EXHIBIT 13

                                  RESORTQUEST
                                 INTERNATIONAL


CORPORATE PROFILE

ResortQuest  International  is the leading  provider of privately owned vacation
home and condominium  rentals in premier resort  locations across North America.
Headquartered in Memphis,  Tennessee, the company is the first to offer vacation
home and  condominium  rental,  sales and property  management  services under a
single brand name. Through its web site, resortquest.com, the company offers the
most comprehensive online reservations service in the vacation rental industry.

PROPERTIES

The ResortQuest  portfolio  currently  offers  vacationers a choice of more than
14,000 privately owned vacation rental units in North America, including:

                                [GRAPHIC OMITTED]

FINANCIAL HIGHLIGHTS
(actuals)

1998
--------------------------------------------------
REVENUES                       $49,524,000
--------------------------------------------------
NET INCOME                      $3,069,000
--------------------------------------------------
EARNINGS PER SHARE                   $0.29
--------------------------------------------------
UNITS                               13,243


                                [GRAPHIC OMITTED]


<PAGE>


                      RESORTQUEST.COM: PORTAL TO THE FUTURE


                               [GRAPHIC OMITTED]


Launched in January 1999,  resortquest.com  is one of the most comprehensive web
sites in the  vacation  industry  based on its  breadth of  locations,  property
information and functionality.  The interactive web site provides consumers with
instant access to  ResortQuest's  14,000 vacation rental  properties  located in
premier beach, mountain, golf and tennis resorts across North America.

     RESORTQUEST.COM  enables consumers  worldwide to search through the brand's
impressive  inventory of vacation home and condominium  rentals to find vacation
accommodations  that meet their  needs--and then to make  reservations  directly
online.  The web site allows  travelers to check  availability and rental rates,
and provides extensive  information about each property,  along with photographs
and floor plans, so travelers will know exactly what to expect when they arrive.

     In addition,  resortquest.com  features a "Special  Offers" section that is
updated regularly and includes special vacation  packages,  seasonal offers, and
last minute deals exclusively available at ResortQuest properties.

     For individuals who may be interested in buying or selling a vacation home,
resortquest.com  provides  a  multiple-location  real  estate  listing  service,
accessible to anyone worldwide,  for its beach, mountain, golf and tennis resort
markets that offer real estate brokerage  services.

     ResortQuest  is  aggressively  marketing the web site with a  multi-faceted
campaign that includes print advertising in high-profile publications, including
USA Today,  Conde Nast  Traveler,  Travel & Leisure,  and leading  travel  trade
journals.  The brand also is  promoting  its web site  through  Internet  banner
advertising  and targeted  links,  e-mail  marketing  campaigns  and direct mail
programs.

     Internet  sales  are  expected  to  account  for  more  than  one-third  of
ResortQuest's  revenues  over the next few years.  The company is  committed  to
offering the most complete  online  booking portal in the industry and utilizing
the power of the Internet to serve the vacation needs of travelers  today and in
the future.



                                       1



<PAGE>



CHAIRMAN'S LETTER

"ResortQuest is changing the landscape of the vacation rental industry."
David C. Sullivan
Chairman and Chief Executive Officer

1998 was a  remarkable  year for  ResortQuest,  a year in which we launched  the
world's first brand in vacation property rentals. Since our inception in May, we
laid the foundation  for a concept that will forever change the vacation  rental
industry.

     To lead the new  company,  we  assembled  a  senior  management  team  that
averages more than 23 years of lodging  experience and has a proven track record
of building  successful  brands that sustain  long-term brand loyalty.  With the
team in place, we began to build a strong and lasting  infrastructure to support
the ResortQuest brand.

     Next, we assembled an impressive and varied  inventory of quality  vacation
homes and condominiums in premier resort  destinations.  With our initial public
offering in May,  ResortQuest  acquired 12 leading vacation property  management
companies with 8,900 units in eight states and Canada, as well as the industry's
leading software provider. Currently, our vacation rental portfolio has grown to
20 property management  companies with more than 14,000 privately owned vacation
residences  in  29  of  the  most  desirable,   geographically   and  seasonally
diversified resort locations in North America.

     In 1999, the plan is to continue  expanding our distribution and the number
of vacation rental  accommodations  under management  contract.  Our acquisition
pipeline  remains quite active,  and we continue to aggressively  seek strategic
acquisitions in new resort  locations and to add depth in existing ones.  Longer
term, we intend to expand globally.

     While our acquisition  strategy is a critical  success factor,  effectively


                                       2


<PAGE>



managing customer expectations and delivering consistent quality will enable the
ResortQuest brand to endure over time. To build credibility and consistency,  we
developed  detailed product and service  standards for the brand, and we created
and implemented the industry's first company-wide rating system that categorizes
vacation rental  accommodations  according to quality,  condition and amenities.
Delivering a consistent, high-quality product will drive repeat business to both
new and existing ResortQuest destinations.

     To build brand  awareness and drive revenue,  we developed a  multi-faceted
marketing   approach   targeting   consumers  and  travel  trade  that  includes
high-profile print advertising,  direct mail, e-mail marketing, public relations
and  promotional  programs.   To  target  vacation  homeowners,   we  introduced
QuestClub,  a unique,  value-added  benefits  program  that  allows  owners  who
contract  with a local  ResortQuest  company  to  enjoy  extraordinary  vacation
privileges and significant value at other ResortQuest locations.
--------------------------------------------------------------------------------
MISSION STATEMENT

     Our  mission  is to be  the  provider  of  choice  for  vacation  home  and
condominium rental, sales and property management  services.  We will accomplish
this by empowering our employees, consistently delivering quality and value, and
establishing strong,  trusting  relationships with our customers so we may serve
them for a lifetime.
--------------------------------------------------------------------------------
     Our  most  important  marketing  initiative,  however,  was  the  strategic
investment we made developing the ResortQuest web site. In January,  we launched
resortquest.com,  an online, interactive vacation rental resource for year-round
vacation planning (see page one of this report). For the first time, vacationers
can visit


                                       3


<PAGE>


resort destinations across North America,  view photographs and floor plans, and
make reservations with a simple click of the mouse. In addition, resortquest.com
features real estate  listings for  ResortQuest  locations that offer  brokerage
services. The Internet is the ideal marketing and sales vehicle for ResortQuest,
and we are taking  steps to ensure  that we remain on the  cutting  edge of this
technology.

                               [GRAPHIC OMITTED]


     Internally,  the  vacation  rental  industry  has  traditionally  grown  by
increasing  rental rates and units under management.  Through branding,  we have
been able to put in place a number of  additional  measures to enhance  internal
growth. By leveraging purchasing strength, capitalizing on centralized marketing
initiatives,   utilizing  state-of-the-art  technology  and  implementing  "best
practices"  programs,  we are creating  significant  operational and cost-saving
synergies.

     All in all,  1998 was a  remarkable  year,  one in  which  we  accomplished
exactly what we said we would: we


                                       4

<PAGE>


created a brand,  developed  product and  service  standards,  formulated  brand
marketing  strategies,  rolled  out  a  property  rating  system,  and  launched
resortquest.com.  With this formidable  infrastructure in place,  ResortQuest is
well-positioned  to accelerate growth and set the industry standard for years to
come.

     I would like to thank all of our  employees at every  ResortQuest  location
for their  hard work,  and our  property  owners  and guests for their  positive
response and confidence. We have a growing portfolio of exceptional resort
properties, a strong management team, and a well-defined plan for future growth.
Our goal for 1999 and beyond is to execute  our  internal  and  external  growth
strategies and remain open to new opportunities.



                               [GRAPHIC OMITTED]
David C. Sullivan
Chairman and Chief Executive Officer


                                       5


<PAGE>


                               [GRAPHIC OMITTED]


A BETTER WAY TO VACATION

During the past few years, the vacation rental industry has experienced dramatic
growth, with vacationers in record numbers discovering the benefits of renting a
private residence instead of a standard hotel room or suite.  These guests enjoy
more space, greater privacy, increased flexibility,  better value--literally all
the comforts of home.

     Traditionally,  the companies that rented and managed these properties were
small,  local  businesses  that offered no guarantees  about the properties they
represented.  The vacationer could only hope that the rental experience would be
a good one.

--------------------------------------------------------------------------------
ResortQuest's  concept of branding  represents the next evolutionary step in the
vacation rental industry.
--------------------------------------------------------------------------------

     That changed in May 1998 with ResortQuest International,  the world's first
brand in the vacation rental industry.

     The debut of this new  concept  was  widely  supported  by a number of very
positive social, demographic and economic trends: leisure travel expenditures in
the U.S. have been increasing  every year since 1986, a period that included two
recessions  and the Gulf War; 76 million  aging baby boomers are entering  their
peak spending and  leisure-time  years with increasing  amounts of discretionary
income and more free time to travel;  and the travel  industry  has  witnessed a
growing  trend  of  people  looking  for  more  experience-oriented   vacations,
including alternatives to hotel rooms.

     ResortQuest's  concept of branding represents the next evolutionary step in
the  vacation  rental  industry.  By  providing a one-stop  resource for quality
vacation rentals in prime resort  destinations,  making the reservations



                                       6


<PAGE>

process simple and  hassle-free,  and  implementing  standards to ensure product
quality,  ResortQuest  is  building a new level of  awareness,  credibility  and
momentum for the industry.

     ResortQuest,  with its extensive  collection of quality  vacation homes and
condominiums,  is changing the landscape of the vacation  rental  industry.  The
brand is taking the highly fragmented vacation rental industry to new heights by
implementing  product standards that enhance customer trust and loyalty,  and by
providing the industry's first one-stop resource for renting vacation properties
in North America's most sought-after resort locations.

          ResortQuest is dedicated to providing a quality vacation experience to
every  guest,  every time and has  implemented  stringent  product  and  service
requirements at each of its locations.  In addition,  ResortQuest introduced the
industry's first accommodations rating system so guests will always know what to
expect  from  one  vacation   destination   to  the  next  (see  adjacent  box).
--------------------------------------------------------------------------------
          ResortQuest has developed a five-level  rating system that categorizes
accommodations according to specific criteria so guests will always know what to
expect at every ResortQuest location.

ACCOMMODATION CATEGORIES

Quest Home

An exclusive group of  extraordinary  accommodations  which are so luxurious and
unique that they are in a class of their own.

Platinum

Exceptional  accommodations marked by unique design that offers superior quality
furnishings,   luxury  features,  designer  appointments,   and  top-of-the-line
kitchens, baths, and amenities.

Gold

Upscale,  well-appointed  accommodations  with a designer  touch  that  includes
excellent furnishings,  special features,  and top-quality kitchens,  baths, and
amenities.

Silver

Inviting,  pleasing  accommodations  that are taste-fully  decorated and feature
quality furnishings and contemporary kitchens and baths.

Bronze

Comfortable,  pleasant  accommodations  that  provide  many of the  comforts and
conveniences of home.
--------------------------------------------------------------------------------

     In addition to  effectively  managing  customer  expectations,  ResortQuest
saves  travelers time and effort by providing easy access to its 14,000 vacation
home and condominium rentals through resortquest.com.

     Vacationers can use the web site to quickly and efficiently  research their
destination  from a wide  range of  resort  locations,  check  availability  and
pricing, and view floor plans and photos of their desired  accommodations.  They
can book their vacation  directly online or by calling  ResortQuest's  toll-free
number, 877-588-5800.


                                       7



<PAGE>

                               [GRAPHIC OMITTED]


WIN-WIN CONCEPT

ResortQuest brings a new level of awareness and strength to the industry.  While
travelers   benefit  from  the  convenience  and  reliability  that  ResortQuest
provides, vacation homeowners, property management companies, and employees also
reap rewards.

     For vacation  homeowners...  ResortQuest  provides the best of both worlds:
local  management  expertise and attention,  along with the marketing  power and
resources of a leading brand.  Each local management team brings to the table an
in-depth  knowledge of the vacation rental business and the market area, as well
as practical  property  management  experience,  both of which work to enhance a
property's value and marketability.

     Through its broad-based  marketing,  ResortQuest  reaches potential renters
from key resort feeder  markets  around the globe,  which in turn  increases the
potential for higher  rental  income.  And should an owner decide to sell,  most
ResortQuest  locations have a complete real estate referral and sales program to
help obtain top dollar for a property.

     By  contracting  with a ResortQuest  company,  homeowners  also receive the
opportunity  to participate in 



                                       8


<PAGE>


QuestClub,  an exclusive owner benefits program that provides travel  privileges
and substantial savings at other ResortQuest properties.

     For property management  companies...  ResortQuest provides the opportunity
to  dramatically  expand  their  businesses,  and  better  serve  customers  and
homeowners. Local companies retain their name, management and employee base, and
company owners convert their equity into more liquid assets to give them greater
financial freedom.  Local companies also achieve operating and pricing synergies
by being part of a large brand.

     For employees...  ResortQuest  provides all the advantages of working for a
major  corporation,  from  greater  job  advancement  opportunities  to enhanced
benefits.
--------------------------------------------------------------------------------

ResortQuest is building a new level of awareness,  credibility  and momentum for
the industry.
--------------------------------------------------------------------------------

     From  vacationer  to homeowner  to local  property  management  company and
employee - ResortQuest is a win-win  proposition.  With its seasoned  management
team, operational expertise,  technological  advantages,  and marketing breadth,
ResortQuest has established  significant barriers to new competition.  The brand
intends to continue to lead the industry by pioneering  innovative solutions for
the  vacation  rental  industry and keeping its promise to provide a lifetime of
service to its customers.



                                       9



<PAGE>


                               [GRAPHIC OMITTED]


RESORTQUEST MILESTONES

MAY 1998

Completed initial public offering;  purchased 12 property  management  companies
aggregating  9,000  rental  units and the  vacation  rental  industry's  leading
software company

JULY 1998

Completed first  acquisition in Breckenridge,  Colo.,  increasing  ResortQuest's
share in one of the nation's most popular ski resorts

AUGUST 1998

Entered popular Gulf Shores, Ala. market with second acquisition

SEPTEMBER 1998

Broadened Canadian inventory in Whistler, British Columbia

SEPTEMBER 1998

Acquired  Abbott  Resorts,  the largest resort  property  management  company in
Florida,  increasing  ResortQuest's  portfolio  to  more  than  11,000  vacation
properties

SEPTEMBER 1998

Increased  ResortQuest  credit  facility  to $55  million  to help  fund  future
acquisitions

OCTOBER 1998

Introduced  the  QuestClub  homeowner  benefits  program,   offering  homeowners
substantial   savings  on  vacation  home  and  condominium   rentals  at  other
ResortQuest locations

OCTOBER 1998

Developed  product  and  service  standards  for  the  ResortQuest  brand  to be
implemented system-wide

OCTOBER 1998

Launched  the  industry's  first  company-wide  rating  system that  categorizes
ResortQuest vacation rental accommodations  according to quality,  condition and
amenities

DECEMBER 1998

Acquired fourth property  management  company in Colorado  (Dillon),  increasing
company's depth in this important U.S. ski area

JANUARY 1999

Announced  RESORTQUEST.COM,  the first branded  online  booking  resource in the
vacation rental industry to offer "up-to-the-minute"  reservation  capabilities,
along with descriptions, photos and floor plans of rental properties

JANUARY 1999

Acquired   property   management   company  in  Oregon   (Sunriver),   expanding
ResortQuest's presence in Western U.S.

