,875) (46,876)
Professional fees (3,454) (9,051) (25,987) (19,603)
------------ ------------ ------------ ------------
(1,396,779) (1,359,179) (2,983,477) (2,869,081)
------------ ------------ ------------ ------------
Operating income 348,886 366,003 791,341 899,788

Other income (expenses):
Interest expense (167,488) (153,124) (331,263) (302,853)
------------ ------------ ------------ ------------
Net income $ 181,398 $ 212,879 $ 460,078 $ 596,935
============ ============ ============ ============

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

-2-

PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
---------------------

CRI HOTEL INCOME PARTNERS, L.P.

STATEMENTS OF INCOME - Continued

(Unaudited)

For the three months ended For the six months ended
June 30, June 30,
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------

Net income allocated to General Partner (2%) $ 3,628 $ 4,258 $ 9,202 $ 11,939
============ ============ ============ ============

Net income allocated to BAC Holders (98%) $ 177,770 $ 208,621 $ 450,876 $ 584,996
============ ============ ============ ============

Net income per BAC based on 868,662 BACs outstanding $ 0.21 $ 0.24 $ 0.52 $ 0.67
============ ============ ============ ============

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

-3-

PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
---------------------

CRI HOTEL INCOME PARTNERS, L.P.

STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)

For the six months ended June 30, 1997

(Unaudited)

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

Balance, December 31, 1996 $(264,641) $ 6,471,532 $ 6,206,891

Distributions paid or accrued of $0.88 per BAC
(including return of capital of $0.36 per BAC) (15,602) (764,422) (780,024)

Net income 9,202 450,876 460,078
--------- ------------ ------------
Balance, June 30, 1997 $(271,041) $ 6,157,986 $ 5,886,945
========= ============ ============

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

-4-

PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
---------------------

CRI HOTEL INCOME PARTNERS, L.P.

STATEMENTS OF CASH FLOWS

(Unaudited)

For the six months ended
June 30,
------------------------------
1997 1996
------------ ------------

Cash flows from operating activities:
Net income $ 460,078 $ 596,935
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 478,268 443,520
Accrued interest on notes payable 331,263 302,853

Changes in assets and liabilities:
Increase in receivables and other assets, net (113,862) (129,118)
Increase in accounts payable and accrued expenses 113,307 29,817
------------ ------------
Net cash provided by operating activities 1,269,054 1,244,007
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (508,059) (168,392)
Net withdrawals from reserve for replacements (12,251) (117,997)
Net decrease in working capital reserves 62,980 --
------------ ------------
Net cash used in investing activities (457,330) (286,389)
------------ ------------
Cash flows from financing activities:
Distributions paid to BAC Holders and General Partner (788,887) (1,044,731)
------------ ------------

Net increase (decrease) in cash and cash equivalents 22,837 (87,113)

Cash and cash equivalents, beginning of period 504,423 677,454
------------ ------------
Cash and cash equivalents, end of period $ 527,260 $ 590,341
============ ============

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

-5-

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

In the opinion of CRICO Hotel Associates I, L.P. (the General Partner), the
accompanying unaudited financial statements of CRI Hotel Income Partners, L.P.
(the Partnership) contain all adjustments of a normal recurring nature necessary
to present fairly the Partnership's financial position as of June 30, 1997 and
December 31, 1996, and the results of its operations for the three and six
months ended June 30, 1997 and 1996 and its cash flows for the six months ended
June 30, 1997 and 1996.

These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. While the General Partner believes that the disclosures
presented are adequate to make the information not misleading, it is suggested
that these financial statements be read in conjunction with the financial
statements and the notes included in the Partnership's Annual Report filed on
Form 10-K for the year ended December 31, 1996.

Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 presentation.

