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 September 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 September 30, 1997
- ---------------------------- ---------------------------------
(Not applicable) (Not applicable)

CRI HOTEL INCOME PARTNERS, L.P.

INDEX TO FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 1997

Page
----

PART I. Financial Information (Unaudited)

Item 1. Financial Statements

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

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

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

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

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

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 9

PART II. Other Information

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 15

Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

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

CRI HOTEL INCOME PARTNERS, L.P.

BALANCE SHEETS
ASSETS

September 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 5,598,068 5,009,400
Leasehold improvements 1,382,000 1,382,000
------------ ------------
21,667,526 21,078,858
Less: accumulated depreciation and amortization (9,229,928) (8,546,840)
------------ ------------
12,437,598 12,532,018
Cash and cash equivalents 589,532 504,423
Working capital reserve 172,424 225,000
Receivables, reserve for replacements and other assets 780,742 596,828
Acquisition fees, principally paid to related parties,
net of accumulated amortization of $329,432 and $303,930, respectively 690,672 716,174
Property purchase costs, net of accumulated amortization
of $58,513 and $53,956, respectively 123,754 128,311
------------ ------------
Total assets $ 14,794,722 $ 14,702,754
============ ============

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Current liabilities:
Accounts payable and accrued expenses $ 1,040,630 $ 872,421
Distributions payable 390,012 398,875
Short-term portion of notes payable 7,727,114 3,843,549
------------ ------------
Total current liabilities 9,157,756 5,114,845
------------ ------------
Long term portion of notes payable -- 3,381,018
------------ ------------
Total liabilities 9,157,756 8,495,863
------------ ------------
Commitments and contingencies
Partners' capital (deficit):
General Partner (276,042) (264,641)
Beneficial Assignee Certificates (BACs) Series A; 868,662 BACs issued and outstanding 5,913,008 6,471,532
------------ ------------
Total partners' capital 5,636,966 6,206,891
------------ ------------
Total liabilities and partners' capital $ 14,794,722 $ 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 nine months ended
September 30, September 30,
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------

Revenue:
Rooms $ 2,293,727 $ 2,267,857 $ 7,176,772 $ 7,155,748
Telephone 70,262 83,134 219,016 263,052
Rental and other 91,349 93,882 295,423 272,079
Food and beverage 27,870 21,666 84,710 65,214
------------ ------------ ------------ ------------
2,483,208 2,466,539 7,775,921 7,756,093
------------ ------------ ------------ ------------
Departmental expenses:
Rooms (708,722) (717,028) (2,051,425) (2,101,747)
Telephone (25,562) (25,634) (78,019) (82,185)
Rental and other (37,667) (22,505) (116,547) (65,107)
Food and beverage (22,161) (18,405) (66,016) (55,218)
------------ ------------ ------------ ------------
(794,112) (783,572) (2,312,007) (2,304,257)
------------ ------------ ------------ ------------
Gross operating income 1,689,096 1,682,967 5,463,914 5,451,836
------------ ------------ ------------ ------------
Unallocated operating income (expenses):
Interest and other income 18,561 21,150 55,729 59,726
General and administrative (252,511) (249,891) (833,142) (778,834)
Building lease expense (126,132) (124,385) (563,784) (529,035)
Marketing (230,517) (227,265) (677,923) (700,597)
Depreciation and amortization (246,743) (226,550) (725,011) (670,070)
Energy (143,265) (153,356) (407,490) (413,826)
Property taxes (136,358) (128,010) (408,666) (394,134)
Property operations and maintenance (141,556) (133,441) (422,671) (412,664)
Management fees (85,889) (86,244) (272,067) (271,160)
Base asset management fee, paid to related
parties (23,437) (23,436) (70,312) (70,312)
Professional fees (9,932) (12,405) (35,919) (32,008)
------------ ------------ ------------ ------------
(1,377,779) (1,343,833) (4,361,256) (4,212,914)
------------ ------------ ------------ ------------
Operating income 311,317 339,134 1,102,658 1,238,922

Other expenses:
Interest expense (171,284) (156,595) (502,547) (459,448)
------------ ------------ ------------ ------------
Net income $ 140,033 $ 182,539 $ 600,111 $ 779,474
============ ============ ============ ============

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)

Net income allocated to General Partner (2%) $ 2,801 $ 3,650 $ 12,002 $ 15,589
============ ============ ============ ============

Net income allocated to BAC Holders (98%) $ 137,232 $ 178,889 $ 588,109 $ 763,885
============ ============ ============ ============

