<PAGE>

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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               ----------------

                                   FORM 10-Q

(Mark One)

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
   EXCHANGE ACT OF 1934

   For the quarterly period ended June 30, 2001

                                      OR

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
   EXCHANGE ACT OF 1934

   For the transition period from _________ to _________

                               ----------------

                         Commission File Number 1-9320

                          WYNDHAM INTERNATIONAL, INC.
            (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
                  Delaware                                       94-2878485
<S>                                            <C>
       (State or other jurisdiction of              (I.R.S. Employer Identification No.)
       incorporation or organization)
</TABLE>

                       1950 Stemmons Freeway, Suite 6001
                              Dallas, Texas 75207
              (Address of principal executive offices) (Zip Code)

                                (214) 863-1000
             (Registrant's telephone number, including area code)

                                      N/A
  (Former name, former address and former fiscal year, if changed since last
                                    report)

                               ----------------

   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X]   No [_]

   The number of shares outstanding of the registrant's class A common stock,
par value $.01 per share, as of the close of business on August 7, 2001, was
167,793,803.

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<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

                                     INDEX

                         PART I--FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
 <C>      <S>                                                             <C>
 Item 1.  Financial Statements..........................................    3

 Wyndham International, Inc.:
    Condensed Consolidated Balance Sheets as of June 30, 2001 (unaudited)
     and December 31, 2000...............................................   3
    Condensed Consolidated Statements of Operations for the three and six
     months ended June 30, 2001 and 2000 (unaudited).....................   4
    Condensed Consolidated Statements of Cash Flows for the six months
     ended June 30, 2001 and 2000 (unaudited)............................   5
    Notes to Condensed Consolidated Financial Statements as of June 30,
     2001 (unaudited)....................................................   6

 Item 2.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations.....................................   16

 Item 3.  Qualitative and Quantitative Disclosures about Market Risks...   24

                           PART II--OTHER INFORMATION

 Item 1.  Legal Proceedings.............................................   25

 Item 2.  Changes in Securities and Use of Proceeds.....................   26

 Item 3.  Defaults Upon Senior Securities...............................   26

 Item 4.  Submission of Matters to Vote of Security Holders.............   27

 Item 5.  Other Information.............................................   27

 Item 6.  Exhibits and Reports on Form 8-K:
    Exhibits.............................................................  28
    Reports on Form 8-K..................................................  28

 Signature...............................................................  29
</TABLE>

                                       2
<PAGE>

                         PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                          WYNDHAM INTERNATIONAL, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share amounts)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                         June 30,   December 31,
                                                           2001         2000
                                                        ----------  ------------
<S>                                                     <C>         <C>
                        ASSETS
Current assets:
 Cash and cash equivalents............................  $   59,674   $   52,460
 Restricted cash......................................     108,456       98,070
 Accounts receivable..................................     178,256      188,381
 Inventories..........................................      19,416       21,211
 Prepaid expenses and other assets....................      17,764       15,248
 Assets held for sale, net of accumulated depreciation
  of $172,919 in 2001 and $205,242 in 2000............     966,843    1,196,272
                                                        ----------   ----------
 Total current assets.................................   1,350,409    1,571,642
                                                        ----------   ----------
Investment in real estate and related improvements net
 of accumulated depreciation of $596,062 in 2001 and
 $497,669 in 2000.....................................   3,561,163    3,515,223
Investment in unconsolidated subsidiaries.............      93,272      104,814
Notes and other receivables...........................      45,107       48,976
Management contract costs, net of accumulated
 amortization of $20,512 in 2001 and $18,034 in 2000..     105,500      109,106
Leasehold costs, net of accumulated amortization of
 $25,712 in 2001 and $21,128 in 2000..................     120,462      125,044
Trade names and franchise costs, net of accumulated
 amortization of $20,800 in 2001 and $17,560 in 2000..     101,027      104,249
Deferred acquisition costs............................       4,757        2,936
Goodwill and intangibles, net of accumulated
 amortization of $42,880 in 2001 and $36,826 in 2000..     332,978      339,032
Deferred expenses, net of accumulated amortization of
 $45,526 in 2001 and $42,244 in 2000..................      70,864      104,474
Other assets..........................................      41,721       41,403
                                                        ----------   ----------
 Total assets.........................................  $5,827,260   $6,066,899
                                                        ==========   ==========
         LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable and accrued expenses................  $  189,069   $  210,592
 Deposits.............................................      30,024       38,943
 Borrowings associated with assets held for sale......     453,495      505,836
 Current portion of borrowings under credit facility,
  term loans, mortgage notes and capital lease
  obligations.........................................     315,462      155,728
                                                        ----------   ----------
 Total current liabilities............................     988,050      911,099
                                                        ----------   ----------
Borrowings under credit facility, term loans, mortgage
 notes and capital lease obligations..................   2,529,908    2,737,386
Derivative financial instruments......................      46,895          --
Deferred income taxes.................................     403,538      430,030
Deferred income.......................................       7,358        7,875
Minority interest in the operating partnerships.......      21,416       21,416
Minority interest in other consolidated subsidiaries..      88,925      164,906
Commitments and contingencies
Shareholders' equity:
 Preferred stock, $0.01 par value; authorized:
  150,000,000 shares; shares issued and outstanding:
  11,486,308 in 2001 and 11,087,390 in 2000...........         115          111
 Common stock, $0.01 par value; authorized:
  750,000,000 shares; shares issued and outstanding:
  167,735,248 in 2001 and 167,416,376 in 2000.........       1,677        1,674
 Additional paid in capital...........................   3,870,303    3,828,900
 Receivables from shareholders........................     (17,648)     (17,161)
 Accumulated other comprehensive loss.................     (40,917)        (811)
 Accumulated deficit..................................  (2,072,360)  (2,018,526)
                                                        ----------   ----------
 Total shareholders' equity...........................   1,741,170    1,794,187
                                                        ----------   ----------
   Total liabilities and shareholders' equity.........  $5,827,260   $6,066,899
                                                        ==========   ==========
</TABLE>

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

                                       3
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                  (unaudited)

<TABLE>
<CAPTION>
                                      Three Months        Six Months Ended
                                     Ended June 30,           June 30,
                                    ------------------  ----------------------
                                      2001      2000       2001        2000
                                    --------  --------  ----------  ----------
<S>                                 <C>       <C>       <C>         <C>
Revenue:
  Hotel revenue.................... $581,080  $632,012  $1,185,837  $1,269,073
  Management fee and service fee
   income..........................    6,282    12,422      14,202      25,022
  Interest and other income........    1,782    18,561       5,461      22,526
                                    --------  --------  ----------  ----------
    Total revenue..................  589,144   662,995   1,205,500   1,316,621
                                    --------  --------  ----------  ----------
Expenses:
  Hotel expenses...................  419,680   448,142     845,286     888,918
  General and administrative.......   31,036    26,872      44,337      48,766
  Interest expense.................   82,743    93,427     168,687     185,290
  Depreciation and amortization....   62,230    78,996     117,072     158,447
  Loss on sale of assets...........   13,259    10,844      12,923      14,052
  Impairment loss on assets held
   for sale........................      --     77,300         --       77,300
  Gain on derivative instruments...   (6,074)      --      (15,676)        --
                                    --------  --------  ----------  ----------
    Total expenses.................  602,874   735,581   1,172,629   1,372,773
                                    --------  --------  ----------  ----------
Operating (loss) income............  (13,730)  (72,586)     32,871     (56,152)
  Equity in earnings of
   unconsolidated subsidiaries.....    1,216     3,479       1,597       3,969
                                    --------  --------  ----------  ----------
(Loss) income before income taxes,
 minority interest, accounting
 change and extraordinary item.....  (12,514)  (69,107)     34,468     (52,183)
  Income tax benefit (provision)...    3,035    23,642     (16,221)     20,697
                                    --------  --------  ----------  ----------
(Loss) income before minority
 interest, accounting change and
 extraordinary item................   (9,479)  (45,465)     18,247     (31,486)
  Minority interest in consolidated
   subsidiaries....................   (2,106)   (1,052)     (6,952)     (3,434)
                                    --------  --------  ----------  ----------
(Loss) income before accounting
 change and extraordinary item.....  (11,585)  (46,517)     11,295     (34,920)
  Cumulative effect of change in
   accounting principle, net of
   taxes...........................      --        --      (10,364)        --
  Extraordinary item from early
   extinguishment of debt, net of
   taxes...........................     (719)      --         (719)        --
                                    --------  --------  ----------  ----------
Net (loss) income.................. $(12,304) $(46,517) $      212  $  (34,920)
  Preferred stock dividends........  (27,506)  (25,652)    (54,531)    (50,867)
                                    --------  --------  ----------  ----------
Net loss attributable to common
 shareholders...................... $(39,810) $(72,169) $  (54,319) $  (85,787)
                                    ========  ========  ==========  ==========
Basic and diluted loss per common
 share:
  Net loss before accounting change
   and extraordinary item.......... $  (0.24) $  (0.43) $    (0.26) $    (0.51)
  Cumulative effect of accounting
   change..........................      --        --        (0.06)        --
  Extraordinary item............... $    --   $    --   $      --   $      --
                                    --------  --------  ----------  ----------
    Net loss per common share...... $  (0.24) $  (0.43) $    (0.32) $    (0.51)
                                    ========  ========  ==========  ==========
</TABLE>

