EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the Agreement) entered into as of                     , 2004, by and between Capital Lodging Operating Partnership, L.P. (the Company) and Ricardo Koenigsberger (Executive).

WHEREAS, Capital Lodging General Partner, LLC (the LLC) is the Companys general partner and Capital Lodging, a Maryland real estate investment trust, (the Trust) owns 99.9% of the membership interests of the LLC and              limited partnership units in the Company;

WHEREAS, the parties desire to enter into an agreement to reflect Executives executive capacities in the Trusts business and to provide for Executives new employment by the Company, upon the terms and conditions set forth herein; and

WHEREAS, Executive has agreed to certain confidentiality, non-competition and non-solicitation covenants contained hereunder, in consideration of the benefits provided to Executive under this Agreement;

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Employment. The Company hereby agrees to employ Executive, and Executive hereby accepts such employment and agrees to perform Executives duties and responsibilities, in accordance with the terms, conditions and provisions hereinafter set forth.

1.1. Employment Term. This Agreement shall be effective as of the date the Underwriting Agreement (as defined below) is executed and the common shares of beneficial interest, $0.001 par value per share, of the Trust (the Shares) are priced for the initial public offering of the Trust (the Effective Date) and shall continue until December 31, 2007 (the Initial Term), and shall be automatically extended for an additional one (1) year period on December 1, 2005 and on each December 1 thereafter, including each December 1 that occurs within the Initial Term (the last day of each such term is referred to herein as a Term Date), unless either party terminates this Agreement not later than thirty (30) days prior to the Term Date by providing written notice to the other party of such partys intent not to renew, or it is sooner terminated pursuant to Section 2 or 3 below. The period commencing on the Effective Date and ending on the date on which the term of Executives employment under the Agreement shall terminate is hereinafter referred to as the Employment Term. For purposes of this Agreement, the Underwriting Agreement shall mean the agreement between the Trust and the underwriter or underwriters managing the initial public offering of the Shares.

1.2. Duties and Responsibilities. During the Employment Term, Executive shall serve as the Chairman of the Board of Trustees of the Trust (the Board) and shall be employed as an employee at the Company. The Executives principal employment duties and responsibilities shall be those duties and responsibilities customary for the position of the Chairman of the Board and such other duties and responsibilities as the Board shall reasonably assign to the Executive. Executive shall perform all duties and accept all responsibilities incident to such position as may be reasonably assigned to him by the Board. The Executive

shall report directly to the Board and the President and Chief Executive Officer of the Trust shall report directly to Executive.

1.3. Extent of Service. Executive agrees to use Executives best efforts to carry out Executives duties and responsibilities under Section 1.2 hereof and, consistent with the other provisions of this Agreement, to devote a majority of his time (as defined below) to perform his duties and responsibilities as the Chairman of the Board and employee of the Company. The foregoing shall not be construed as preventing Executive from making investments in other businesses or enterprises, provided that Executive agrees not to become engaged in any other business activity which, in the reasonable judgment of the Board, is likely to interfere with Executives ability to discharge Executives duties and responsibilities to the Company and the Trust. In addition, Executive shall be permitted to continue to be a partner in Apollo Real Estate Advisors, L.P. (Apollo) and shall not be limited in his ability to continue to serve and devote such time to Apollo and its affiliates or joint ventures as is necessary for his position with Apollo, so long as this does not interfere with his spending a majority of his time performing his duties and responsibilities as Chairman of the Board and employee of the Company. Further, Executive shall be able to maintain his investment as a partner in Apollo. For purposes of this Agreement, majority of his time shall mean the performance of an average of eighty-four (84) hours per month (which will include, for this purpose, vacation and any other paid time off time taken by Executive in accordance with Company policies) over any consecutive six (6) month period; provided, however, that, subject to Section 1.9 of the Agreement, Executive may, in his sole discretion, provide more of his time to perform his duties and responsibilities as the Chairman of the Board and employee of the Company.

1.4. Base Salary. For all the services rendered by Executive hereunder, the Company shall pay Executive a base salary (Base Salary), commencing on the Effective Date, at the annual rate of $250,000, payable in installments at such times as the Company customarily pays its other senior level executives. Executives Base Salary shall be reviewed annually for appropriate increases by the Board (or a committee of the Board) taking into consideration the Trusts peer group of real estate investment trusts and the Trusts gross sales and enterprise value; provided, however, that commencing on January 1, 2005, and on each January 1 thereafter during the Employment Term, the Base Salary shall be increased by no less than 5% of the Base Salary in effect on (i) for purposes of January 1, 2005, the Effective Date, and (ii) for purposes of January 1, 2006 and each January 1 thereafter, the January 1 of the immediately prior year. The amount of increase shall be determined before March 31 of each year and shall be retroactive to January 1. The Base Salary, including any increases, shall not be decreased during the Employment Term. For purposes of this Agreement, the term Base Salary shall mean the amount established and adjusted from time to time pursuant to this Section 1.4.