Net income per BAC based on 868,662 BACs outstanding $ 0.16 $ 0.21 $ 0.68 $ 0.88
============ ============ ============ ============

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 nine months ended September 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 $1.32 per BAC
(including return of capital of $0.64 per BAC) (23,403) (1,146,633) (1,170,036)

Net income 12,002 588,109 600,111
--------- ------------ ------------
Balance, September 30, 1997 $(276,042) $ 5,913,008 $ 5,636,966
========= ============ ============

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 nine months ended
September 30,
------------------------------
1997 1996
------------ ------------

Cash flows from operating activities:
Net income $ 600,111 $ 779,474
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 725,011 670,070
Accrued interest on notes payable 502,547 459,448
Changes in assets and liabilities:
Increase in receivables and other assets, net (188,974) (6,808)
Increase (decrease) in accounts payable and accrued expenses 168,209 (38,693)
------------ ------------
Net cash provided by operating activities 1,806,904 1,863,491
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (588,668) (398,385)
Net (deposits to) withdrawals from reserve for replacements (6,804) 26,065
Net withdrawals from working capital reserves 52,576 --
------------ ------------
Net cash used in investing activities (542,896) (372,320)
------------ ------------
Cash flows from financing activities:
Distributions paid to BAC Holders and General Partner (1,178,899) (1,541,111)
------------ ------------

Net increase (decrease) in cash and cash equivalents 85,109 (49,940)

Cash and cash equivalents, beginning of period 504,423 677,454
------------ ------------
Cash and cash equivalents, end of period $ 589,532 $ 627,514
============ ============

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 September 30, 1997
and December 31, 1996, and the results of its operations for the three and nine
months ended September 30, 1997 and 1996 and its cash flows for the nine months
ended September 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 Note
(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 September 30, 1997 and December 31, 1996, respectively, the Notes,
including accrued interest, consisted of the following:

-6-

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

2. NOTES PAYABLE - Continued

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

Minneapolis Days Inn 10/31/97 $ 2,257,536 $ 2,110,713
Plymouth Days Inn 12/29/97 1,853,374 1,732,836
Roseville Days Inn 2/28/98 1,917,178 1,792,492
Clearwater Days Inn 3/31/98 1,699,026 1,588,526
------------ -----------
$ 7,727,114 $ 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 January 31,
1999. During 1996, this lease was extended for an additional five years,
thereby expiring January 31, 2004.

The General Partner is proceeding with refinancing the four Notes (which
mature between October 31, 1997 and March 31, 1998). On November 3, 1997, the
Partnership refinanced with Citicorp Real Estate, Inc. ("Citicorp") the Note
secured by the Minneapolis Days Inn which matured October 31, 1997. The new
Note, which is nonrecourse, is payable on demand and its interest rate floats at
one-month LIBOR plus 165 basis points (LIBOR plus 1.65%, currently 7.34%). The
General Partner anticipates completing the refinancing of the remaining three
Notes with Citicorp by the close of the year, at which time the Note secured by
the Minneapolis Days Inn will be modified to reflect a fixed term and interest
rate. If such refinancing is not concluded with Citicorp, Citicorp could demand
payment of the Note secured by the Minneapolis Days Inn and foreclose on the
hotel if not paid. The combined refinancing proceeds should be approximately
$8.9 million. Such proceeds in excess of the amount needed to pay off the
former financing (approximately $7.9 million) will be used to pay the costs of

-7-

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

2. NOTES PAYABLE - Continued

refinancing and to fund needed capital improvements at the hotels. Subject to
prepayment terms which may or may not be included in the combined refinancing,
such refinancing should not preclude the future sale of the hotels, either
individually or as a portfolio; however, there is no assurance that the
refinancing, on the terms described above or on other terms, will be
successfully concluded.

3. WORKING CAPITAL RESERVES

The working capital reserve of $172,424 and $225,000 as of September 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 deemed
appropriate. During the nine months ended September 30, 1997, the General
Partner approved a $309,008 increase to the working capital reserve in order to
address needed capital improvements at the hotels. Additionally, during the
nine months ended September 30, 1997, the Partnership funded $361,584 from the
working capital reserve to the hotels to pay for such capital improvements.