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

                                       4
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                           Six Months Ended
                                                               June 30,
                                                          --------------------
                                                            2001       2000
                                                          ---------  ---------
<S>                                                       <C>        <C>
Cash flows from operating activities:
 Net income (loss)......................................  $     212  $ (34,920)
 Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
   Depreciation and amortization........................    117,072    158,447
   Amortization of deferred compensation................        776        255
   Amortization of deferred loan costs..................     10,856     11,276
   Net loss on sale of assets...........................     12,923     14,052
   Impairment loss on assets held for sale..............        --      77,300
   Gain on derivative instruments.......................    (15,676)       --
   Provision for bad debt expense.......................        --       1,628
   Equity in earnings of unconsolidated subsidiaries....     (1,597)    (3,969)
   Minority interest in consolidated subsidiaries.......      6,952      3,434
   Recognition of deferred termination fee..............        --     (14,746)
   Write-off of deferred acquisition costs..............      1,445      1,283
   Deferred income taxes................................      8,415    (27,406)
   Cumulative effect of accounting change...............     10,364        --
   Extraordinary item...................................        719        --
   Changes in assets and liabilities:
     Accounts receivable and other assets...............      5,822    (67,391)
     Inventory..........................................      1,796      2,079
     Deferred income....................................       (517)     8,738
     Accounts payable and other accrued expenses........    (28,376)   (30,023)
                                                          ---------  ---------
      Net cash provided by operating activities.........    131,186    100,037
                                                          ---------  ---------
Cash flows from investing activities:
 Acquisition of hotel properties and related working
  capital assets net of cash acquired...................        --     (20,626)
 Improvements and additions to hotel properties.........   (100,692)   (85,191)
 Proceeds from sale of assets...........................    106,097    198,967
 Payment of contingent liability........................        --     (32,825)
 Changes in restricted cash accounts....................    (10,386)   (29,249)
 Collection on notes receivable.........................      6,064        452
 Advances on other notes receivable.....................     (1,720)    (1,344)
 Deferred acquisition costs.............................     (3,266)    (1,694)
 Management contract costs..............................     (1,038)       --
 Investment in unconsolidated subsidiaries..............     (1,600)    (5,375)
 Distributions from unconsolidated subsidiaries.........      2,980      5,764
 Other..................................................        --         597
                                                          ---------  ---------
      Net cash (used in) provided by investing
       activities.......................................     (3,561)    29,476
                                                          ---------  ---------
Cash flows from financing activities:
 Borrowings under credit facility and mortgage notes....    255,000    366,081
 Repayments under credit facility and mortgage notes....   (355,085)  (499,143)
 Payment of deferred loan costs.........................       (750)    (2,218)
 Distributions made to minority interest in other
  partnerships..........................................     (5,534)    (4,251)
 Dividends paid.........................................    (14,624)   (14,624)
 Proceeds received from amendments to financial
  derivatives...........................................        --       6,654
 Premiums paid for financial derivatives................        --     (34,360)
                                                          ---------  ---------
      Net cash used in financing activities.............   (120,993)  (181,861)
                                                          ---------  ---------
Foreign currency translation adjustment.................        582     10,657
Net increase (decrease) in cash and cash equivalents....      7,214    (41,691)
Cash and cash equivalents at beginning of period........     52,460    144,333
                                                          ---------  ---------
Cash and cash equivalents at end of period..............  $  59,674  $ 102,642
                                                          =========  =========
</TABLE>

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

                                       5
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     (in thousands, except share amounts)
                                  (unaudited)

1. Organization:

   Wyndham International, Inc. (together with its consolidated subsidiaries,
"Wyndham" or the "Company") is a fully integrated and multi-branded hotel
enterprise that operates primarily in the upscale and luxury segments. Through
a series of acquisitions, Wyndham has since 1995 grown from 20 hotels to
become one of the largest U.S. based hotel operators. As of June 30, 2001,
Wyndham owned interests in 129 hotels with over 37,000 guestrooms and leased
38 hotels from third parties with over 5,800 guestrooms. In addition, Wyndham
managed 34 hotels for third party owners with over 10,600 guestrooms and
franchised 30 hotels with over 5,600 guestrooms.

  Principles of Consolidation

   The consolidated financial statements include the accounts of Wyndham, its
wholly-owned subsidiaries, and the partnerships, corporations, and limited
liability companies in which Wyndham owns a controlling interest, after the
elimination of all significant intercompany accounts and transactions.

   Partnerships--The condition for control is the ownership of a majority
voting interest and the ownership of the general partnership interest.

   Corporations and Limited Liability Companies--The condition for control is
the ownership of a majority voting interest.

   These financial statements have been prepared in accordance with Generally
Accepted Accounting Principles ("GAAP") for interim financial information and
with the instructions for Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by GAAP for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Operating results for the three
and six months ended June 30, 2001 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2001. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K, for the year
ended December 31, 2000. Certain prior period amounts have been reclassified
to conform to current period presentation with no effect to previously
reported net loss or accumulated deficits.

   Newly Issued Accounting Standards

   In June 2001, the Financial Accounting Standards Board ("FASB") approved
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS
No. 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. SFAS No. 142 will be
effective for fiscal years beginning after December 15, 2001 and will require
(1) intangible assets (as defined in SFAS No. 141) to be reclassified into
goodwill, (2) goodwill amortization to cease, and (3) the testing of goodwill
for impairment at transition and at interim periods (if an event or
circumstance would result in an impairment). The Company will adopt SFAS
No. 142 on January 1, 2002. The Company has not yet determined the impact of
SFAS No. 142 on the Company's results of operations and financial position.

                                       6
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                     (in thousands, except share amounts)
                                  (unaudited)


2. Investment in Real Estate and Related Improvements

  Asset Sales

   During the first quarter of 2001, the Company sold one hotel property and a
sewer company. The Company received net cash proceeds of approximately $7,976,
after the repayment of mortgage debt of $21,875. The Company recorded a net
gain of $336, net of previous impairment of $19,089, as a result of asset
sales.

   During the second quarter of 2001, the Company sold four hotels and
investments in an additional four hotels for net cash proceeds of $76,246. The
Company retained a preferred equity interest in one of the hotels sold. In
addition, the Company exchanged six hotels with a net book value of $70,134,
for one hotel with an estimated fair value of $61,308. As a result of asset
sales and the exchange, the Company recorded a net loss of $13,259 in the
second quarter, net of previously recorded impairment of $141,863.

