SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

______________

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the Quarterly Period Ended June 30, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from __________ to __________

Commission File Number 0-27360

_____________

EXTENDED STAY AMERICA, INC.
(Exact name of Registrant as specified in its charter)

Delaware 36-3996573
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

450 EAST LAS OLAS BOULEVARD, FORT LAUDERDALE, FL 33301
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (954) 713-1600
_____________

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 _____
-----

At August 10, 2001, the registrant had issued and outstanding an aggregate of
92,778,295 shares of Common Stock.

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EXTENDED STAY AMERICA, INC.

Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share data)

ASSETS
----------
June 30, December 31,
2001 2000(1)
---------- ------------

Current assets:
Cash and cash equivalents.................................... $ 8,625 $ 13,386
Accounts receivable.......................................... 7,619 9,152
Prepaid expenses............................................. 7,304 8,246
Deferred income taxes........................................ 36,108 37,487
Other current assets......................................... 27
---------- ----------
Total current assets...................................... 59,656 68,298
Property and equipment, net................................... 2,159,357 2,035,492
Deferred loan costs, net...................................... 21,879 17,086
Other assets.................................................. 813 726
---------- ----------
$2,241,705 $2,121,602
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
Accounts payable............................................. $ 39,465 $ 32,587
Accrued retainage............................................ 10,383 10,076
Accrued property taxes....................................... 11,902 12,246
Accrued salaries and related expenses........................ 3,816 3,644
Accrued interest............................................. 6,018 6,590
Other accrued expenses....................................... 25,736 18,602
Current portion of long-term debt............................ 3,837 5,000
---------- ----------
Total current liabilities................................. 101,157 88,745
---------- ----------
Deferred income taxes......................................... 113,290 103,224
---------- ----------
Long-term debt................................................ 1,016,163 947,000
---------- ----------

Commitments

Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares
authorized; no shares issued and outstanding.................
Common stock, $.01 par value, 500,000,000 shares authorized;
94,964,870 and 95,468,972 shares issued and outstanding,
respectively............... .............................. 950 955
Additional paid-in capital................................... 817,216 825,755
Retained earnings............................................ 192,929 155,923
---------- ----------
Total stockholders' equity................................ 1,011,095 982,633
---------- ----------
$2,241,705 $2,121,602
========== ==========

_____________________
(1) Derived from audited financial statements

See notes to the unaudited condensed consolidated financial statements

EXTENDED STAY AMERICA, INC.

Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)

Three Months Ended Six Months Ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
-------- -------- -------- --------

Revenue..................................................... $143,112 $133,236 $277,527 $247,176

Property operating expenses................................. 56,694 51,972 113,533 102,903
Corporate operating and property
management expenses....................................... 11,773 11,070 23,399 21,983
Headquarters relocation costs............................... 4,426 4,426
Depreciation and amortization............................... 17,745 16,357 35,287 32,507
-------- -------- -------- --------
Total costs and expenses................................. 90,638 79,399 176,645 157,393
-------- -------- -------- --------

Income from operations before interest, income taxes and
cumulative effect of accounting change.................... 52,474 53,837 100,882 89,783

Interest expense, net....................................... 18,394 18,420 38,092 35,564
-------- -------- -------- --------

Income before income taxes and cumulative effect of
accounting change.......................................... 34,080 35,417 62,790 54,219

Provision for income taxes.................................. 13,632 14,168 25,115 21,689
-------- -------- -------- --------

Net income before cumulative effect of accounting change.... 20,448 21,249 37,675 32,530

Cumulative effect of change in accounting for derivatives,
net of income tax benefit of $466.......................... (669)
-------- -------- -------- --------

Net income.................................................. $ 20,448 $ 21,249 $ 37,006 $ 32,530
======== ======== ======== ========

Net income per common share - Basic:
Net income before cumulative effect of accounting change... $ 0.22 $ 0.22 $ 0.40 $ 0.34
Cumulative effect of accounting change..................... (0.01)
-------- -------- -------- --------
Net income................................................. $ 0.22 $ 0.22 $ 0.39 $ 0.34
======== ======== ======== ========

Net income per common share - Diluted:
Net income before cumulative effect of accounting change... $ 0.21 $ 0.22 $ 0.38 $ 0.34
Cumulative effect of accounting change.....................
-------- -------- -------- --------
Net income................................................. $ 0.21 $ 0.22 $ 0.38 $ 0.34
======== ======== ======== ========

Weighted average shares:
Basic...................................................... 94,773 95,232 95,256 95,432
Effect of dilutive options................................. 3,122 677 3,128 502
-------- -------- -------- --------
Diluted.................................................... 97,895 95,909 98,384 95,934
======== ======== ======== ========

See notes to the unaudited condensed consolidated financial statements

EXTENDED STAY AMERICA, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

Six Months Ended
----------------------
June 30, June 30,
2001 2000
--------- ---------

Cash flows from operating activities:
Net income.......................................................... $ 37,006 $ 32,530
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization..................................... 35,287 32,507
Amortization of deferred loan costs included in interest expense.. 2,583 2,033
Deferred income taxes............................................. 11,445 14,595
Cumulative effect of accounting change, net....................... 669
Changes in operating assets and liabilities....................... 10,104 195
--------- ---------
Net cash provided by operating activities....................... 97,094 81,860
--------- ---------
Cash flows from investing activities:
Additions to property and equipment................................. (149,929) (127,652)
Other assets........................................................ (87) (315)
--------- ---------
Net cash used in investing activities........................... (150,016) (127,967)
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt........................................ 399,000 283,000
Repayments of term loans and revolving credit facility.............. (331,000) (219,000)
Proceeds from issuance of common stock.............................. 15,203 70
Repurchases of Company common stock................................. (27,666) (8,574)
Additions to deferred loan costs.................................... (7,376) (5,772)
--------- ---------
Net cash provided by financing activities....................... 48,161 49,724
--------- ---------
(Decrease) increase in cash and cash equivalents..................... (4,761) 3,617
Cash and cash equivalents at beginning of period..................... 13,386 6,449
--------- ---------
Cash and cash equivalents at end of period........................... $ 8,625 $ 10,066
========= =========