2. NOTES PAYABLE

In addition to the capital provided by the sale of Beneficial Assignee
Certificates (BACs), the Partnership received Zero Coupon Purchase Money Notes
(the Notes) financing from Days Inn for the acquisition of the hotels. The
Notes are nonrecourse notes collateralized by the various properties. Each note
provides for a ten year maturity from the date of acquisition with an accrual of
interest at 9% per annum, compounded on a monthly basis. Principal and accrued
interest, which will equal 47.4% of the original purchase price of the hotel, is
due upon maturity of each Note. The Notes may be prepaid at the initial note
balance plus accrued interest at any time without premium or penalty. The Notes
were originally issued by BancBoston Mortgage Corporation (BancBoston). During
the second quarter 1997, BancBoston sold the Notes to Credit Suisse First Boston
Mortgage Capital, LLC (First Boston).

As of June 30, 1997 and December 31, 1996, respectively, the Notes,
including accrued interest, consist of the following:

-6-

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

2. NOTES PAYABLE - Continued

June 30, December 31,
Note Maturity Date 1997 1996
---------------------- ------------- ----------- -----------

Minneapolis Days Inn 10/31/97 $ 2,207,494 $ 2,110,713
Plymouth Days Inn 12/29/97 1,812,290 1,732,836
Roseville Days Inn 2/28/98 1,874,683 1,792,492
Clearwater Days Inn 3/31/98 1,661,363 1,588,526
----------- -----------
$ 7,555,830 $ 7,224,567
=========== ===========

The balances of the Notes, including accrued interest, due upon maturity
are as follows:

Maturity
Date Balance
-------- -----------

Minneapolis Days Inn 10/31/97 $ 2,274,467
Plymouth Days Inn 12/29/97 1,867,275
Roseville Days Inn 2/28/98 1,990,159
Clearwater Days Inn 3/31/98 1,776,927
Scottsdale Days Inn (A) (A)
-----------
$ 7,908,828
===========

(A) The Scottsdale Days Inn is held as a leasehold interest. The maturity of
the lease was originally set for January 31, 1994. This lease term was
initially extended an additional five years, thereby expiring on January
31, 1999. During 1996, this lease was extended for an additional five
years, thereby expiring January 31, 2004.

The General Partner is currently reviewing several options available to the
Partnership to address the upcoming maturity of the Notes and the capital
improvement needs of the properties. One option may be to sell the hotels
outright (or in the case of Scottsdale, sell the leasehold interest), either as
individual assets or in a sale pool together. Another option may be to
refinance the Notes. As of August 8, 1997, the Partnership is focusing on a
plan to refinance the Notes, primarily as excess refinancing proceeds may
provide the funds necessary to make additional needed capital improvements to
the hotels. A refinancing should not preclude the future sale of the hotels,
either individually or as a portfolio. Currently, the General Partner is
negotiating with First Boston as well as several other potential lenders to
obtain refinancing. Additionally, the General Partner is negotiating with First
Boston to extend the current due dates of the Notes until a refinancing is
obtained. The General Partner anticipates that refinancing of the Notes will be

-7-

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

2. NOTES PAYABLE - Continued

obtained by December 31, 1997. There is no assurance that a refinancing loan
will be obtained nor is there any assurance that an extension of the existing
maturity dates with the current holder of the Notes will be achieved. In
addition, if a sale of all the hotels as a portfolio is alternatively pursued,
the portfolio sale would result in the dissolution of the Partnership. The
Partnership will solicit BAC Holders for majority approval of any sale offer, in
accordance with the Partnership Agreement, if the sale of the portfolio is
pursued.

3. WORKING CAPITAL RESERVES

The working capital reserve of $162,020 and $225,000 as of June 30, 1997
and December 31, 1996, respectively, represents funds held in reserve which are
maintained as working capital for the Partnership. The working capital reserve
may be increased or reduced by the General Partner as it deems appropriate. The
General Partner has approved an increase of the working capital reserve by
$577,000 during 1997, in order to address capital improvements needed to
increase the marketability of the hotels in connection with a potential
refinancing of the Notes, or a potential sale of the properties, as discussed
above. During the six months ended June 30, 1997 and 1996, the Partnership
increased the working capital reserve by $298,604 and $0, respectively. The
General Partner has approved an additional increase to the working capital
reserve of approximately $278,396 during the remainder of 1997, however, there
is no assurance that such an increase will be made. Additionally, during the
six months ended June 30, 1997, the working capital reserves were decreased by
$361,584 to provide funding to the hotels to perform needed capital
improvements, as mentioned above.