JANUARY 1999

Purchased first property  management  company in Big Sky, Mont.,  increasing the
range of vacation experiences offered by ResortQuest

JANUARY 1999

Entered   important   Southern   California  market  with  acquisition  of  Palm
Desert/Palm Springs property management company

FEBRUARY 1999

Penetrated Hilton Head Island, S.C. market with acquisition of one of the area's
leading property management companies

FEBRUARY 1999

Entered  Scottsdale,  Ariz.  market with 10th  acquisition  since initial public
offering, increasing ResortQuest's rental portfolio to 14,000 vacation homes and
condominiums across North America


                                       10

<PAGE>


INDEX OF FINANCIALS


MANAGEMENT'S DISCUSSION AND ANALYSIS                                  11

CONSOLIDATED BALANCE SHEETS                                           21

CONSOLIDATED STATEMENTS OF INCOME                                     22

CONSOLIDATED STATEMENTS OF PRO FORMA INCOME                           23

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                       24

CONSOLIDATED STATEMENTS OF CASH FLOWS                                 25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                            26

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                              39

MANAGEMENT'S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS              39

QUARTERLY RESULTS OF OPERATIONS                                       40

SELECTED FINANCIAL DATA                                               40

DIRECTORS AND OFFICERS                                                41

INVESTOR INFORMATION                                                  41


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
CONDITION AND RESULTS OF OPERATIONS

ResortQuest  International,  Inc.  ("ResortQuest"  or  "Company")  is a  leading
provider of vacation condominium and home rentals in premier destination resorts
throughout the United States and Canada.  Through the  consolidation  of leading
vacation rental and property management companies, the development of a national
brand and best practices  management  systems,  ResortQuest offers vacationers a
network of high quality, fully furnished,  privately-owned  condominium and home
rentals.  ResortQuest has developed  quality standards and segmented most of our
13,243 condominiums and homes into five categories (Quest Home, Platinum,  Gold,
Silver and Bronze),  developed a single  source  access  through a web site with
on-line  booking   capabilities   (resortquest.com)   and  a  toll-free  central
reservation  center, and has implemented a multi-faceted  nation-wide  marketing
program.   ResortQuest  offers  property  owners  superior  management  services
designed to enhance their rental income and profits.  The  condominium  and home
rental properties are owned by non-related third parties.

     On May 26, 1998, ResortQuest consummated its initial public offering ("IPO"
or "Offering") and the acquisition of 12 vacation rental and property management
companies  and one leading  vacation  rental and  property  management  software
company (the "Founding  Companies")  ("Combinations").  ResortQuest has executed
five additional vacation rental and property management acquisitions through the
end of 1998 (together with the Founding Companies,  the "Operating  Companies").
At December 31, 1998,  ResortQuest manages approximately 13,243 condominiums and
homes nationwide and in Canada. These rental properties are located in beach and
island resorts such as the Hawaiian Islands; Bethany Beach, DE; Gulf Shores, AL;
Nantucket,  MA; the Outer Banks, NC; Destin, Fort Walton Beach and South Walton,
FL; Sanibel and Captiva  Islands,  FL; and St. Simons  Island,  GA; and mountain
resorts such as Aspen,  Breckenridge,  Dillon and Telluride,  CO; Park City, UT;
and Whistler, British Columbia. Eight of the Operating Companies also offer real
estate brokerage  services.  First Resort, one of the Founding  Companies,  is a
leading  provider  of  integrated   management  services  and  reservations  and
accounting  software for the vacation rental and property  management  industry.

POST-IPO   ACQUISITIONS 

Subsequent to the IPO, ResortQuest executed five acquisitions through the end of
1998:  Goldpoint,  located  in  Breckenridge,  Colorado,  effective  July  1998;
Plantation Resort Management, Inc. ("Plantation Resort") located in Gulf Shores,
Alabama,  effective  August  31,  1998;  Whistler  Exclusive  Properties,   Ltd.
("Whistler Exclusive") located in Whistler,  British Columbia, Canada, effective
September 3, 1998; Abbott Realty Services,  Inc.  ("Abbott  Resorts") located in
Destin, Florida, effective September 30, 1998; and Columbine Management Company,
Inc.  ("Columbine")  located in Dillon,  Colorado,  effective  December  1, 1998
(collectively, the "Post-IPO Acquisitions"). The Post-IPO Acquisitions had 2,956
vacation rental condominiums and homes under management,  and are located in two
new markets and three existing markets  ("tuck-in").  The Post-IPO  Acquisitions
cost $45.0 million and were financed through a combination of stock and cash.

     In  January  and  February  1999,   ResortQuest  executed  five  additional
acquisitions,  which included 1,172 vacation rental condominiums and homes under
management,  located in five new  markets.  The new  markets  include  Sunriver,
Oregon; Big Sky, Montana; Palm Desert, California;  Hilton Head, South Carolina;
and Scottsdale, Arizona. These acquisitions cost $20.5 million and were financed
through a combination of stock and cash.

RESULTS OF OPERATIONS

ResortQuest's  revenues  are  derived  primarily  from  property  rental fees on
vacation condominium and home rentals, and service fees from additional services
provided to  vacationers  and property  owners.  


                                       11

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Continued)


ResortQuest  receives property rental fees when the properties are rented, which
are generally a percentage of the rental price of the vacation property.  Rental
fees range  from  approximately  3% to over 40% based upon the type of  services
provided  by  ResortQuest  to the  property  owner and the type of rental  units
managed. Revenues are recognized by ResortQuest based on its proportionate share
of the  total  rental  price  of the  vacation  condominium  or  home,  and  are
recognized  ratably  over the rental  period.  On a pro forma basis for the year
ended December 31, 1998, ResortQuest recognized $35.3 million of property rental
fees,  representing  50.9% of  ResortQuest's  total  1998  revenues.  Additional
services   provided  to  vacationers,   such  as   reservations,   housekeeping,
long-distance  telephone,  lift tickets,  beach  equipment and pool cleaning are
charged  separately and recorded as service fees revenue by ResortQuest.  During
1998, ResortQuest  recognized $16.2 million of service fees,  representing 23.4%
of ResortQuest's  total 1998 pro forma revenues.  ResortQuest's  remaining $17.9
million of 1998 pro forma  revenues  are derived from other  sources,  including
management of homeowners' associations,  the sale and service of vacation rental
and property management  software,  net broker commissions on real estate sales,
and food & beverage sales.

     Direct operating  expenses include direct  compensation,  telecommunication
expenses,  housekeeping supplies, printing, marketing and food & beverage costs.
Compensation  includes salary,  wages, bonus and benefits for employees involved
with the rental or maintenance of the rental units, housekeeping,  reservations,
marketing,  and the food & beverage facilities.  Telecommunication  costs result
primarily from the cost of toll-free  numbers,  as well as the cost of telephone
service provided by ResortQuest to property owners in certain  markets.  General
and  administrative  expenses  consist  primarily  of salary,  wages,  bonus and
benefits for general managers as well as other non-operational  personnel,  fees
for professional services, rent and other general office expenses.

     Before the IPO, the Operating Companies operated as independent,  privately
owned entities,  and their results of operations  reflect varying tax structures
(S Corporations or C Corporations) which have influenced the historical level of
owners'  compensation.  The Operating Companies' owners and key employees agreed
to certain, and in some cases substantial, reductions in their salary, bonus and
benefits in connection with being acquired by ResortQuest.

     ResortQuest  has  begun to  realize  certain  savings  as a  result  of the
consolidation of long-distance telephone, insurance, employee benefits and other
general and  administrative  expenses of the  Operating  Companies.  ResortQuest
cannot quantify these savings accurately at this time. Consequently, ResortQuest
is unable to determine  whether  these savings will be material or not. Any such
savings will be offset by the costs of being a publicly  traded  company and the
incremental  costs related to  ResortQuest's  new management  team.  Neither the
anticipated  savings  nor the  anticipated  costs have been  included in the pro
forma combined financial information of ResortQuest.

     In  July  1996,  the  Securities  and  Exchange   Commission  issued  Staff
Accounting  Bulletin  No.  97  ("SAB  97")  relating  to  business  combinations
immediately  prior to an initial  public  offering.  SAB 97 requires  that these
combinations   be  accounted  for  using  the  purchase  method  of  acquisition
accounting.  Under the purchase method,  one of the combining  companies must be
designated  as the  accounting  acquiror.  Aston Hotels & Resorts  ("Aston") was
identified  as the  accounting  acquiror for  financial  statement  presentation
purposes  (e.g.,  Aston's  financial  statements were carried over at historical
basis). For the remaining Founding  Companies,  $72.7 million,  representing the
excess of the fair  value of the  merger  consideration  received  over the fair
value of the net assets  acquired,  was recorded as "goodwill" on  ResortQuest's
balance  sheet.  In  addition,  goodwill  of  $25.5  million  was  recorded  and
attributed  to  the  Restricted   Common  Stock  issued  to  management  of  and
consultants  to  ResortQuest.   Additionally,  ResortQuest  recorded  additional
goodwill  of  $33.8  million  in  conjunction  with the  Post-IPO  Acquisitions.
Goodwill is being amortized as a non-cash charge to the income  statement over a
40-year period other than the goodwill  associated with the acquisition of First
Resort, which is being amortized over a 15-year period.  ResortQuest  recognized
$1.8 million of goodwill  amortization  in 1998. In addition,  the $29.5 million
paid to the  owners  

                                       12
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Continued)


of Aston in  conjunction  with the  Combinations  has been  reflected  as excess
distributions in the Consolidated Statements of Changes in Stockholders' Equity.

RESULTS OF CONTINUING OPERATIONS--ACTUAL

Effective  with  the  closing  of  ResortQuest's   Offering  on  May  26,  1998,
ResortQuest  acquired 12 vacation rental and property  management  companies and
one leading vacation rental and property management  software company.  However,
for  financial  accounting  reporting  purposes,  Aston  was  identified  as the
accounting acquiror and the remaining Founding Companies (including ResortQuest)
were  accounted for under the purchase  method of accounting.  Accordingly,  the
ResortQuest  historical  consolidated financial information for periods prior to
the Offering  include only the operating  results of Aston.  Since May 26, 1998,
the historical consolidated financial information includes the combined balances
and  transactions  of  ResortQuest,  the Founding  Companies,  plus the Post-IPO
Acquisitions  from  their  respective  date  of  acquisition.  Comparability  of
historical results of operations for the periods presented may be misleading and
are not necessarily indicative of future results of the combined operations.

     The following table sets forth the ResortQuest actual consolidated  results
of operations for the twelve months ended December 31, 1996, 1997 and 1998.

<TABLE>
<CAPTION>
(in thousands)                                     1996                            1997                         1998
--------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>         <C>                <C>        <C>                <C>         <C>   
Revenues                                         $19,460     100.0%             $19,554    100.0%             $49,524     100.0%
Direct operating expenses                         10,401      53.4                8,908     45.6               27,330      55.2
General and administrative expenses                5,248      27.0                5,081     26.0               14,171      28.6
Depreciation and amortization                        326       1.7                  394      2.0                3,089       6.2
--------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations               $  3,485      17.9%            $  5,171     26.4%             $ 4,934      10.0%
</TABLE>

Twelve Months Ended December 31, 1998 Compared to
   Twelve Months Ended December 31, 1997 - Actual

REVENUES

Revenues increased $30.0 million, or 153.3%, from $19.6 million in 1997 to $49.5
million in 1998,  due to the  revenue  impact of the  companies  acquired in the
Combinations and Post-IPO Acquisitions.  Aston revenues for 1998 were relatively
flat as compared to prior year despite the continued pressures from the troubled
Asian  inbound  market.  Revenues  from the 1998  acquisitions  for the  Hawaii,
Mountain,  Beach and Other segments were $800,000,  $5.4 million,  $21.8 million
and $2.0 million, respectively.

DIRECT OPERATING EXPENSES

Direct operating expenses increased $18.4 million,  or 206.8%, from $8.9 million
in 1997 to $27.3  million in 1998,  due to the expense  impact of the  companies
acquired in the Combinations and Post-IPO Acquisitions. Aston's direct operating
expenses  increased  $793,000,  as compared to prior  year,  primarily  due to a
$513,000  increase in  payments  made under  certain  guarantee  contracts.  The
timing, size and location of acquisitions have a significant impact on operating
margins.  Direct operating expense margins increased 9.6 percentage points, from
45.6% in 1997 to 55.2% in 1998. The Mountain  segment and southern  Florida peak
season is the first quarter and Beach segment peak season is the third  quarter.
Direct operating  expenses from the 1998 acquisitions for the Hawaii,  Mountain,
Beach and Other  segments were  $200,000,  $4.6 million,  $11.8 million and $1.1
million, respectively.


                                       13

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Continued)

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased $9.1 million, or 178.9%, from $5.1
million  in 1997 to $14.2  million  in 1998,  due to the  expense  impact of the
companies  acquired in the Combinations,  Post-IPO  Acquisitions and incremental
public-company expenses. Aston general and administrative expenses for 1998 were
relatively flat as compared to prior year. Depreciation and amortization expense
increased due to the goodwill impact of acquisitions recorded using the purchase
method of accounting.  General and administrative  expenses,  including goodwill
amortization,  from the 1998  acquisitions for the Hawaii,  Mountain,  Beach and
Other  segments  were  $500,000,  $2.3  million,  $5.9 million and $3.1 million,
respectively.

Twelve Months Ended December 31, 1997 Compared to
   Twelve Months Ended December 31, 1996 - Actual

REVENUES

Revenues were relatively flat as compared to prior year.

DIRECT OPERATING EXPENSES

Direct operating expenses decreased  approximately $1.5 million,  or 14.4%, from
$10.4  million in 1996 to $8.9  million in 1997.  As a  percentage  of revenues,
direct  operating  expenses  decreased  from  53.5%  in 1996 to  45.6%  in 1997,
primarily due to a reduction in salaries, bonuses, and promotional and marketing
expenses.   

GENERAL  AND  ADMINISTRATIVE  EXPENSES

General and  administrative  expenses  decreased  $167,000,  or 3.2%,  from $5.2
million in 1996 to $5.1 million in 1997. As a percentage of revenues,  operating
income  increased  from 17.9% in 1996 to 26.4% in 1997,  due  primarily to lower
direct operating expenses in 1997.

OTHER

The following table sets forth other historical items affecting consolidated net
income for the three years ended December 31, 1996, 1997 and 1998.