Noncash investing and financing transactions:
Capitalized or deferred items included in accounts payable
and accrued liabilities............................................ $ 37,931 $ 22,485
========= =========

Supplemental cash flow disclosures:
Cash paid for:
Income taxes....................................................... $ 10,466 $ 14,661
========= =========
Interest expense, net of amounts capitalized....................... $ 36,430 $ 33,881
========= =========

See notes to the unaudited condensed consolidated financial statements

EXTENDED STAY AMERICA, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2001

NOTE 1 -- BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements are unaudited and
include the accounts of Extended Stay America, Inc. and subsidiaries (the
"Company"). All significant intercompany accounts and transactions have been
eliminated in consolidation.

These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.

The condensed consolidated balance sheet data at December 31, 2000 was derived
from audited financial statements of the Company but does not include all
disclosures required by generally accepted accounting principles.

Operating results for the three-month and six-month periods ended June 30,
2001 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2001. For further information, refer to the financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000.

The computation of diluted earnings per share for the three months ended June
30, 2001 and 2000 does not include approximately 2.3 million and 9.4 million
weighted average shares, respectively, and for the six months ended June 30,
2001 and 2000 does not include approximately 2.3 million and 12.8 million
weighted average shares, respectively, of common stock represented by
outstanding options because the exercise price of the options for the periods
was greater than the average market price of common stock during the periods.

Certain previously reported amounts have been reclassified to conform with the
current period's presentation.

Revenue Recognition

Effective December 31, 2000, the Company adopted the Securities and Exchange
Commission's Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition" as
amended. SAB No. 101 provides guidance on the recognition, presentation and
disclosure of revenue, including specifying basic criteria which must be met
before revenue can be recognized. The adoption of SAB No. 101 had no impact on
the Company's financial statements.

Room revenue and other revenue are recognized when services are rendered.
Amounts paid in advance are deferred until earned. Room revenue on weekly
guests is recognized ratably. In the event a guest checks-out early making them
ineligible for the weekly rate, they are re-assessed at the daily rate with any
resulting adjustment reflected in revenue on the date of check-out.

Impairment of Long-Lived Assets

In accordance with Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of", assets are generally evaluated on a market-by-market
basis in making a determination as to whether such assets are impaired. At each
year-end, we review long-lived assets for impairment based on estimated future
nondiscounted cash flows attributable to the assets. In the event such cash
flows are not expected to be sufficient to recover the recorded value of the
assets, the assets are written down to their estimated fair values.

The Company performed a comprehensive review of long-lived assets as of the
end of December 31, 2000. Based on this review, no long-lived assets were
deemed to be impaired.

Derivative Financial Instruments and Cumulative Effect of a Change in Accounting

The Company does not enter into financial instruments for trading or
speculative purposes. The Company uses interest rate cap contracts to hedge its
exposure on variable rate debt. Through December 31, 2000, the cost of the caps
was included in prepaid expenses and amortized to interest expense over the life
of the cap contract.

Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for
Derivative Instruments and Hedging Activities", as amended, requires all
derivatives to be carried on the balance sheet at fair value. SFAS No. 133, as
amended, is effective for financial statements issued for periods beginning
after December 15, 2000. At December 31, 2000, the carrying value of our
interest rate cap contracts was $1,115,000 and their fair value was zero. The
Company adopted SFAS No. 133 on January 1, 2001 and designated its interest rate
cap contracts as cash-flow hedges of its variable rate debt. SFAS No. 133, as
interpreted by the Derivatives Implementation Group, required the transition
adjustment to be allocated between the cumulative-effect-type adjustment of
earnings and the cumulative-effect-type adjustment of other comprehensive income
based on our pre-SFAS No.133 accounting policy for the contracts. Since the
fair value of the interest rate cap contracts at adoption was zero, the entire
transition adjustment was recognized in earnings.

Headquarters Relocation Costs

On May 18, 2001, we announced that we would be relocating our corporate
headquarters from Ft. Lauderdale, Florida to Spartanburg, South Carolina. We
expect to incur non-recurring charges of approximately $8.5 million during 2001
in connection with the move, including approximately $2.4 million in non-cash
charges related to the abandonment of unamortized leasehold improvements and
charges associated with the valuation of stock options for terminated employees.
Through June 30, 2001, we had incurred approximately $4.4 million of such
charges.

New Accounting Releases

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS No. 141 requires that all business combinations be accounted for
by the purchase method. This statement also requires the separate recognition
of intangible assets apart from goodwill that can be identified in a purchase
and increases the financial statement disclosures associated with business
combinations. This statement is effective for all business combinations
initiated after June 30, 2001 and for all business combinations accounted for by
the purchase method for which the date of acquisition is July 1, 2001, or later.
SFAS No. 142 requires a non-amortization approach for goodwill in which goodwill
will be tested for impairment at least annually by evaluating the fair value of
the acquired business. This statement is effective for fiscal years beginning
after December 15, 2001, to all goodwill and other intangible assets recognized
in an entity's statement of financial position at the beginning of that fiscal
year, regardless of when those previously recognized assets were initially
recognized. SFAS No. 141 and SFAS No. 142 will have no impact on the Company's
financial statements.

