SecProbe.io

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20549-0409

October 8, 2004

Mr. Andrew M. Sims
President
MHI Hospitality Corporation
814 Capitol Landing Road
Williamsburg, Virginia 23185

Re:	MHI Hospitality Corporation
	Registration Statement on Form S-11, filed on September 9, 2004
	File No.  333-118873

Dear Mr. Sims:

We have reviewed your filing and have the following comments.  Where
indicated, we think you should revise your document in response to
these comments.  If you disagree, we will consider your explanation
as to why our comment is inapplicable or a revision is unnecessary.
Please be as detailed as necessary in your explanation.  In some of
our comments, we may ask you to provide us with supplemental
information so we may better understand your disclosure.  After
reviewing this information, we may or may not raise additional
comments.

Please understand that the purpose of our review process is to assist
you in your compliance with the applicable disclosure requirements
and to enhance the overall disclosure in your filing.  We look
forward to working with you in these respects.  We welcome any
questions you may have about our comments or on any other aspect of
our review.  Feel free to call us at the telephone numbers listed at
the end of this letter.

General
1. We note that you intend to elect to be taxed as a REIT and that
your offering may constitute a "blind-pool" offering.  If so, please
revise to include all applicable Industry Guide 5 disclosure,
including prior performance information substantially similar to that
required under Item 8 and Appendix II of Industry Guide 5.  Refer to
Release 33-6900.  If you do not believe you are required to provide
prior performance disclosures, or if you do not believe that you have
any prior performance to disclose, please supplementally explain the
basis for that belief.

2. We note that in connection with the formation transactions, the
company will issue partnership units to affiliates and non-
affiliates, which units are convertible into shares of the company`s
common stock, in exchange for the contribution to MHI of five of your
initial hotel properties. Please supplementally provide us with your
analysis with respect to the potential for the integration of the
offers and sales of limited partnership units convertible into common
stock with your public offering of common stock, including a
discussion of any relevant staff interpretations.
3. We note that in the formation transactions you will be
consolidating the ownership of properties through the issuance of
operating partnership units to owners of various property entities.
It appears that these transactions may constitute a roll-up
transaction that would be subject to Subpart 900 of Regulation S-K.
Please provide all the disclosure and other relevant information
required by Subpart 900, or provide us with a supplemental analysis
of why the formation transactions do not constitute a roll-up
transaction.
4. Please supplementally provide us with copies of any graphics,
maps, photographs, and related captions or other artwork including
logos that you intend to use in the prospectus.  Such graphics and
pictorial representations should not be included in any preliminary
prospectus distributed to prospective investors prior to our review.
5. Please provide us with all written promotional and sales material,
including material that will be used only by broker-dealers.  In this
regard, note that sales materials must set forth a balanced
presentation of the risks and rewards to investors and should not
contain any information or disclosure that is inconsistent with or
not also provided in the prospectus.  For guidance, refer to Item
19.D. of Guide 5.
6. It appears that the number of securities to be issued in the
formation transactions has been fixed. Please advise us
supplementally how the number of securities to be issued was
determined.
7. Supplementally tell us if you have a website, and if so, please
revise to include your website address.
8. We note that you rely on industry information in the filing and
you reference market data provided by Smith Travel Research.  Please
provide us with copies of articles and industry reports you rely on
and reference in the filing.  These materials should be appropriately
marked, dated, and refer to the page numbers on which they are cited.
Please indicate how these materials support your belief regarding
industry trends.  Additionally, tell us whether any of the reports
were prepared for you or were published generally.

9. We are unable to find disclosure pursuant to Item 25(b) of Form S-
11.  Please advise or revise.
10. Please fill in or provide supplementally all remaining
uncompleted information in the next amendment, other than pricing
information that you have omitted pursuant to Rule 430A. We may have
further comments based on the revised materials.