3. Borrowing Under Term Loans, Mortgage Notes and Capital Lease Obligations:

   Effective March 30, 2001, the Company amended two mortgage notes with
balances of $29,540 and $15,000 with Credit Lyonnais. The amendments extended
the maturities from March 30, 2001 to September 28, 2001 and March 29, 2002,
respectively. The notes bear interest at LIBOR plus 2.25%.

   In connection with the sale of the hotel in the first quarter, the proceeds
from the sale of the property were used to repay mortgage debt owed to Lehman
Brothers Holdings Inc. ("Lehman Brothers") in the amount of $21,875.

   In connection with the exchange of the hotel assets in the second quarter,
the Company repaid mortgage debt owed to Lehman Brothers in the amount of
$8,125 and Bear, Stearns Funding Inc. in the amount of $33,135. As a result of
the repayment of debt, the Company recorded a charge of $719, net of taxes, as
an extraordinary item resulting from the write-off of unamortized deferred
financing costs.

4. Derivatives:

   On January 1, 2001, the Company changed its method of accounting for its
derivative instruments in accordance with its adoption of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended by
SFAS No. 137 and No. 138.

   The adoption of the SFAS No. 133, as amended, on January 1, 2001 resulted
in the cumulative effect of an accounting change of $10,364 (net of taxes of
$6,911) being recognized in the consolidated statement of operations and a
charge of $21,691 (net of taxes of $14,460) in other comprehensive income in
the first quarter of 2001.

   As of June 30, 2001, the Company had recorded a gain of $15,676 for the
change in the fair market value through earnings, and a charge of $19,430 (net
of taxes of $12,954) through other comprehensive income.

   Within the next twelve months the Company expects the reclassification to
earnings of the transition adjustment previously recorded in accumulated other
comprehensive income to be immaterial. Gains and losses on derivatives that
arose prior to the initial application of SFAS No. 133 and were deferred as
adjustments of the carrying amount of hedged items were not adjusted. As a
result, no adjustments related to such gains and losses were included in the
transition adjustments described above.

                                       7
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                     (in thousands, except share amounts)
                                  (unaudited)


  Accounting for Derivatives and Hedging Activities

   On the date when the Company enters into a derivative contract, it
designates the derivative as a hedge of (a) a forecasted transaction or (b)
the variability of cash flows that are to be received or paid in connection
with a recognized asset or liability (a "cash flow" hedge). Currently, the
Company has only entered into derivative contracts which are designated as
cash flow hedges. Changes in the fair value of a derivative that is highly
effective and that is designated and qualifies as a cash flow hedge, to the
extent that the hedge is effective, are recorded in other comprehensive
income, until earnings are affected by the variability of cash flows of the
hedged transaction (e.g., until periodic settlements of a variable-rate asset
or liability are recorded in earnings). Any hedge ineffectiveness (which
represents the amount by which the changes in the fair value of the derivative
exceed the variability in the cash flows of the forecasted transaction) is
recorded in current-period earnings. Changes in the fair value non-hedging
instruments are reported in current-period earnings.

   The Company occasionally purchases a financial instrument in which a
derivative instrument is "embedded." Upon purchasing the financial instrument,
the Company assesses whether the economic characteristics of the embedded
derivative are clearly and closely related to the economic characteristics of
the remaining component of the financial instrument (i.e., the host contract)
and whether a separate, non-embedded instrument with the same terms as the
embedded instrument would meet the definition of a derivative instrument. When
it is determined that (1) the embedded derivative possesses economic
characteristics that are not clearly and closely related to the economic
characteristics of the host contract and (2) a separate, stand-alone
instrument with the same terms would qualify as a derivative instrument, the
embedded derivative is separated from the host contract, carried at fair
value, and designated as either (1) a cash flow or (2) a trading or non-
hedging derivative instrument. However, if the entire contract were to be
measured at fair value, with changes in fair value reported in current
earnings, or if the Company could not reliably identify and measure the
embedded derivative for purposes of separating that derivative from its host
contract, the entire contract would be carried on the balance sheet at fair
value and not be designated as a hedging instrument.

   The Company formally documents all relationships between hedging
instruments and hedged items, as well as its risk-management objective and
strategy for undertaking various hedge transactions. This process includes
linking all derivatives that are designated as cash flow hedges to (1)
specific assets and liabilities on the balance sheet or (2) specific firm
commitments or forecasted transactions. The Company also formally assesses
(both at the hedge's inception and on an ongoing basis) whether the
derivatives that are used in hedging transactions have been highly effective
in offsetting changes in the cash flows of hedged items and whether those
derivatives may be expected to remain highly effective in future periods. When
it is determined that a derivative is not (or has ceased to be) highly
effective as a hedge, the Company discontinues hedge accounting prospectively,
as discussed below.

   The Company discontinues hedge accounting prospectively when (1) it
determines that the derivative is no longer effective in offsetting changes in
the cash flows of a hedged item (including hedged items such as firm
commitments or forecasted transactions); (2) the derivative expires or is
sold, terminated, or exercised; (3) it is no longer probable that the
forecasted transaction will occur; (4) a hedged firm commitment no longer
meets the definition of a firm commitment; or (5) management determines that
designating the derivative as a hedging instrument is no longer appropriate.

   When the Company discontinues hedge accounting because it is no longer
probable that the forecasted transaction will occur in the originally expected
period, the gain or loss on the derivative remains in accumulated other
comprehensive income and is reclassified into earnings when the forecasted
transaction affects earnings.

                                       8
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                     (in thousands, except share amounts)
                                  (unaudited)

However, if it is probable that a forecasted transaction will not occur by the
end of the originally specified time period or within an additional two-month
period of time thereafter, the gains and losses that were accumulated in other
comprehensive income will be recognized immediately in earnings. In all
situations in which hedge accounting is discontinued and the derivative
remains outstanding, the Company will carry the derivative at its fair value
on the balance sheet, recognizing changes in the fair value in current-period
earnings.

5. Comprehensive Loss:

   SFAS No. 130, "Reporting Comprehensive Income" establishes standards for
reporting and displaying comprehensive income and its components. Total
comprehensive loss for the relevant periods is calculated as follows:

<TABLE>
<CAPTION>
                                         Three Months      Six Months Ended
                                        Ended June 30,         June 30,
                                       ------------------  ------------------
                                         2001      2000      2001      2000
                                       --------  --------  --------  --------
   <S>                                 <C>       <C>       <C>       <C>
   Net (loss) income.................. $(12,304) $(46,517) $    212  $(34,920)
   Unrealized gain on securities held
    for sale..........................      474       343       492       480
   Unrealized foreign exchange gain
    (loss)............................       37    (5,246)      523    (4,225)
   Unrealized loss on derivative
    instruments.......................   (1,240)      --    (41,121)      --
                                       --------  --------  --------  --------
     Total comprehensive loss......... $(13,033) $(51,420) $(39,894) $(38,665)
                                       ========  ========  ========  ========
</TABLE>

6. Computation of Earnings Per Share:

   Basic and diluted earnings per share have been computed as follows:

<TABLE>
<CAPTION>
                                     Three Months Ended    Three Months Ended
                                       June 30, 2001         June 30, 2000
                                    --------------------- ---------------------
                                     Basic    Diluted (1)  Basic    Diluted (1)
                                    --------  ----------- --------  -----------
                                    (in thousands, except per share amounts)
<S>                                 <C>       <C>         <C>       <C>
Loss before extraordinary item....  $(11,585)  $(11,585)  $(46,517)  $(46,517)
Preferred stock dividends.........   (27,506)   (27,506)   (25,652)   (25,652)
                                    --------   --------   --------   --------
Loss attributable to common
 shareholders before extraordinary
 item.............................  $(39,091)  $(39,091)  $(72,169)  $(72,169)
Extraordinary item................      (719)      (719)       --         --
                                    --------   --------   --------   --------
Net loss..........................  $(39,810)  $(39,810)  $(72,169)  $(72,169)
                                    ========   ========   ========   ========
Weighted average number of shares
 outstanding......................   167,698    167,698    167,250    167,250
                                    ========   ========   ========   ========
Loss per share:
  Loss before extraordinary item..  $  (0.24)  $  (0.24)  $  (0.43)  $  (0.43)
  Extraordinary item..............       --         --         --         --
                                    --------   --------   --------   --------
Net loss per common share.........  $  (0.24)  $  (0.24)  $  (0.43)  $  (0.43)
                                    ========   ========   ========   ========
</TABLE>
--------
(1) For the three months ended June 30, 2001, the dilutive effect of unvested
    stock grants of 5,267, options to purchase 915 shares of common stock and
    133,717 shares of preferred stock were not included in the

