FIRST SIX MONTHS 2009 COMPARED TO 2008

During the first six months of 2009 the Company recorded a net loss of $2,321,000, or $(0.63) per share, compared to net income of $1,596,000, or $0.43 per share, during the first six months of 2008. The economic recession continued to affect the Company's business during the first six months of 2009. Royal Sonesta Hotel Boston reported a pre-tax loss of $1,695,000 during the first six months of 2009, compared to pre-tax income of $367,000 during the first six months of 2008. Pre-tax income from management activities decreased from $934,000 during the 2008 period to a pre-tax loss of $2,105,000 during the 2009 period, mainly due to lower income from Sonesta Bayfront Hotel Coconut Grove, lower fee income from the Company's operations in Egypt and lower income from Trump International Sonesta Beach Resort Sunny Isles. The management agreement for this property was terminated effective April 1, 2008. Interest income decreased by $405,000 to $208,000 during the first six months of 2009 compared to last year, primarily due to the lower rates of return on the Company's cash balances. A detailed analysis of the revenue 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     $  10,501     $  14,329
Royal Sonesta Hotel New Orleans                             500        16,955        19,108
Management and service fees and other revenues                          2,144         4,783
Total revenues, excluding revenues from managed
and affiliated properties                                           $  29,600     $  38,220

Total revenues during the six-month period ended June 30, 2009 were $29,600,000 compared to $38,220,000 in the same period in 2008, a decrease of approximately $8,620,000.

Royal Sonesta Hotel Boston recorded revenues of $10,501,000 during the first six months of 2009 compared to $14,329,000 during the first six months of 2008, representing a $3,828,000, or 27%, decrease. Room revenues during the 2009 period decreased by $2,601,000 due to a 28% decrease in room revenue per available room ("REVPAR"). Both lower occupancy levels as well as a reduction in the average daily room rates contributed to this decrease. The decrease in room revenues was almost entirely due to a decrease in room nights from the group and convention market segment. Business from this market segment is heavily dependent on high levels of corporate spending, which has been impacted by the ongoing economic recession. The decrease in available group business causes in turn more competition for available transient business amongst Boston area hotels, which resulted in discounted rates. Revenue from other sources, which are primarily from food and beverage sales and parking revenues, decreased by $1,227,000 in the first half of 2009 compared to the previous year. This was mainly due a decrease in banquet revenues, which depends heavily on group and convention activity at the hotel.

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

Revenues at Royal Sonesta Hotel New Orleans decreased by $2,153,000 to $16,955,000 during the first half of 2009 compared to last year, representing an 11% decrease. Room revenues decreased by $1,769,000 due to a 14% decrease in REVPAR. The hotel was able to limit the decrease in average daily room rates to a slight 2%, but occupancy declined substantially in 2009 compared to 2008. Similar to the decline in business at Royal Sonesta Boston, the decrease in demand was primarily from the group and convention market, due to lower corporate spending. Rooms sold in the transient segment slightly increased in 2009 compared to last year. Revenues from other sources decreased by $384,000 in 2009 compared to 2008. Decreases in banqueting revenues due to reduced group and convention business was partially offset by increased beverage sales. This increase was due to the transformation of the hotel's main lounge into the Irvin Mayfield's Jazz Playhouse, which boosted beverage sales in this outlet.

Revenues from management activities decreased from $4,783,000 during the first six months of 2008 to $2,144,000 during the first six months of 2009, a $2,639,000 decrease. The 2008 period included $840,000 of management 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 income from Sonesta Bayfront Hotel Coconut Grove decreased by $554,000 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 any fee income from the Coconut Grove operations during the first six months of 2009. Demand in Egypt has declined moderately, but did result in decreases in fee income from the Company's managed hotels in this country by $563,000. The decrease was mainly from lower fees earned from the Company's resort hotels. The remaining decrease in management income was due to lower income from the Company's licensed hotels in St. Maarten and from lower income from the Company's purchasing subsidiary, which provides services to Sonesta hotels and third party clients.

OPERATING INCOME

                                                                    OPERATING INCOME (LOSS)
                                                                         (in thousands)
                                                                          2009             2008
Royal Sonesta Hotel Boston                                       $        (258 )     $    1,858
Royal Sonesta Hotel New Orleans                                            510            1,087
Operating income from hotels after management and service fees             252            2,945
Management activities and other                                         (2,289 )           (135 )
Operating income (loss)                                          $      (2,037 )     $    2,810

Operating loss for the six-month period ended June 30, 2009 was $2,037,000, compared to operating income of $2,810,000 in the six-month period ended June 30, 2008, a decrease of approximately $4,847,000.