<TABLE>
<CAPTION>
(in thousands)                                 1996       1997    1998
-----------------------------------------------------------------------
<S>                                           <C>     <C>       <C>    
Interest and other income (expense)           $(342)   $   (86) $ (403)
Income (loss) from discontinued operations      455     (1,494)  1,347
Effective tax rate                              n/a       n/a     32.3%
</TABLE>

     Aston's  operations  were primarily  financed  through  working capital and
long-term  debt  resulting  in higher  levels of interest  expense  prior to the
Combinations.  Concurrent with the Combinations,  ResortQuest did not assume any
of Aston's previous debt.  However,  ResortQuest did assume  approximately  $5.7
million of debt from certain of the Founding  Companies,  which was subsequently
paid  off by the  Company  after  the  IPO.  The cash  portion  of the  Post-IPO
Acquisitions  resulted in increased borrowings under the Credit Facility,  which
caused interest expense to increase during the fourth quarter 1998.

     ResortQuest  has  decided  that it will no longer  continue  or enter  into
leasing  arrangements  for  lodging  facilities.  Accordingly,  for all  periods
presented,  the results of operations for the leased operations are reflected as
discontinued operations.  Concurrent with the Combinations,  Aston assigned such
leases to a corporation owned by Aston's principal stockholder. On May 27, 1998,
ResortQuest  entered  into a  contract  with this  corporation  to manage  these
facilities for a fee.

     ResortQuest's  effective tax rate for the year ended  December 31, 1998, is
impacted  by:  (i)  Aston's  earnings  prior to May 26,  1998  which will not be
included in ResortQuest's  consolidated income tax returns; (ii) amortization of
goodwill which is principally not deductible for income tax purposes;  and (iii)
the  recording  of a one-time  cumulative  deferred  income tax entry for Aston,
which was previously  taxed under S Corporation  status.  The effective tax rate
for the years ended December 31, 1997 and 1996,  are not applicable  since Aston
qualified and filed as a S Corporation.

                                       14

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Continued)


RESULTS OF OPERATIONS--
PRO FORMA

To provide  better  comparability,  the combined pro forma results of operations
for the twelve  months  ended  December 31, 1998 and 1997 include the results of
ResortQuest and the Founding  Companies as if the  Combinations  had occurred on
January  1,  1997 and  Post-IPO  Acquisitions  since  date of  acquisition.  The
combined  pro forma  results  of  operations  include  the  effects  of: (i) the
Combinations;  (ii) the  proceeds  from the  issuance  of  6,670,000  shares  of
ResortQuest Common Stock, which was used to pay the cash portion of the purchase
price for the Founding Companies, to repay debt assumed in the Combinations, and
to pay IPO transaction  costs; (iii) certain  adjustments to salaries,  bonuses,
and  benefits to former  owners and key  management  of the  Founding  Companies
effective  with the IPO;  (iv)  reversal  of  compensation  expense in the three
months  ended  March  31,  1998,   relating  to  the   non-recurring,   non-cash
compensation   charge  of  $5.1  million  related  to  Common  Stock  issued  to
management; (v) provision for income taxes as if pro forma income was subject to
federal,  state or provincial  income taxes and that goodwill was not deductible
for income tax  purposes  during the periods  presented;  (vi)  amortization  of
goodwill  resulting from the  Combinations and (vii) excludes income (loss) from
discontinued operations.

HAWAIIAN ISLANDS

The following table sets forth the Hawaiian  island resorts'  combined pro forma
results of operations for the twelve months ended December 31, 1998 and 1997.

<TABLE>
<CAPTION>
(in thousands)             1997                    1998
--------------------------------------------------------------------
<S>                     <C>           <C>         <C>         <C>   
Revenues                $21,960       100.0%      $21,874     100.0%
Operating expenses       14,322        65.2        15,194      69.5
--------------------------------------------------------------------
Operating income        $ 7,638        34.8%     $  6,680      30.5%
--------------------------------------------------------------------
</TABLE>


Twelve Months Ended December 31, 1998 Compared to
   Twelve Months Ended December 31, 1997 - Hawaii

REVENUES

Revenues in 1997 include a $677,000 gain from the sale of the Company's interest
in a Hawaiian hotel.  Excluding this gain, revenues increased $591,000, or 2.8%,
from $21.3 million in 1997 to $21.9  million in 1998,  primarily due to a slight
increase in average daily rate that helped maintain revenue per available unit.

     Hawaii overall was impacted in 1998 by the Northwest Airlines strike during
third quarter 1998 and the continued  pressures  from the troubled Asian inbound
market.  Northwest  Airlines accounts for approximately 15% of the lift into the
Hawaiian  islands.  Occupancy  rates in the third  quarter  were off compared to
prior year. However, Aston was not as negatively impacted by the Asian crisis as
compared to the overall  market.  Inbound  traffic from Asia  accounts for about
one-third of Hawaii's visitors who seem to prefer Waikiki Beach, which is on the
Hawaiian  island of Oahu. For several years,  Aston shifted most of its business
to the United  States  mainland  wholesalers  and  increased  its  inventory  of
management contracts on the neighbor islands away from Waikiki Beach.  

OPERATING EXPENSES 

Operating  expenses increased  $872,000,  or 6.1%, from $14.3 million in 1997 to
$15.2 million in 1998. As a percentage of revenues, operating expenses increased
from 65.2% in 1997 to 69.5% in 1998,  primarily  due to the  Northwest  Airlines
strike in the third quarter of 1998.

MOUNTAIN

The following table sets forth the mountain  resorts  combined pro forma results
of operations  for the twelve months ended  December 31, 1998 and 1997.  The pro
forma mountain results of operations only include the Founding Companies located
in: Aspen,  Breckenridge,  Telluride,  Colorado;  Park City, Utah; and Whistler,
British  Columbia.  Since the IPO,  ResortQuest  acquired  three other

                                       15
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Continued)


mountain resorts (Goldpoint in July 1998,  Whistler Exclusive in September 1998,
and  Columbine in December  1998) which are included in the pro forma results of
operations  for the period from their  acquisition  dates  through  December 31,
1998.

<TABLE>
<CAPTION>
(in thousands)              1997                      1998
---------------------------------------------------------------------
<S>                      <C>          <C>          <C>         <C>   
Revenues                 $14,379      100.0%       $14,744     100.0%
Operating expenses        12,584       87.6         12,643      85.8
---------------------------------------------------------------------
Operating income         $ 1,795       12.4%       $ 2,101      14.2%
---------------------------------------------------------------------
</TABLE>


Twelve Months Ended December 31, 1998 Compared to
   Twelve Months Ended December 31, 1997 - Mountain

REVENUES

Revenues  increased  $365,000,  or 2.5%,  from  $14.4  million  in 1997 to $14.7
million in 1998, primarily due to an increase in property rental fees, resulting
from a 6.2%  increase  in rental  units  under  management  contract.  

OPERATING EXPENSES  

Operating expenses were relatively flat as compared to prior year. However, as a
percentage of revenues, operating expenses decreased from 87.6% in 1997 to 85.8%
in 1998, primarily due to a slight reduction in direct operating costs.

BEACH

The following table sets forth the beach resorts (excluding Hawaii) combined pro
forma results of operations  for twelve months ended December 31, 1997 and 1998.
The pro forma beach  results of operations  only include the Founding  Companies
located in:  Bethany Beach,  Delaware;  Nantucket,  Massachusetts;  Outer Banks,
North Carolina;  Sanibel and Captiva  Islands,  Florida;  and St. Simons Island,
Georgia. Since the IPO, ResortQuest acquired two other beach resorts (Plantation
Resort in August 1998 and Abbott  Resorts in September  1998) which are included
in the pro forma  results of  operations  for the period from their  acquisition
date through December 31, 1998.

<TABLE>
<CAPTION>
(in thousands)          1997                     1998
----------------------------------------------------------------
<S>               <C>           <C>         <C>         <C>   
Revenues             $17,616       100.0%      $29,524     100.0%
Operating expenses    13,942        79.1        23,355      79.1
----------------------------------------------------------------
Operating income     $ 3,674        20.9%      $ 6,169      20.9%
----------------------------------------------------------------
</TABLE>


Twelve Months Ended December 31, 1998 Compared to
   Twelve Months Ended December 31, 1997 - Beach

REVENUES

Revenues increased $11.9 million,  or 67.6%, from $17.6 million in 1997 to $29.5
million in 1998,  due to an 18.3%  increase  in lodging  revenues  (caused by an
11.1%  increase  in average  daily rate and a 7.8%  increase  in number of units
under management  contract),  and $7.3 million in revenues for Plantation Resort
from July 1 and Abbott Resorts from October 1 through the end of 1998. 

OPERATING EXPENSES 

Operating expenses increased $9.4 million,  or 67.5%, from $13.9 million in 1997
to $23.4 million in 1998,  due  primarily to the expense  impact of the Post-IPO
Acquisitions  and increased  salaries and wages to service the  increased  units
under management contract.


                                       16
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Continued)


OTHER OPERATIONS

The  following  table  sets  forth  the other  combined  pro  forma  results  of
operations  for the  twelve  months  ended  December  31,  1998 and 1997,  which
includes: First Resort and corporate.

<TABLE>
<CAPTION>
(in thousands)         1997                  1998
-----------------------------------------------------------
<S>                 <C>        <C>        <C>         <C>    
Revenues            $ 2,864    100.0%      $ 3,305    100.0%
Operating expenses    3,136    109.5         6,100    184.6
-----------------------------------------------------------
Operating loss      $  (272)    (9.5)%     $(2,795)   (84.6)%
-----------------------------------------------------------
</TABLE>


Twelve Months Ended December 31, 1998 Compared to
   Twelve Months Ended December 31, 1997 - Other

REVENUES

Revenues increased $441,000, or 15.4%, from $2.9 million in 1997 to $3.3 million
in 1998,  due primarily from  increased  sales of software and software  service
fees. 

OPERATING EXPENSES

Operating  expenses  increased by $3.0 million,  or 94.5%,  from $3.1 million in
1997 to $6.1 million in 1998.  This  increase  primarily  results from  expenses
associated  with being a public  company,  which did not exist prior to the IPO,
and the expense recognition of certain  nonrecurring  acquisition costs incurred
in  connection   with  the   Plantation   Resort   acquisition,   which  totaled
approximately $134,000.

LIQUIDITY AND CAPITAL RESOURCES

ResortQuest is a holding company that conducts all of its operations through its
Operating Companies.  Accordingly,  the primary internal source of ResortQuest's
liquidity  is  through  the  cash  flows  realized  from its  subsidiaries,  the
Company's   amended  $55  million  Credit  Facility   ("Credit   Facility")  and
ResortQuest Common Stock.

     ResortQuest generated cash flows from operating activities of $12.7 million
in 1998  primarily due to income from  continuing  operations and an increase in
reservation  and escrow  deposits  partially  offset by a decrease  in  accounts
payable  and  accrued   liabilities.   Cash  used  in  investing  activities  by
ResortQuest was  approximately  $39.5 million in 1998, due primarily to the cash
portions  of  the   Combinations   and  Post-IPO   Acquisitions.   During  1998,
ResortQuest's 1998 cash provided by financing  activities totaled $48.5 million,
which  included  $60.0  million net proceeds  from the IPO and $32.0  million in
borrowings  under the  Credit  Facility,  partially  offset by $29.5  million in
distributions to Aston's stockholders in conjunction with the IPO.

      At December 31, 1998,  ResortQuest had approximately $23.3 million in cash
and cash equivalents, of which $13.7 million represents cash held in escrow. The
cash held in escrow is  released  at  varying  times in  accordance  with  state
regulations,  generally  based  upon the guest  stay,  or for real  estate  sale
deposits  when the  property is sold.  Certain  assets,  including  real estate,
personal property, receivables and cash, that were not used in the operations of
certain  Founding  Companies were excluded from the Combinations and retained by
the respective  stockholders of such Founding  Companies.  At December 31, 1998,
ResortQuest  had a working  capital  deficit of $2.1  million,  $38.0 million of
outstanding  long-term  debt  and  $23.0  million  available  under  its  Credit
Facility.

      At  December  31,  1998,  the former  principal  stockholder  of Aston was
indebted to  ResortQuest in the aggregate  amount of $4.0 million.  This debt is
fully  collateralized  with real estate and cash and cash equivalents pledged to
ResortQuest.

     On May 26, 1998,  ResortQuest  issued an  aggregate of 9,254,286  shares of
Common Stock in  connection  with the  Combinations  (1,708,333  shares to Aston
stockholders  and 7,545,953 shares to the remaining  stockholders  involved with
the  Combinations)  and 6,670,000  shares of Common Stock in connection with the
Offering.  Shares  issued in the Offering  were sold at a price to the public of
$11.00 per share.  The net  proceeds to  ResortQuest  from the  Offering  (after
deducting  underwriting  discounts,  commissions  and  offering  expenses)  were
approximately   $60.0  million.   Pursuant  to  the  Combinations,   ResortQuest
consummated  the  acquisitions  of the  Founding  Companies  for an aggregate of
approximately  $54.9 million in cash,  6,119,656  shares of Common Stock and the
assumption  of $5.7 million in debt.  As of December 31, 1998,  the net proceeds
have 

                                       17
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Continued)

been  used as  follows:  (i)  $54.9  million  to pay  the  cash  portion  of the
consideration  for the  Combinations,  and (ii) $5.2  million to pay off assumed
indebtedness.

     ResortQuest  entered into a credit agreement (the "Credit Agreement") as of
May  26,  1998  with  NationsBank,   N.A.  and  First  Tennessee  Bank  National
Association,  with  respect  to a  $30  million  revolving  line  of  credit  in
conjunction with the Credit Facility. On September 30, 1998, the Credit Facility
was  amended to allow for the  ResortQuest  acquisition  of Abbott  Resorts.  On
December 7, 1998, the Credit  Facility was amended for a second time to increase
the facility to $55 million and added two additional  lenders,  Societe Generale
and Union  Planters  Bank,  N.A. The Credit  Facility may be used for letters of
credit not to exceed $2.5 million,  acquisitions,  capital expenditures, and for
general corporate purposes.  The Credit Agreement requires ResortQuest to comply
with various loan  covenants,  which include  maintenance  of certain  financial
ratios,  restrictions  on additional  indebtedness  and  restrictions  on liens,
guarantees,  advances,  capital  expenditures,  sale of  assets  and  dividends.
Interest  on  outstanding  balances  of  the  Credit  Facility  is  computed  at
ResortQuest's  election, on the basis of either the Prime Rate or the Eurodollar
Rate plus a margin ranging from 1.25% to 2.00%,  depending on certain  financial
ratios.  Availability  fees  range from  0.25% to 0.50% per annum  depending  on
certain  financial  ratios  are  payable  on the  unused  portion  of the Credit
Facility.  At December 31, 1998,  borrowings  under the Credit Facility  totaled
$32.0 million,  resulting  primarily from the Abbott  Resorts  acquisition,  and
ResortQuest  is paying a margin of 1.75% and  availability  fees of 0.375%.  The
weighted  average  interest rate during 1998,  based on outstanding  ResortQuest
Credit Facility borrowings, including the applicable LIBOR spread, was 7.3%. The
Credit  Facility has a three-year term and is secured by  substantially  all the
assets of ResortQuest and its subsidiaries,  including the stock in the Founding
Companies and any future material subsidiaries,  as defined.  ResortQuest,  each
Founding  Company and all other  current and future  material  subsidiaries  are
required to guarantee repayment of all amounts due under the Credit Facility. At
December 31, 1998, ResortQuest was in compliance with applicable loan covenants.