1.5. Annual Incentive Award. Executive shall be entitled to receive an annual cash incentive bonus for each fiscal year during the Employment Term consistent with a bonus policy adopted by the Board (or the compensation committee of the Board) (the Bonus Policy). If the Executive, the Company or the Trust, as the case may be, satisfies the performance criteria contained in such Bonus Policy for a fiscal year, Executive shall receive an annual incentive bonus determined by multiplying Executives Base Salary for the year by the minimum percentages determined under the following schedule:

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If the Executive, the Company or the Trust, as the case may be, fails to satisfy the performance criteria contained in such Bonus Policy for a fiscal year, the Board (or the compensation committee of the Board) may determine whether any incentive bonus shall be payable to Executive for that year. In establishing its Bonus Policy, the Board (or the compensation committee of the Board) shall take into consideration a combination of the Executives performance (approximately 20%) and that of the Company or the Trust (approximately 80%). The performance hurdles for a particular year shall be established no later than January 15 of the applicable calendar year. In establishing the performance hurdles, the Board (or the compensation committee of the Board) will take into account dilution resulting from acquisitions and Share offerings, plus any changes made to the accounting rules and the standards in which they arise. For the initial year of the Bonus Policy, the Board (or the compensation committee of the Board) shall consider the following performance hurdles:

In determining Executives bonus, these performance hurdles will be weighted as follows: 60% based on the EBITDA Goals actually achieved and 40% based on the Acquisitions Growth actually achieved.

For purposes of this Agreement, the term Incentive Bonus shall mean the amount established pursuant to this Section 1.5.

1.6. Retirement, Welfare and Other Benefit Plans and Programs.

(a) During the Employment Term, Executive shall be entitled to participate in all employee retirement and welfare benefit plans and programs made available to the Companys senior level executives as a group or to its employees generally, as such retirement and welfare plans may be in effect from time to time and subject to the eligibility requirements of the plan; provided, however, that, if Executive fails to satisfy the eligibility requirements for any such welfare benefit plans or programs, Executive shall be reimbursed, on a pre-tax basis, by the Company during the Employment Term for any costs incurred by Executive in connection with obtaining comparable benefits. During the Employment Term, Executive shall be entitled to vacation and sick leave in accordance with the Companys vacation, holiday and other pay for time not worked policies. Nothing in this Agreement shall prevent the

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Company or the Trust from amending or terminating any retirement, welfare or other employee benefit plans or programs from time to time as the Company or the Trust deems appropriate.

(b) Executive shall receive a monthly automobile allowance of $750, in advance of the month to which it relates.

(c) Executive shall be entitled to participate in any nonqualified deferred compensation plan maintained by the Company for the benefit of its senior level executives.

(d) Executive shall be reimbursed for up to $10,000 per year for tax preparation and financial consulting fees.

1.7. Reimbursement of Expenses. Executive shall be provided with reimbursement of reasonable expenses related to Executives employment by the Company on a basis no less favorable than that which may be authorized from time to time for senior level executives as a group.

1.8. Incentive Compensation.

(a) Initial Share Awards. As of the Effective Date, the Trust shall grant to the Executive a restricted Share award that has a value of $550,000, with such value to be determined based on the price set for the Shares for the initial public offering of the Trust, (the IPO Share Award). The IPO Share Award shall be granted under the Trusts 2004 Equity Compensation Plan (the Equity Plan) and the Shares subject to the IPO Share Award shall vest with respect to 18% of the Shares on December 31, 2004 and the remaining 82% of the Shares shall vest on December 31, 2005. The other terms and conditions of the IPO Share Award shall be as set forth in the Trusts standard Share award agreement for such awards under the Equity Plan.

(b) Annual Share Awards. During the Employment Term, Executive shall be entitled to the following annual grants of Share awards:

(i) Except as provided in subsection (b)(iii) below, the Trust shall make an annual grant to the Executive of a restricted Share award under the Equity Plan, or such other plan maintained by the Trust that permits the granting of Share awards, equal to no less than (A) for the 2006 calendar year, 120% of the number of Shares granted pursuant to the IPO Share Award (the 2006 Time-Based Share Award), (B) for the 2007 calendar year, 120% of the number of Shares granted pursuant to the 2006 Time-Based Share Award (the 2007 Time-Based Share Award) and (C) for the 2008 calendar year and each calendar year thereafter during the Employment Term, 120% of the 2007 Time-Based Share Award. Such annual Share award grants shall be made no later than January 15 of the calendar year in which the award is intended to meet the requirements of this subsection (b)(i). The annual Share awards granted pursuant to this subsection (b)(i) shall fully vest on December 31 of the calendar year in which the award was granted, and shall be subject to the other terms and conditions set forth in the Trusts standard Share award agreement for such awards under the Equity Plan or such other plan.