                                       9
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                     (in thousands, except share amounts)
                                  (unaudited)

   computation of diluted earnings per share because they are anti-dilutive.
   For the three months ended June 30, 2000, the dilutive effect of unvested
   stock grants of 745 and 124,646 shares of preferred stock were not included
   in the computation of diluted earnings per share because they are anti-
   dilutive. In addition, for the three months ended June 30, 2001, options to
   purchase 11,802 shares of common stock at prices ranging from $2.6875 to
   $30.40 were outstanding but not included in the computation because the
   exercise prices of the options were greater than the average market price
   of the common shares and, therefore, the effect would be anti-dilutive. For
   the three months ended June 30, 2000, options to purchase 18,786 shares of
   common stock at prices ranging from $2.00 to $30.40 were outstanding but
   not included in the computation because the exercise prices of the options
   were greater than the average market price of the common shares and,
   therefore, the effect would be anti-dilutive.

<TABLE>
<CAPTION>
                                     Six Months Ended      Six Months Ended
                                      June 30, 2001         June 30, 2000
                                   --------------------- ---------------------
                                    Basic    Diluted (1)  Basic    Diluted (1)
                                   --------  ----------- --------  -----------
                                   (in thousands, except per share amounts)
<S>                                <C>       <C>         <C>       <C>
Income (loss) before cumulative
 effect of accounting change and
 extraordinary item............... $ 11,295   $ 11,295   $(34,920)  $(34,920)
Preferred stock dividends.........  (54,531)   (54,531)   (50,867)   (50,867)
                                   --------   --------   --------   --------
Loss attributable to common
 shareholders before cumulative
 effect of accounting change and
 extraordinary item...............  (43,236)   (43,236)   (85,787)   (85,787)
Cumulative effect of accounting
 change...........................  (10,364)   (10,364)       --         --
Extraordinary item................     (719)      (719)       --         --
                                   --------   --------   --------   --------
Net loss attributable to common
 shareholders..................... $(54,319)  $(54,319)  $(85,787)  $(85,787)
                                   ========   ========   ========   ========
Weighted average number of shares
 outstanding......................  167,559    167,559    167,227    167,227
                                   ========   ========   ========   ========
Loss per share:
  Loss before cumulative effect of
   accounting change and
   extraordinary item............. $  (0.26)  $  (0.26)  $  (0.51)  $  (0.51)
  Cumulative effect of accounting
   change.........................    (0.06)     (0.06)       --         --
  Extraordinary item..............      --         --         --         --
                                   --------   --------   --------   --------
Net loss per common share......... $  (0.32)  $  (0.32)  $  (0.51)  $  (0.51)
                                   ========   ========   ========   ========
</TABLE>
--------
(1) For the six months ended June 30, 2001, the dilutive effect of unvested
    stock grants of 2,982, options to purchase 649 shares of common stock and
    133,717 shares of preferred stock were not included in the computation of
    diluted earnings per share because they are anti-dilutive. For the six
    months ended June 30, 2000, the dilutive effect of unvested stock grants
    of 778, options to purchase common stock of 169 and 124,646 shares of
    preferred stock were not included in the computation of diluted earnings
    per share because they are anti-dilutive. In addition, for the six months
    ended June 30, 2001, options to purchase 12,757 shares of common stock at
    prices ranging from $2.15 to $30.40 were outstanding but not included in
    the computation because the exercise prices of the options were greater
    than the average market price of the common shares and, therefore, the
    effect would be anti-dilutive. For the six months ended June 30, 2000,
    options to purchase 14,202 shares of common stock at prices ranging from
    $2.6875 to $30.40 were outstanding but not included in the computation
    because the exercise prices of the options were greater than the average
    market price of the common shares and, therefore, the effect would be
    anti-dilutive.

                                      10
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                     (in thousands, except share amounts)
                                  (unaudited)


7. Commitments and Contingencies:

  Contingencies

   On May 7, 1999, Doris Johnson and Charles Dougherty filed a lawsuit in the
Northern District of California against Patriot American Hospitality, Inc.
(collectively with its subsidiaries, "Patriot"), Wyndham, their respective
operating partnerships and Paine Webber Group, Inc. This action, Johnson v.
Patriot American Hospitality, Inc., et al., No. C-99-2153, was commenced on
behalf of all former holders of Bay Meadows Operating Company ("Bay Meadows")
stock during a class period from June 2, 1997 to the date of filing. The
action asserts securities fraud claims and alleges that the purported class
members were wrongfully induced to tender their shares as part of the
Patriot/Bay Meadows merger based on a fraudulent prospectus. The action
further alleges that defendants continued to defraud shareholders about their
intentions to acquire numerous hotels and saddle Patriot and Wyndham with
massive debt during the class period. Three other actions against the same
defendants subsequently were filed in the Northern District of California: (i)
Ansell v. Patriot American Hospitality, Inc., et al., No. C-99-2239 (filed May
14, 1999), (ii) Sola v. Paine Webber Group, Inc., et al., No. C-99-2770 (filed
June 11, 1999), and (iii) Gunderson v. Patriot American Hospitality, Inc., et
al., No. C 99-3040 (filed June 23, 1999). Another action with substantially
identical allegations, Susnow v. Patriot American Hospitality, Inc., et al.,
No. 3-99-CV1354-T (filed June 15, 1999), also subsequently was filed in the
Northern District of Texas. By order of the Judicial Panel on Multidistrict
Litigation, these actions along with certain actions identified below have
been consolidated in the Northern District of California for consolidated
pretrial purposes. On or about October 13, 2000, the defendants moved to
dismiss the actions. The Court heard legal arguments on motions to dismiss the
actions on December 14, 2000 but has not yet rendered a decision. Wyndham
intends to defend the suits vigorously.

   On or about June 22, 1999, a lawsuit captioned Levitch v. Patriot American
Hospitality, Inc., et al., No. 3-99-V1416-D, was filed in the Northern
District of Texas against Patriot, Wyndham, James D. Carreker and Paul A.
Nussbaum. This action asserts securities fraud claims and alleges that, during
the period from January 5, 1998 to December 17, 1998, the defendants defrauded
shareholders by issuing false statements about Patriot and Wyndham. The
complaint was filed on behalf of all shareholders who purchased Patriot and
Wyndham stock during that period. Three other actions, Gallagher v. Patriot
American Hospitality, Inc., et al., No. 3-99-CV1429-L, filed on June 23, 1999,
David Lee Meisenburg, et al. v. Patriot American Hospitality, Inc., Wyndham
International, Inc., James D. Carreker, and Paul A. Nussbaum, Case No. 3-99-
CV1686-X, filed July 27, 1999 and Deborah Szekely v. Patriot American
Hospitality, Inc., et al., No. 3-99-CV1866-D, filed on or about August 27,
1999, allege substantially the same allegations. By orders of the Judicial
Panel on Multidistrict Litigation, these actions have been consolidated with
certain other shareholder actions and transferred to the Northern District of
California for consolidated pre-trial purposes. On or about October 20, 2000,
the defendants moved to dismiss the actions. The Court has heard arguments on
motions to dismiss the actions on December 14, 2000 but has not yet rendered a
decision. Wyndham intends to defend the suits vigorously.