Royal Sonesta Hotel Boston reported an operating loss of $258,000 during the six-month period ended June 30, 2009 compared to operating income of $1,858,000 during the same period in 2008, a decrease of $2,116,000. Revenues decreased by $3,828,000, and this decrease was partially offset by a decrease of $1,712,000, or 14%, in overall expenses. Costs and operating expenses decreased by $1,257,000, or 18%, mainly due to lower payroll costs. Helped by lower occupancies, the hotel has reduced staffing levels in all operating departments. Employee benefit costs also decreased due to the elimination of the matching contributions to the Company's 401(k) plan, and the elimination of any bonus payments for 2009. The remaining decrease in expenses was due to decreases in the hotel's overhead costs, including administrative and general expense, maintenance costs and advertising and human resources expenses.

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

Operating income at Royal Sonesta Hotel New Orleans decreased by $577,000 to $510,000 in the six-month period ended June 30, 2009 compared to last year. Decreases in revenues of $2,153,000 were for a large part offset by a $1,576,000 decrease in expenses. This decrease was mainly due to a $562,000 decrease in costs and operating expenses, resulting mainly from lower payroll and benefit costs, and due to a decrease in rent expense of $793,000. The Company operates the Royal Sonesta Hotel New Orleans under a lease, which includes a rent payable to the landlord equal to 75% of net cash flow. The rent savings was due to the lower operating profits.

The Company reported an operating loss of $2,289,000 from management activities in the first half of 2009 compared to an operating loss of $135,000 in the same period in 2008, a decrease of $2,154,000. 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 activities decreased by $2,639,000. The decrease in revenues was partially offset by a decrease in expenses of $485,000, which was mainly 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, following the Company's termination of the management agreement for this hotel effective April 1, 2008.

OTHER INCOME (DEDUCTIONS)

Interest income decreased from $613,000 during the first six months of 2008 to $208,000 during the first six months of 2009, a $405,000 decrease. 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 during the first six months of 2008 was primarily from the sale of a co-op unit the Company owned in New York City.

SECOND QUARTER 2009 COMPARED TO 2008

During the second quarter of 2009, the Company recorded a net loss of $109,000, or $(0.03) per share, compared to net income of $1,506,000, or $0.41 per share, during the second quarter of 2008. The pre-tax income during the second quarter of 2009 at Royal Sonesta Hotel Boston was $534,000 compared to $1,838,000 during the 2008 second quarter. Demand in the Boston area during the 2009 second quarter continued to be very soft. Income from management activities decreased by $1,031,000 on a pre-tax basis, primarily from lower fee income from Sonesta Bayfront Hotel Coconut Grove and the Company's managed properties in Egypt. A detailed analysis of the revenues and income by location follows.

REVENUES

                                                           TOTAL REVENUES
                                                           (in thousands)
                                                  NO. OF
                                                  ROOMS         2009         2008
Royal Sonesta Hotel Boston                            400     $  7,151     $  9,491
Royal Sonesta Hotel New Orleans                       500        8,335        9,221
Management and service fees and other revenues                   1,011        1,710
Total revenues, excluding revenues from
managed and affiliated properties                             $ 16,497     $ 20,422

Total revenues for the three-month period ended June 30, 2009 were $16,497,000 compared to $20,422,000 in 2008, a decrease of approximately $3,925,000.

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

Second quarter 2009 revenues at Royal Sonesta Hotel Boston were $7,151,000 compared to $9,491,000 during the second quarter of 2008, a decrease of $2,340,000. Room revenues declined by $1,699,000 due to a 27% decrease in room revenue per available room ("REVPAR"). Both lower occupancy levels as well as average daily room rates achieved contributed to the REVPAR decrease. The occupancy decrease was entirely due to lower sales from the group and convention market segment. Transient room sales increased slightly. Reductions in corporate spending contributed to the decrease in group and convention business. Revenues other than rooms declined by $641,000 during the 2009 second quarter, representing a 20% decrease. This was primarily due to lower banqueting revenues, resulting from the decline in group and convention business.

Revenues at Royal Sonesta Hotel New Orleans were $8,335,000 during the 2009 second quarter compared to $9,221,000 during the 2008 second quarter, a decrease of $886,000, or 10%. The decrease in revenues was entirely due to a decrease in room revenues of $887,000, resulting from lower occupancies during the 2009 second quarter. The average daily room rate during the second quarter of 2009 was virtually the same as in the 2008 quarter. The decrease in occupancy was mainly due to lower demand from the group and convention market. The hotel managed to maintain its average room rate during the second quarter of 2009 despite the increased competition among hotels in New Orleans.