NOTE 2 -- PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

(000's Omitted)
June 30, December 31,
2001 2000
---------- ----------

Operating Facilities:
Land and improvements........................................ $ 545,063 $ 499,999
Buildings and improvements................................... 1,420,105 1,348,604
Furniture, fixtures, equipment and supplies.................. 268,024 258,212
Total Operating Facilities................................. 2,233,192 2,106,815
Office furniture, fixtures and equipment....................... 8,284 8,084
Facilities under development, including land and improvements.. 150,466 118,110
---------- ----------
2,391,942 2,233,009
Less: Accumulated depreciation................................ (232,585) (197,517)
Total property and equipment................................... $2,159,357 $2,035,492
========== ==========

The Company utilizes general contractors for the construction of its
properties. Pursuant to the terms of the Company's contractual agreements with
the general contractors, amounts are retained from payments made to them until
such time as the terms of the agreement have been satisfactorily completed.
Retained amounts are recorded as accrued retainage.

NOTE 3 -- LONG-TERM DEBT

On June 27, 2001, the Company issued $300 million 9.875% Senior Subordinated
Notes due 2011. The net proceeds were used to reduce amounts outstanding under
the Company's existing credit agreement. The Company is obligated to cause the
notes to generally be freely transferable no later than six months after their
issuance or the annual interest rate will increase by 0.5%. Interest on the
notes is payable semiannually on June 15 and December 15. The notes are not
collateralized, are pari passu with the Company's existing $200 million 9.15%
Senior Subordinated Notes due 2008, and are subordinated to the Company's senior
indebtedness. The notes contain certain covenants for the benefit of the
holders. These covenants, among other things, limit the Company's ability under
certain circumstances to incur additional indebtedness, pay dividends and make
investments and other restricted payments, enter into transactions with 5%
stockholders or affiliates, create liens, and sell assets.

On July 24, 2001, the Company entered into an agreement with various banks
establishing $900 million in credit facilities that provide for revolving loans
and term loans on a senior collateralized basis. The proceeds of the credit
facilities are to be used for general corporate purposes and to retire existing
indebtedness under the Company's existing credit agreement.

In connection with the termination of its previously existing credit facility
on July 24, 2001, the Company incurred an extraordinary charge of $6.0 million,
net of income taxes of $4.0 million, associated with the write-off of
unamortized deferred debt costs which will be reflected in earnings for the
quarter ending September 30, 2001.

Loans under the new credit facilities bear interest, at the Company's option,
at either a prime-based rate or a LIBOR-based rate plus an applicable margin.
The table below illustrates the amounts committed under the new credit
facilities and the interest on loans made under the new credit facilities:

Applicable Margin Over
----------------------
Description Total Amount Prime LIBOR Maturity
----------- ------------ ----- ----- --------

Revolving Facility............................ $200 million 1.25% 2.25% 6 years
A-1 Facility (term loan)...................... 50 million 1.25% 2.25% 6 years
A-2 Facility (delayed draw term loan)......... 50 million 1.25% 2.25% 6 years
A-3 Facility (delayed draw term loan)......... 100 million 1.25% 2.25% 6 years
B Facility (term loan)........................ 500 million 1.75% 2.75% January 15, 2008

Upon completing the refinancing of the credit facilities on July 24, 2001, the
Company had outstanding loans of $5 million under the revolving facility and
$550 million under the term loans, leaving $345 million available and committed
under the new credit facilities. Availability of the revolving facility
depends, however, upon the Company satisfying certain financial ratios of debt
and interest compared to earnings before interest, taxes, depreciation and
amortization, with these amounts being calculated pursuant to definitions
contained in the new credit agreement.

The loans under the new credit facilities will mature on the dates set forth
in the table above. The A-1, A-2 and A-3 term loans will be amortized in
quarterly installments of varying amounts over six years and the B term loan
will be subject to principal payments of 1% of the initial loan amounts in each
of the first six years following the closing date with the remaining principal
balance to be repaid during the seventh year.

The Company's obligations under the new credit facilities are guaranteed by
each of its subsidiaries. The new credit facilities are also collateralized by
a first priority lien on all stock of the Company's subsidiaries and all other
current and future assets owned by the Company and its subsidiaries (other than
mortgages on real property).

The new credit facilities contain a number of negative covenants, including,
among others, covenants that limit the Company's ability under certain
circumstances to incur debt, make investments, pay dividends, prepay other
indebtedness, engage in transactions with affiliates, enter into sale-leaseback
transactions, create liens, make capital expenditures, acquire or dispose of
assets, or engage in mergers or acquisitions. In addition, the new credit
facilities contain affirmative covenants, including, among others, covenants
that require the Company to maintain its corporate existence, comply with laws,
maintain its properties and insurance, and deliver financial and other
information to the lenders. The new credit facility also requires the Company
to comply with certain financial tests and to maintain certain financial ratios
on a consolidated basis.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

General

We own and operate three brands in the extended stay lodging market--
StudioPLUS(TM) Deluxe Studios ("StudioPLUS"), EXTENDED STAYAMERICA Efficiency
Studios ("EXTENDED STAY"), and Crossland Economy Studios(SM) ("Crossland"). Each
brand is designed to appeal to different price points that are generally below
$500 per week. All three brands offer the same core components: a
living/sleeping area; a fully-equipped kitchen or kitchenette; and a bathroom.
StudioPLUS facilities serve the mid-price category and generally feature guest
rooms that are larger than those in our other brands, an exercise facility, and
a swimming pool. EXTENDED STAY rooms are designed to compete in the economy
category. Crossland rooms are typically smaller than EXTENDED STAY rooms and are
targeted for the budget category. In this Quarterly Report on Form 10-Q, the
words "Extended Stay America", "Company", "we", "our", "ours", and "us" refer to
Extended Stay America, Inc. and its subsidiaries unless the context suggests
otherwise.