     On September 30, 1998,  ResortQuest  executed a promissory  note (the "Note
Agreement")  maturing on January 31, 1999 in favor of  NationsBank,  N.A.,  with
respect to an additional  $5.0 million  revolving  line of credit.  The interest
rate on  outstanding  balances,  the  interest  payment  dates  and the terms of
default  under the Note  Agreement  were the same as those  provided  for in the
Credit Facility.  The Note Agreement was secured on the same terms as the Credit
Facility.  The Note Agreement was terminated  effective  December 7, 1998,  when
ResortQuest   secured   additional   availability  under  the  Credit  Facility.
ResortQuest also has entered into discussions with NationsBank, N.A. and certain
other  lenders to increase  the size of the Credit  Facility to provide cash for
future acquisitions.

     ResortQuest  anticipates  that its cash flow from  operations  will provide
cash in excess of the Company's  normal  working  capital  levels,  debt service
requirements and planned capital  expenditures for the foreseeable future. Total
capital  expenditures  for 1999 are  anticipated  to be between $3.5 million and
$4.0 million, of which approximately  $600,000 will be for software development,
with the balance going to furniture, fixtures and equipment.

     ResortQuest intends to pursue attractive acquisition  opportunities.  There
can be no  assurance  that the  Company  will be able to  identify,  acquire  or
profitably  manage  additional  businesses or  successfully  integrate  acquired
businesses  into  ResortQuest   without   substantial  costs,  delays  or  other
operational  or  financial  problems.   Increased  competition  for  acquisition
candidates  may  develop,   in  which  event  there  may  be  fewer  acquisition
opportunities  available to ResortQuest,  as well as higher acquisition  prices.
Further,  acquisitions involve a number of special risks,  including the failure
of acquired companies to achieve anticipated results,  diversion of management's
attention,  failure to retain key personnel, risks associated with unanticipated
events or liabilities and amortization of acquired  intangible  assets,  some or
all of which could have a material  adverse  effect on  ResortQuest's  business,
financial condition and results of operations.

                                       18
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Continued)


YEAR 2000 COMPLIANCE

The vacation property management industry uses a complex suite of software.  The
areas of greatest risk of software failure due to Year 2000 problems are:

     o   Property Management Systems (guest services and
         back-office accounting)
     o   Reservations/Inventory Management
     o   Hardware BIOS (the software that runs "beneath" the
         operating system)
     o   Analysis and/or management reporting  tools 
     o   Imbedded  control systems (HVAC, elevator controls, etc.)

     ResortQuest is in the process of evaluating  the various  components of its
operating  environment  (personal  computer  workstations and related equipment,
network  servers,  telephone  and data  communication  equipment,  point of sale
devices,  software  applications  (both  third  party and  internally  developed
software)),  and  embedded  technology  such as micro  controllers.  ResortQuest
expects to complete the  analysis,  and implement any  corrective  measures,  in
early 1999.  The Year 2000 project is not  expected to delay or supercede  other
planned IT projects.

     Based upon the  information  gathered to date,  ResortQuest  estimates  the
upper range of the cost of the analysis and subsequent replacement or upgrade of
system components, which are not Year 2000 compliant, is approximately $600,000.
A significant  portion of the total potential  expense  estimate  relates to the
cost   of   replacement   of   personal   computer   hardware,    servers,   and
telecommunications  equipment.  Funding  of Year 2000  costs is  expected  to be
provided by cash flows from operations.

     The impact upon ResortQuest by Year 2000 issues is greatest in the areas of
property     management    systems,     telecommunications,     and    financial
accounting/reporting.  ResortQuest  believes that the  consequences of Year 2000
issues  with  respect  to the  adverse  impact  upon the  Company's  results  of
operations will not be material.

     ResortQuest will have  contingency  plans in place designed to mitigate the
impact of Year 2000 issues.  The  contingency  plan will include  items such as:
offsite and/or manual  reservations/inventory  management,  property  management
(guest services,  back-office functions,  work order administration),  financial
accounting and reporting,  and management  reporting.  All contingency plans are
expected to be  developed,  tested and  implemented  by the end of third quarter
1999.

NEWLY ISSUED ACCOUNTING 
PRONOUNCEMENTS

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities." This statement
establishes  accounting  and  reporting  standards  for  derivatives,  including
certain  derivative  instruments  embedded  in  other  contracts   (collectively
referred to as  derivatives),  and for hedging  activities.  It requires that an
entity to  recognize  all  derivatives  either as assets or  liabilities  in the
statement of financial position and measure those instruments at fair value.

     This  statement  is  effective  for all  fiscal  quarters  of fiscal  years
beginning  after  September  15,  1999.  The  adoption  of SFAS  No.  133 is not
anticipated  to have a material  impact on the financial  position or results of
operations of ResortQuest.

SEASONALITY AND QUARTERLY FLUCTUATIONS

The  business of the  operating  companies  is highly  seasonal.  The results of
operations  of  each  of  the  operating  companies  are  subject  to  quarterly
fluctuations  caused primarily by the seasonal variations in the vacation rental
and property  management  industry,  with peak seasons  dependent on whether the
resort is primarily a summer or winter  destination.  During  1998,  ResortQuest
derived  approximately  30% of its pro forma revenues and 71.8% of its operating
income in the first quarter and 24.4% of its pro forma revenues and 25.7% of its
operating income in the third quarter. Although the seasonality of ResortQuest's
revenues and earnings may be partially mitigated by the geographic  diversity of
the Operating Companies and any future acquisitions, there is likely to continue
to be a significant  seasonal factor with respect to ResortQuest's  revenues and
earnings.  


                                       19

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
(Continued)


ResortQuest's   quarterly   results  of  operations   may  also  be  subject  to
fluctuations as a result of the timing and cost of  acquisitions,  the timing of
real estate  sales,  changes in  relationships  with travel  providers,  extreme
weather  conditions or other factors  affecting  leisure travel and the vacation
rental and property  management  industry.  Unexpected  variations  in quarterly
results could also adversely affect the price of the Common Stock, which in turn
could adversely affect ResortQuest's proposed acquisition strategy.

MARKET RISK

ResortQuest  is  exposed  to market  risk,  which is  defined as a 10% change in
prices, through changes in interest rates related to borrowings under the Credit
Facility.

INFLATION

Inflation did not have a significant  effect on the results of operations of the
Operating Companies for 1996, 1997 or 1998.

RISKS ASSOCIATED WITH FORWARD LOOKING 
STATEMENTS

This filing contains certain  forward-looking  statements  within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934,  as  amended,  which are  intended  to be covered  by the safe  harbors
created  thereby.  Investors are cautioned that all  forward-looking  statements
involve  risks  and  uncertainties,  including  but  not  limited  to the  risks
associated with successful  integration of the Founding Companies and additional
acquired companies,  factors affecting internal growth and management of growth,
ResortQuest's  acquisition strategy and availability of financing,  the tour and
travel  industry,  seasonality,  quarterly  fluctuations  and  general  economic
conditions,  dependence on technology  and travel  providers,  and other factors
discussed in the Registration Statement.  Although ResortQuest believes that the
assumptions  underlying  the  forward-looking  statements  contained  herein are
reasonable,  any of the assumptions could be inaccurate,  and, therefore,  there
can be no assurance that the forward-looking  statements included in this filing
will prove to be accurate. In light of the significant uncertainties inherent in
the   forward-looking   statements   included  herein,  the  inclusion  of  such
information  should not be regarded as a  representation  by  ResortQuest or any
other person that the objectives and plans of ResortQuest will be achieved.

PERFORMANCE STATISTICS

<TABLE>
<CAPTION>
                              YEARS ENDED DECEMBER 31,
                            1997          1998     INC/DEC
------------------------------------------------------------------
<S>                       <C>           <C>            <C>   
HAWAII
Lodging revenues (1)      $142,637      $139,814       (2.0)%
------------------------------------------------------------------
Occupancy                     72.5%         72.1%      (0.4)pts
------------------------------------------------------------------
Average daily rate         $104.47       $104.97        0.5%
------------------------------------------------------------------
RevPAU                      $75.78        $75.66       (0.2)%
------------------------------------------------------------------
Total units                  5,145         5,124       (0.4)%
------------------------------------------------------------------

MOUNTAIN
Lodging revenues (1)      $ 28,093       $28,818        2.6%
------------------------------------------------------------------
Occupancy                     35.1%         35.5%       0.4 pts
------------------------------------------------------------------
Average daily rate         $163.89       $161.61       (1.4)%
------------------------------------------------------------------
RevPAU                      $57.46        $57.34       (0.2)%
------------------------------------------------------------------
Total units                  1,544         1,639        6.2%
------------------------------------------------------------------

BEACH
------------------------------------------------------------------
Lodging revenues (1)      $ 39,622       $46,877       18.3%
------------------------------------------------------------------
Occupancy                     55.7%         55.8%       0.1 pts
------------------------------------------------------------------
Average daily rate         $126.73       $140.72       11.0%
------------------------------------------------------------------
RevPAU                      $70.62        $78.52       11.2%
------------------------------------------------------------------
Total units                  2,165         2,334        7.8%
------------------------------------------------------------------

TOTAL
Lodging revenues (1)      $210,352      $215,509        2.5%
------------------------------------------------------------------
Occupancy                     63.1%         62.5%      (0.6)pts
------------------------------------------------------------------
Average daily rate         $113.74       $116.91        2.8%
------------------------------------------------------------------
RevPAU                      $71.74        $73.11        1.9%
------------------------------------------------------------------
Total units                  8,854         9,097        2.7%
------------------------------------------------------------------
</TABLE>


(1)  Lodging revenues are in thousands and represent the total rental charged to
     property rental customers. ResortQuest's revenue represents from 3% to over
     40% of the lodging revenues based on the services provided by the Company.

(2)  The  above  statistics  exclude  Houston  &  O'Leary,   The  Maury  People,
     Plantation Resort, Abbott Resorts and Columbine units of approximately 130,
     1,200,  384,  2,291,  and  141  respectively.   Also  excluded  from  these
     statistics  are  owner  use  nights  and   renovation   nights  which  were
     approximately  12.1% of gross  available  nights in the twelve months ended
     December 31, 1998 and 10.2% of gross available  nights in the twelve months
     ended  December 31, 1997.  For the three months ended December 31, 1998 and
     1997,  owner use  nights  and  renovation  nights  were  13.4%  and  11.6%,
     respectively.


                                       20
<PAGE>

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,       DECEMBER 31,
(in thousands, except share amounts)                                                                  1997              1998
-------------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets
<S>                                                                                                <C>               <C>      
   Cash and cash equivalents                                                                       $  1,632          $  23,309
   Trade and other receivables, net of allowance                                                      1,195              3,767
   Receivables from stockholders                                                                          -              5,209
   Deferred income taxes                                                                                  -              1,297
   Other current assets                                                                                 129              2,241
-------------------------------------------------------------------------------------------------------------------------------
     Total current assets                                                                             2,956             35,823
Goodwill, net                                                                                             -            130,214
Property and equipment, net                                                                           1,776             16,485
Deferred income taxes                                                                                     -                211
Advances to stockholder                                                                               7,235                  -
Advances to affiliates, net                                                                           1,799                  -
Other assets                                                                                            796              2,187
-------------------------------------------------------------------------------------------------------------------------------
       Total assets                                                                                 $14,562           $184,920
===============================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Current maturities of long-term debt                                                           $     421         $    1,209
   Customer deposits, deferred revenues and payable to property owners                                    -             23,208
   Accounts payable and accrued liabilities                                                           6,538             12,420
   Payable to stockholders                                                                                -                813
   Other current liabilities                                                                            585                269
-------------------------------------------------------------------------------------------------------------------------------
     Total current liabilities                                                                        7,544             37,919
Long-term debt, net of current maturities                                                             4,129             37,953
Other long-term obligations                                                                           1,881              1,881
Net liabilities of discontinued operations                                                            1,403                  -
-------------------------------------------------------------------------------------------------------------------------------
     Total liabilities                                                                               14,957             77,753
-------------------------------------------------------------------------------------------------------------------------------

Commitments and contingencies
Stockholders' equity (deficit)
   Common stock,  $0.01 par value, 50,000,000 shares authorized, 1,708,333 and 
     16,891,927 shares outstanding, respectively                                                         17                169
   Additional paid-in capital                                                                            88            135,905
   Excess distributions                                                                                   -            (29,500)
   Retained earnings (accumulated deficit)                                                             (500)               593
-------------------------------------------------------------------------------------------------------------------------------
     Total stockholders' equity (deficit)                                                              (395)           107,167
-------------------------------------------------------------------------------------------------------------------------------
       Total liabilities and stockholders' equity                                                   $14,562           $184,920
===============================================================================================================================
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       21


<PAGE>

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                                  YEARS ENDED DECEMBER 31,
(in thousands, except share amounts)                                             1996              1997               1998
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>               <C>                <C>    
Revenues
   Property management fees                                                   $ 7,540           $  8,079           $22,882
   Service fees                                                                 8,442              8,338            13,982
   Other                                                                        3,478              3,137            12,660
----------------------------------------------------------------------------------------------------------------------------
     Total revenues                                                            19,460             19,554            49,524
----------------------------------------------------------------------------------------------------------------------------
Operating expenses
   Direct operating                                                            10,401              8,908            27,330
   General and administrative                                                   5,248              5,081            14,171
   Depreciation and amortization                                                  326                394             3,089
----------------------------------------------------------------------------------------------------------------------------
     Total operating expenses                                                  15,975             14,383            44,590
----------------------------------------------------------------------------------------------------------------------------
Operating income                                                                3,485              5,171             4,934
Other income (expense)
   Interest expense, net                                                         (736)              (763)             (403)
   Other                                                                          394                677                 -
----------------------------------------------------------------------------------------------------------------------------
Income before income taxes                                                      3,143              5,085             4,531
Provision for income taxes                                                          -                  -             1,462
----------------------------------------------------------------------------------------------------------------------------
Income from continuing operations                                               3,143              5,085             3,069
Income (loss) from discontinued operations                                        455             (1,494)            1,347
----------------------------------------------------------------------------------------------------------------------------
Net income                                                                    $ 3,598           $  3,591          $  4,416
============================================================================================================================
Earnings per share
   Basic
     Continuing operations                                                    $  1.84           $   2.98          $   0.29
     Discontinued operations                                                     0.27              (0.88)             0.13
----------------------------------------------------------------------------------------------------------------------------
     Net income                                                               $  2.11           $   2.10          $   0.42
============================================================================================================================
   Diluted
     Continuing operations                                                    $  1.84           $   2.98          $   0.29
     Discontinued operations                                                     0.27              (0.88)             0.12
----------------------------------------------------------------------------------------------------------------------------
     Net income                                                               $  2.11           $   2.10          $   0.41
============================================================================================================================
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                          22 
<PAGE>

