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                                                                 EXHIBIT 10.2

                                                     EXECUTION COPY




                                  LETTER AGREEMENT (this "Letter Agreement")
                           made on this 30th day of July, 1998, by and among
                           PATRIOT AMERICAN HOSPITALITY, INC., a Delaware
                           corporation (the "REIT"), WYNDHAM INTERNATIONAL,
                           INC., a Delaware corporation (the "OPCO", and
                           together with the REIT, jointly and severally, the
                           "Companies" and each a "Company"), and PAINEWEBBER
                           FINANCIAL PRODUCTS INC. ("PaineWebber").

                  The purpose of this Letter Agreement is to confirm the 
satisfaction of certain obligations under the Purchase Price Adjustment 
Mechanism Agreement among REIT, OPCO and PaineWebber dated April 6, 1998 (the 
"PPAM Agreement").

                  NOW, THEREFORE, in consideration of the representations, 
warranties and covenants herein contained, and on the terms and subject to 
the conditions herein set forth, the Companies and PaineWebber hereby agree 
as follows:

                  Section 1.01.  DEFINITIONS.  All capitalized terms used but 
not defined herein shall have the meanings given them in the PPAM Agreement.

                  Section 1.02. REPRESENTATIONS. The representations, 
warranties and covenants of the Companies in Section 4 of the Purchase 
Agreement, dated as of April 6, 1998 (the "Purchase Agreement"), among the 
Companies and PaineWebber are hereby incorporated by reference herein, and 
the Companies hereby so represent, warrant and covenant to PaineWebber. The 
provisions of Section 6 of the Purchase Agreement shall also be applicable to 
any Paired Shares delivered to PaineWebber under this Agreement.

                  Section 1.03. INTERIM SETTLEMENT. The Companies agree to 
deliver to PaineWebber Interim Settlement Shares for the Reset Date that 
occurred on June 30, 1998, PROVIDED, HOWEVER, that such Interim Settlement 
Shares need not be delivered pursuant to an effective registration statement 
covering any sale of such Interim Settlement Shares by PaineWebber, PROVIDED 
FURTHER that if such Interim Settlement Shares are not the subject of an 
effective registration statement covering all sales of such Interim 
Settlement Shares by PaineWebber by August 28, 1998, the Companies shall 
deliver cash collateral to PaineWebber on such date in an amount equal to the 
Interim Settlement Amount for the Reset Date that occurred on June 30, 1998. 
Any cash collateral delivered by the Companies to PaineWebber pursuant to 
this Section shall be subject to the provisions of Section 5.1 of the PPAM 
Agreement. PaineWebber acknowledges that the Companies' obligations to 
deliver Interim Settlement Shares to PaineWebber under Section 5.1 of the 
PPAM Agreement with respect to the Reset Date occurring on June 30, 1998, 
shall be satisfied upon the full performance by the 

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Companies of all their respective obligations under this Letter Agreement. 
For the avoidance of doubt, such satisfaction is only with respect to the 
obligations of the Companies arising with respect to the Reset Date occurring 
on June 30, 1998, and in no way affects the obligations of the Companies with 
respect to future Reset Dates.

                  Section 1.04. MISCELLANEOUS PROVISIONS. The 
representations, warranties and covenants of the Companies contained in 
Section 6 and Section 7 of the PPAM Agreement are hereby incorporated by 
reference herein, and the Companies hereby so represent, warrant and covenant 
to PaineWebber.

                  Section 1.05. GOVERNING LAW AND JURISDICTION. This Letter 
Agreement will be governed by and construed in accordance with the laws of 
the State of New York without reference to choice of law doctrine. With 
respect to any suit, action or proceeding relating to this Letter Agreement 
("Proceedings"), each party irrevocably submits to the exclusive jurisdiction 
of the courts of the State of New York and the United States District Court 
located in the Borough of Manhattan in New York City and waives any objection 
which it may have at any time to the laying of venue of any Proceedings 
brought in any such court, waives any claim that such Proceedings have been 
brought in an inconvenient forum and further waives the right to object, with 
respect to such Proceedings, that such court does not have any jurisdiction 
over such party.

                  IN WITNESS WHEREOF, PaineWebber and the Companies have 
caused this Letter Agreement to be duly executed and delivered, as of the 
date first written above.

                                         PATRIOT AMERICAN HOSPITALITY, INC.,

                                         by  /s/
                                                --------------------------

                                         WYNDHAM INTERNATIONAL, INC.,

                                         by  /s/
                                                --------------------------

                                        PAINEWEBBER FINANCIAL PRODUCTS, INC.,

                                         by  /s/
                                                --------------------------