GENERAL

The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q.

We own the sole general partner's interest in the Partnership. Our principal source of cash flows is from the operations of the Hotels and management and licensing contracts with affiliated and third-party hotels.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In our Annual Report on Form 10-K for the year ended January 31, 2012, we identified the critical accounting policies that affect our more significant estimates and assumptions used in preparing our consolidated financial statements. We believe that the policies we follow for the valuation of our hotel properties, which constitute the majority of our assets, are our most critical policies. Those policies include methods used to recognize and measure any identified impairment of our hotel properties assets. There have been no material changes to our critical accounting policies since January 31, 2012.

LIQUIDITY AND CAPITAL RESOURCES

Our principal source of cash to meet our cash requirements, including distributions to our shareholders, is our share of the Partnership's cash flow, quarterly distributions from the Albuquerque, New Mexico hotel property and our direct ownership of the Yuma, Arizona property. The Partnership's principal source of revenue is hotel operations for the two hotel properties it owns and quarterly distributions from the Tucson Foothills, Arizona property. Our liquidity, including our ability to make distributions to our shareholders, will depend upon our ability and the Partnership's ability to generate sufficient cash flow from hotel operations.

Hotel operations are significantly affected by occupancy and room rates. Occupancy increased from the first three months of fiscal year 2012 to the first three months of fiscal year 2013, while rates decreased. Results are also significantly impacted by overall economic conditions and specifically conditions in the travel industry. Unfavorable changes in these factors could negatively impact hotel room demand and pricing, which would reduce the Trust's profit margins on rented suites.

The Trust has principal of $565,000 due and payable for the remainder of fiscal year 2012 under mortgage notes payable. For the period between May 1, 2012 and April 30, 2013, the Trust has principal of $1.0 million due and payable under mortgage notes payable.

The non-recourse mortgage note payable relating to our Ontario, California property, which is secured by the property and the rents, revenues and profits from the property, matured on May 11, 2011 and was modified on February 14, 2012. The lender reduced the principal balance by $500,000 and waived all penalties and accumulated interest in exchange for a $1.0 million pay down of the principal balance by the Trust. The interest rate was lowered from 8.28% to 5.0% reducing the monthly principal and interest payment to $31,700 from $71,100. The note was extended for three years to January 14, 2015.

We anticipate that current cash balances, future cash flows from operations, proceeds from sales of non-controlling interests in the Ontario and Tucson Foothills subsidiaries, and available credit will be sufficient to satisfy our obligations as they become due. The bank line of credit is in final negotiations and is expected to be finalized by June 23, 2012. In the event cash flows from operations are insufficient to satisfy these obligations as they become due, we may seek to refinance properties, negotiate additional credit facilities or issue debt instruments. From sales of non-controlling interests in the Ontario and Tucson Foothills subsidiaries, we received $1.2 million during the first quarter of fiscal year 2013.

For the remainder of fiscal year 2013 (May 1, 2012 through January 31, 2013), our management has projected that cash flows from operations alone may not be sufficient to meet all of our financial obligations as they come due. Based on this projection, we began selling non-controlling ownership interests in our Ontario, California subsidiary, providing enough available liquidity for management to believe that the we will meet all of our financial obligations as they come due during fiscal year 2013. See Note 5 - "Note Payable to Bank", Note
6 - "Sale of Membership Interests in Albuquerque Suite Hospitality, LLC", Note 7
- "Sale of Partnership Interests in Tucson Hospitality Properties, LP" and Note
8 - "Sale of Partnership Interests in Ontario Hospitality Properties, LP."

As of April 30, 2012, we have no commitments for capital expenditures beyond the 4% reserve for refurbishment and replacements set aside annually for each hotel property.