4. DISTRIBUTIONS TO BAC HOLDERS

The following distributions were paid or accrued to BAC Holders of record
during the first and second quarters of 1997 and 1996:

1997 1996
Distributions to Distributions to
BAC Holders BAC Holders
-------------------- --------------------

Quarter Ended Total Per BAC Total Per BAC
------------- ---------- ------- ---------- -------

March 31 $ 382,211 $ 0.44 $ 486,450 $ 0.56
June 30 382,211 0.44 486,450 0.56
---------- ------- ---------- -------
$ 764,422 $ 0.88 $ 972,900 $ 1.12
========== ======= ========== =======

-8-

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

4. DISTRIBUTIONS TO BAC HOLDERS - Continued

expects that distributions may be reduced substantially in the fourth quarter of
1997 and continuing into 1998. Distributions are dependent on the net cash flow
produced from hotel operations, net of Partnership expenses. The cash flow from
certain hotels may be materially affected by changing market conditions and by
seasonality.

5. COMMITMENTS

a. Hotel operations management agreements
--------------------------------------

The Partnership entered into management agreements with Buckhead Hotel
Management Company, Inc. (Buckhead) in connection with operations of the
hotels. Each agreement is for an initial term of twelve to fifteen years,
with a five-year renewal option. The agreements call for a base management
fee of 3.5% of gross revenue from operations, a marketing fee of 1.5% of
net room revenues, and a reservation fee of 2.3% of gross revenues from
rental of hotel guest rooms. The agreements also call for incentive
management fees generally equal to 25% of net cash flow available after
payment of a preferred cash flow return to the Partnership equal to 11% of
the aggregate purchase price for the hotels owned by the Partnership. No
incentive management fees were earned for the first and second quarters of
1996 or 1997.

In connection with the potential sales of the properties owned by the
Partnership, as discussed below, the Partnership could incur termination
fees of approximately $1.6 million with respect to the management
agreements with Buckhead, in the event that the hotels are sold and the
purchaser of the hotels does not elect to maintain Buckhead as the
management company. As the potential sales of the properties, and the
terms thereof, are uncertain as of August 8, 1997, these costs have not
been reflected in the accompanying financial statements.

b. Ground lease agreement
----------------------

The Partnership entered into a lease with Vicorp Restaurants, Inc.
(Vicorp) effective January 1991, for a portion of the Minneapolis Days Inn
property to operate a restaurant (Baker's Square). Gross rental income
pursuant to the lease agreement was $13,061 and $26,122 for the three and
six months ended June 30, 1997, respectively, and $12,619 and $25,238 for
the three and six months ended June 30, 1996, respectively.

6. RELATED-PARTY TRANSACTIONS

The Partnership, in accordance with the terms of the Partnership Agreement,
is obligated to reimburse the General Partner or its affiliates for their direct
expenses in connection with managing the Partnership. The Partnership paid or
accrued $17,680 and $29,760 for the three and six months ended June 30, 1997,
respectively, and $11,900 and $22,093 for the three and six months ended June
30, 1996, respectively, to the General Partner or its affiliates as direct
reimbursement of expenses incurred on behalf of the Partnership. Such
reimbursements are included in general and administrative expense on the
statements of income.

-9-

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

6. RELATED-PARTY TRANSACTIONS - Continued

The amount of the base asset management fee earned by the General Partner
or its affiliates is 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 or accrued a base asset management fee of
$23,437 and $46,875 for the three and six months ended June 30, 1997,
respectively, and $23,438 and $46,876 for the three and six months ended June
30, 1996, respectively.