   Wyndham has received a draft complaint which threatens to assert claims on
behalf of Golden Door, LLC, Golden Springs, LLC, Golden Door, Inc., Deer
Springs Ranch, LLC, Deborah Szekely and Sarah Livia Brightwood. The potential
plaintiffs appear to be the same as the plaintiffs who filed the action
referenced above, Deborah Szekely v. Patriot American Hospitality, Inc.,
etal., No. 3-99-CV1866-D, however the allegations of the complaints are not
the same. The draft complaint purports to assert claims against Patriot,
Wyndham and their respective operating partnerships for securities fraud under
California securities code, common law fraud, breach of fiduciary duty and
deceit in connection with the purchase by Patriot of the Golden Door Spa in
February 1998. The draft complaint seeks compensatory damages for the alleged
lost value of the potential plaintiff's stock and other unspecified damages.
Although the Company has received a draft complaint, to date no complaint has
been filed.

                                      11
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                     (in thousands, except share amounts)
                                  (unaudited)

   On or about May 8, 2001, a demand for arbitration was filed on behalf of
John W. Cullen, IV, William F. Burruss, Heritage Hotel Management & Investment
Ltd. and GH-Resco, L.L.C. naming Wyndham International Operating Partnership,
L.P. f/k/a Patriot American Operating Partnership, L.P. (the "Partnership") as
respondent. A similar arbitration was originally filed on or about October 26,
2000 against Wyndham. The Supreme Court of the State of New York, however,
ruled that Wyndham did not agree to arbitrate any claims with the claimants
and stayed the arbitration with respect to Wyndham. Claimants then recommended
an identical arbitration, dropped Wyndham and named the Partnership as a
respondent. The Demand for Arbitration claims that the claimants and the
Partnership are parties to a Contribution Agreement dated February 28, 1997
and that the Partnership is in breach of that agreement. Claimants assert that
the Partnership breached its agreement to pay respondents additional
consideration under the Contribution Agreement by, among other things,
allegedly denying claimants compensation due to them in connection with
various transactions initiated by claimants and provided to the Partnership,
which allegedly provided the Partnership with growth and added revenue. In
addition, claimants assert that the Partnership failed to provide claimants
with various other amounts due under the Contribution Agreement, failed to
indemnify claimants for certain expenses and intentionally and negligently
mismanaged the Partnership's business. Claimants do not specify the amount of
damages sought. The Partnership intends to defend the claims vigorously.

   Wyndham has been served with purported class action complaints in
California (Bryant v. Wyndham International, Inc., San Diego County Superior
Court Case No. GIC76544 (filed April 10, 2001) and Judd v. Wyndham
International, Inc., San Francisco County Superior Court Case No. 322378
(filed June 25, 2001)), Florida (Soper, et. al v. Wyndham International, Inc.,
Dade County Circuit Court Case No. 01-15095 CA15 (filed June 25, 2001)) and
Illinois (Nicoloff v. Wyndham International, Inc., Madison County Circuit
Court Case No. GIC76544 (filed July 23, 2001)). Each of the actions allege
substantially the same allegations and claim, in sum, that it is an unfair
business practice for hotels to assess an "energy surcharge" in addition to
regular room rates when only the room rates are advertised. The suits seek
restitution, damages, including punitive damages, and injunctive relief.
Additionally, the Attorneys General of Florida and Texas are investigating
this same issue. Wyndham has conditionally settled the Bryant action, and has
not responded to the complaints in any of the other actions. Wyndham intends
to defend the suits vigorously.

8. Dividends

   On June 30, 2001, the Company paid a quarterly dividend, at an annual rate
of 9.75%, on its series A and B preferred stock. The dividend was paid
partially in cash and partially in additional shares of preferred stock. The
Company paid a total of $7,312 in cash and issued approximately 1,094 shares
of series A preferred stock and 200,840 shares of series B preferred stock.

   On March 31, 2001, the Company paid a quarterly dividend, at an annual rate
of 9.75%, on its series A and B preferred stock. The dividend was paid
partially in cash and partially in additional shares of preferred stock. The
Company paid a total of $7,312 in cash and issued approximately 1,070 shares
of series A preferred stock and 196,063 shares of series B preferred stock.

9. Segment Reporting:

   The Company classifies its business into proprietary owned brands and non-
proprietary branded hotel divisions, under which it manages the business.

                                      12
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                     (in thousands, except share amounts)
                                  (unaudited)

   Wyndham is the brand umbrella under which all of its proprietary products
are marketed. It includes three four-star, upscale hotel brands that offer
full-service accommodations to business and leisure travelers, as well as the
five-star luxury resort brand.

  Description of reportable segments

   The Company has seven reportable segments: Wyndham Hotels & Resorts(R),
Wyndham Luxury Resorts, Summerfield Suites by Wyndham(TM), Wyndham Gardens(R),
other proprietary branded hotel properties, non-proprietary branded hotel
properties and other.

  .  Wyndham Hotels & Resorts(R) are upscale, full-service hotel properties
     that contain an average of 400 hotel rooms, generally between 15,000 and
     250,000 square feet of meeting space and a full range of guest services
     and amenities for business and leisure travelers, as well as conferences
     and conventions. The hotels are located primarily in the central
     business districts and dominant suburbs of major metropolitan markets
     and are targeted to business groups, meetings, and individual business
     and leisure travelers. These hotels offer elegantly appointed facilities
     and high levels of guest service.

  .  Wyndham Luxury Resorts are five-star hotel properties that are
     distinguished by their focus on incorporating the local environment into
     every aspect of the property, from decor to cuisine to recreation. The
     luxury collection includes the Golden Door Spa, one of the world's
     preeminent spas.

  .  Wyndham Gardens(R) are full-service properties, which serve individual
     business travelers and are located principally near major airports and
     suburban business districts. Amenities and services generally include a
     three-meal restaurant, signature Wyndham Gardens(R) libraries and
     laundry and room service.

  .  Summerfield Suites by Wyndham(TM) offer guests the highest quality
     lodging in the upscale all suites segment. Each suite has a fully
     equipped kitchen, a spacious living room and a private bedroom. Many
     suites feature two bedroom, two bath units. The hotels also have a
     swimming pool, exercise room and other amenities to serve business and
     leisure travelers.

  .  Other proprietary branded hotel properties include Malmaison, Sierra
     Suites, Clubhouse and hotels acquired in the Arcadian acquisition. As of
     June 30, 2001, the Company had sold its interests in Sierra Suites,
     Clubhouse, the hotels acquired in the Arcadian acquisition and the
     Malmaison properties. Only one hotel remained in the segment as of June
     30, 2001.

  .  Non-proprietary branded properties include all properties which are not
     Wyndham branded hotel properties or other proprietary branded
     properties. The properties consist of non-Wyndham branded assets, such
     as Crowne Plaza(R), Embassy Suites(R), Marriott, Courtyard by
     Marriott(R), Sheraton(R) and independents.

  .  Other includes management fee and service fee income, interest and other
     income, general and administrative costs, interest expense, depreciation
     and amortization and other charges. These amounts are not allocated to
     each reportable segment; therefore, they are reported in the aggregate
     within this segment.

  Factors management used to identify the reportable segments

   The Company's reportable segments are determined by brand affiliation and
type of property. The reportable segments are each managed separately due to
the specified characteristics of each segment.

                                      13
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                     (in thousands, except share amounts)
                                  (unaudited)

  Measurement of segment profit or loss

   The Company evaluates performance based on the operating income or loss
from each business segment. The accounting policies of the reportable segments
are the same as those described in Note 1. The total revenue and operating
income (loss) for each segment for the three and six months ended June 30,
2001 and 2000, respectively, are presented in the table below. There were no
material changes in total assets from amounts disclosed in the Company's
Annual Report on Form 10-K for the year ended December 31, 2000.