4. DISTRIBUTIONS TO BAC HOLDERS

The following distributions were paid or accrued to BAC Holders of record
during the first three 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
September 30 382,211 0.44 416,957 0.48
---------- ------- ---------- -------
$1,146,633 $ 1.32 $1,389,857 $ 1.60
========== ======= ========== =======

As a result of the increase in working capital reserves during 1997, as
discussed above, the distribution levels for the first three quarters of 1997
have decreased from 1996. Due to the anticipated refinancing of the Notes, as
discussed above, the General Partner expects that distributions may be further
reduced in the fourth quarter of 1997 and continuing into 1998. The General
Partner expects the distribution for the four quarters ending December 31, 1997
to approximate $1.54 per BAC, versus $2.05 for the four quarters ended December
31, 1996. Distributions are also 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.

-8-

CRI HOTEL INCOME PARTNERS, L.P.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

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 three quarters of 1996
or 1997.

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 Baker's Square restaurant. Gross rental income
pursuant to the lease agreement was $13,060 and $39,182 for the three and
nine months ended September 30, 1997, respectively, and $12,619 and $37,858
for the three and nine months ended September 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 $8,607 and $38,367 for the three and nine months ended September 30,
1997, respectively, and $11,695 and $33,788 for the three and nine months ended
September 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.

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 $70,312 for the three and nine months ended September 30, 1997,
respectively, and $23,436 and $70,312 for the three and nine months ended
September 30, 1996, respectively.

-9-

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. During the nine months ended September 30, 1997,
the Partnership funded $361,584 from the working capital reserve to the hotels
to address such capital improvements. The Partnership anticipates using funds
generated by a refinancing of the partnership's debt to fund further capital
improvements needed at the hotels, as discussed below.

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 nine months
ended September 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
the anticipated refinancing of the purchase money notes issued by the
Partnership, as discussed further below. Short-term liabilities of $9,157,756
increased by $4,042,911 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 accrued property tax at
four hotels and an increase in building lease payable at the Scottsdale hotel.

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

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

In addition to the capital provided by the sale of Beneficial Assignee
Certificates (BACs), the Partnership received Zero Coupon Purchase Money Note

-10-

(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 September 30, 1997 and December 31, 1996, respectively, the Notes,
including accrued interest, consisted of the following:

-11-

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

Minneapolis Days Inn 10/31/97 $ 2,257,536 $ 2,110,713
Plymouth Days Inn 12/29/97 1,853,374 1,732,836
Roseville Days Inn 2/28/98 1,917,178 1,792,492
Clearwater Days Inn 3/31/98 1,699,026 1,588,526
----------- -----------
$ 7,727,114 $ 7,224,567
=========== ===========

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

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

-12-

prepayment terms which may or may not be included in the combined refinancing,
such refinancing should not preclude the future sale of the hotels, either
individually or as a portfolio; however, there is no assurance that the
refinancing, on the terms described above or on other terms, will be
successfully concluded.

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

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

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

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

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. Unregistered tender offers may or
may not reflect the value of the BACs of the Partnership as reflected in trades
on the secondary markets, but historically unregistered tender offers have been
made at steep discounts to secondary market prices. The Partnership takes no
position as to recommending that BAC Holders accept any tender offers which may
be made. Because the acceptance of an unregistered tender offer generally is

-13-

irrevocable, the General Partner suggests that any BAC Holder check current
prices on the secondary market before making a decision.

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

The Partnership's net income, which consists principally of revenues from
hotel operations, decreased $42,506 during the three months ended September 30,
1997 from the comparable period in 1996 primarily due to a $33,946 increase in
unallocated operating expenses. Unallocated operating expenses increased
primarily due to a $20,193 increase in depreciation and amortization expense due
to capital improvement expenditures. Contributing to the decrease in the
Partnership's net income was a $15,162 increase in rental and other expense due
to increased Lodgenet movie usage and a $12,872 decrease in telephone revenue
due to reduced occupancy and telephone usage. Partially offsetting the decrease
in the Partnership's net income was a $25,870 increase in room revenue due to
higher room rates.

The Partnership's net income decreased $179,363 during the nine months
ended September 30, 1997 primarily due to a $148,342 increase in unallocated
operating expenses. Unallocated operating expenses increased primarily due to a
$54,941 increase in depreciation and amortization expense as discussed above, a
$54,308 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 $34,749 increase in building lease expense at the
Scottsdale hotel. The increase in unallocated departmental expenses was
partially offset by a $22,674 decrease in marketing expense 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 $51,440 increase in rental and other
expense and a $44,036 decrease in the telephone revenue, as discussed above.
Partially offsetting the decrease in the Partnership's net income was a $50,322
decrease in rooms expense due to effective control efforts implemented by the
new Minnesota general managers, a $23,344 increase in rental and other income
due to more movie rental income and in-room safe revenue collected and a $21,024
increase in room revenue, 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