The table below provides a summary of our selected development and operational
results for the three months and six months ended June 30, 2001 and 2000.

Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
2001 2000 2001 2000
---- ---- ---- ----

Total Facilities Open (at period end)....... 405 378 405 378
Total Facilities Opened..................... 5 6 13 16
Average Occupancy Rate...................... 79% 83% 77% 78%
Average Weekly Room Rate.................... $ 321 $ 302 $ 321 $ 301

Average occupancy rates are determined by dividing the rooms occupied on a
daily basis by the total number of rooms. Due to our rapid expansion, our
overall average occupancy rate has been negatively impacted by the lower
occupancy typically experienced during the pre-stabilization period for newly-
opened facilities. We expect the negative impact on overall average occupancy
to decline as the ratio of newly-opened properties to total properties in
operation declines. Average weekly room rates are determined by dividing room
revenue by the number of rooms occupied on a daily basis for the applicable
period and multiplying by seven. The average weekly room rates generally will
be greater than standard room rates because of (1) stays of less than one week,
which are charged at a higher nightly rate, (2) higher weekly rates for rooms
that are larger than the standard rooms, and (3) additional charges for more
than one person per room. We expect that our future occupancy and room rates
will be impacted by a number of factors, including the number and geographic
location of our new facilities as well as the season in which we open those
facilities. We also cannot assure you that we can maintain our occupancy and
room rates.

At June 30, 2001, we had 405 operating facilities (39 Crossland, 272 EXTENDED
STAY, and 94 StudioPLUS) and had 38 facilities under construction (37 EXTENDED
STAY and 1 StudioPLUS). We expect to complete the construction of the
facilities currently under construction generally within the next twelve months,
however, we cannot assure you that we will complete construction within the time
periods we have historically experienced. Our ability to complete construction
may be materially impacted by various factors including final permitting and
obtaining certificates of occupancy, as well as weather-induced construction
delays.

Results of Operations

For the Three Months Ended June 30, 2001 and 2000

Property Operations

The following is a summary of the number of properties in operation at the end
of each period along with the related average occupancy rates and average weekly
room rates during each period:

For the Three Months Ended
-----------------------------------------------------------------------------------
June 30, 2001 June 30, 2000
--------------------------------------- ---------------------------------------
Average Average Average Average
Facilities Occupancy Weekly Room Facilities Occupancy Weekly Room
Open Rate Rate Open Rate Rate
---------- -------------- ----------- ---------- -------------- -----------

Crossland.............. 39 78% $222 39 82% $ 213
EXTENDED STAY.......... 272 79 332 248 84 308
StudioPLUS............. 94 78 344 91 82 342
--- -- ---- --- -- -----
Total................ 405 79% $321 378 83% $ 302
=== == ==== === == =====

The decrease in overall average occupancy rates for the second quarter of 2001
compared to the second quarter of 2000 reflects, primarily, the impact of a
general decline in demand for lodging products as a result of the slowing U.S.
economy. The increase in overall average weekly room rates for the second
quarter of 2001 compared to the second quarter of 2000 is due to increases in
rates charged in previously opened properties and, particularly for the EXTENDED
STAY brand, the geographic dispersion of properties opened since June 30, 2000
and the higher standard weekly room rates in certain of those markets.

Comparable hotels, consisting of the 305 properties opened for at least one
year at the beginning of the first quarter of 2000, realized the following
percentage changes in the components of REVPAR (revenue per available room) for
the second quarter of 2001 as compared with the second quarter of 2000:

Crossland EXTENDED STAY StudioPLUS Total
---------- -------------- ----------- ------

Number of Comparable Hotels.............. 33 195 77 305
Change in Occupancy Rate................. (4.8)% (5.3)% (4.1)% (5.0)%
Change in Average Weekly Rate............ 4.7% 2.6% (1.4)% 2.0%
Change in REVPAR......................... (0.3)% (2.8)% (5.5)% (3.1)%

We believe that the percentage changes in the components of REVPAR for the
Crossland and StudioPLUS brands differ significantly from the EXTENDED STAY
brand primarily as a result of the number and geographic dispersion of the
comparable hotels. We believe that the declines in occupancy experienced in the
second quarter are consistent with the overall lodging industry and are a result
of the slowing U.S. economy. If demand for lodging continues at the rates
experienced during May and June of this year, we expect that we will experience
declines in REVPAR for the remainder of the year of 3% to 5% when compared to
the prior year.

We recognized total revenue of $143.1 million for the second quarter of 2001
and $133.2 million for the second quarter of 2000. This is an increase of $9.9
million, or 7%. The 372 properties that we owned and operated throughout both
periods experienced an aggregate decrease in revenue of approximately $2.7
million which was offset by approximately $12.6 million of incremental revenue
attributable to properties opened after March 31, 2000.

Property operating expenses, consisting of all expenses directly allocable to
the operation of the facilities but excluding any allocation of corporate
operating and property management expenses, depreciation, or interest were $56.7
million (40% of total revenue) for the second quarter of 2001, compared to $52.0
million (39% of total revenue) for the second quarter of 2000. We expect the
ratio of property operating expenses to total revenue to generally fluctuate
inversely relative to occupancy rate increases or decreases because the majority
of these expenses do not vary based on occupancy. Our overall occupancy rates
were 79% for the second quarter of 2001 and 83% for the second quarter of 2000.
Our property operating margins were 60% for the second quarter of 2001 and 61%
for the second quarter of 2000.