RESULTS OF OPERATIONS

Our expenses consist primarily of hotel operating expenses, property taxes, insurance, corporate overhead, interest on mortgage debt, professional fees and depreciation of the Hotels. Our operating performance is principally related to the performance of the Hotels. Therefore, management believes that a review of the historical performance of the operations of the Hotels, particularly with respect to occupancy, calculated as rooms sold divided by the number of rooms available, average daily rate ("ADR"), calculated as total room revenue divided by number of rooms sold, and revenue per available room ("REVPAR"), calculated as total room revenue divided by the number of rooms available, is appropriate for understanding revenue from the Hotels. Occupancy was 74.4% for the three months ended April 30, 2012, an increase of 6.5% from the prior year period. ADR decreased $2.56, or 3.3%, to $75.86. The decrease in ADR and increased occupancy resulted in an increase of $3.20, or 6.0%, in REVPAR to $56.46 from $53.26 in the prior year period. The increase in occupancy is due to the moderately improving trend in our economy, which caused more vacation and business travelers.

The following table shows occupancy, ADR and REVPAR for the periods indicated:

                                               April 30,
                                         2012              2011
OCCUPANCY                                     74.4 %            67.9  %
AVERAGE DAILY RATE (ADR)               $     75.86       $     78.42
REVENUE PER AVAILABLE ROOM (REVPAR)    $     56.46       $     53.26

No assurance can be given that the trends reflected in this data will be maintained or improve or that occupancy, ADR or REVPAR will not decrease as a result of changes in national or local economic or hospitality industry conditions. We expect the improving economic conditions to positively affect our business levels for the remainder of this current fiscal year.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED APRIL 30, 2012 COMPARED TO THE
THREE MONTHS ENDED APRIL 30, 2011

A summary of the operating results for the three months ended April 30, 2012 and
2011 is:

                                  2012          2011         Change     % Change
Revenue                        $ 4,819,625   $ 4,998,782   $ (179,157 )    (3.6) %
Operating Income               $   852,340   $   443,202   $  409,138       92.3 %
Total Expenses                 $ 4,174,911   $ 4,942,801   $ (767,890 )   (15.5) %
Net Income Attributable to
Controlling Interest           $   464,214   $    50,106   $  414,108     >100.0 %
Net Income Per Share - Basic
and Diluted                    $      0.05   $      0.01   $     0.04     >100.0 %

For the three months ended April 30, 2012, our total revenue was $4.8 million, a decrease of $179,000, compared with the prior year period total of $5.0 million. The decrease was due to changing the employees at the Hotels from employees of the management company to employees of each hotel. The management company no longer receives payroll reimbursements, which in the prior year period was $591,000. Revenues from hotel operations, which include Room, Food and Beverage, Telecommunications and Other revenues, increased 11.7% to $4.8 million for the three months ended April 30, 2012, from $4.3 million for the three months ended April 30, 2011. Hotel operations, including Food and Beverage operations, experienced increases in revenues during the first quarter of fiscal year 2013 due to higher occupancy as a result of improving economic conditions.

Total operating expenses were $4.0 million for the three months ended April 30, 2012, a decrease of $588,000, or 12.8%, from the prior year period total of $4.6 million. The decrease was due to payroll reimbursements of $591,000 in the three months ended April 30, 2011.

General and administrative expense decreased $42,000 for the three months ended April 30, 2012, or 5.3%, to $796,000 from $838,000 in the prior year period primarily due to effective cost controls.

Repairs and maintenance expense was $396,000 for the three months ended April 30, 2012, a decrease of $30,000 or 7.6% under the prior year period total of $426,000. The decrease was primarily due to lower maintenance labor and operating expenses at the Yuma, Arizona location due to significant maintenance projects at the property during the prior year period.

Operating income was $852,000 for the three months ended April 30, 2012, an increase over the prior year period of $443,000, or 92.3%. The increase reflects improved efficiencies in sales and management.

Consolidated net income improved by $589,000 for the three month period ended April 30, 2012 to $645,000, or $0.05 per basic share, from $56,000, or $0.01 per basic share, during the three months ended April 30, 2011. This increase was due to greater activity at the hotels and a successful debt restructure for our Ontario property.

