8-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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                                    FORM 8-K

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                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

                         Date of Report: August 4, 2005
                        (Date of earliest event reported)

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                           ARLINGTON HOSPITALITY, INC.
             (Exact name of registrant as specified in its charter)

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           Delaware                       0-15291                 36-3312434
(State or other jurisdiction of    (Commission File No.)        (IRS Employer
        incorporation)                                       Identification No.)

                        2355 South Arlington Heights Road
                                    Suite 400
                        Arlington Heights, Illinois 60005
                    (Address of Principal Executive Offices)

                                 (847) 228-5400
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
          (Former name or former address, if changed since last report)

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CHECK THE APPROPRIATE BOX BELOW IF THE FORM 8-K FILING IS INTENDED TO
SIMULTANEOUSLY SATISFY THE FILING OBLIGATION OF THE REGISTRANT UNDER ANY OF THE
FOLLOWING PROVISIONS (SEE GENERAL INSTRUCTION A.2. BELOW):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
    230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
    240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
    Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
    Act (17 CFR 240.13e-4(c))



ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

         On August 4, 2005, the Board of Directors of Arlington Hospitality,
Inc. (the "Company") agreed to enter into a Fifth Amendment to the Employment
Agreement by and between the Company and Mr. Stephen K. Miller, the Company's
Interim Chief Executive Officer. Pursuant to the amendment, Mr. Miller will
continue to serve as the Company's Interim Chief Executive Officer until the
earlier of: (i) April 30, 2006 (extended from June 30, 2005); or (ii) until a
successor Chief Executive Officer is appointed. Additionally, Mr. Miller's
annual base salary was increased from an annual rate of $200,000 to $225,000 for
his service as Interim Chief Executive Officer. The amendment also increased Mr.
Miller's severance amount by $7,500, in the event that he is terminated for
reasons other than cause within twelve months of the Company's hire of a
permanent Chief Executive Officer. The remainder of the Employment Agreement
remains unchanged.

         On August 1, 2005, the Company entered into an engagement letter with
Chanin Capital L.L.C., an affiliate of Chanin Capital Partners ("Chanin") to
serve as the Company's exclusive financial advisor. Chanin has been engaged to
review the Company's assets and liabilities, business and financial projections
and to determine its strategic and financial alternatives including determining
the best avenues for negotiating with the Company's creditors and other
stakeholders. The letter agreement may be terminated by either party upon
providing 30 days' prior written notice of termination. Certain provisions of
the agreement relating to the payment of certain fees and expenses including
indemnification provisions may continue after termination of the agreement. In
exchange for providing financial advisory services, the Company agreed to pay
Chanin a monthly advisor fee. Chanin is entitled to receive certain
transaction-based fees including: (1) in the event of a merger or acquisition
involving the Company; (2) in the event of a restructuring of the Company; or
(3) in the event of a debt or equity financing. The amount paid as monthly
advisory fees will reduce any amounts owed pursuant to the transaction-based
fees. The Company has agreed to reimburse Chanin its reasonable, out-of-pocket
expenses provided the expenses do not exceed a certain amount, without the
Company's prior written consent.

         On August 2, 2005, the Company issued a press release announcing its
engagement of Chanin. The press release is attached hereto as Exhibit 99.1 and
is incorporated herein by reference.

ITEM 3.01 NOTICE OF DELISTING OR FAILURE TO SATISFY A CONTINUED LISTING RULE OR
STANDARD; TRANSFER OF LISTING

         On August 2, 2005, the Company received a notice from the Listing
Qualifications Department of the Nasdaq Stock Market indicating that for the
last 30 consecutive business days, the bid price of the Company's common stock
has closed below the minimum $1.00 per share requirement for continued listing
under Marketplace Rule 4310(c)(4). The notice further indicates that pursuant to
Marketplace Rule 4310(c)(8)(D), the Company will be provided 180 calendar days
(or until January 30, 2006) to regain compliance. If, at anytime before January
30, 2006, the bid price of the Company's common stock closes at $1.00 per share
or more for a minimum of 10 consecutive business days, the Company may regain
compliance with the Marketplace Rules. The Company is currently evaluating
alternatives to regain compliance with the minimum bid requirement.