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(ii) Except as provided in subsection (b)(iii) below, the Trust shall make an annual grant to the Executive of a restricted Share award under the Equity Plan, or such other plan maintained by the Trust that permits the granting of Share awards, equal to no less than: (i) for the 2005 calendar year, the Share award shall have a value of $300,000 on the date of grant, with such value to be based on the fair market value of the Shares on the date of grant, (the 2005 Performance Share Award), (ii) for the 2006 calendar year, 120% of the number of Shares granted pursuant to the 2005 Performance Share Award (the 2006 Performance Share Award), (C) for the 2007 calendar year, 120% of the number of Shares granted pursuant to the 2006 Share Award (the 2007 Performance Share Award), and (D) for the 2008 calendar year and each calendar year thereafter during the Employment Term, 120% of the number of Shares granted pursuant to the 2007 Performance Share Award. Such annual grants shall be made no later than January 15 of the calendar year in which the award is intended to meet the requirements of this subsection (b)(ii). The annual restricted Share award granted pursuant to this subsection (b)(ii) shall vest on December 31 of the calendar year of the date of grant, but only to the extent the performance criteria established, in writing, by the Board (or the compensation committee of the Board) at the time of the date of grant of such award is achieved, and shall be subject to the other terms and conditions set forth in the Trusts standard Share award agreement for such awards under the Equity Plan or such other plan.

(iii) Notwithstanding anything in this Agreement to the contrary, the Trust shall have the discretion, but not the obligation, and shall not be required to, grant the annual Share awards described in this Section 1.8(b) during any calendar year; provided, however, that if the Trust fails to grant such Share awards, the Trust shall notify the Executive such Share award shall not be made for the calendar year.

(c) Options. As of the Effective Date, the Trust shall grant to Executive an option to purchase 100,000 Shares under the Trusts 2004 Option Plan (the Option Plan). To the maximum extent permitted by section 422 of the Internal Revenue Code of 1986, as amended, (the Code) such option shall be an incentive stock option (within the meaning of section 422 of the Code) and to the extent any portion of the option cannot qualify as an incentive stock option on the date of grant, the excess Shares shall be granted pursuant to a nonqualified stock option. The portion of the option that is an incentive stock option shall become exercisable ratably over a three-year period from the date of grant and the portion of the option that is a nonqualified stock option shall become fully exercisable on the third anniversary of the date of grant. The option grant described in this subsection (c) shall have an exercise price per share equal to the price set for the Shares for the initial public offering of the Trust and shall be subject to the other terms and conditions set forth in the Trusts standard incentive stock option and nonqualified stock option agreement for such awards under the Option Plan or such other plan.

(d) Other Equity Awards. In addition to the Share awards and option grants described in this Section 1.8, the Executive shall be entitled to receive other equity or cash awards under the Equity Plan, the Option Plan and any subsequently implemented equity compensation plan or short-term or long-term incentive compensation plan established by the Trust or the Company, as determined by the Trust or the Company.

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1.9. New Agreement. Notwithstanding anything in this Agreement to the contrary, if the Board, by a majority vote, requires that the Executive, or if the Executive determines that it is necessary for him to, spend more than a majority of his time to perform his duties and responsibilities with the Company and the Trust, the Board may require that the Executive, or the Executive may require that the Board, negotiate, in good faith, an amendment to the Agreement or a new employment agreement to govern the Executives new compensation and responsibilities for the Company and the Trust; provided, however, that Executive shall not be required to take on any additional duties and responsibilities until an amendment to the Agreement or a new employment agreement is entered into, unless the Executive provides prior written consent to assume such additional duties and responsibilities. In the negotiations, the parties shall take into account the additional time commitment, duties and responsibilities that will be required of the Executive, as well as such other factors as the parties deem appropriate, including, but not limited to, the actual and expected opportunity costs that Executive will be required to forfeit with respect to his other commitments and obligations if he enters into the amendment to the Agreement or a new employment agreement. If the parties cannot agree to the terms of an amendment to the Agreement or a new employment agreement, this Agreement shall continue in effect in accordance with its terms and Executive shall not be required to spend more than a majority of his time to perform his duties and responsibilities with the Company and the Trust.

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