-10-

PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------

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

CRI Hotel Income Partners, L.P. (the Partnership) expects that the hotels
in the aggregate will generate sufficient cash flow to achieve a positive cash
flow after operating expenses. In addition to periodic replacement of fixed
assets, which are funded from the replacement reserves, the Partnership has
determined that significant capital improvements are needed to enhance the
marketability of the hotels in connection with a potential refinancing of the
purchase money notes issued by the Partnership, or a potential sale of the
properties, as discussed below. The General Partner has approved a $577,000
increase in the working capital reserves during 1997, as discussed below, to
address the capital improvement needs of the hotels. During the six months
ended June 30, 1997, the working capital reserves were decreased by $361,584 to
provide funding to the hotels to perform needed 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 Partnership closely
monitors its cash flow position in an effort to ensure that sufficient cash is
available for operating requirements and distributions to BAC Holders. The
Partnership's net cash provided by operating activities for the six months ended
June 30, 1997, along with existing cash resources, was adequate to support
operating, investing and financing requirements and declared distributions to
BAC Holders and the General Partner. With the exception of the maturing
purchase money notes, which are discussed further below, the Partnership
estimates that existing cash and cash equivalents along with future cash flows
from the hotels' operations, in the aggregate, will be sufficient to pay
operating expenses and short term commitments, fund working capital and
replacement reserves, and make distributions to BAC Holders and the General
Partner. However, distributions are expected to be significantly reduced
beginning with the fourth quarter 1997 and continuing into 1998 as a result of a
potential refinancing of the purchase money notes issued by the Partnership, as
discussed further below. Short-term liabilities of $8,931,570 increased from
1996. This resulted primarily from the reclassification of the remaining
portion of purchase money notes which will mature during February and March
1998, an increase in trade payables at three hotels, and an increase in other
liabilities at four hotels.

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

-11-

six months ended June 30, 1997, the working capital reserves were decreased by
$361,584 to provide funding to the hotels to perform needed capital
improvements, as mentioned above.

Purchase Money Notes
- --------------------

As of June 30, 1997 and December 31, 1996, respectively, the Notes,
including accrued interest, consist of the following:

-12-

June 30, December 31,
Note Maturity Date 1997 1996
---------------------- ------------- ----------- -----------

The balances of the Notes, including accrued interest, due upon maturity
are as follows:

Maturity
Date Balance
-------- -----------

-13-

will be obtained nor is there any assurance that an extension of the existing
maturity dates with the current holder of the Notes will be achieved. In
addition, if a sale of all the hotels as a portfolio is alternatively pursued,
the portfolio sale would result in the dissolution of the Partnership. The
Partnership will solicit BAC Holders for majority approval of any sale offer, in
accordance with the Partnership Agreement, if the sale of the portfolio is
pursued.

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

The following distributions were paid or accrued to BAC Holders of record
during the first and second quarters of 1997 and 1996:

1997 1996
Distributions to Distributions to
BAC Holders BAC Holders
-------------------- --------------------

Quarter Ended Total Per BAC Total Per BAC
------------- ---------- ------- ---------- -------

March 31 $ 382,211 $ 0.44 $ 486,450 $ 0.56
June 30 382,211 0.44 486,450 0.56
---------- ------- ---------- -------
$ 764,422 $ 0.88 $ 972,900 $ 1.12
========== ======= ========== =======

As a result of the increase in working capital reserves during 1997, as
discussed above, the General Partner anticipates a decrease in the 1997
distribution levels. The General Partner expects the distribution for the three
quarters ending September 30, 1997 to approximate $1.32 per BAC. Due to the
potential refinancing of the Notes, as discussed above, the General Partner
expects that distributions may be reduced substantially in the fourth quarter of
1997 and continuing into 1998. Distributions are dependent on the net cash flow
produced from hotel operations, net of Partnership expenses. The cash flow from
certain hotels may be materially affected by changing market conditions and by
seasonality.