EBITDA

We reported earnings before non-controlling interest, interest, taxes, depreciation and amortization (Adjusted EBITDA) of $1.3 million for the three months ended April 30, 2012, compared to $892,000 in the prior year, an increase of $394,000, or 44.1%. Adjusted EBITDA is a non-GAAP financial measure that management believes provides meaningful insight into the Trust's financial performance and its operating profitability before non-operating expenses (such as interest and "other" non-core expenses) and non-cash charges (depreciation and amortization).

A reconciliation of Adjusted EBITDA to net income attributable to Shareholders of Beneficial Interest for the three month periods ended April 30 follows:

                                                     2012           2011
Net Income attributable to controlling interest   $   464,214     $  50,106
Add back:
Depreciation                                          433,657       449,032
Interest expense                                      207,626       387,221
Non-controlling interest                              180,608         6,018
Less:
Interest income                                          (108 )        (143 )
ADJUSTED EBITDA                                   $ 1,285,997     $ 892,234

OFF-BALANCE SHEET FINANCINGS AND LIABILITIES

Other than lease commitments and legal contingencies incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or liabilities. We do not have any majority-owned subsidiaries that are not included in the consolidated financial statements. (See Note 2 - "Summary of Significant Accounting Policies.")

SEASONALITY

The Hotels' operations historically have been seasonal. The three southern Arizona hotels experience their highest occupancy in the first fiscal quarter and, to a lesser extent, the fourth fiscal quarter. The second fiscal quarter tends to be the lowest period of occupancy at those three southern Arizona hotels. This seasonality pattern can be expected to cause fluctuations in our quarterly revenue. The two hotels located in California and New Mexico historically experience their most profitable periods during the second and third fiscal quarters (the summer season), providing some balance to the general seasonality of our hotel business. To the extent that cash flows from operations are insufficient during any quarter, because of temporary or seasonal fluctuations in revenue, we may utilize cash on hand or borrowings to make distributions to our shareholders or to meet operating needs. No assurance can be given that we will make distributions in the future.

FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-Q, including statements containing the phrases "believes," "intends," "expects," "anticipates," "predicts," "will be," "should be," "looking ahead," "may" or similar words, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend that such forward-looking statements be subject to the safe harbors created by such Acts. These forward-looking statements include statements regarding our intent, belief or current expectations in respect of (i) the declaration or payment of dividends; (ii) the leasing, management or operation of the Hotels;
(iii) the adequacy of reserves for renovation and refurbishment; (iv) our financing plans; (v) our position regarding investments, acquisitions, developments, financings, and other matters; and (vi) trends affecting our or any Hotel's financial condition or results of operations.

These forward-looking statements reflect our current views in respect of future events and financial performance, but are subject to many uncertainties and factors relating to the operations and business environment of the Hotels that may cause our actual results to differ materially from any future results expressed or implied by such forward-looking statements. Examples of such uncertainties include, but are not limited to:

• local or national economic and business conditions, including, without limitation, conditions which may affect public securities markets generally, the hospitality industry or the markets in which we operate or will operate;

• fluctuations in hotel occupancy rates;

• changes in room rental rates that may be charged by InnSuites Hotels in response to market rental rate changes or otherwise;

• seasonality of our business;

• interest rate fluctuations;

• changes in government regulations, including federal income tax laws and regulations;

• competition;

• any changes in our financial condition or operating results due to acquisitions or dispositions of hotel properties;

• insufficient resources to pursue our current strategy;

• concentration of our investments in the InnSuites Hotelsฎ brand;

• loss of franchise or membership contracts;

• real estate and hospitality market conditions;

• hospitality industry factors;

• our ability to have access to a line of credit;

• our ability to meet present and future debt service obligations;

• our inability to refinance indebtedness at or prior to the time it matures;

• terrorist attacks or other acts of war;

• outbreaks of communicable diseases;

• natural disasters;

• data breaches; and

• loss of key personnel.

We do not undertake any obligation to update publicly or revise any forward-looking statements whether as a result of new information, future events or otherwise. Pursuant to Section 21E(b)(2)(E) of the Securities Exchange Act of 1934, the qualifications set forth hereinabove are inapplicable to any forward-looking statements in this Form 10-Q relating to the operations of the Partnership.