The increase came primarily from acquisitions and increased roomrevenues. RevPAR for its 52 consolidated hotels rose 18.3% for thequarter to $79.98, driven by a 12.8% rise in average daily rates to$116.70. Occupancy rose 4.9% to 68.53% for the quarter. Operatingmargins also rose from 38.8% at the end of 2005 to 41.8% by Dec.31, 2006, and adjusted funds from operations were up 45%.

The results reflect the company's strategy "of increasing ourpresence in high barrier to entry metro markets with a specificfocus on New York City, adding newer hotels to our portfolio andincreasing our already strong concentration of extended-stay hotelproperties," said Jay Shah, CEO, during a conference call. He said75% of EBITDA comes from four metro markets: Philadelphia,Washington, DC and Boston in addition to New York.

While the company will continue to seek selective potentialacquisitions in DC and Boston, Shah said, "we continue to see valuein New York." Five New York properties, for which Hersha hassupplied development loans, are under way and expected to reachcompletion within approximately two years, taking its total numberof New York assets to 13.