Mini-Tender Offers
- ------------------

The Partnership has received several requests from BAC Holders for lists of
the names and most current addresses of all BAC Holders. These requests may be
the first step by such BAC Holders to launch one or more unregistered tender
offers to acquire BACs in the Partnership. These unregistered tender offers may
or may not reflect the value of the BACs of the Partnership per secondary
markets, but are generally made at steep discounts. The Partnership takes no
position as to recommending that BAC Holders accept any mini-tender offers which
may be made.

-14-

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

The Partnership's net income, which consists principally of revenues from
hotel operations, decreased $31,481 during the three months ended June 30, 1997
from the comparable period in 1996 primarily due to a $37,600 increase in
unallocated operating expenses. Unallocated operating expenses increased
primarily due to a $31,939 increase in general and administrative expenses due
to liability insurance premium increases at the hotels and increased payroll
costs at the Partnership level, and a $19,939 increase depreciation and
amortization expense due to capital improvement expenditures, partially offset
by a $21,083 decrease in marketing expenses due to decreased payroll costs
related to the vacancy of the sales director position at the University hotel,
which was filled during May 1997. Contributing to the decrease in the
Partnership's net income was a $14,495 increase in rental and other expense due
to increased Lodgenet movie usage and a $13,512 decrease in telephone revenue
due to reduced occupancy and telephone usage. Partially offsetting the decrease
in the Partnership's net income was a $25,644 decrease in rooms expense due to
effective control efforts implemented by the new Minnesota general managers and
a $19,690 increase in rental and other income due to more movie rental income
and in-room safe revenue collected.

The Partnership's net income decreased $136,857 during the six months ended
June 30, 1997 primarily due to a $114,396 increase in unallocated operating
expenses. Unallocated operating expenses increased primarily due to a $51,688
increase in general and administrative expenses and a $34,748 increase in
depreciation and amortization expense as discussed above, and a $33,002 increase
in building lease expense at the Scottsdale hotel. The increase in unallocated
departmental expenses was partially offset by a $25,926 decrease in marketing
expense as discussed above. Contributing to the decrease in the Partnership's
net income was a $36,278 increase in rental and other expense and a $31,164
decrease in telephone revenue, as discussed above. Partially offsetting the
decrease in the Partnership's net income was a $42,016 decrease in room expense
and a $25,877 increase in rental and other income as discussed above.

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

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, the following months
should provide the highest gross operating income and net cash flow:

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

Clearwater, FL October through April
Minneapolis, MN May through October
Plymouth, MN June through October
Roseville, MN May through October
Scottsdale, AZ January through May

-15-

The Partnership's Statements of Income include operating results for each
of the hotels as outlined below. Gross Operating Income represents total
revenue from rooms, telephone, food and beverage, and rental and other, less the
related departmental expenses. Operating Income (Loss) represents Gross
Operating Income less unallocated operating income (expenses). The operating
results and average occupancy for the hotels for the three and six months ended
June 30, 1997 and 1996 are as follows:

-16-

Gross Operating Income Gross Operating Income
For the three months ended For the six months ended
June 30, June 30,
---------------------------- ----------------------------
Hotel Location 1997 1996 1997 1996
- -------------- ------------ ------------ ------------ ------------

Clearwater, FL $ 269,847 $ 276,782 $ 701,543 $ 666,923
Minneapolis, MN 411,187 414,722 714,418 729,886
Plymouth, MN 203,439 213,895 340,366 367,924
Roseville, MN 274,948 242,750 452,829 431,439
Scottsdale, AZ 586,244 577,033 1,565,662 1,572,697
------------ ------------ ------------ ------------
Total $ 1,745,665 $ 1,725,182 $ 3,774,818 $ 3,768,869
============ ============ ============ ============

Operating Income (Loss) Operating Income (Loss)
For the three months ended For the six months ended
June 30, June 30,
---------------------------- ----------------------------
Hotel Location 1997 1996 1997 1996
- -------------- ------------ ------------ ------------ ------------