CONSOLIDATED STATEMENTS OF PRO FORMA INCOME
(unaudited)


<TABLE>
<CAPTION>
                                                                                                     YEARS ENDED DECEMBER 31,
(in thousands, except share amounts)                                                                 1997                1998
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                 <C>               <C>    
Revenues
   Property management fees                                                                         $30,990           $35,341
   Service fees                                                                                      11,322            16,236
   Other                                                                                             14,507            17,870
------------------------------------------------------------------------------------------------------------------------------
     Total revenues                                                                                  56,819            69,447
------------------------------------------------------------------------------------------------------------------------------
Operating expenses
   Direct operating                                                                                  27,680            35,627
   General and administrative                                                                        12,383            17,084
   Depreciation and amortization                                                                      3,921             4,581
------------------------------------------------------------------------------------------------------------------------------
     Total operating expenses                                                                        43,984            57,292
------------------------------------------------------------------------------------------------------------------------------
Operating income                                                                                     12,835            12,155
Other income (expense)
   Interest expense, net                                                                                276               (78)
------------------------------------------------------------------------------------------------------------------------------
Income before income taxes                                                                           13,111            12,077
Provision for income taxes                                                                            6,203             5,724
------------------------------------------------------------------------------------------------------------------------------
Net income                                                                                         $  6,908          $  6,353
==============================================================================================================================
Earnings per share
   Basic                                                                                           $   0.43          $   0.39
==============================================================================================================================
   Diluted                                                                                         $   0.43          $   0.39
==============================================================================================================================
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       23
<PAGE>

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                     RETAINED
                                                                      ADDITIONAL                     EARNINGS
                                                   COMMON STOCK          PAID-IN         EXCESS  (ACCUMULATED
(in thousands, except share amounts)         SHARES      AMOUNT          CAPITAL  DISTRIBUTIONS       DEFICIT)         TOTAL
------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>            <C>         <C>            <C>             <C>             <C>      
Balance, December 31, 1995                 1,708,333      $  17       $       88     $        -      $   (500)       $   (395)
   Net income                                      -          -                -              -         3,598           3,598
   Distributions                                   -          -                -              -        (3,598)         (3,598)
------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996                 1,708,333         17               88              -          (500)           (395)
   Net income                                      -          -                -              -         3,591           3,591
   Distributions                                   -          -                -              -        (3,591)         (3,591)
------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997                 1,708,333         17               88              -          (500)           (395)
   Net income                                      -          -                -              -         4,416           4,416
   Initial public offering                 6,670,000         67           59,954              -             -          60,021
   Distributions to stockholders                   -          -                -        (29,500)       (3,198)        (32,698)
   Stock issued in connection with
     Combinations                          7,545,953         75           68,620              -             -          68,695
     Post-IPO acquisitions                   967,641         10            7,243              -          (125)          7,128
------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                16,891,927       $169         $135,905       $(29,500)     $    593        $107,167
==============================================================================================================================
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       24
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
                                                                                                      YEARS ENDED DECEMBER 31,

(in thousands)                                                                      1996              1997               1998
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>               <C>               <C>     
Cash flows from operating activities
   Net income                                                                    $  3,598          $  3,591          $  4,416
   (Income) loss from discontinued operations                                        (455)            1,494            (1,347)
------------------------------------------------------------------------------------------------------------------------------
     Income from continuing operations                                              3,143             5,085             3,069
   Adjustments to reconcile income from continuing operations
       to net cash provided by operating activities
       Depreciation and amortization                                                  326               394             3,089
       Changes in operating assets and liabilities
         Trade and other receivables                                                 (236)              253             1,598
         Accounts payable and accrued liabilities                                     258               918            (2,542)
         Customer deposits, deferred revenue and payable to property owners             -                 -             9,325
         Deferred income taxes                                                          -                 -               503
         Other                                                                       (557)             (710)           (2,280)
------------------------------------------------------------------------------------------------------------------------------
           Cash provided by continuing operations                                   2,934             5,940            12,762
Cash flows used in discontinued operations                                           (253)              (17)              (56)
------------------------------------------------------------------------------------------------------------------------------
           Net cash provided by operating activities                                2,681             5,923            12,706
------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
   Cash portion of acquisitions, net                                                    -                 -           (35,518)
   Purchases of property and equipment                                                  -               (56)           (4,002)
   Other                                                                              304               402                 -
------------------------------------------------------------------------------------------------------------------------------
           Net cash provided by (used in) investing activities                        304               346           (39,520)
------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
   Net proceeds from public stock issuance                                              -                 -            60,021
   Distributions to stockholders                                                   (3,098)           (3,591)          (32,698)
   Net credit facility borrowings                                                       -                 -            32,000
   Payment of other long-term obligations                                          (1,160)             (563)           (9,592)
   Other                                                                            2,326            (2,601)           (1,240)
------------------------------------------------------------------------------------------------------------------------------
           Net cash (used in) provided by financing activities                     (1,932)           (6,755)           48,491
------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                                1,053              (486)           21,677
Cash and cash equivalents, beginning of period                                      1,065             2,118             1,632
------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                                         $  2,118          $  1,632           $23,309
==============================================================================================================================
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       25
<PAGE>
NOTES TO CONSOLIDATE FINANCIAL STATEMENTS
DECEMBER 31, 1998



NOTE 1 - BASIS OF PRESENTATION

FORMATION

ResortQuest  International,  Inc. (a Delaware Corporation,  "ResortQuest" or the
"Company"),  formerly  known as Vacation  Properties  International,  Inc.,  was
formed to create the first national branded provider of vacation condominium and
home rentals and management in premier destination  resorts.  Effective with the
closing of  ResortQuest's  initial public  offering on May 26, 1998 (the "IPO"),
the Company acquired 12 vacation rental and property management companies (Hotel
Corporation of the Pacific, Inc. ("Aston"), Brindley & Brindley Realty, Inc. and
B&B on the Beach,  Inc., Coastal Resorts  Management,  Inc., and Coastal Resorts
Realty,  L.L.C.,  Collection  of Fine  Properties,  Inc.,  Houston  and  O'Leary
Company,  Maui  Condo  & Home  Realty,  Inc.,  The  Maury  People,  Inc.,  Howey
Acquisition, Inc. and Priscilla Murphy Realty, Inc., Resort Property Management,
Inc., Telluride Resort Accommodations, Inc., Trupp-Hodnett Enterprises, Inc. and
THE Management  Company,  and Whistler Chalets Limited) and one leading vacation
rental and property  management  software company (First Resort  Software,  Inc.
("First Resort")) (collectively, the "Founding Companies") (the "Combinations").
However,  for  accounting  and reporting  purposes,  Aston was identified as the
accounting  acquiror and the remaining Founding Companies along with ResortQuest
were accounted for under the purchase method of accounting.

     Accordingly,  the historical  consolidated financial statements include the
financial  results of Aston prior to the  Combinations  and the IPO, and include
the combined balances and transactions of ResortQuest and the Founding Companies
only since May 26, 1998.  Comparability of actual results for all actual periods
presented may be misleading and are not necessarily indicative of the results of
the combined  operations.  

PRO FORMA  FINANCIAL  INFORMATION 

To provide better comparability, the consolidated statements of pro forma income
include the financial  results of ResortQuest  and the Founding  Companies as if
the Combinations had occurred on January 1, 1997. The consolidated statements of
pro forma income include the effects of: (i) the Combinations; (ii) the proceeds
from the issuance of 6,670,000 shares of ResortQuest  Common Stock, a portion of
which was used to pay the cash  portion of the  purchase  price for the Founding
Companies,  to pay IPO  transaction  costs,  and to repay  debt  assumed  in the
Combinations;  (iii) certain adjustments to salaries,  bonuses,  and benefits to
former owners and key  management of the Founding  Companies  effective with the
IPO; (iv) reversal of  compensation  expense in the three months ended March 31,
1998,  relating  to the  non-recurring,  non-cash  compensation  charge  of $5.6
million  related to Common Stock issued to management;  (v) provision for income
taxes as if pro forma income was subject to federal,  state or provincial income
taxes and that goodwill was not  deductible  for income tax purposes  during the
periods   presented;   (vi)   amortization   of  goodwill   resulting  from  the
Combinations; and (vii) excludes income (loss) from discontinued operations.

POST-IPO ACQUISITIONS

Since the IPO, ResortQuest has completed five acquisitions:  Goldpoint,  located
in  Breckenridge,   Colorado,   effective  July  31,  1998;   Plantation  Resort
Management,   Inc.  ("Plantation  Resort")  located  in  Gulf  Shores,  Alabama,
effective  August 31,  1998;  Whistler  Exclusive  Properties,  Ltd.  ("Whistler
Exclusive") located in Whistler,  British Columbia,  Canada, effective September
3, 1998;  Abbott Realty Services,  Inc.  ("Abbott  Resorts")  located in Destin,
Florida,  effective  September 30, 1998; and Columbine  Management & Real Estate
("Columbine")   located  in  Dillon,   Colorado,   effective  December  1,  1998
(collectively "Post-IPO Acquisitions"). 

                                       26

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Goldpoint,  Whistler Exclusive,  Abbott Resorts and Columbine were accounted for
under the purchase  method of accounting,  accordingly the results of operations
have been included since the respective date of acquisition.  The acquisition of
Plantation Resort was accounted for as a pooling of interests;  however,  due to
the fact that the impact of the  acquisition of Plantation  Resort is not deemed
material  to the  financial  statements  of  ResortQuest  taken as a whole,  the
historical financial statements of ResortQuest have not been restated to include
the effect of Plantation Resort.

     Nonrecurring  acquisition  costs incurred in connection with the Plantation
Resort  transaction  totaled  approximately  $134,000  and, in  accordance  with
Accounting  Principles Bulletin Opinion No. 16, have been included as an expense
in the statement of income for 1998.

     The acquisition of Abbott Resorts is considered  significant to ResortQuest
for  financial  reporting  purposes.  ResortQuest  paid  $40.0  million in total
consideration  to the prior  stockholders  of Abbott  Resorts  ($26.5 million in
cash,  $6.6  million in Common  Stock,  and $6.8 million in assumed  debt).  The
purchase  price was  allocated  to  tangible  assets  and  liabilities  with the
remaining $32.2 million to goodwill. The consolidated results of operations on a
pro forma basis as though  Abbott  Resorts had been acquired on January 1, 1997,
including  the pro forma  impacts of the  Founding  Companies  and the IPO,  are
presented below. The pro forma information  presented below includes  reductions
in salaries  that owners of Abbott  Resorts  agreed to in  conjunction  with the
acquisitions  discussed  above.  The  remaining  Post-IPO  Acquisitions  are not
considered  significant to  ResortQuest  for financial  reporting  purposes and,
therefore,  have not been included in the following pro forma presentation.  The
unaudited pro forma results of operations  for the years ended December 31, 1997
and 1998 are not  necessarily  indicative  of the results to be expected for the
full year.

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
(in thousands, except share amounts)                 1997             1998
----------------------------------------------------------------------------
<S>                                                <C>             <C>    
Revenue                                            $83,167         $94,946
============================================================================
Net income                                        $  6,957        $  7,955
============================================================================
Earnings per share
   Basic                                          $   0.42        $   0.48
============================================================================
   Diluted                                        $   0.42        $   0.47
============================================================================
</TABLE>

NOTE 2 - SUMMARY OF SIGNIFICANT
   ACCOUNTING POLICIES

REVENUE RECOGNITION
Property Management Fees

At December 31, 1998,  ResortQuest  has entered into 11,913  exclusive and 1,330
non-exclusive  rental and management  agreements  with owners of condominium and
homes in 21 resort locations  throughout North America. The exclusive agreements
entitle  ResortQuest  to  receive  a  fee  for  renting  and  maintaining  these
properties.  ResortQuest requires certain minimum deposits,  as reservations are
booked.  These  deposits  are  non-refundable  and  recorded as a  component  of
customer deposits,  deferred revenue and payable to owners, along with remaining
rental  prepayments.  ResortQuest  recognizes  revenue from property  rental and
management  fees  ratably  over  the term of guest  stays.  ResortQuest  records
revenue for cancellations upon occurrence.  

SERVICE FEES 

ResortQuest internally provides or arranges through third parties other services
for property owners or guests. Other services include reservation, housekeeping,
long-distance  telephone,  ski rentals,  lift tickets,  beach equipment and pool
cleaning.  Internally  provided  services are  recognized as service fee revenue
when the service is provided.  Services  provided by third parties are generally
billed  directly to  property  owners and are not  included in the  accompanying
consolidated  financial statements.  


                                       27
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)


Other 

ResortQuest  recognizes other revenues related to real estate broker commission,
food  &  beverage  sales  and  First  Resort  software  and  maintenance  sales.
ResortQuest has real estate broker sales operations in the following  locations:
Aspen, Colorado;  Bethany Beach, Delaware;  Islands of Captiva and Sanibel, Fort
Myers, Fort Walton Beaches and Destin, Florida; the Outer Banks, North Carolina;
St.  Simons,  Georgia;  Gulf  Shores,  Alabama;  and the  Island  of  Nantucket,
Massachusetts.  ResortQuest  recognizes  revenues on real estate sales when such
transactions  are complete and such revenue is recorded net of the related agent
commission  amount.   ResortQuest  also  manages  food  &  beverage  outlets  in
connection  with the management of larger  condominium  complexes,  primarily in
Hawaii and  Florida.  First  Resort sells a fully  integrated  software  package
specifically  designed  for the  property  rental  business,  along with ongoing
service  contracts.  First Resort recognizes  software and maintenance  revenues
when  the  systems  are   installed   and  ratably  over  the  service   period,
respectively. Other revenues were as follows:

<TABLE>
<CAPTION>
                                    YEARS ENDED DECEMBER 31,
(in thousands)                1996        1997         1998
------------------------------------------------------------
<S>                          <C>        <C>         <C>    
Real estate brokerage
   commissions, net          $    -     $     -     $ 4,858
Food & beverage               2,185       2,271       2,265
Software sales and  service       -           -       1,954
Other                         1,293         866       3,583
------------------------------------------------------------
                             $3,478      $3,137     $12,660
============================================================
</TABLE>



DIRECT OPERATING EXPENSES

Direct operating expenses include expenses related to housekeeping, maintenance,
reservations,  marketing and advertising, and other costs associated with rental
and management.  Direct operating  expenses also include food & beverage cost of
sales and operating expenses as follows:

<TABLE>
<CAPTION>
                                     YEARS ENDED DECEMBER 31,
(in thousands)                 1996        1997         1998
-------------------------------------------------------------
<S>                         <C>          <C>         <C>    
Rental and management       $ 8,289      $6,956      $25,096
Food & beverage               2,112       1,952        2,234
-------------------------------------------------------------
                            $10,401      $8,908      $27,330
=============================================================
</TABLE>

GOODWILL

Goodwill is the excess of the purchase  price over fair value of identified  net
assets acquired in business combinations accounted for as purchases. Goodwill is
being  amortized  on a  straight-line  basis  over 40  years,  other  than  that
associated  with the  acquisition  of First Resort,  which is amortized  over 15
years, representing the approximate remaining useful life of acquired intangible
assets. ResortQuest recognized $1.8 million of goodwill amortization in 1998. In
accordance with Statement of Financial  Accounting  Standards  ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of," subsequent to an acquisition, ResortQuest continually evaluates
whether later events and circumstances have occurred that indicate the remaining
net book value may warrant  revision  or may not be  recoverable.  When  factors
indicate  that the net book value should be evaluated  for possible  impairment,
the Company uses an estimate of the related  business'  undiscounted cash flows,
in measuring whether such long-lived assets are recoverable.