<TABLE>
<CAPTION>
                          Wyndham   Wyndham            Summerfield    Other        Non
   Three Months Ended     Hotels &  Luxury   Wyndham    Suites by  Proprietary Proprietary
     June 30, 2001       Resorts(R) Resorts Gardens(R) Wyndham(TM)   Branded     Branded     Other      Total
   ------------------    ---------- ------- ---------- ----------- ----------- ----------- ---------  ----------
<S>                      <C>        <C>     <C>        <C>         <C>         <C>         <C>        <C>
Total revenue...........  $283,489  $23,934  $17,830     $35,081     $ 1,275    $219,471   $   8,064  $  589,144
Operating income
 (loss).................    74,002    6,110    3,732       7,410          63      58,995    (164,042)    (13,730)

<CAPTION>
                          Wyndham   Wyndham            Summerfield    Other        Non
   Three Months Ended     Hotels &  Luxury   Wyndham    Suites by  Proprietary Proprietary
     June 30, 2000       Resorts(R) Resorts Gardens(R) Wyndham(TM)   Branded     Branded     Other      Total
   ------------------    ---------- ------- ---------- ----------- ----------- ----------- ---------  ----------
<S>                      <C>        <C>     <C>        <C>         <C>         <C>         <C>        <C>
Total revenue...........  $284,121  $27,395  $24,780     $36,445     $12,601    $246,670   $  30,983  $  662,995
Operating income
 (loss).................    75,941    6,411    4,298       9,193       3,646      72,201    (244,276)    (72,586)

<CAPTION>
                          Wyndham   Wyndham            Summerfield    Other        Non
    Six Months Ended      Hotels &  Luxury   Wyndham    Suites by  Proprietary Proprietary
     June 30, 2001       Resorts(R) Resorts Gardens(R) Wyndham(TM)   Branded     Branded     Other      Total
    ----------------     ---------- ------- ---------- ----------- ----------- ----------- ---------  ----------
<S>                      <C>        <C>     <C>        <C>         <C>         <C>         <C>        <C>
Total revenue...........  $591,447  $52,366  $35,540     $69,035     $ 2,433    $435,016   $  19,663  $1,205,500
Operating income
 (loss).................   168,472   14,594    6,128      12,480         224     113,308    (282,335)     32,871

<CAPTION>
                          Wyndham   Wyndham            Summerfield    Other        Non
    Six Months Ended      Hotels &  Luxury   Wyndham    Suites by  Proprietary Proprietary
     June 30, 2000       Resorts(R) Resorts Gardens(R) Wyndham(TM)   Branded     Branded     Other      Total
    ----------------     ---------- ------- ---------- ----------- ----------- ----------- ---------  ----------
<S>                      <C>        <C>     <C>        <C>         <C>         <C>         <C>        <C>
Total revenue...........  $587,952  $57,496  $48,689     $69,743     $26,977    $478,216   $  47,548  $1,316,621
Operating income
 (loss).................   172,334   17,257    9,011      15,857       7,451     133,728    (411,790)    (56,152)
</TABLE>

   The following table represents revenue information by geographic area for
the three and six months ended June 30, 2001 and 2000, respectively. Revenues
are attributed to the United States and its territories and Europe based on
the location of hotel properties.

<TABLE>
<CAPTION>
                  Three Months Ended June 30,
                             2001               Six Months Ended June 30, 2001
                 ----------------------------- --------------------------------
                 United States Europe  Total   United States Europe    Total
                 ------------- ------ -------- ------------- ------- ----------
<S>              <C>           <C>    <C>      <C>           <C>     <C>
Revenues........   $587,025    $2,119 $589,144  $1,201,725   $ 3,775 $1,205,500

<CAPTION>
                  Three Months Ended June 30,
                             2000               Six Months Ended June 30, 2000
                 ----------------------------- --------------------------------
                 United States Europe  Total   United States Europe    Total
                 ------------- ------ -------- ------------- ------- ----------
<S>              <C>           <C>    <C>      <C>           <C>     <C>
Revenues........   $654,536    $8,459 $662,995  $1,300,113   $16,508 $1,316,621
</TABLE>

10. Supplemental Cash Flow Disclosure:

   The Company pays a quarterly dividend in additional shares of preferred
stock. On June 30, 2001, the Company issued approximately 1,094 shares of
series A preferred stock and 200,840 shares of series B preferred stock with a
value of $20,193. On March 31, 2001, the Company issued approximately 1,070
shares of series A preferred stock and 196,063 shares of series B preferred
stock with a value of $19,713.

                                      14
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                     (in thousands, except share amounts)
                                  (unaudited)

   The adoption of SFAS No. 133, as amended, on January 1, 2001, resulted in a
liability of $30,187 and a reduction of deferred expenses of $23,239
representing the difference between the carrying value and the fair value of
the derivatives with the offset recognized in the cumulative effect of an
accounting change of $10,364 (net of taxes of $6,911) being recognized in the
consolidated statement of operations and a charge of $21,691 (net of taxes of
$14,460) in other comprehensive income.

   In addition, the Company recorded the change in the fair value of its
derivatives of $16,708 with a gain of $15,676 for the change in the fair
market value through earnings, and a charge of $19,430 (net of taxes of
$12,954) through other comprehensive income.

   The Company exchanged six assets with a net book value of $70,134 for the
acquisition of one hotel with an estimated fair value of $61,308.

11. Subsequent Events:

   In July 2001, the Company completed a $180,000 mortgage financing through
Lehman Brothers which is secured by four hotel properties. The loan bears
interest at LIBOR plus 1.80% and matures August 10, 2003. The proceeds from
the loan were used to repay existing mortgage indebtedness and reduce balances
on the Company's increasing rate term loans and revolving credit facility.

   In July 2001, the Company also completed a refinancing with Credit
Lyonnais. At the time of the refinancing, the loan had an outstanding balance
of $29,175 and was scheduled to mature on September 28, 2001. The principal
amount of the loan was increased to $45,000 and bears interest at LIBOR plus
2.15% and matures July 30, 2003. The proceeds from the loan were used to repay
existing indebtedness.

                                      15
<PAGE>

ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

   The following discussion and analysis should be read in conjunction with
the Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000.

   Certain statements in this Form 10-Q constitute "forward-looking
statements" as that term is defined under (S)21E of the Securities and
Exchange Act of 1934, as amended, and the Private Securities Litigation Reform
Act of 1995. The words "believe," "expect," "anticipate," "intend," "estimate"
and other expressions which are predictions of or indicate future events and
trends and which do not relate to historical matters identify forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements. Although forward-looking statements reflect
management's good faith beliefs, reliance should not be placed on forward-
looking statements because they involve known and unknown risks, uncertainties
and other factors, which may cause the actual results, performance or
achievements of the Company to differ materially from anticipated future
results, performance or achievements expressed or implied by such forward-
looking statements. The Company undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new information,
future events or otherwise. Certain factors that might cause a difference
include, but are not limited to, risks associated with the availability of
equity or debt financing at terms and conditions favorable to the Company;
risks associated with the course of litigation; the Company's ability to
effect sales of assets on favorable terms and conditions; the Company's
ability to integrate acquisitions into its operations and management; risks
associated with the hotel industry and real estate markets in general;
competition within the lodging industry; the impact of general economic
conditions; risks associated with debt financing; and other risks set forth
under "Certain Risk Factors" in the Company's 2000 Annual Report on Form 10-K.

Results of operations:

  General

   As of June 30, 2001, the Company had 167 owned and leased hotels with
approximately 42,800 guest rooms as compared to 184 owned and leased hotels
with approximately 46,600 guestrooms at June 30, 2000. This decrease was a
result of hotels sold during that twelve-month period.

  Three months ended June 30, 2001 compared with the three months ended June
  30, 2000

   Hotel revenues were $581,080,000 and $632,012,000 for the three months
ended June 30, 2001, and 2000, respectively. Approximately $26,987,000 of the
decrease in revenues can be attributed to hotels that have been sold. The
remaining decrease is attributable to declining Revenues per Available Room
("RevPAR") throughout the Company's owned and leased hotel portfolio which
decreased approximately 6.0% for the three months ended June 30, 2001 as
compared to the same period in 2000. Future operating results may be adversely
impacted if the economy remains weak. For the full year 2001, the Company
expects a 2% to 3% RevPAR decline for its comparable owned and leased hotel
portfolio.

