FIRST QUARTER 2009 COMPARED TO 2008

In the first quarter of 2009 the Company recorded net loss of $2,212,000, or $(0.60) per share, compared to net income of $90,000, or $0.02 per share, during the first quarter of 2008.

The ongoing economic recession seriously affected the Company's business in the 2009 first quarter. Operating income at the Company's Royal Sonesta Hotel Boston decreased by $787,000 in the first quarter of 2009 compared to last year. Income from management activities decreased by $1,321,000 in the 2009 quarter compared to last year, due to lower fee income from Sonesta Bayfront Hotel Coconut Grove, lower fee income from the Company's operations in Egypt and due to the fact that the management agreement for Trump International Sonesta Beach Resort Sunny Isles was terminated effective April 1, 2008. In addition, interest income decreased by $248,000, primarily due to lower income earned on the Company's cash balances resulting from lower rates of return. A detailed analysis of the revenues and income by location follows.

REVENUES

The Company records costs incurred on behalf of owners of managed and affiliated
properties, and expenses reimbursed from managed and affiliated properties, on a
gross basis. The revenues included and discussed in this Management's Discussion
and Analysis exclude the "other revenues and expenses from managed and
affiliated properties."

                                                                 TOTAL REVENUES
                                                                 (in thousands)
                                                       NO. OF
                                                       ROOMS          2009          2008
Royal Sonesta Hotel Boston                                  400     $   3,350     $   4,838
Royal Sonesta Hotel New Orleans                             500         8,620         9,887
Management and service fees and other revenues                          1,133         3,073
Total revenues, excluding other revenues from
managed and affiliated properties                                   $  13,103     $  17,798

Total revenues for the quarter ended March 31, 2009 were $13,103,000 compared to $17,798,000 in the 2008 quarter, a decrease of approximately $4,695,000.

Royal Sonesta Hotel Boston recorded first quarter 2009 revenues of $3,350,000 compared to first quarter 2008 revenues of $4,838,000, representing a $1,488,000, or 31%, decrease. Room revenues during the 2009 period decreased by $902,000, due to a 30% decrease in room revenue per available room ("REVPAR"). This REVPAR decrease was the result of both lower occupancies as well as a lower average daily rate achieved. The largest decrease was in the group and convention market segment, which was heavily impacted by lower corporate spending. The decrease in group business put more pressure on hotels to attract transient business, which resulted in discounted rates. The first quarter is traditionally the lowest occupancy quarter of the year, resulting in very heavy competition for available business. The decrease in revenues other than rooms of $586,000 was primarily the result of lower food and beverage revenues. Banqueting business in particular, which heavily depends on group and convention business, was down significantly.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)

Revenues at Royal Sonesta Hotel New Orleans during the first quarter of 2009 were $8,620,000 compared to $9,887,000 during the first quarter of 2008, representing a $1,267,000, or 13%, decrease. Room revenues decreased by $882,000, due to a 13% REVPAR decrease. The decrease was mainly due to lower occupancy levels during the 2009 first quarter compared to 2008. Average daily room rates decreased modestly. The main reason for the decrease in occupancy was lower group and convention business. The hotel's transient business increased during the first quarter which helped offset part of the reduction in group and convention business. Revenues from other sources decreased by $385,000, which was almost entirely due to lower food and beverage revenues. Food and beverage revenues decreased as a result of the lower occupancy. Banqueting revenues decreased due to the reduction in group and convention business.

Revenues from management activities decreased from $3,073,000 in the 2008 first quarter to $1,133,000 during the 2009 first quarter, a decrease of $1,940,000. The 2008 first quarter included $840,000 of fee income from Trump International Sonesta Beach Resort Sunny Isles. The management agreement for this hotel was terminated by the Company effective April 1, 2008. Management fee income from Sonesta Bayfront Hotel Coconut Grove decreased by $300,000 compared to 2008. The Company is committed to an annual minimum return payment to the hotel's owner, and the Company's policy is to eliminate fees from its income if it does not expect to earn the annual minimum return. As a result, the Company did not record fee income from the Coconut Grove Hotel during the first quarter of 2009. Fee income from the Company's managed operations in Egypt decreased by $370,000 to $625,000 in the first quarter of 2009 compared to last year. In Egypt, demand has decreased, in particular for the Company's resort hotels.

OPERATING INCOME

                                                                  OPERATING INCOME (LOSS)
                                                                       (in thousands)
                                                                        2009             2008
Royal Sonesta Hotel Boston                                     $      (1,513 )     $     (726 )
Royal Sonesta Hotel New Orleans                                          199              571
Operating loss from hotels after management and service fees          (1,314 )           (155 )
Management activities and other                                       (1,086 )            235
Operating income (loss)                                        $      (2,400 )     $       80

Operating loss for the three-month period ended March 31, 2009 was $2,400,000, compared to operating income of $80,000 in the three-month period ended March 31, 2008, a decrease of approximately $2,480,000.