The provisions for depreciation and amortization for our lodging facilities
were $17.5 million for the second quarter of 2001 and $16.0 million for the
second quarter of 2000. These provisions were computed using the straight-line
method over the estimated useful lives of the assets. These provisions reflect
a pro rata allocation of the annual depreciation and amortization charge for the
periods for which the facilities were in operation. Depreciation and
amortization for the second quarter of 2001 increased as compared to the second
quarter of 2000 because we operated 27 additional facilities in 2001 and we
operated for a full quarter the 6 properties that were opened in the second
quarter of 2000.

Corporate Operations

Corporate operating and property management expenses include all expenses not
directly related to the development or operation of lodging facilities. These
expenses consist primarily of personnel and certain marketing costs, as well as
development costs that are not directly related to a site that we will develop.
We incurred corporate operating and property management expenses of $11.8
million (8% of total revenue) in the second quarter of 2001 and $11.1 million
(8% of total revenue) in the second quarter of 2000. The increase in the amount
of these expenses for the second quarter of 2001 as compared to the same period
in 2000 reflects the impact of additional personnel and related expenses in
connection with the increased number of facilities we operated. We expect these
expenses will continue to increase in total amount but decline moderately as a
percentage of revenue as we develop and operate additional facilities in the
future.

Depreciation and amortization was $275,000 for the quarter ended June 30, 2001
and $316,000 for the comparable period in 2000. These provisions were computed
using the straight-line method over the estimated useful lives of the assets for
assets not directly related to the operation of our facilities. These assets
were primarily office furniture and equipment.

We realized $170,000 of interest income in the second quarter of 2001 and
$139,000 in the second quarter of 2000. This interest income was primarily
attributable to the temporary investment of funds drawn under our credit
facilities. We incurred interest charges of $20.9 million during the second
quarter of 2001 and $20.9 million in the second quarter of 2000. Of these
amounts, $2.3 million in the second quarter of 2001 and $2.3 million in the
second quarter of 2000 were capitalized and included in the cost of buildings
and improvements.

We recognized income tax expense of $13.6 million and $14.2 million (40% of
income before income taxes and the cumulative effect of an accounting change, in
both periods) for the second quarter of 2001 and 2000, respectively. Our income
tax expense differs from the federal income tax rate of 35% primarily due to
state and local income taxes. We expect our annualized effective income tax
rate for 2001 will be approximately 40%.

For the Six Months Ended June 30, 2001 and 2000

Property Operations

The following is a summary of the properties in operation at the end of each
period along with the related average occupancy rates and average weekly room
rates during each period:

For the Six Months Ended
------------------------------------------------------------------------------------
June 30, 2001 June 30, 2000
--------------------------------------- ---------------------------------------
Average Average Average Average
Facilities Occupancy Weekly Room Facilities Occupancy Weekly Room
Open Rate Rate Open Rate Rate
---------- -------------- ----------- ---------- -------------- -----------

Crossland........... 39 78% $ 223 39 78% $ 213
EXTENDED STAY....... 272 78 332 248 79 307
StudioPLUS.......... 94 76 345 91 78 341
--- -- ----- --- -- -----
Total............. 405 77% $ 321 378 78% $ 301
=== == ===== === == =====

The decrease in overall average occupancy rates for the six-month period ended
June 30, 2001 compared to the same period in 2000 reflects, primarily, the
impact of a general decline in demand for lodging products as a result of the
slowing U.S. economy which affected the Company's occupancy levels beginning in
the second quarter of 2001. The increase in overall average weekly room rates
for the six months ended June 30, 2001 as compared to the same period of 2000 is
due to increases in rates charged at previously opened properties and,
particularly for the EXTENDED STAY brand, the geographic dispersion of
properties opened since June 30, 2000 and the higher standard weekly room rates
in certain of those markets.

Comparable hotels, consisting of the 305 properties opened for at least one
year at the beginning of the first quarter of 2000, realized the following
percentage changes in the components of REVPAR for the six months ended June 30,
2001 as compared with the same period of 2000:

Crossland EXTENDED STAY StudioPLUS Total
---------- -------------- ------------ ------

Number of Comparable Hotels.............. 33 195 77 305
Change in Occupancy Rate................. (0.1)% (1.7)% (2.1)% (1.5)%
Change in Average Weekly Rate............ 4.9% 3.4% (0.8)% 2.6%
Change in REVPAR......................... 4.9% 1.7% (2.9%) 1.0%

The percentage change in the components of REVPAR experienced in the six
months ended June 30, 2001 reflects an increase in REVPAR of 5.7% in the first
quarter which was partially offset by a decrease in REVPAR of 3.1% in the second
quarter.

We recognized total revenue of $277.5 million for the six months ended June
30, 2001 and $247.2 million for the six months ended June 30, 2000. This is an
increase of $30.3 million, or 12%. Approximately $26.2 million of the increased
revenue was attributable to properties opened after December 31, 1999 and
approximately $4.1 million was attributable to an increase in revenue for the
362 properties that we owned and operated throughout both periods.

Property operating expenses for the six months ended June 30, 2001 were $113.5
million (41% of total revenue), compared to $102.9 million (42% of total
revenue) for the six months ended June 30, 2000. We expect the ratio of
property operating expenses to total revenue to generally fluctuate inversely
relative to occupancy rate increases or decreases because the majority of these
expenses do not vary based on occupancy. Our overall occupancy rates were 77%
for the six months ended June 30, 2001 and 78% for the six months ended June 30,
2000. However, as a result of the increase in average weekly room rates from
$301 for the six months ended June 30, 2000 to $321 for the six months ended
June 30, 2001, our property operating margins were 59% for the six months ended
June 30, 2001 and 58% for the six months ended June 30, 2000.