Prospectus Cover Page
11. We note the inclusion of red herring language on the cover page.
Supplementally advise us whether you have circulated or intend to
circulate the preliminary prospectus.
12. The cover page should contain only information required by Item
501 or that is key information.  Much of the information you have
included in paragraph one is not appropriately placed on the cover
page, including, for example, that you are succeeding to the lodging
assets and operations of your predecessor group. Please revise. See
our Plain English Handbook available at www.sec.gov.
13. Please revise to include cover page risk factor disclosure
addressing the most significant risks associated with your offering.
Please include, for example, cover page risk factor disclosure with
respect to:

* Your long-term debt of $25.7 million on a pro forma basis as of
June 30, 2004;
* The extent to which officers, directors, and affiliates will
control equity interest in the company on a fully diluted basis upon
completion of the offering and the substantial benefits to be
received by affiliates in connection with the offering.
* Federal income taxes consequences in the event you fail to qualify
as a REIT.
* The tax indemnification obligations of MHI Hospitality Corporation.
* The conflicts of interest officers and directors will experience
based on their ownership interest in the operating partnership.
* The geographic concentration of your hotels.
* The absence in your organizational documents of limitations on the
amount of debt you may incur.
* The fact that you have not obtained independent third party
appraisals of the hotels, and that therefore the consideration paid
in the formation and structuring transactions may exceed the fair
market value of the contributed properties.

Prospectus Summary
14. The Summary should provide investors with a clear, concise and
coherent "snapshot" description of the most significant aspects of
the offering.  We note that much of the information in the Summary is
repeated in the body of the prospectus, particularly within your
Business section.  Please revise the prospectus to delete repetitive
disclosure and to provide a brief overview of only the most salient
aspects of the transaction.  Please see Item 503(a) of Regulation S-
K.

Overview - page 1
15. Please revise to clarify your corporate history, including
identifying your predecessor group. When you revise, please indicate
the reason you are succeeding to the assets and operations of your
predecessor group, and indicate how you will do so.
16. Please revise to include the disclosure required by Item 3(b) of
Form S-11 with respect to underwriting compensation and the
percentage of securities being offered to affiliates, or advise us
why you believe it is appropriate not to do so.
17. Please revise to briefly explain the significance of the terms
"upper upscale" and midscale" the first time you use them in your
prospectus.
18. Please revise throughout to balance the description of
management`s experience with disclosure that your management has no
experience operating a public company or a REIT.
19. Please revise to clarify what it means to "leverage the
experience" of your management team and MHI Hotels Services.
20. Please revise to indicate why management believes the hotels
referenced at the bottom of page one are well-positioned for future
growth.
21. Please revise to briefly explain what it means to score in the
"upper echelons" as rated by Hilton and Holiday Inn. For example,
what scale do these franchisors use? What percentage of franchisees
typically score in the upper echelon?

Growth-Oriented Balance Sheet, page 2
22. Please revise to state that there are no limits in your charter
or bylaws on your ability to incur debt.

Improved Lodging Cycle - page 2
23. Please revise to indicate why management believes there is a
recovery in the lodging industry. When you revise, please also
indicate why management believes there is "significant upside
potential" in the current U.S. lodging environment.

Summary risk factors - page 3
24. Please revise to clarify that you have included all material
risks.
25. To the extent we highlight or request risk factor disclosure on
in the Summary risk factors, please make conforming changes in the
Risk Factors section.
26. Please revise to include risk factor disclosure related to your
lack of operating history.
27. Please revise to include risk factor disclosure related to your
long-term debt.
28. Please revise to include risk factor disclosure addressing and
quantifying the amount of proceeds you will use to purchase
properties and the amount that you will use to repay indebtedness
related to such properties.
29. Please revise to include risk factor disclosure related to the
absence in your organizational documents of a limitation on the
amount of debt you may incur.
30. Please revise to include risk factor disclosure related to your
possible use of hedging.
31. Please revise to include risk factor disclosure related to the
control that officers, directors, and affiliates will have upon
completion of the offering.
32. Please revise the risk at bullet factor four to quantify the
extent of your tax indemnification obligations, and to describe the
nature of and the term of the obligations you reference.
33. Please describe the risks in the event that you fail to qualify
as a REIT.

Our Initial Properties, page 4
34. Please revise to include similar disclosure regarding the
leasehold resort.
35. Please revise to include a column disclosing the acquisition cost
of each property.

Formation Transactions - page 5
36. With respect to our comments on this section of the prospectus
summary, please provide conforming changes to the discussion of your
formation transactions in the body of the prospectus.