Revenues from management activities decreased by $699,000, from $1,710,000 during the 2008 second quarter to $1,011,000 during the 2009 second quarter. This decrease was primarily due to a decrease in management income from the Company's operations in Egypt, which experienced a decline in business, particularly in the resort hotels. The Company also eliminated fee income from Sonesta Bayfront Hotel Coconut Grove from its 2009 second quarter revenues. The Company is committed to a minimum annual return to the owner of the hotel, and forecasts indicate that the hotel will not produce sufficient income to provide this minimum annual return. Income from corporate support activities decreased by $169,000 in the 2009 quarter compared to previous year, primarily due to lower income from the Company's purchasing activities, which provides services to Sonesta and third party hotels.

OPERATING INCOME

                                                                    OPERATING INCOME (LOSS)
                                                                         (in thousands)
                                                                          2009             2008
Royal Sonesta Hotel Boston                                       $       1,255       $    2,584
Royal Sonesta Hotel New Orleans                                            311              516
Operating income from hotels after management and service fees           1,566            3,100
Management activities and other                                         (1,203 )           (370 )
Operating income                                                 $         363       $    2,730

Operating income for the quarter ended June 30, 2009 was $363,000, compared to operating income of $2,730,000 in the quarter ended June 30, 2008, a decrease of approximately $2,367,000.

Royal Sonesta Hotel Boston reported operating income of $1,255,000 during the 2009 second quarter, a $1,329,000 decrease compared to operating income of $2,584,000 in the 2008 second quarter. Revenue declined by $2,340,000, and this decrease was partially offset by decreases in expenses totaling $1,011,000, representing a 15% decrease in overall expenses. The bulk of the savings came from a $741,000, or 19%, decrease in costs and operating expenses. This resulted primarily from lower payroll and employee benefit costs, due to the lower occupancies and the Company's decisions to eliminate contributions to 401(k) plans and bonuses for the 2009 year.

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

Operating income during the second quarter of 2009 at Royal Sonesta Hotel New Orleans totaled $311,000 compared to $516,000 in the 2008 second quarter, a $205,000 decrease. Revenues declined by $886,000 in the 2009 quarter compared to last year. This decrease in revenues was for a large part offset by a $681,000 decrease in expenses. This decrease was primarily from lower costs and operating expenses, resulting from lower staffing costs due to the reduced occupancy levels, as well as a decrease in rent expense under the lease under which the Company operates the hotel. Rent is based on a percentage of cash flow, and therefore rent decreased due to the lower operating profits.

The operating loss from management activities, which is computed after giving effect to management and marketing fees from owned and leased hotels, rose from $370,000 in the 2008 second quarter to $1,203,000 during the 2009 second quarter. Revenues declined by $699,000 in the second quarter of 2009 compared to last year, and expenses related to these activities increased by $134,000. The increase in expenses was primarily due to costs incurred in connection with a management opportunity the Company pursued for a hotel in South Florida. The Company decided in February 2009 not to pursue this management opportunity any further, but incurred additional costs during the 2009 second quarter.

OTHER INCOME (DEDUCTIONS)

Interest income decreased from $242,000 in the 2008 second quarter to $85,000 in the 2009 second quarter due to lower income from a loan to the owner of Sonesta Bayfront Hotel Coconut Grove, which loan was repaid in October 2008, and from lower income earned on the Company's cash balances due to the lower rates of return.

FEDERAL, FOREIGN AND STATE INCOME TAXES

In the first half of 2009 the Company recorded a tax benefit of $962,000 on its pre-tax loss of $3,283,000. 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 first six months of 2008, the Company recorded a tax expense of $792,000 on pre-tax income of $2,388,000. The expense in the first half of 2008 was lower than the statutory rate because the Company benefitted 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 first half of 2009 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 becomes uncertain as to 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 million at June 30, 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). During the 2009 second quarter, the Company agreed to fund up to $3 million for project related costs. Of this commitment, $1,834,000 was funded during the first six months of 2009, and the Company expects to fund the remainder before the end of the year.

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

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

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 six months of 2009 were approximately $1,651,000 at this location.

During the 2009 first quarter, the Company 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 owner subsequently elected not to draw down on this commitment.

The Company has a mortgage loan secured by Royal Sonesta Hotel Boston in the amount of $32.4 million at June 30, 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.