The provisions for depreciation and amortization for our lodging facilities
were $34.7 million for the six months ended June 30, 2001 and $31.9 million for
the six months ended June 30, 2000. Depreciation and amortization for the six
months ended June 30, 2001 increased as compared to the same period in 2000
because we operated 27 additional facilities in 2001 and we operated for a full
six months the 16 properties that were opened in the first six months of 2000.

Corporate Operations

We incurred corporate operating and property management expenses of $23.4
million (8% of total revenue) in the six months ended June 30, 2001 and $22.0
million (9% of total revenue) in the six months ended June 30, 2000. The
increase in the amount of these expenses for the six-month period ended June 30,
2001 as compared to the same period in 2000 reflects the impact of additional
personnel and related expenses in connection with the increased number of
facilities we operated.

Depreciation and amortization for assets not directly related to operation of
our facilities was $555,000 for the six months ended June 30, 2001 and $641,000
for the six months ended June 30, 2000.

We realized $331,000 of interest income in the six months ended June 30, 2001
and $336,000 in the six months ended June 30, 2000. This interest income was
attributable to the temporary investment of funds drawn under our credit
facilities. We incurred interest charges of $43.4 million in the six months
ended June 30, 2001 and $40.4 million in the six months ended June 30, 2000. Of
these amounts, $4.9 million in the six months ended June 30,

2001 and $4.5 million in the six months ended June 30, 2000 were capitalized and
included in the cost of buildings and improvements.

We recognized income tax expense of $25.1 million for the six-month period
ended June 30, 2001 and $21.7 million for the six-month period ended June 30,
2000 (40% of income before income taxes and the cumulative effect of an
accounting change, in both periods). Income tax expense differs from the
federal income tax rate of 35% primarily due to state and local income taxes.

Cumulative Effect of a Change in Accounting

Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for
Derivative Instruments and Hedging Activities", as amended, requires all
derivatives to be carried on the balance sheet at fair value. SFAS No. 133, as
amended, is effective for financial statements issued for periods beginning
after December 15, 2000. At December 31, 2000, the carrying value of our
interest rate cap contracts was $1,115,000 and their fair value was zero. The
Company adopted SFAS No. 133 on January 1, 2001 and designated its interest rate
cap contracts as cash-flow hedges of its variable rate debt. SFAS No. 133, as
interpreted by the Derivatives Implementation Group, required the transition
adjustment to be allocated between the cumulative-effect-type adjustment of
earnings and the cumulative-effect-type adjustment of other comprehensive income
based on our pre-SFAS No. 133 accounting policy for the contracts. Because the
fair value of the interest rate cap contracts at adoption was zero, the entire
transition adjustment was recognized in earnings.

Liquidity and Capital Resources

We had net cash and cash equivalents of $8.6 million as of June 30, 2001 and
$13.4 million as of December 31, 2000. At June 30, 2001 we had approximately
$7.1 million invested, and at December 31, 2000 we had approximately $14.0
million invested in short-term demand notes having credit ratings of A1/P1 or
the equivalent using domestic commercial banks and other financial institutions.
We also deposited excess funds during these periods in an overnight sweep
account with a commercial bank which in turn invested these funds in short-term,
interest-bearing reverse repurchase agreements. Due to the short-term nature of
these investments, we did not take possession of the securities, which were
instead held by the financial institutions. The market value of the securities
held pursuant to these arrangements approximates the carrying amount. Deposits
in excess of $100,000 are not insured by the Federal Deposit Insurance
Corporation.

Our operating activities generated cash of $97.1 million during the six months
ended June 30, 2001 and $81.9 million during the six months ended June 30, 2000.

We used $150.0 million to acquire land, develop, or furnish a total of 51
sites opened or under construction in the six months ended June 30, 2001 and
$127.7 million for 39 sites in the six months ended June 30, 2000.

Our cost to develop a property varies significantly by brand and by geographic
location due to differences in land and labor costs. Similarly, the average
weekly rate charged and the resulting cash flow from these properties will vary
significantly but generally are expected to be in proportion to the development
costs. For the 359 properties we opened from January 1, 1996 through December
31, 2000, the average development cost was approximately $5.5 million with an
average of 107 rooms. In 2001, we expect to open a number of properties in the
Northeast and West where average development costs are higher. Accordingly, we
expect our average development cost for 2001 to increase to approximately $9.0
million per property.

We made open market repurchases of 1,987,400 shares of common stock for
approximately $27.7 million in the six months ended June 30, 2001 and 1,092,400
shares of common stock for approximately $8.6 million in the six months ended
June 30, 2000. We received net proceeds from the exercise of options to
purchase common stock totaling approximately $15.2 million in the six months
ended June 30, 2001 and $70,000 in the six months ended June 30, 2000.

We entered into an agreement dated July 24, 2001 with various banks
establishing $900 million principal amount of senior credit facilities, subject
to certain conditions (the "New Credit Facilities"). The proceeds of the New
Credit Facilities are to be used for general corporate purposes and to retire
existing indebtedness under the amended and restated credit agreement dated as
of June 7, 2000 (the "Old Credit Facilities"). The New Credit Facilities also
provide for up to an additional $700 million in uncommitted facilities.

The loans under the New Credit Facilities will mature on the dates set forth
in the table below. The A-1, A-2 and A-3 term loans will be amortized in
quarterly installments of varying amounts over six years and the B term loan
will be subject to principal payments of 1% of the initial loan amounts in each
of the first six years following the closing date with the remaining principal
balance to be repaid during the seventh year. Availability of the revolving
facility depends upon our satisfying financial ratios of leverage and interest,
calculated pursuant to definitions contained in the New Credit Facilities, and
upon our not being in default under the related credit agreement.