ITEM 8.01 - OTHER MATTERS

         Pursuant to the Company's operating line of credit with LaSalle Bank
NA, on July 31, 2005, the availability under the line of credit was decreased
from $3.5 million to $3.0 million. Accordingly, on July 31, 2005, the Company
was required to make a principal payment of $500,000 to LaSalle Bank NA. The
Company, however, did not make this payment and is in discussions with LaSalle
Bank NA to obtain a modification to the line of credit agreement.


ITEM 9.01 EXHIBITS

(c)      Exhibits

99.1     Press Release of Arlington Hospitality, Inc. dated August 2, 2005



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

DATE: August 4, 2005


                               Arlington Hospitality, Inc.
                               (Registrant)

                               By:  /s/ Stephen K. Miller
                                    ------------------------------------
                                        Stephen K. Miller
                                        Interim Chief Executive Officer

                               By:  /s/ James B. Dale
                                    ------------------------------------
                                        James B. Dale
                                        Senior Vice President and
                                        Chief Financial Officer





                                  EXHIBIT INDEX

EXHIBIT       DESCRIPTION
- -------       -----------
 99.1         Press release of Arlington Hospitality, Inc. dated August 2, 2005.

EX-99.1

                                                                    EXHIBIT 99.1



For Immediate Release
CONTACT:                                            MEDIA CONTACT:
James B. Dale, Chief Financial Officer              Jerry Daly or Carol McCune
847-228-5401 x 361                                  703-435-6293
jimdale@arlingtonhospitality.com                    jerry@dalygray.com


 ARLINGTON HOSPITALITY, INC. RETAINS CHANIN CAPITAL L.L.C. AS FINANCIAL ADVISOR
                      AND SEEKS RESTRUCTURING ALTERNATIVES

         ARLINGTON HEIGHTS, IL., August 2, 2005 - Arlington Hospitality, Inc.
(Nasdaq/SmallCap: HOST), a hotel development and management company, today
announced that it has retained Chanin Capital, L.L.C., an affiliate of Chanin
Capital Partners ("Chanin"), to serve as Arlington's exclusive financial advisor
in connection with Arlington's efforts to restructure its debt and/or equity
capital. Chanin will assist Arlington's Board of Directors and management in
analyzing the Company and its business and financial prospects with a view
towards developing a plan for negotiating with the Company's existing creditors
and other stakeholders.

         Chanin is comprised of more than 50 dedicated professionals in London,
Los Angeles, and New York. Since its founding in 1984, Chanin has completed more
than $146 billion in financial recapitalization and restructuring transactions,
and has consummated more than $29 billion in mergers & acquisitions
transactions. Chanin has been consistently ranked as one of the leading
restructuring and bankruptcy advisory firms in the United States.

         Arlington Hospitality, Inc. is a hotel development and management
company that builds, operates and sells mid-market hotels. Arlington is the
nation's largest owner and franchisee of AmeriHost Inn hotels, a mid-market,
limited-service hotel brand owned and presently franchised in 20 states and
Canada by Cendant Corporation (NYSE: CD), with over 100 properties. Currently,
Arlington Hospitality, Inc. owns or manages 35 AmeriHost Inn hotels in nine
states, for a total of 2,400 rooms, with additional AmeriHost Inn & Suites
hotels under development.

         This press release may contain forward-looking statements.
Forward-looking statements are statements that are not historical, including
statements regarding management's intentions, beliefs, expectations,
representations, plans or predictions of the future, and are typically
identified by words such as "believe," "expect," "anticipate," "intend,"
"estimate," "may," "will," "should," and "could." There are numerous risks and
uncertainties that could cause actual results to differ materially from those
set forth in the forward-looking statements. For a discussion of these factors,
see the Company's report on Form 10-K for the year ended December 31, 2004 and
report on Form 10-Q for the three months ended March 31, 2005 under the section
headed "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Risk Factors."