Clearwater, FL $ 105,747 $ 113,337 $ 347,255 $ 322,948
Minneapolis, MN 218,955 212,221 313,533 315,008
Plymouth, MN 60,170 63,287 39,189 74,022
Roseville, MN 118,226 100,831 137,080 125,219
Scottsdale, AZ 130,620 133,847 532,910 577,831
Depreciation and Partnership operating
expenses (284,832) (257,520) (578,626) (515,240)
------------ ------------ ------------ ------------
Total $ 348,886 $ 366,003 $ 791,341 $ 899,788
============ ============ ============ ============

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Average Occupancy Average Occupancy
For the three months ended For the six months ended
June 30, June 30,
---------------------------- ----------------------------
Hotel Location 1997 1996 1997 1996
- -------------- ------------ ------------ ------------ ------------

Clearwater, FL 65% 75% 76% 79%
Minneapolis, MN 90% 91% 83% 83%
Plymouth, MN 77% 86% 69% 77%
Roseville, MN 98% 94% 89% 87%
Scottsdale, AZ 91% 96% 95% 95%
------ ------ ------ ------
Total (2) 85% 89% 83% 85%
====== ====== ====== ======

(1) The totals for average occupancy are based on a weighted average taking
into consideration the number of rooms at each location.

Gross operating income and operating income for the Clearwater hotel for
the three months ended June 30, 1997 decreased from the same period in 1996
primarily due to an unexpected drop in occupancy. Gross operating income and
operating income for the Clearwater hotel for the six months ended June 30, 1997
increased from the same period in 1996 primarily due to strong results resulting
from increased occupancy and room rates during the first quarter 1997 which
offset decreased occupancy during the second quarter 1997. Gross operating
income for the Minneapolis hotel for the three and six months ended June 30,
1997 decreased from the same period in 1996 primarily due to decreased room
rates in order to maintain occupancy. Operating income for the Minneapolis
hotel for the three months ended June 30, 1997 increased from the same period in
1996 primarily due to decreased payroll costs related to the replacement of the
sales director position during May 1997. Operating income for the Minneapolis
hotel for the six months ended June 30, 1997 remained fairly consistent with the
same period in 1996. Gross operating income and operating income for the
Plymouth hotel for the three and six months ended June 30, 1997 decreased from
the same period in 1996 primarily due to the loss of insurance contract rooms
and decreased occupancy during renovation work at the hotel. Gross operating
income and operating income for the Roseville hotel for the three and six months
ended June 30, 1997 increased from the same period in 1996 primarily due to a
new trucking contract and higher room rates. Gross operating income for the
Scottsdale hotel for the three months ended June 30, 1997 increased from the
same period in 1996 primarily due to higher room rates. Gross operating income
for the Scottsdale hotel for the six months ended June 30, 1997 decreased from
the same period in 1996 primarily due to increased room demand in the area
during 1996 as a result of Super Bowl XXX being hosted in the City of Phoenix.
Operating income for the Scottsdale hotel for the three and six months ended
June 30, 1997 decreased from the same period in 1996 primarily due to Super Bowl
XXX during 1996 and higher building lease costs in 1997.

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PART II. OTHER INFORMATION
-----------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------

No reports on Form 8-K were filed with the Commission during the quarter
ended June 30, 1997.

All other items are not applicable.

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SIGNATURE

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

CRI HOTEL INCOME PARTNERS, L.P.

By: CRICO Hotel Associates I, L.P.
General Partner

By: CRI, Inc.
General Partner

August 13, 1997 By: /s/ Susan R. Campbell
- --------------------- -------------------------------------
Date Susan R. Campbell
Executive Vice President and
Chief Operating Officer

Signing on behalf of the
Registrant and as Acting
Chief Accounting Officer,
Principal Financial and
Principal Accounting Officer

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EXHIBIT INDEX
-------------

Exhibit Method of Filing
- ------- -----------------------------

27 Financial Data Schedule Filed herewith electronically

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