   Hotel expenses were $419,680,000 and $448,142,000 for the three months
ended June 30, 2001 and 2000, respectively. As with revenues, hotel expenses
were impacted by the hotel sales discussed above. Approximately $17,550,000 of
the decrease in hotel expenses can be attributed to hotels that have been
sold. The remaining decrease in hotel expenses can be attributed to staffing
reductions at the hotels and other cost saving initiatives implemented earlier
this year to improve margins as revenues decline.

   Management fee and service fee income was $6,282,000 and $12,422,000 for
the three months ended June 30, 2001 and 2000, respectively. The decrease is
primarily a result of the loss of certain management contracts since June 30,
2000. For the three months ended June 30, 2000, fees earned for certain
contracts lost were approximately $4,486,000 which included a portfolio of 17
management contracts lost in the second quarter

                                      16
<PAGE>

of 2000. In addition, in the second quarter of 2000, the Company reflected
approximately $866,000 in incentive fees. For the three months ended June 30,
2001, in accordance with Staff Accounting Bulletin ("SAB") No. 101, incentive
management fees have not been recognized.

   Interest and other income was $1,782,000 and $18,561,000 for the three
months ended June 30, 2001 and 2000, respectively. In 2000, the Company
recognized a deferred fee of $14,746,000 resulting from the termination of a
portfolio of 17 management contracts.

   General and administrative expenses were $31,036,000 and $26,872,000 for
the three months ended June 30, 2001 and 2000, respectively. The increase in
2001 is primarily related to the increase in conversion costs of $7,751,000
resulting from the implementation of brand standards in the Company's
portfolio of hotels. The increase was offset in part by lower training costs
and a reduction in staffing at the corporate office during 2001.

   Interest expense was $82,743,000 and $93,427,000 for the three months ended
June 30, 2001 and 2000, respectively. The decrease in interest expense is
primarily a result of a reduction in the amount of debt outstanding and a
reduction of interest rates. At June 30, 2001, the Company had approximately
$3.3 billion of debt as compared to $3.6 billion in debt as of June 30, 2000.
The average one-month LIBOR rate was 4.27% and 6.47% for the three months
ended June 30, 2001 and 2000, respectively.

   Depreciation and amortization expense was $62,230,000 and $78,996,000 for
the three months ended June 30, 2001 and 2000, respectively. During the third
and fourth quarters of 2000, management identified certain assets held for
sale. In accordance with SFAS No. 121, once management identifies an asset for
sale, depreciation is no longer recorded, thus reducing depreciation for the
three months ended June 30, 2001. In addition, in December 2000, certain
intangible assets were impaired, thus reducing amortization expense for the
three months ended June 30, 2001.

   During the three months ended June 30, 2001, the Company realized losses on
the sale of assets of $13,259,000. During the three months ended June 30,
2000, the Company recognized losses of $10,844,000 on the sale of assets.

   During the three months ended June 30, 2001, in accordance with SFAS No.
133, as amended, with respect to the change in the fair value of its
derivatives, the Company recorded a gain of $6,074,000 through earnings for
the ineffective portion of the derivatives, and a charge of $1,240,000 through
other comprehensive income for the effective portion of the derivative
instruments.

   For the three months ended June 30, 2000, the Company recognized
$77,300,000 of impairment losses related to assets held for sale. In
accordance with SFAS No. 121, when management identifies assets held for sale,
a fair value is estimated. If the fair value of the asset is less than the
carrying value amount, a reserve for impairment is established. In 2001, no
impairment charges were recorded.

   The benefit for income taxes was $3,035,000 and $23,642,000 for the three
months ended June 30, 2001 and 2000, respectively. The decrease in the tax
benefit is in part due to increased operating profitability and in part to the
classification of certain assets as held for sale in accordance with GAAP,
resulting in differences in GAAP and tax depreciation.

   Minority interests' share of income in consolidated subsidiaries was
$2,106,000 and $1,052,000 for the three months ended June 30, 2001 and 2000,
respectively. The increase in the allocation of income is due to the increased
profitability of certain partnerships which resulted from the fact that no
depreciation expense was recorded as assets in these partnerships were held
for sale.

                                      17
<PAGE>

   During the three months ended June 30, 2001, the Company recorded a charge
of $719,000, net of taxes, as an extraordinary item resulting from the write-
off of unamortized deferred financing costs for debt that was repaid.

   The resulting net loss for the three months ended June 30, 2001 was
$12,304,000 compared to net loss of $46,517,000 for the three months ended
June 30, 2000.

  Six months ended June 30, 2001 compared with the six months ended June 30,
  2000

   Hotel revenues were $1,185,837,000 and $1,269,073,000 for the six months
ended June 30, 2001, and 2000, respectively. Approximately $53,638,000 of the
decrease in revenues can be attributed to those hotels that have been sold.
The remaining decrease is attributable to declining RevPAR throughout the
Company's owned and leased hotel portfolio which decreased 2.6% for the six
months ended June 30, 2001 as compared to the same period in 2000. Future
operating results may be adversely impacted if the economy remains weak.

   Hotel expenses were $845,286,000 and $888,918,000 for the six months ended
June 30, 2001 and 2000, respectively. As with revenues, hotel expenses were
impacted by the hotel sales discussed above. Approximately $37,437,000 of the
decrease in hotel expenses can be attributed to hotels that have been sold.
The remaining decrease can be attributed to staffing reductions at the hotels
and other cost saving initiatives implemented earlier this year to improve
margins as revenues decline.

   Management fee and service fee income was $14,202,000 and $25,022,000 for
the six months ended June 30, 2001 and 2000, respectively. The decrease is
primarily a result of the management contracts sold to Sierra Hotel Company LP
effective March 31, 2000 and the loss of certain other management contracts.
For the six months ended June 30, 2000, fees earned for contracts sold to
Sierra Hotel Company LP were approximately $2,389,000 and fees earned for
certain contracts lost were approximately $5,885,000. In addition, for the six
months ended June 30, 2000, the Company reflected approximately $1,668,000 in
incentive fees that have not been reflected in 2001 in accordance with SAB No.
101.

   Interest and other income was $5,461,000 and $22,526,000 for the six months
ended June 30, 2001 and 2000, respectively. In 2000, the Company recognized a
deferred fee of $14,746,000 resulting from the termination of a portfolio of
17 management contracts.

   General and administrative expenses were $44,337,000 and $48,766,000 for
the six months ended June 30, 2001 and 2000, respectively. The general and
administrative expenses in 2001 were impacted by increases in conversion costs
of $7,646,000 resulting from the implementation of brand standards in the
Company's portfolio of hotels. The increase in conversion costs was offset in
part by lower legal costs related to litigation and the spin-off of Interstate
Hotel Corporation. The Company has also reduced its training costs and the
size of its corporate staff during 2001 leading to a reduction in general and
administrative costs.

   Interest expense was $168,687,000 and $185,290,000 for the six months ended
June 30, 2001 and 2000, respectively. The decrease in interest expense is
primarily a result of a reduction in the amount of debt outstanding and a
reduction of interest rates. At June 30, 2001, the Company had approximately
$3.3 billion of debt as compared to $3.6 billion in debt as of June 30, 2000.
The average one-month LIBOR rate was 4.91% and 6.19% for the six months ended
June 30, 2001 and 2000, respectively.

   Depreciation and amortization expense was $117,072,000 and $158,447,000 for
the six months ended June 30, 2001 and 2000, respectively. During the third
and fourth quarters of 2000, management identified certain assets held for
sale. In accordance with SFAS No. 121, once management identifies an asset for
sale, depreciation is no longer recorded, thus reducing depreciation for the
six months ended June 30, 2001. In addition, in December 2000, certain
intangible assets were impaired, thus reducing amortization expense for the
six months ended June 30, 2001.

                                      18
<PAGE>

   During the six months ended June 30, 2001, the Company realized losses on
the sale of assets of $12,923,000. During the six months ended June 30, 2000,
the Company recognized losses of $14,052,000 on the sale of assets.