Conflicts of Interest - page 6
37. Please revise to include disclosure of conflicts that existed in
connection with negotiating the consideration for the contribution of
interests in the initial hotel properties.

Use of Proceeds, page 12
38. We note that you intend to use $25.1 million to repay debt
related to three properties.  Please revise to specify the properties
and include the information described in Instruction 4 to Item 504 of
Regulation S-K.  Furthermore, we note that on page 140 you state that
an affiliate of BB&T is the lender under a mortgage loan secured by
the Holiday Inn Brownstone and that a portion of the proceeds will be
used to repay this mortgage loan. Please describe and quantify this
use of the offering proceeds. Please similarly revise the disclosure
on page 34.

Our Distribution Policy - page 13
39. Please revise to state that your cash available for distributions
may be less than 90% of your REIT taxable income, which could require
you to sell assets or borrow funds in order to make distributions.
Also disclose that distributions in excess of available cash will
constitute a return of capital rather than a dividend to
stockholders.

Risk Factors - page 16
40. Please revise your risk factor subheadings so that each one
conveys the specific risk to you.  Currently, some of your
subheadings merely state a general risk or a fact about your
business.  We note the following examples:

* Our returns depend on management of our hotels by MHI Hotels
Services.
* Our TRS lessee structure subjects us to the risk of increased hotel
operating expenses.
* Complying with REIT requirements may cause us to forego otherwise
attractive opportunities.
* Complying with REIT requirements may force us to liquidate
otherwise attractive investments.
41. Please include a separate risk factor to disclose the risk that
since the number of op units is fixed the value of the consideration
to affiliates may increase if the offering price increases.
42. Please revise to include risk factor disclosure addressing your
lack of operating history.
43. Please revise to include risk factor disclosure addressing your
geographic concentration.

Conflicts of interest could result in our executive officers and
certain of our directors acting other than in our stockholders` best
interests - page 16
44. We note that you discuss multiple conflicts under this one
heading.  Please revise to break out the various conflicts under
separate headings or subheadings.

Our executive officers and certain of our directors may experience
conflicts of interest in connection with their ownership interests in
our operating partnership - page 17
45. Please revise to provide aggregate disclosure with respect to the
percentage that affiliates will own in the operating partnership, in
addition to the individual disclosure you have provided.

Our tax indemnification obligations, which apply in the event that we
sell certain properties, could subject us to liability for
substantial payments and limit our operating flexibility and reduce
our returns on our investments - page 17
46. Please revise to state, if true, that the tax indemnification
agreement was not the result of arm`s length negotiations.
47. Please revise to quantify the extent of the tax indemnification
obligations in the forepart of your discussion.

We did not obtain independent appraisals of our initial hotel
properties or the leasehold interests in the resort property - page
18
48. Please revise to include the aggregate value of the units you
will issue to executive officers and directors in connection with
your formation transactions.

We have agreed to provide certain of our contributors opportunities
to guaranty liabilities of our operating partnership - page 19
49. Please revise to more fully explain how the contributors are able
to defer recognition of gain by guaranteeing liabilities of the
operating partnership. Please also state the term of the protected
period, i.e., five years or ten years.

Future debt service obligations could adversely affect our overall
operating results - page 19
50. Please expand your disclosure to address, if true, that lenders
may impose restrictions that could affect your distribution and
operating policies, as well as your ability to incur additional debt.

Our net income would be adversely affected if our leases for the
resort property are terminated - page 21
51. Please revise to briefly explain under what circumstances the
Shell Island leases could be terminated.

Joint venture investments could be adversely affected by our lack of
sole decision-making authority - page 21
52. We note your statement that you may in certain circumstances be
liable for the actions of your third-party partners or co-venturers.
Please expand your disclosure to briefly describe those circumstances
under which you would be liable for the actions of your third-party
partners or co-venturers.

Our operating results are sensitive to fluctuations in interest
rates, and our hedging strategies may not be effective - page 22
53. Please revise to quantify the portion of your debt that is
sensitive to fluctuations in interest rates.
54. Please revise to discuss the risks associated with your hedging
activities under a separate