Applicable Margin Over
----------------------
Description Total Amount Prime LIBOR Maturity
----------- ------------ ----- ----- --------

Loans under the New Credit Facilities bear interest, at our option, at either
a prime-based rate or a LIBOR-based rate plus an applicable margin. In
addition, the commitment fee on the unused revolving facility and the unused
delayed draw term loan facilities is 0.5% per annum. The table above
illustrates the interest on loans made under the New Credit Facilities.

We are required to repay indebtedness outstanding under the New Credit
Facilities with the net cash proceeds from certain sales of our, and our
subsidiaries', assets, from issuances of debt by us or our subsidiaries, and
from insurance recovery events (subject to certain reinvestment rights). We are
also required to repay indebtedness outstanding under the New Credit Facilities
annually in an amount equal to 50% of our excess cash flow, as calculated
pursuant to the New Credit Facilities.

Our obligations under the New Credit Facilities are guaranteed by each of our
subsidiaries. The New Credit Facilities are also secured by liens on all stock
of our subsidiaries and all other current and future assets owned by us and our
subsidiaries (other than mortgages on real property).

The credit agreement for the New Credit Facilities contains a number of
negative covenants, including, among others, covenants that limit our ability
under certain circumstances to incur debt, make investments, pay dividends,
prepay other indebtedness, engage in transactions with affiliates, enter into
sale-leaseback transactions, create liens, make capital expenditures, acquire or
dispose of assets, or engage in mergers or acquisitions. In addition, that
credit agreement contains affirmative covenants, including, among others,
covenants that require us, and our subsidiaries, to maintain our corporate
existence, comply with laws, maintain our properties and insurance, and deliver
financial and other information to the lenders. That credit agreement also
requires us to comply with certain financial tests on a consolidated basis,
including a maximum total leverage ratio, a maximum senior leverage ratio, and a
minimum interest coverage ratio.

Failure to satisfy any of the covenants constitutes an event of default under
the New Credit Facilities, notwithstanding our ability to meet our debt service
obligations. The loan documentation includes other customary and usual events
of default for these types of credit facilities, including without limitation,
an event of default if a change of control occurs. Upon the occurrence of an
event of default, the lenders have the ability to accelerate all amounts then
outstanding under the New Credit Facilities and to foreclose on the collateral.

Upon refinancing the Old Credit Facilities with the New Credit Facilities on
July 24, 2001, we had outstanding loans of $5 million under the revolving
facility and $550 million under the term loans, leaving $345 million available
and committed under the New Credit Facilities.

In addition to our $200 million 9.15% Senior Subordinated Notes due 2008 (the
"2008 Notes"), on June 27, 2001, we issued $300 million aggregate principal
amount of Senior Subordinated Notes (the "2011 Notes"). The net proceeds of the
2011 Notes were used to reduce amounts outstanding under the Old Credit
Facility. We are obligated to cause the 2011 Notes to generally be freely
transferable no later than December 27, 2001 or the annual interest rate will
increase by 0.5%. The 2011 Notes bear interest at an annual rate of 9.875%
payable semiannually on June 15 and December 15 of each year and mature on June
15, 2011. We may redeem the 2011 Notes beginning on June 15, 2006. The initial
redemption price is 104.938% of their principal amount, plus accrued interest.
The redemption price declines each year after 2006 and is 100% of their
principal amount, plus accrued

interest, after 2009. In addition, before June 15, 2004, we may redeem up to
$105 million of the 2011 Notes, using the proceeds from certain sales of our
stock, at 109.875% of their principal amount, plus accrued interest.

The 2011 Notes are not collateralized, are pari passu with the 2008 Notes, and
are subordinated to all of our senior indebtedness including the New Credit
Facility, and contain certain covenants for the benefit of the holders. These
covenants, among other things, limit our ability to incur additional
indebtedness, pay dividends and make investments and other restricted payments,
enter into transactions with 5% stockholders or affiliates, create liens, and
sell assets.

In connection with the credit facilities and the notes, we incurred additions
to deferred loan costs of $7.4 million during the six months ended June 30,
2001and $5.8 million during the six months ended June 30, 2000. On July 24,
2001, we incurred an extraordinary charge of $6.0 million, net of income taxes
of $4.0 million, associated with the write-off of unamortized deferred debt
costs related to the Old Credit Facilities which will be reflected in earnings
for the quarter ending September 30, 2001.

Our primary market risk exposures result from the variable nature of the
interest rates on borrowings under our credit facilities. We entered into our
credit facilities for purposes other than trading. Based on the levels of
borrowings under the New Credit Facility at July 24, 2001, if interest rates
changed by 1.0%, our annual cash flow and net income would change by $3.3
million. We manage our market risk exposures by periodic evaluation of such
exposures relative to the costs of reducing the exposures by entering into
interest rate swap or cap agreements or by refinancing the underlying
obligations with longer term fixed rate debt obligations. We do not own
derivative financial instruments or derivative commodity instruments other than
interest rate cap contracts on a total of $800 million that limit our exposure
to LIBOR increases to a maximum LIBOR rate of 8.88% from June 17, 2001 through
June 16, 2002.