INCOME TAXES

Prior to the IPO,  Aston had  elected S  Corporation  status as  defined  by the
Internal Revenue Code and state tax statutes.  Under S Corporation  status,  the
former  stockholders  report their share of  ResortQuest's  taxable  earnings or
losses in their personal tax returns for the periods prior to the Combinations.

                                       28
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)


     In  conjunction  with  the  Combinations,  the  Company  changed  from an S
Corporation  to a C  Corporation  for  federal  and state  income tax  reporting
purposes,  which  requires  ResortQuest  to recognize  the tax  consequences  of
operations in its  statements of income.  The unaudited  statements of pro forma
income  reflect the estimated  impact of  recognizing  income tax expenses as if
ResortQuest  had been a C Corporation  for tax reporting  purposes for the years
ended December 31, 1997 and 1998.

     Under the asset  and  liability  method of  accounting  for  income  taxes,
deferred tax assets and liabilities are recognized for the estimated  future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying amounts of existing assets, including net operating loss carryforwards,
and  liabilities  and their  respective  tax  bases.  Deferred  tax  assets  and
liabilities are measured using enacted tax rates in effect for the year in which
those temporary  differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period when the new rate is enacted.

CASH AND CASH EQUIVALENTS

For the purposes of the balance sheets and statements of cash flows, ResortQuest
considers all investments with original maturities of three months or less to be
cash equivalents.  At December 31, 1998, cash and cash equivalents include $13.7
million of cash held in escrow for prepaid rentals and pending real estate sales
transactions.

INVENTORIES

Inventories  consist  primarily of food and beverage items and are stated at the
lower of cost (first-in, first-out method) or market.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost or, in the case of equipment  acquired
under capital leases,  the present value of future lease payments.  Depreciation
is computed using the  straight-line  method over the estimated  useful lives of
the assets or the lease  terms.  Expenditures  for repairs and  maintenance  are
charged  to  expense  when  incurred.   Expenditures   for  major  renewals  and
betterments,   which  extend  the  useful  lives  of  existing  equipment,   are
capitalized  and  depreciated.  Upon  retirement or  disposition of property and
equipment,  the cost and related  accumulated  depreciation are removed from the
accounts and any  resulting  gain or loss is  recognized  in the  statements  of
income.

FINANCIAL INSTRUMENTS

The carrying  values of all financial  instruments  approximate  their estimated
fair value.

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amount  of  assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

CONCENTRATION OF RISK

Prior to the Combinations,  ResortQuest's operations were exclusively located in
the state of Hawaii and were  subject to  negative  events  that  affect  travel
patterns of visitors. After considering the pro forma impact of the Combinations
and Abbott  Resorts,  Hawaii only accounts for 23% of total  revenues and 40% of
operating income of ResortQuest.

NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities." This statement
establishes  accounting  and  reporting  standards  for  derivatives,  including
certain  derivative  instruments  embedded  in  other  contracts   (collectively
referred to as  derivatives),  and for hedging  activities.  It requires that an
entity  recognize  all  derivatives  either  as  assets  or  liabilities  in the
statement of financial position and measure those instruments at fair value.


                                       29

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)


     This  statement  is  effective  for all  fiscal  quarters  of fiscal  years
beginning  after  September  15,  1999.  The  adoption  of SFAS  No.  133 is not
anticipated  to have a material  impact on the financial  position or results of
operations  of  ResortQuest.  

RECLASSIFICATIONS  

Certain  prior year  amounts  have been  reclassified  to conform  with the 1998
presentation.

NOTE 3 - NOTE RECEIVABLE FROM STOCKHOLDER

In connection with the Combinations,  Aston formalized its receivable  resulting
from cash  advances to its primary  stockholder  with a $4.0 million  promissory
note (the  "Note").  The Note bears  interest at  one-half of one percent  below
prime  rate of  interest,  but not less  than six  percent  and not more than 10
percent.  Payments  under the Note are  interest  only,  due and  payable  every
January and July 1st. The Note is due on demand with 180 days notice at any time
through May 26, 1999. If payment is not requested within the notice period,  the
Note becomes due and payable on May 25, 2008.

     Prior to the Combinations, advances were made to Aston affiliated companies
and  principal  stockholder.   Advances  to  affiliates  represent  advances  to
companies  controlled  by Aston's  principal  stockholder.  The  advances had no
scheduled repayment,  and Aston suspended the accrual of interest.  In 1996, one
affiliate  made a $2.0 million  repayment,  $112,500 of which was  recognized as
previously unrecorded interest.  The remaining receivable balance was guaranteed
by Aston's principal stockholder and was repaid during 1998. Advances to Aston's
principal  stockholder  were primarily  utilized  relative to the  stockholder's
investment  in  two  hotels  managed  by  the  Company.  The  advances  are  not
collateralized,  are non-interest bearing and have no scheduled repayments.  The
stockholder made payments of approximately  $1.5 million on these advances prior
to the Combinations.

NOTE 4 - DISCONTINUED OPERATIONS

ResortQuest  has decided that they will no longer continue to enter into leasing
arrangements for lodging facilities.  Accordingly,  for all periods presented in
the  accompanying  financial  statements,  the  financial  position,  results of
operations  and cash flows of the leased  assets are  reflected as  discontinued
operations.  Concurrent with the Combinations, Aston assigned such leases to AST
Holdings, Inc., a corporation owned by Aston's principal stockholder. On May 27,
1998,  ResortQuest  entered  into a contract  with AST  Holdings to manage these
facilities for a fee.

Net assets (liabilities) of discontinued operations were as follows:

<TABLE>
<CAPTION>
                                                DECEMBER 31,
(in thousands)                                         1997
------------------------------------------------------------
<S>                                                 <C>    
Current assets                                      $ 2,955
Advances to affiliates                                    1
Other assets                                            193
Property and equipment                                  197
------------------------------------------------------------
   Total assets                                       3,346
Current liabilities                                  (4,119)
Capital lease obligations                               (53)
Other long-term obligations                            (577)
------------------------------------------------------------
   Net liabilities of discontinued operations       $(1,403)
============================================================
</TABLE>

Income (loss) from discontinued operations are as follows:

<TABLE>
<CAPTION>
                                             YEARS ENDED DECEMBER 31,
(in thousands)                            1996        1997      1998
---------------------------------------------------------------------
<S>                                    <C>         <C>       <C>    
Revenue                                $29,945     $30,848   $14,304
Operating expenses                      22,833      24,826    10,120
General and administrative expense       6,631       7,317     2,839
---------------------------------------------------------------------
   Operating income (loss)                 481      (1,295)    1,345
Other (expense) income                     (26)        (33)        2
---------------------------------------------------------------------
Net income (loss) from
   discontinued operations             $   455     $(1,328)  $ 1,347
=====================================================================
</TABLE>

         In addition  to the loss from  discontinued  operations,  ResortQuest's
operating  results  for the year ended  December  31,  1997  include a charge of
$166,000  for an expected  loss  resulting  from the  disposal  of  discontinued
operations. 

                                       30

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)


NOTE 5 - SUPPLEMENTAL FINANCIAL INFORMATION

Trade and other receivables consisted of the following:

<TABLE>
<CAPTION>
                                                   DECEMBER 31,
(in thousands)                              1997          1998
---------------------------------------------------------------
<S>                                      <C>            <C>   
Receivable from managed properties       $   610        $1,073
Other                                        660         2,750
---------------------------------------------------------------
   Total                                   1,270         3,823
Less - Allowance for doubtful accounts       (75)          (56)
---------------------------------------------------------------
                                          $1,195        $3,767
===============================================================
</TABLE>

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
                                    ESTIMATED
                                   USEFUL LIFE                DECEMBER 31,
(in thousands)                      IN YEARS       1997            1998
--------------------------------------------------------------------------
<S>                                   <C>       <C>             <C>     
Land and improvements                            $      -        $  3,448
Building and improvements             15-30             -           4,929
Furniture, fixtures and
   equipment                           3-10           938           8,351
Leased property                        3-7          2,396           2,347
--------------------------------------------------------------------------
                                                    3,334          19,075

Less - accumulated depreciation
   and amortization                                (1,558)         (2,590)
--------------------------------------------------------------------------
                                                   $1,776         $16,485
==========================================================================
</TABLE>

Accounts payable and accrued liabilities consisted of the following:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
(in thousands)                                       1997            1998
--------------------------------------------------------------------------
<S>                                               <C>         <C>     
Accounts payable                                   $3,311         $ 7,090
Accrued payroll                                     1,214             986
Other accrued liabilities                           2,013           4,344
--------------------------------------------------------------------------
                                                   $6,538         $12,420
==========================================================================
</TABLE>


Supplemental cash flow information is as follows:

<TABLE>
<CAPTION>
                                                  YEARS ENDED DECEMBER 31,
(in thousands)                                   1996      1997       1998
---------------------------------------------------------------------------
<S>                                              <C>       <C>    <C>     
Supplemental disclosure of cash flow
   information
Cash paid for interest                           $556      $628   $    641
---------------------------------------------------------------------------
Cash paid for income taxes                       $  -      $  -   $    721
---------------------------------------------------------------------------
Supplemental disclosure of non-cash flow
   information
Capital lease obligations                        $912      $928   $     83
---------------------------------------------------------------------------
Common stock portion of
     Combinations                                $  -      $  -   $ 68,695
---------------------------------------------------------------------------
Common stock portion of
     Post-IPO Acquisitions                       $  -      $  -   $  7,251
---------------------------------------------------------------------------
</TABLE>

NOTE 6 - LONG-TERM DEBT

ResortQuest  entered into a credit agreement (the "Credit  Agreement") as of May
26, 1998 with NationsBank,  N.A. and First Tennessee Bank National  Association,
with respect to a $30 million  revolving line of credit in conjunction  with the
Credit Facility. On September 30, 1998, the Credit Facility was amended to allow
for the  ResortQuest  acquisition  of Abbott  Resorts.  On December 7, 1998, the
Credit  Facility  was amended for a second time to increase  the facility to $55
million and added two additional  lenders,  Societe  Generale and Union Planters
Bank,  N.A. The Credit  Facility may be used for letters of credit not to exceed
$2.5 million,  acquisitions,  capital  expenditures,  and for general  corporate
purposes.  The Credit Agreement requires ResortQuest to comply with various loan
covenants,  which include maintenance of certain financial ratios,  restrictions
on additional  indebtedness  and  restrictions on liens,  guarantees,  advances,
capital  expenditures,  sale of assets and  dividends.  Interest on  outstanding
balances of the Credit Facility is computed at  ResortQuest's  election,  on the
basis of either the Prime Rate or the Eurodollar Rate plus a margin ranging from
1.25% to 2.00%,  depending on certain financial ratios.  Availability fees range
from 0.25% to 0.50% per annum depending 


                                       31

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

on  certain  financial  ratios are  payable on the unused  portion of the Credit
Facility.  At December 31, 1998,  borrowings  under the Credit Facility  totaled
$32.0  million,   resulting  primarily  from  the  Abbott  Resorts  acquisition.
ResortQuest is paying a margin of 1.75% and availability  fees of 0.375%,  which
resulted in interest  expense of  approximately  $517,000 in 1998.  The weighted
average  interest  rate during 1998,  based on  outstanding  ResortQuest  Credit
Facility borrowings, including the applicable LIBOR spread, was 7.3%. The Credit
Facility has a three-year term and is secured by substantially all the assets of
ResortQuest and its subsidiaries,  including the stock in the Founding Companies
and any future material  subsidiaries,  as defined.  ResortQuest,  each Founding
Company and all other current and future material  subsidiaries  are required to
guarantee  repayment of all amounts due under the Credit  Facility.  At December
31, 1998, ResortQuest was in compliance with applicable loan covenants.

     On September 30, 1998,  ResortQuest  executed a promissory  note (the "Note
Agreement")  maturing on January 31, 1999 in favor of  NationsBank,  N.A.,  with
respect to an additional  $5.0 million  revolving  line of credit.  The interest
rate on  outstanding  balances,  the  interest  payment  dates  and the terms of
default  under the Note  Agreement  were the same as those  provided  for in the
Credit Facility.  The Note Agreement was secured on the same terms as the Credit
Facility.  The Note Agreement was terminated  effective  December 7, 1998,  when
ResortQuest   secured   additional   availability  under  the  Credit  Facility.
ResortQuest also has entered into discussions with NationsBank, N.A. and certain
other  lenders to increase  the size of the Credit  Facility to provide cash for
future acquisitions.

At December 31, 1997 and 1998, long-term debt consisted of the following:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
(in thousands)                                               1997        1998
------------------------------------------------------------------------------
<S>                                                        <C>        <C>    
Credit facility                                            $    -     $32,000
Various notes with banks, secured by certain
   assets, at interest rates ranging from
   7.125% to 9%, due between
   May 1999 through January 2013                                -       5,246
Other notes                                                 2,816         191
Long-term capital lease obligations                         1,734       1,725
------------------------------------------------------------------------------
Total                                                       4,550      39,162
Less - current maturities                                    (421)     (1,209)
------------------------------------------------------------------------------
Total non-current portion                                  $4,129     $37,953
==============================================================================
</TABLE>

     Annual  maturities of long-term debt are: 1999,  $1.2 million;  2000,  $1.8
million;  2001, $33.7 million;  2002, $1.6 million; 2003, $402,000; and $407,000
thereafter.

NOTE 7 - OPERATING LEASES

ResortQuest  has entered into  non-cancelable  operating  leases for  equipment,
operating space, office space, hotel properties and individual condominium units
within its managed  properties.  At December  31,  1998,  future  minimum  lease
commitments under all non-cancelable operating leases are as follows:

<TABLE>
<CAPTION>
(in thousands)                                  DECEMBER 31,
-------------------------------------------------------------
<S>                                                  <C>   
1999                                                 $1,187
2000                                                    929
2001                                                    857
2002                                                    820
2003                                                    652
Thereafter                                            1,480
-------------------------------------------------------------
                                                     $5,925
============================================================-
</TABLE>


                                       32

<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMEMENTS
(Continued)


     Under terms of the leases,  ResortQuest  is  generally  required to pay all
taxes, insurance and maintenance.  Rent expense for the years ended December 31,
1996, 1997, and 1998,  aggregated  approximately $4.8 million,  $5.3 million and
$2.4 million, respectively.

