NOTE 10 – EARNINGS PER SHARE

The following table is a reconciliation of the income or loss (numerator) and the weighted average shares (denominator) used in the calculation of basic and diluted earnings per common share. The computation of basic and diluted earnings per share is presented below.

	Three Months Ended						Six Months Ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Numerator:
BASIC AND DILUTED*
Income (Loss) from Continuing Operations	$	9,307		$	5,494		$	(5,053	)	$	(10,693	)
(Income) Loss from Continuing Operations allocated to Noncontrolling Interests		(457	)		(1,138	)		617			569
Distributions to 8.0% Preferred Shareholders		(2,299	)		(1,200	)		(3,499	)		(2,400	)
Dividends Paid on Unvested Restricted Shares		(56	)		(45	)		(120	)		(100	)
Income (Loss) from Continuing Operations applicable to Common Shareholders		6,495			3,111			(8,055	)		(12,624	)

Discontinued Operations
Income (Loss) from Discontinued Operations		41			213			(17	)		63
(Income) Loss from Discontinued Operations allocated to Noncontrolling Interests		(2	)		(13	)		1			(5	)
Income (Loss) from Discontinued Operations applicable to Common Shareholders		39			200			(16	)		58

Net Income (Loss) applicable to Common Shareholders	$	6,534		$	3,311		$	(8,071	)	$	(12,566	)

Income (loss) allocated to noncontrolling interest in Hersha Hospitality Limited Partnership has been excluded from the numerator and units of limited partnership interest in Hersha Hospitality Limited Partnership have been omitted from the denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the numerator and denominator would have no impact. Weighted average units of limited partnership interest in Hersha Hospitality Limited Partnership outstanding for the three months ended June 30, 2011 and 2010 were 7,294,791 and 9,239,135, respectively. Weighted average units of limited partnership interest in Hersha Hospitality Limited Partnership outstanding for the six months ended June 30, 2011 and 2010 were 7,344,630 and 9,376,419, respectively.

	Three Months Ended						Six Months Ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Denominator:
Weighted average number of common shares - basic		168,672,936			137,200,796			168,504,893			118,360,826
Effect of dilutive securities:
Restricted Stock Awards		598,402			255,401			-	**		-	**
Contingently Issued Shares		1,689,808			467,764			-	**		-	**
Option to acquire common shares		2,726,087			2,360,156			-	**		-	**
Partnership Units		-	*		-	*		-	*		-	*
Weighted average number of common shares - diluted		173,687,233			140,284,117			168,504,893			118,360,826

	Three Months Ended				Six Months Ended
	June 30, 2011		June 30, 2010		June 30, 2011			June 30, 2010
Earnings Per Share:
BASIC
Income (Loss) from Continuing Operations applicable to Common Shareholders	$	0.04	$	0.02	$	(0.05	)	$	(0.11	)
Income (Loss) from Discontinued Operations applicable to Common Shareholders		0.00		0.00		(0.00	)		0.00
Net Income (Loss) applicable to Common Shareholders	$	0.04	$	0.02	$	(0.05	)	$	(0.11	)

DILUTED*
Income (Loss) from Continuing Operations applicable to Common Shareholders	$	0.04	$	0.02	$	(0.05	)	$	(0.11	)
Income (Loss) from Discontinued Operations applicable to Common Shareholders		0.00		0.00		(0.00	)		0.00
Net Income (Loss) applicable to Common Shareholders	$	0.04	$	0.02	$	(0.05	)	$	(0.11	)

Unvested stock awards, contingently issuable share awards and options to acquire our common shares have been omitted from the denominator for the purpose of computing diluted earnings per share for the six months ended June 30, 2011 and 2010, since the effect of including these awards in the denominator would be anti-dilutive to loss from continuing operations applicable to common shareholders. For the six months ended June 30, 2011, there were 509,384 anti-dilutive unvested stock awards outstanding, 1,719,502 anti-dilutive contingently issuable share awards outstanding, and 2,882,867 anti-dilutive options to acquire our common shares outstanding. For the six months ended June 30, 2010, there were 182,499 anti-dilutive unvested stock awards outstanding, 143,122 anti-dilutive contingently issuable share awards outstanding, and 1,916,814 anti-dilutive options to acquire our common shares outstanding.