We expect to make capital expenditures of approximately $350 million a year
through 2003, subject to the availability of financing on reasonable terms. We
plan to continue an active development program thereafter. We had commitments
not reflected in our financial statements at June 30, 2001 totaling
approximately $190 million to complete construction of extended stay properties.
We believe that the remaining availability under the New Credit Facilities,
together with cash on hand and cash flows from operations, will provide
sufficient funds to continue our expansion as presently planned and to fund our
operating expenses through 2003. We may increase our capital expenditures and
property openings in future years, in which case our capital needs will
increase. We may also need additional capital depending on a number of factors,
including the number of properties we construct or acquire, the timing of that
development, the cash flow generated by our properties, and the amount of open
market repurchases we make of our common stock. Also, if capital markets
provide favorable opportunities, our plans or assumptions change or prove to be
inaccurate, our existing sources of funds prove to be insufficient to fund our
growth and operations, or if we consummate acquisitions, we may seek additional
capital sooner than currently anticipated. In the event we obtain additional
capital, we may seek to increase property openings in future years. Sources of
capital may include public or private debt or equity financing. We cannot
assure you that we will be able to obtain additional financing on acceptable
terms, if at all. Our failure to raise additional capital could result in the
delay or abandonment of some or all of our development and expansion plans, and
could have a material adverse effect on us.

New Accounting Releases

Seasonality and Inflation

Based upon the operating history of our facilities, we believe that extended
stay lodging facilities are not as seasonal in nature as the overall lodging
industry. We do expect, however, that our occupancy rates and revenues will be
lower than average during the first and fourth quarters of each calendar year.
Because many of our expenses do not fluctuate with changes in occupancy rates,
declines in occupancy rates may cause fluctuations or decreases in our quarterly
earnings.

The rate of inflation as measured by changes in the average consumer price
index has not had a material effect on our revenue or operating results during
any of the periods presented. We cannot assure you, however, that inflation
will not affect our future operating or construction costs.

Special Note on Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements. Words
such as "expects", "intends", "plans", "projects", "believes", "estimates", and
similar expressions are used to identify these forward-looking statements. We
have based these forward-looking statements on our current expectations and
projections about future events. However, these forward-looking statements are
subject to risks, uncertainties, assumptions, and other factors which may cause
our actual results, performance, or achievements to be materially different.
These factors include, among other things:

. uncertainty as to changes in economic activity and the impact of such
changes on the consumer demand for lodging products in general and for
extended stay lodging products in particular;

. increasing competition in the extended stay lodging market;

. uncertainty as to our future profitability;

. our ability to meet construction and development schedules and budgets;

. our ability to develop and implement the operational and financial
systems needed to manage rapidly growing operations;

. our ability to integrate and successfully operate any properties
acquired in the future and the risks associated with these properties;

. our ability to increase or maintain revenue and profitability in our new
and mature properties;

. our ability to obtain financing on acceptable terms to finance our
growth; and

. our ability to operate within the limitations imposed by financing
arrangements.

Other matters set forth in this Quarterly Report may also cause our actual
future results to differ materially from these forward-looking statements. We
cannot assure you that our expectations will prove to be correct. In addition,
all subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements mentioned above. You should not place undue reliance on
these forward-looking statements. All of these forward-looking statements are
based on our expectations as of the date of this Quarterly Report. We do not
intend to update or revise any forward-looking statements, whether as a result
of new information, future events, or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Item 2. "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

PART II

OTHER INFORMATION

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

The following summarizes the votes at the Annual Meeting of the Company's
stockholders held on May 1, 2001:

Matter For Against Abstain Non-Vote Shares Voted
------ --- ------- ------- -------- ------------

Election of Directors:
H. Wayne Huizenga............................ 82,012,503 -- 4,431,865 -- 86,444,368
George D. Johnson, Jr........................ 74,789,044 -- 11,655,324 -- 86,444,368
Donald F. Flynn.............................. 81,869,223 -- 4,575,145 -- 86,444,368
Stewart H. Johnson........................... 82,004,375 -- 4,439,993 -- 86,444,368
John J. Melk................................. 81,857,856 -- 4,586,512 -- 86,444,368
Peer Pedersen................................ 82,031,244 -- 4,413,124 -- 86,444,368

Ratification of the appointment of
PricewaterhouseCoopers LLP as
Independent Auditors for the
Company for 2001............................. 86,176,768 245,291 22,309 -- 86,444,368

Approval of the Extended Stay America, Inc.
2001 Employee Stock Option Plan.............. 49,393,889 30,495,298 53,355 6,501,826 79,942,542

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit
Number Description of Exhibit
------ ----------------------

10.1 Indenture relating to the $300 million 9.875% Senior
Subordinated Notes due June 15, 2011 dated as of June 27,
2001 by and between the Company and Manufacturers and
Traders Trust Company, as Trustee (incorporated by reference
to Exhibit 99.3 to the Company's Report on Form 8-K dated
June 28, 2001).

10.2 Registration Rights Agreement relating to the $300 million
9.875% Senior Subordinated Notes due June 15, 2011 dated as
of June 27, 2001 by and between the Company and Morgan
Stanley & Co. Incorporated, Goldman Sachs & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Bear, Stearns &
Co. Inc., and Fleet Securities, Inc. (incorporated by
reference to Exhibit 99.2 to the Company's Report on Form 8-
K dated June 28, 2001).

(b) Reports on Form 8-K

The Company filed a report on Form 8-K dated June 15, 2001 relating to the
intent to commence an offering of $300 million of Senior Subordinated Notes.

The Company filed a report on Form 8-K dated June 28, 2001 announcing the
completion of the private placement of $300 million of 9.875% Senior
Subordinated Notes due June 15, 2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on August 14, 2001.

EXTENDED STAY AMERICA, INC.

/s/ Gregory R. Moxley
---------------------------------------------
Gregory R. Moxley
Chief Financial Officer
(Principal Financial Officer)

/s/ Patricia K. Tatham
---------------------------------------------
Patricia K. Tatham
Vice President - Corporate Controller
(Principal Accounting Officer)