     In conjunction with the Combinations and Post-IPO Acquisitions, ResortQuest
entered into several lease  agreements with certain former owners for the use of
office space and facilities.  Lease payments made to former owners, who are also
stockholders  and  directors,  during  1996,  1997  and 1998  were  approximated
$114,000, $110,000 and $548,000, respectively.

     As an  accommodation  to certain of the  managed  properties,  the  Company
assists in obtaining  leases of operating  equipment.  In some  instances,  this
assistance  includes  entering  into the  leases as the  technical  lessee.  The
managed  properties  perform all  obligations  under the leases,  including  the
making of lease  payments and the provision of insurance  coverage.  ResortQuest
remains  contingently  liable  under the leases  until  completion  of the lease
terms.  Because ResortQuest  undertakes the role of a technical lessee simply as
an accommodation  to the managed  properties and because the leased equipment is
used only for and by the managed properties, these leases have not been recorded
on the Company's books.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

GUARANTEES

Prior to the Combinations, Aston had guaranteed or co-signed debts of its former
principal  stockholder,  which primarily relates to mortgage loans on two hotels
managed by Aston. These guarantees were fully  collateralized  with real estate,
cash or cash  equivalents,  including shares of Common Stock,  pledged either to
the lenders of such debt or Aston to secure such debt.  As of December 31, 1998,
the former principal stockholder of Aston has removed all guarantees.

     Certain of Aston's management  agreements contain provisions for guaranteed
levels of returns to owners. These agreements also contain force majeure clauses
to  protect  the  Company  from  forces or  occurrences  beyond  the  control of
management.  During 1996, 1997 and 1998,  ResortQuest made payments in excess of
the management fees earned on these guaranteed agreements of $116,000,  $327,000
and $840,000, respectively.

ACQUISITION INDEMNIFICATION

Subject  to  certain  limitations,   pursuant  to  the  Agreement  and  Plan  of
Organization  entered  into by and between each of the  Founding  Companies  and
ResortQuest  (each an "Agreement"),  the stockholders of the Founding  Companies
have indemnified  ResortQuest against losses, claims,  damages,  actions, suits,
proceedings,  demands, assessments,  adjustments, costs and expenses as a result
of or arising from (i) any breach of the  representations  and warranties in the
Agreement and its schedules and certificates by the stockholders of the Founding
Companies,  (ii) any breach of any agreement on the part of the stockholders set
forth in the Agreement,  (iii) any liability under the 1933 Act, the 1934 Act or
other federal or state law or regulation arising out of or based upon any untrue
statement of a material  fact  relating  solely to the  Founding  Company or the
stockholders  and  (iv)  certain  other  identified  claims  or  litigation.  In
addition,  pursuant  to each  Agreement  and  subject  to  certain  limitations,
ResortQuest  agreed  to  indemnify  the  stockholders  against  losses,  claims,
damages, actions, suits, proceedings,  demands, assessments,  adjustments, costs
and expenses incurred by the stockholders as a result of or arising from (i) any
breach by ResortQuest or of its  representations and warranties in the Agreement
and its schedules and certificates, (ii) any breach of any agreement on the part
of ResortQuest under this Agreement, (iii) any liability under the 1933 Act, the
1934  Act or  other  federal  or  state  law or  regulation,  at  common  law or
otherwise,  arising out of or based upon any untrue  statement or alleged untrue
statement  of a  material  fact  relating  to  ResortQuest  or any of the  other
Founding Companies contained in certain filings with the Securities and Exchange
Commission,  or (v) the matters  described  in the  schedules  to the  Agreement
relating to guarantees.

     ResortQuest  is not aware of any events  that have or could have caused any
party to such  indemnification  under any of the  Agreements  during the periods
presented in the  accompanying  consolidated  financial  statements.  


                                       33
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)


LITIGATION

ResortQuest and its  subsidiaries  are involved in various legal actions arising
in the ordinary course of business. Management does not believe that the outcome
of such legal  actions will have a materially  adverse  effect on the  Company's
consolidated financial position or results of operations.

INSURANCE

ResortQuest carries a broad range of insurance  coverage,  including general and
business  auto  liability,  commercial  property,  workers'  compensation  and a
general  umbrella  policy.  The Company has not incurred  significant  claims or
losses on any of its  insurance  policies  during the periods  presented  in the
accompanying financial statements.

BENEFIT PLANS

As of December 31, 1998,  ResortQuest had ten 401(k) profit sharing plans, which
existed prior to the IPO and the  acquisition  of the Founding  Companies or the
Post-IPO  Acquisitions.  Under the plans currently in place, employees may defer
from 1% to 18% of eligible earnings,  company matching  contributions range from
0% to 50% of the first 4% to 6% of employee contributions,  and employee vesting
in Company matching contributions varies from immediate vesting in some plans to
seven or more years in other plans.  Currently,  in the  aggregate of all plans,
there are  approximately  1,800 eligible  employees  covered under the plans and
1,200 active participants.  ResortQuest matching contributions to the plans were
$107,000, $184,000 and $231,000 in 1996, 1997 and 1998, respectively.

     ResortQuest is currently in the process of establishing a new 401(k) profit
sharing plan,  which will cover all domestic  employees.  The new 401(k) plan is
expected to be in place in second quarter 1999. Once this plan is in place,  all
existing plans will be merged into the new 401(k) plan during 1999.

EMPLOYMENT AGREEMENTS

Effective  with the  Combinations  and the  Post-IPO  Acquisitions,  ResortQuest
entered  into  employment  agreements  with all senior  corporate  officers  and
several key employees of the  Operating  Companies.  Among other  things,  these
agreements allow for severance  payments and some include  acceleration of stock
option  awards  upon a change in control of  ResortQuest,  as defined  under the
agreements.  The maximum amount of compensation  that would be payable under all
agreements if a change in control  occurred  without prior written  notice as of
December 31, 1998, would be approximately $21.4 million.

NOTE 9 - STOCKHOLDERS' EQUITY

COMMON STOCK

On May 26, 1998,  ResortQuest  issued an aggregate of 9,254,286 shares of Common
Stock  in  connection  with  the   Combinations   (1,708,333   shares  to  Aston
stockholders  and 7,545,953 shares to the remaining  stockholders  involved with
the  Combinations)  and 6,670,000  shares of Common Stock in connection with the
IPO.  Shares issued in the Offering were sold at a price to the public of $11.00
per share.  The net proceeds to ResortQuest  from the Offering (after  deducting
underwriting  discounts,  commissions and offering  expenses) were approximately
$60.0  million.  Subsequent to the IPO,  ResortQuest  issued  967,641  shares of
Common Stock in connection  with the Post-IPO  Acquisitions  (191,939  shares to
Plantation Resort  stockholders,  757,040 shares to Abbott Resorts  stockholders
and  18,662  shares  to  Columbine  stockholders).  As  of  December  31,  1998,
ResortQuest  had  16,891,927  shares  of Common  Stock  issued  and  outstanding
(13,757,297  shares of Common Stock and 3,134,630  shares of  restricted  Common
Stock).  The Common Stock and restricted  Common Stock are identical except that
the holders of restricted Common Stock are only entitled to one-half of one vote
for each share on all matters.

     On June 25, 1998, ResortQuest registered 3.0 million shares of Common Stock
with  the  Securities  and  Exchange  Commission  ("SEC")  pursuant  to a  shelf
registration statement ("Shelf"). 

                                       34

<PAGE>

Common  Stock  registered  under the Shelf is to be used  primarily  for  future
acquisitions.  Subsequently,  the Shelf was re-filed with the SEC to include the
pro forma impact of the Abbott acquisition,  which was again deemed effective on
November 6, 1998. At December 31, 1998, 967,641 shares covered by the Shelf have
been issued in connection with the Post-IPO Acquisitions.

PREFERRED STOCK

ResortQuest's  authorized  capital  includes 10.0 million shares of undesignated
preferred stock with a $0.01 par value.

NOTE 10 - STOCK OPTIONS

In March 1998,  ResortQuest's  Board of Directors and stockholders  approved the
Company's 1998 Long-Term  Incentive Plan  ("Incentive  Plan").  The options vest
annually and ratably  over a four-year  period from the date of grant and expire
ten years after the grant date.  ResortQuest  has reserved  2,027,031  shares of
Common Stock for use in connection  with the 1998 Long-Term  Incentive  Plan. In
connection with the IPO, options in the form of  non-qualified  stock options to
purchase a total of  1,695,000  shares of Common  Stock of the Company at $11.00
per share were  granted  to  management  of the  Founding  Companies,  corporate
management, certain stockholders, and non-employee directors.  Subsequent to the
IPO, 179,351  non-qualified  stock options have been granted to new employees at
the then  ResortQuest  Common Stock market value (ranging from $8.94 to $16.81).
The Incentive Plan also provides for the issuance of stock appreciation  rights,
restricted or deferred stock, dividend  equivalents,  bonus shares and awards in
lieu of Company  obligations to pay cash compensation,  non-employee  directors'
deferred shares, or other awards.  The value of the options is based in whole or
in part upon the value of the Common Stock.

     ResortQuest applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees,"  and related  interpretations  in accounting for
its stock option plan. Accordingly,  no compensation cost has been recognized in
the consolidated statements of income for the Incentive Plan. In accordance with
SFAS  No.  123,  "Accounting  for  Stock-Based  Compensation,"  ResortQuest  has
estimated  the  fair  value  of  each  option  grant  using  the   Black-Scholes
option-pricing  model.  Had  compensation  cost for  awards  under the Plan been
determined based on the fair value at the grant dates,  ResortQuest's net income
and  earnings  per share  would  have  been  reduced  to the pro  forma  amounts
indicated below:
<TABLE>
<CAPTION>
(in thousands, except per share amounts)              1996      1997     1998
--------------------------------------------------------------------------------
<S>                                                  <C>       <C>       <C>   
Net income
   As reported                                       $3,598    $3,591    $4,416
   Pro forma                                          3,598     3,591     3,740
Basic earnings per share
   As reported                                       $ 2.11    $ 2.10    $ 0.42
   Pro forma                                           2.11      2.10      0.36
Diluted earnings per share
   As reported                                       $ 2.11    $ 2.10    $ 0.41
   Pro forma                                           2.11      2.10      0.35
</TABLE>

A summary of ResortQuest's stock option transactions,  from May 26, 1998 through
December 31, 1998, is as follows:

<TABLE>
<CAPTION>
                                                            OPTIONS OUTSTANDING
--------------------------------------------------------------------------------
                                              Weighted                    Common
                                               average                     stock
                                              exercise                 available
                                                 price      Number     for grant
--------------------------------------------------------------------------------
<S>                                           <C>      <C>          <C>      
IPO - May 26, 1998                                n/a            -    1,910,914
Increased availability common
  stock issued during the year                    n/a            -      116,117
Options granted                                $10.90    1,874,351   (1,874,351)
--------------------------------------------------------------------------------
Balance-- December 31, 1998                    $10.90    1,874,351      152,680
================================================================================
</TABLE>


                                       35

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



The $4.13 weighted  average fair value of options granted by ResortQuest  during
1998 was based on the Black-Scholes  option-pricing model.  Assumptions included
an average  risk-free  interest  rate of 5.5%;  an average  expected life of 2.6
years;  a volatility  factor of 54.6%;  and no dividends.  At December 31, 1998,
there were 1,874,351 options outstanding with an exercise price that ranges from
$8.94 to $16.81 and an average weighted  exercise price of $10.90 and a weighted
average remaining contractual life of 9.5 years.

NOTE 11 - INCOME TAXES

Income tax expense  attributable  to income from  continuing  operations for the
year ended December 31, 1998 consisted of the following:
<TABLE>
<CAPTION>
(in thousands)                                        1998
-----------------------------------------------------------
<S>                                                 <C>   
Current
   Federal                                          $  853
   State                                               106
Deferred
   Federal                                             448
   State                                                55
-----------------------------------------------------------
Total                                               $1,462
===========================================================
</TABLE>

     The  difference  between  the  statutory  federal  income  tax rate and the
effective  income tax rate  expressed as a percentage of income from  continuing
operations  before  income  taxes for the year  ended  December  31,  1998 is as
follows:

<TABLE>
<CAPTION>
                                                     1998
-----------------------------------------------------------
<S>                                                 <C>   
Federal statutory rate                                34.0%
State income taxes, net of federal benefit             4.2
Goodwill and other permanent items                    44.9
Pre-IPO earnings not taxable                         (50.8)
-----------------------------------------------------------
Effective income tax rate                             32.3%
-----------------------------------------------------------
</TABLE>

     As a  result  of  the  Combinations  and  the  Post-IPO  Acquisitions,  the
allocation  of the purchase  price to the assets and  liabilities  for financial
reporting  purposes  significantly  exceeds the tax basis  carried over from the
predecessor   entities.   Accordingly,   the  acquisitions  created  significant
nondeductible  goodwill  and other  temporary  differences.  The tax  effects of
temporary differences that give rise to significant portions of the deferred tax
assets and liabilities as of December 31, 1998 are as follows:
<TABLE>
<CAPTION>
(in thousands)                                        1998
-----------------------------------------------------------
<S>                                                <C>    
Deferred tax assets
   Claims and other reserves                       $   977
   Section 481 adjustment: Cash to accrual             671
   State net operating losses                          310
   Other                                                45
-----------------------------------------------------------
     Total deferred tax assets                       2,003
-----------------------------------------------------------
Deferred tax liabilities
   Basis difference on fixed assets                   (342)
   Other                                              (153)
-----------------------------------------------------------
     Total deferred tax liabilities                   (495)
-----------------------------------------------------------
                                                    $1,508
===========================================================
</TABLE>


NOTE 12 - EARNINGS PER SHARE

ACTUAL RESULTS

Earnings per share included in the  consolidated  statements of income  includes
Aston's  results  of  operations  under its  historical  capital  and income tax
structure for all periods prior to the  Combinations,  and the combined balances
and  transactions of ResortQuest and the Founding  Companies since May 26, 1998.
The  shares  outstanding  for  Aston  through  May  25,  1998,  and  the  shares
outstanding  for ResortQuest  from May 26, 1998 through  December 31, 1998, were
used to calculate the 1998 weighted  

                                       36


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)


average shares outstanding.  The following table reflects ResortQuest's weighted
average  common shares  outstanding  and the impact of its primary  common share
equivalents.