-14-

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 nine months ended
September 30, 1997 and 1996 were as follows:

-15-

Gross Operating Income Gross Operating Income
For the three months ended For the nine months ended
September 30, September 30,
---------------------------- ----------------------------
Hotel Location 1997 1996 1997 1996
- -------------- ------------ ------------ ------------ ------------

Clearwater, FL $ 206,120 $ 207,335 $ 907,663 $ 874,258
Minneapolis, MN 455,425 466,997 1,169,843 1,196,883
Plymouth, MN 273,048 251,127 613,414 619,051
Roseville, MN 316,333 312,017 769,162 743,456
Scottsdale, AZ 438,170 445,491 2,003,832 2,018,188
------------ ------------ ------------ ------------
Total $ 1,689,096 $ 1,682,967 $ 5,463,914 $ 5,451,836
============ ============ ============ ============

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

Clearwater, FL $ 58,753 $ 54,758 $ 406,008 $ 377,706
Minneapolis, MN 250,403 248,641 563,936 563,649
Plymouth, MN 114,477 111,151 153,666 185,173
Roseville, MN 147,674 158,396 284,754 283,615
Scottsdale, AZ 23,375 29,502 556,285 607,333
Depreciation and Partnership operating expenses (283,365) (263,314) (861,991) (778,554)
------------ ------------ ------------ ------------
Total $ 311,317 $ 339,134 $ 1,102,658 $ 1,238,922
============ ============ ============ ============

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Average Occupancy Average Occupancy
For the three months ended For the nine months ended
September 30, September 30,
---------------------------- ----------------------------
Hotel Location 1997 1996 1997 1996
- -------------- ------------ ------------ ------------ ------------

Clearwater, FL 59% 61% 70% 73%
Minneapolis, MN 86% 91% 84% 86%
Plymouth, MN 76% 84% 72% 79%
Roseville, MN 100% 97% 93% 91%
Scottsdale, AZ 90% 94% 92% 94%
------ ------ ------ ------
Total (1) 83% 86% 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 for the Clearwater hotel for the three months ended
September 30, 1997 remained fairly constant with 1996. Gross operating income
for the Clearwater hotel for the nine months ended September 30, 1997 and
operating income for the three and nine months ended September 30, 1997
increased from the same periods in 1996 primarily due to the replacement of
lower-rated contract business with more profitable clientele. Gross operating
income for the Minneapolis hotel for the three and nine months ended September
30, 1997 decreased from the same periods in 1996 primarily due to decreased room
rates and decreased occupancy. Operating income for the Minneapolis hotel for
the three and nine months ended September 30, 1997 remained fairly constant with
the same periods in 1996. Gross operating income for the Plymouth hotel for the
three months ended September 30, 1997 increased from the same period in 1996
primarily due to positive results of the renovation work performed at the hotel
during 1997. Gross operating income for the Plymouth hotel for the nine months
ended September 30, 1997 decreased from the same period in 1996 primarily due to
poor performance before and during the renovation work at the hotel. Operating
income for the Plymouth hotel for the three months ended September 30, 1997
remained fairly constant with the same period in 1996. Operating income for the
Plymouth hotel for the nine months ended September 30, 1997 decreased from the
same period in 1996 primarily due to the overall impact of the loss of a major
client. Gross operating income for the Roseville hotel for the three and nine
months ended September 30, 1997 increased from the same periods in 1996
primarily due to a new trucking contract, higher room rates and increased
occupancy. Operating income for the Roseville hotel for the three months ended
September 30, 1997 decreased from the same period in 1996 due to increases in
the minimum wage and increased maintenance repairs to upgrade the hotel.
Operating income for the Roseville hotel for the nine months ended September 30,
1997 remained fairly constant with the same period in 1996. Gross operating
income and operating income for the Scottsdale hotel for the three and nine
months ended September 30, 1997 decreased from the same periods in 1996

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primarily due to decreased room demand in the area as a result of Super Bowl XXX
being hosted in the City of Phoenix during 1996 and overall competition in the
Scottsdale area.

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 September 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. (Registrant)

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

By: CRI, Inc.
General Partner

November 13, 1997 By: /s/ Michael J. Tuszka
- ----------------- ---------------------------------
Date Michael J. Tuszka
Vice President/Chief Accounting
Officer of CRI, Inc., and
signing on behalf of the
Registrant as 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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