Royal Sonesta Hotel Boston reported an operating loss of $1,513,000 during the 2009 first quarter, compared to an operating loss of $726,000 in the first quarter of 2008. Revenue decreases of $1,488,000 were partially offset by decreases in expenses of $701,000. The decrease in expenses was primarily due to a $516,000, or 17%, decrease in costs and operating expenses. Due to the lower business levels, the Company reduced staffing levels, and cut operating expenses where possible. Overhead expenses such as administrative and general, advertising and human resources costs also decreased slightly.

Operating income from Royal Sonesta Hotel New Orleans decreased from $571,000 during the 2008 first quarter to $199,000 during the 2009 first quarter, a decrease of $372,000. Decreased revenues of $1,267,000 were for a large part offset by decreases in expenses of $895,000. The decrease in expenses was primarily from a $275,000 decrease in costs and operating expenses and a $520,000 decrease in rent expense. The rent decrease in 2009 resulted from the lower operating profits. The Company operates the Royal Sonesta New Orleans under a lease, and rent is equal to 75% of net cash flow achieved.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)

The Company reported a $1,086,000 operating loss from management activities in the 2009 first quarter compared to operating income of $235,000 in the 2008 first quarter, a decrease of $1,321,000. The Company's loss from management activities is computed after giving effect to management and marketing fees from owned and leased hotels. Revenues from management decreased by $1,940,000, and were partially offset by decreases in expenses related to these activities of $619,000. The decrease in expenses was primarily due to lower depreciation expense. The 2008 first quarter included accelerated depreciation of an investment the Company made in Trump International Sonesta Beach Resort Sunny Isles, due to the Company's termination of the management agreement for this hotel effective April 1, 2008.

OTHER INCOME (DEDUCTIONS)

Interest income decreased from $371,000 in the 2008 first quarter to $123,000 in the 2009 first quarter. The decrease was due to lower income from a loan to the owner of Sonesta Bayfront Hotel Coconut Grove, which was repaid in October 2008, and from lower income earned on the Company's cash balances, due to the lower rates of return.

The gain on sale of assets in the 2008 first quarter resulted from the sale of a coop unit the Company owned in New York City to the Company's Executive Chairman. The Company's Board of Directors approved the transaction.

FEDERAL, FOREIGN AND STATE INCOME TAXES

In the 2009 first quarter the Company recorded a tax benefit of $790,000 on its pre-tax loss of $3,002,000. The tax benefit is lower than the statutory rate, due to state taxes payable on the Company's income from Royal Sonesta Hotel New Orleans and due to foreign taxes payable on the Company's income from its hotels in Egypt and Peru. In the 2008 first quarter, the Company recorded a tax expense of $43,000 on pre-tax income of $133,000. The expense in the 2008 first quarter was lower than the statutory rate because the Company expected to benefit from credits for foreign taxes paid in previous years which had been carrying forward. Those credits more than offset the state income taxes, payable primarily on the Company's income from Royal Sonesta Hotel New Orleans.

The Company recorded a long-term deferred tax asset in the 2009 first quarter for the future federal income tax benefit of the losses incurred. The Company will monitor this tax asset, and provide for valuation allowances if going forward it may become uncertain whether it will actually receive a federal tax benefit for the losses.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and cash equivalents of approximately $28.5 million at March 31, 2009. Company management believes these cash resources will be adequate to meet its cash requirements for 2009 and beyond.

On January 2, 2009 the Company paid a dividend on its common stock of $0.25 per share, for a total of $925,000.

The Company owns a 50% limited partnership interest in a development project in Key Biscayne, Florida (see Note 3). The Company has agreed in principle to fund up to $3 million for project related costs. Of this commitment, $842,000 was funded during the 2009 first quarter.

The Company will make contributions to its Pension Plan totaling $934,000 during the period April 2009 through January 2010.

Royal Sonesta Hotel Boston undertook a significant improvements project during the winter of 2008/2009, upgrading meeting facilities and public spaces. Capital expenditures during the first quarter of 2009 were approximately $1,501,000 at this location.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued)

The Company has agreed to loan an additional $500,000 to the owner of Sonesta Beach Resort Sharm El Sheikh, to help finance the completion of 179 additional rooms.

The Company has a mortgage loan secured by the Royal Sonesta Hotel Boston in the amount of $32.7 million at March 31, 2009 (see Note 4). The loan matures in July 2010. The Company has started evaluating the refinancing options available to replace this loan on or before July 2010.