<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
                                                   1996        1997       1998
--------------------------------------------------------------------------------
<S>                                           <C>          <C>        <C>       
Basic weighted average
   common shares outstanding                  1,708,333    1,708,333  10,529,189
Effect of dilutive securities -
   stock options                                      -            -     139,421
--------------------------------------------------------------------------------
Diluted weighted average
   common shares outstanding                  1,708,333    1,708,333  10,668,610
================================================================================
</TABLE>

PRO FORMA RESULTS

Pro forma  earnings per share  included in the  consolidated  statements  of pro
forma income is based on pro forma net income after  considering the adjustments
described in Note 1 - Pro Forma  Financial  Information.  The pro forma weighted
average  common  shares for all periods  reflect the issuance of Common Stock in
connection with the  Combinations,  the IPO and to ResortQuest  shareholders and
management as though such shares were  outstanding  for the entire  periods.  In
addition,  the 1998  periods  include  the  impact  of  Common  Stock  issued in
connection with the Post-IPO Acquisitions only from their respective acquisition
dates.  However,  the 1998  calculations  also  include the  dilutive  impact of
options  outstanding  from May 27, 1998 through December 31, 1998. The following
table  reflects   ResortQuest's   pro  forma  weighted   average  common  shares
outstanding and the impact of its primary common share equivalents.

<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
                                                               1997       1998
--------------------------------------------------------------------------------
<S>                                                     <C>          <C>        
Basic weighted average
   common shares outstanding                             15,924,286  16,166,168
Effect of dilutive securities -
   stock options                                                  -      74,182
--------------------------------------------------------------------------------
Diluted weighted average
   common shares outstanding                             15,924,286  16,240,350
--------------------------------------------------------------------------------
</TABLE>

NOTE 13 - SEGMENT REPORTING

On  January  1,  1998,  ResortQuest  adopted  the  provisions  of SFAS  No.  131
"Disclosures  about  Segments of an Enterprise and Related  Information."  Under
SFAS No. 131, ResortQuest has one operating segment, property management,  which
is managed as one business unit. The accounting policies of this segment are the
same as those described in the summary of significant  accounting policies.  The
all other segment includes First Resort and corporate.  Approximately 79% of the
all other  segment  assets  represents  goodwill  recorded  for First Resort and
corporate.  The  following  table  presents the revenues,  operating  income and
assets of ResortQuest's reportable segment.

<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
(in thousands)                                     1996       1997        1998
--------------------------------------------------------------------------------
<S>                                           <C>          <C>        <C>       
Revenues
   Property management                           $19,460    $19,554   $ 47,570
   All other                                           -          -      1,954
--------------------------------------------------------------------------------
                                                 $19,460    $19,554   $ 49,524
================================================================================
Operating income
   Property management                           $ 3,485   $  5,171   $  7,226
   All other                                           -          -     (2,292)
--------------------------------------------------------------------------------
                                                 $ 3,485   $  5,171   $  4,934
================================================================================
Assets
   Property management                                      $14,562   $146,584
   All other                                                      -     38,336
--------------------------------------------------------------------------------
                                                            $14,562   $184,920
================================================================================
</TABLE>

NOTE 14 - RELATED-PARTY TRANSACTIONS

ResortQuest has unwritten and written consulting and management  agreements with
certain  stockholders  and  directors  of the  Founding  Companies  and Post-IPO
Acquisitions.  Consulting services include assistance in operations, identifying
acquisitions,  and involvement in local and governmental  affairs.  During 1996,
1997  and  1998,  the  Company   incurred   $221,000,   $232,000  and  $287,000,
respectively, relative to these consulting arrangements.

     ResortQuest  receives sales commissions for selling properties developed by
certain companies and partnerships owned or


                                       37

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)


co-owned by former owners of the Founding  Companies and Post-IPO  Acquisitions.
These net commissions  approximated $1.9 million during 1998 and the Company had
approximately   $414,000  in   receivables  at  December  31,  1998  from  these
affiliates.

     ResortQuest  entered into  numerous  transactions  with the former owner of
Aston  ("Former  Owner") who is now a director and  stockholder  of the Company.
ResortQuest provides management and centralized services  (cooperative sales and
marketing, reservations,  accounting services and other reimbursements) for four
hotels,  of which two are owned by the Former  Owner and two are  managed for an
affiliate  of the Former  Owner.  The  management  fees  charged to these hotels
approximated  $501,000,  $506,000  and  $1.5  million  in 1996,  1997 and  1998,
respectively. ResortQuest also paid HCP, Inc., a company that is wholly owned by
the Former  Owner,  $481,000,  $476,000  and  $158,000  in 1996,  1997 and 1998,
respectively,   for  sales   representation  and  related  accounting  services.
Beginning  in  1997,  ResortQuest  provides   administrative   services  to  AST
International  LLC,  which is controlled  by the Former Owner.  Related to these
services,  the Company  recognized  $272,000  during 1998 and had receivables of
$420,000  and  $208,000  as  of  December  31,  1997  and  1998,   respectively.
ResortQuest  also  provides  certain  management  and clerical  personnel  for a
development  company  owned by the Former  Owner.  During  1996,  1997 and 1998,
ResortQuest incurred $125,000,  $126,000 and $4,000,  respectively,  in salaries
and benefits costs relative to this development company. In return,  ResortQuest
receives certain consulting and support services.

     ResortQuest provides various management and consulting services for certain
companies  and  partnerships  owned or co-owned by former owners of the Founding
Companies  and  Post-IPO   Acquisitions.   During  1998,   ResortQuest  received
approximately $275,000 for these services.

     ResortQuest  also  manages  vacation  properties  pursuant to its  standard
management  agreement  that are  owned or  co-owned  by  certain  directors  and
employees of the Company.


                                       38

<PAGE>


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of ResortQuest International, Inc.:

We have audited the  accompanying  consolidated  balance  sheets of  ResortQuest
International,  Inc., (a Delaware corporation) and subsidiaries (the "Company"),
as of December 31, 1998 and 1997,  and the related  consolidated  statements  of
income,  changes  in  stockholders'  equity and cash flows for each of the three
years ended December 31, 1998. These consolidated  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
ResortQuest  International,  Inc. and subsidiaries,  as of December 31, 1998 and
1997,  and the results of their  operations and their cash flows for each of the
three years ended  December 31, 1998,  in  conformity  with  generally  accepted
accounting principles.

                                                       /s/ Arthur Anderson LLP


Memphis, Tennessee,
   February 25, 1999.

MANAGEMENT'S REPORT ON CONSOLIDATED
FINANCIAL STATEMENTS

ResortQuest International, Inc. ("ResortQuest") is responsible for preparing the
consolidated  financial  statements  and related  information  appearing in this
report.  Management believes that the consolidated  financial statements present
fairly their  consolidated  financial  position,  results of operations and cash
flows in conformity with generally accepted accounting principles.  In preparing
its  consolidated  financial  statements,  ResortQuest  is  required  to include
amounts based on estimates and judgements which it believes are reasonable under
the circumstances.

     ResortQuest  maintains  accounting  and other control  systems  designed to
provide reasonable assurance that financial records are reliable for purposes of
preparing  consolidated  financial  statements  and  that  assets  are  properly
accounted for and safeguarded. Limitations exist in any internal control system,
recognizing that the system's cost should not exceed the benefits derived.

     The  Board  of  Directors  pursues  its  responsibility  for  ResortQuest's
consolidated financial statements through its Audit Committee, which is composed
solely of directors who are not officers or employees of ResortQuest.  The Audit
Committee  meets from time to time with the independent  public  accountants and
management.


/s/ David C. Sullivan
David C. Sullivan
Chairman of the Board &  Chief Executive Officer



/s/ Jeffery M. Jarvis
Jeffery M. Jarvis
Senior Vice President & Chief Financial Officer


                                       39

<PAGE>


QUARTERLY RESULTS OF OPERATIONS
(unaudited)

<TABLE>
<CAPTION>
                                               FIRST    SECOND     THIRD    FOURTH
(in thousands, except share amounts)         QUARTER   QUARTER  QUARTER    QUARTER
-----------------------------------------------------------------------------------
<S>                                            <C>       <C>      <C>      <C>    
1998 ACTUAL
Revenues                                       $6,078    $7,858   $16,949  $18,639
Operating income (loss)                         1,882       726     3,125     (799)
Net income (loss) (a)                           1,697       577     1,715     (920)
Basic earnings (loss) per share (b)              0.99      0.08      0.11    (0.05)
Basic weighted average shares outstanding       1,708     7,176    15,993   16,880
Diluted earnings (loss) per share (b)            0.99      0.08      0.11    (0.05)
Diluted weighted average shares outstanding     1,708     7,290    16,181   16,889

1997 ACTUAL
Revenues                                       $5,581    $4,497    $5,170  $ 4,306
Operating income                                2,055       337     1,846      933
Net income (a)                                  1,887       172     1,644    1,382
Basic earnings per share (b)                     1.10      0.10      0.96     0.81
Basic weighted average shares outstanding       1,708     1,708     1,708    1,708
Diluted earnings per share (b)                   1.10      0.10      0.96     0.81
Diluted weighted average shares outstanding     1,708     1,708     1,708    1,708
</TABLE>



SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                           YEARS ENDED DECEMBER 31,
(in thousands)                          1994       1995     1996     1997     1998
------------------------------------------------------------------------------------
<S>                                   <C>       <C>       <C>      <C>     <C>    
STATEMENT OF INCOME DATA
Revenues                              $20,421   $19,048   $19,460  $19,554  $ 49,524
Operating expenses                     12,406    10,550    10,401    8,908    27,330
General and administrative
   expenses, including depreciation
   and amortization                     5,444     5,434     5,574    5,475    17,260
------------------------------------------------------------------------------------
Income from operations                  2,571     3,064     3,485    5,171     4,934
Interest and other expense, net           246       771       342       86       403
Provision for income taxes                  -         -         -        -     1,462
------------------------------------------------------------------------------------
Income from continuing operations     $ 2,325   $ 2,293   $ 3,143  $ 5,085  $  3,069
===================================================================================-
BALANCE SHEET DATA
Total assets                          $ 9,373   $13,904   $12,970  $14,562  $184,920
Long-Term Debt                          2,396     2,133     2,816    4,129    37,953
Stockholders' Equity (deficit)           (395)     (395)     (395)    (395)  107,167
</TABLE>

(a)  Net income is representative of income from continuing  operations and does
     not include the effects of certain discontinued operations.

(b)  The sum of the quarterly  amounts may not equal the annual amount reported,
     as per share amounts are computed  independently for each quarter while the
     full year is based on the annual weighted average shares outstanding.


                                       40

<PAGE>


                             CORPORATE INFORMATION

EXECUTIVE OFFICERS

David C. Sullivan
Chairman of the Board and Chief Executive Officer

David L. Levine
President and Chief Operating Officer

Frederick L. Farmer
Senior Vice President and Chief Information Officer

Jeffery M. Jarvis
Senior Vice President and Chief Financial Officer

John K. Lines
Senior Vice President, General Counsel and Secretary

W. Michael Murphy
Senior Vice President and Chief Development Officer

Jules S. Sowder
Senior Vice President and Chief Marketing Officer

CORPORATE OFFICERS

S. Mark Aldy
Vice President, Controller

Park Brady
Regional Vice President

Douglas R. Brindley
Regional Vice President

Gary Keirce
Vice President, Human Resources

Paul Manteris
Vice President, Operations

James S. Olin
Regional Vice President

David K. Selberg
Vice President, Finance

BOARD OF DIRECTORS

David C. Sullivan Chairman of the Board and Chief Executive Officer

David L. Levine President and Chief Operating Officer

William W. Abbott, Jr. Former Vice Chairman, Abbott Realty Services, Inc.

Luis Alonso President, Collection of Fine Properties, Inc.

Elan J. Blutinger Managing Director, Alpine Consolidated II, LLC

Park Brady Former President,  Telluride Resort  Accommodations and Regional Vice
President of ResortQuest

Douglas R. Brindley  President,  Brindley & Brindley Realty & Development,  Inc.
and Regional Vice President of ResortQuest

D. Fraser Bullock Managing Director, Alpine Consolidated II, LLC

Paul T. Dobson President, Maui Condominium and Home Realty, Inc.

Sharon Benson Doucette President, The Maury People, Inc.

Joshua M. Freeman Former President and Managing Member,  Coastal Resorts Realty,
LLC

Evan H. Gull Vice President of Development, First Resort Software, Inc.

Heidi O'Leary Houston President, Houston & O'Leary Company, Inc.

Charles O. Howey Former President, Howey Acquisition,  Inc. and Priscilla Murphy
Realty, Inc.

J. Patrick McCurdy President, Whistler Chalets, Ltd.

Daniel E. Meehan Former President, Resort Property Management, Inc.

Leonard A. Potter* Managing Director, Alpine Consolidated II, LLC

Michael D. Rose Chairman, Promus Hotel Corporation

Andre S. Tatibouet President,  Hotel Corporation of the Pacific, Inc., aka Aston
Hotels and Resorts

Hans F. Trupp Chairman, Trupp-Hodnett Enterprises, Inc.

Joseph  V.  Vittoria  Chairman  and Chief  Executive  Officer,  Travel  Services
International, Inc.

Theodore  L.  Weise  President  and Chief  Executive  Officer,  Federal  Express
Corporation

*Advisory Director

EXECUTIVE OFFICES
530 Oak Court Drive, Suite 360
Memphis, Tenn. 38117
Tel: (901) 762-0600
Fax: (901) 762-0678

REGISTRAR AND STOCK TRANSFER AGENT
American Stock Transfer
& Trust Company
40 Wall Street
New York, New York 10005

INDEPENDENT AUDITORS
Arthur Andersen LLP
100 Peabody Place, Suite 1100
Memphis, Tenn. 38103

STOCKHOLDER INQUIRIES

For information about ResortQuest and its subsidiaries,  including copies of its
annual  report on Form 10-K and quarter  reports on Form 10-Q,  please  submit a
written request to: Jeffery  Jarvis,  ResortQuest  International,  Inc., 530 Oak
Court Drive, Suite 360, Memphis,Tenn. 38117.

ANNUAL MEETING DATE

ResortQuest  will hold its annual meeting of stockholders on May 13, 1999 at the
Embassy Suites, 1022 S. Shady Grove, Memphis, Tenn.

INTERNET

RESORTQUEST.COM  is the first nationally  branded online booking resource in the
vacation rental industry.  At RESORTQUEST.COM,  investors can obtain an overview
of the company's financial condition and operating philosophy.

STOCK LISTING

The company's stock began trading on the New York Stock Exchange on May 20, 1998
under the symbol RZT.

Stock Price

1998              HIGH          LOW
--------------------------------------------
FOURTH QUARTER    14 3/4      6  9/16

THIRD QUARTER     17 1/8      8 13/16

SECOND QUARTER    17 3/4         14

First Quarter        n/a         n/a


FORWARD-LOOKING STATEMENTS

Certain  statements in this annual report include  "forward-looking  statements"
within  the  meaning  of  the  safe  harbor  provisions  of  Section  27A of the
Securities  Act of 1933 and Section 21E of the  Securities  Exchange Act of 1934
and are qualified by cautionary  statements  contained herein and in ResortQuest
International, Inc. filings with the Securities and Exchange Commission.


                                       41