   For the six months ended June 30, 2000, the Company recognized $77,300,000
of impairment losses related to assets held for sale. In accordance with SFAS
No. 121, when management identifies assets held for sale, a fair value is
estimated. If the fair value of the asset is less than the carrying value
amount, a reserve for impairment is established. In 2001, no impairment
charges were recorded.

   The (provision) benefit for income taxes was $(16,221,000) and $20,697,000
for the six months ended June 30, 2001 and 2000, respectively. The increase in
the tax provision is in part due to increased operating profitability and in
part to the classification of certain assets as held for sale in accordance
with GAAP, resulting in differences in GAAP and tax depreciation.

   Minority interests' share of income in consolidated subsidiaries was
$6,952,000 and $3,434,000 for the six months ended June 30, 2001 and 2000,
respectively. The increase in the allocation of income is due to the increased
profitability of certain partnerships which resulted from the fact that no
depreciation expense was recorded as assets in these partnerships were held
for sale.

   The adoption of the SFAS No. 133, as amended, on January 1, 2001 resulted
in the cumulative effect of an accounting change of $10,364,000 being
recognized in the consolidated statement of operations and a charge of
$21,691,000 in other comprehensive income for the six months ended June 30,
2001. As of June 30, 2001, the Company recorded a gain of $15,676,000 for the
change in the fair value through earnings, and a charge of $19,430,000 through
other comprehensive income.

   During the six months ended June 30, 2001, the Company recorded a charge of
$719,000, net of taxes, as an extraordinary item resulting from the write-off
of unamortized deferred financing costs for debt that has been repaid.

   The resulting net income for the six months ended June 30, 2001, was
$212,000 compared to a net loss of $34,920,000 for the six months ended June
30, 2000.

Results of reporting segments:

   During the three and six months ended June 30, 2001, revenues and operating
income from the hotels, in each segment, were impacted by the weakening
economy. Lodging demand turned downward as companies reduced discretionary
travel in an effort to lower overall expenses. This slowdown was evidenced by
decreases in occupancy and reductions in Average Daily Rate ("ADR") in the
hotel segments.

   The Company's results of operations are classified into seven reportable
segments. Those segments include Wyndham Hotel & Resorts(R), Wyndham Luxury
Resorts, Wyndham Gardens(R), Summerfield Suites by Wyndham(TM), other
proprietary branded hotel properties, non-proprietary branded properties and
other.

  Three months ended June 30, 2001 compared with the three months ended June
  30, 2000

   Wyndham Hotels & Resorts(R) represent approximately 48.1% and 42.9% of
total revenue for the three months ended June 30, 2001 and 2000, respectively.
Total revenue was $283,489,000 compared to $284,121,000 for the three months
ended June 30, 2001 and 2000, respectively. Operating income was $74,002,000
compared to $75,941,000 for the three months ended June 30, 2001 and 2000,
respectively. The decline in both revenues and operating income can be
attributed primarily to a decrease in occupancy of 5.1% for the period. This

                                      19
<PAGE>

decline was partially offset by the performance of a hotel that was converted
from a non-proprietary hotel to a Wyndham branded hotel after June 30, 2000.
Revenues and operating income for this hotel included in the three months
ended June 30, 2001 were $9,182,000 and $3,262,000, respectively.

   Wyndham Luxury Resorts represent approximately 4.1% of total revenue for
the three months ended June 30, 2001 and 2000, respectively. Total revenue was
$23,934,000 compared to $27,395,000 for the three months ended June 30, 2001
and 2000, respectively. Operating income was $6,110,000 compared to $6,411,000
for the three months ended June 30, 2001 and 2000, respectively. The decreases
in both revenues and operating income can be attributed to decreases in ADR
and occupancy of 6.5% and 9.4%, respectively.

   Wyndham Gardens(R) represents approximately 3.0% and 3.7% of total revenue
for the three months ended June 30, 2001 and 2000, respectively. Total revenue
was $17,830,000 compared to $24,780,000 for the three months ended June 30,
2001 and 2000, respectively. Operating income was $3,732,000 compared to
$4,298,000 for the three months ended June 30, 2001 and 2000, respectively.
Decreases in both revenue and operating income were impacted by decreases in
occupancy of 12.4% and the sale of six Wyndham Garden hotels in June of 2000.
Hotel revenue and operating income included in the three months ended June 30,
2000 for those assets sold were $3,633,000 and $627,000, respectively.

   Summerfield Suites by Wyndham(TM) represents approximately 6.0% as compared
to 5.5% of total revenue for the three months ended June 30, 2001 and 2000,
respectively. Total revenue was $35,081,000 compared to $36,445,000 for the
three months ended June 30, 2001 and 2000, respectively. Operating income was
$7,410,000 compared to $9,193,000 for the three months ended June 30, 2001 and
2000, respectively. Revenues and operating income were impacted by decreases
in ADR and occupancy of 1.1% and 3.1%, respectively. Operating income was also
impacted by the absorption of certain job functions and costs by the hotels
that were previously performed by the Wichita divisional office that was
closed March 31, 2000.

   Other proprietary branded properties represent approximately 0.2% and 1.9%
of total revenue for the three months ended June 30, 2001 and 2000,
respectively. Total revenue was $1,275,000 compared to $12,601,000 for the
three months ended June 30, 2001 and 2000, respectively. Operating income was
$63,000 and $3,646,000 for the three months ended June 30, 2001 and 2000,
respectively. The decrease in both revenues and operating income was primarily
as a result of the sale of the Clubhouse branded hotels in June 2000 and the
sale of the Malmaison properties in November 2000. As of June 30, 2001, only
one hotel remained in this segment.

   Non-proprietary branded properties, including Hilton(R), Holiday Inn(R),
Marriott(R), Ramada(R), Radisson(R), and other major hotel franchises,
represent approximately 37.3% and 37.2% of total revenue for the three months
ended June 30, 2001 and 2000, respectively. Total revenue was $219,471,000
compared to $246,670,000 for the three months ended June 30, 2001 and 2000,
respectively. Operating income was $58,995,000 and $72,201,000 for the three
months ended June 30, 2001 and 2000, respectively. The decrease in both
revenue and operating income was due primarily to the sale of non-proprietary
branded assets and the conversion of one hotel asset to a Wyndham branded
hotel. These assets had revenue and operating income of $21,597,000 and
$8,181,000, respectively, for the three months ended June 30, 2000. The
remaining decrease is attributable to declines in occupancy of 7.5%.

   Other represents revenue from various operating businesses including
management and other service companies. Expenses in this segment are primarily
interest, depreciation, amortization and corporate general and administrative
expenses. Total revenue for the other segment was $8,064,000 and $30,983,000
for the three months ended June 30, 2001 and 2000, respectively. The overall
$22,919,000 decrease was primarily the result of lost management fees from
contracts sold and terminated, including a $14,746,000 termination fee
recognized in 2000. Operating losses for the segment were $164,042,000 and
$244,276,000 for the three months ended June 30, 2001 and 2000, respectively.
The decrease in the loss is primarily attributable to decreases in certain

                                      20
<PAGE>

expenses such as impairment and depreciation expense. The decrease in
depreciation expense of $16,766,000 was primarily a result of the number of
assets held for sale. In accordance with SFAS No. 121, depreciation is no
longer recorded once management has identified an asset held for sale. In
addition, in the second quarter of 2000, the Company recorded $77,300,000 of
impairment charges. No impairment charges were taken in 2001.

  Six months ended June 30, 2001 compared with the six months ended June 30,
  2000

   Wyndham Hotels & Resorts(R) represent approximately 49.1% and 44.7% of
total revenue for the six months ended June 30, 2001 and 2000, respectively.
Total revenue was $591,447,000 compared to $587,952,000 for the six months
ended June 30, 2001 and 2000, respectively. Operating income was $168,472,000
compared to $172,334,000 for the six months ended June 30, 2001 and 2000,
respectively. Revenue and operating income for 2001 were impacted by the
conversion of a non-proprietary hotel to a Wyndham branded hotel. Revenues and
operating income for this hotel included in 2001 results were $15,417,000 and
$4,338,000, respectively. Without this conversion, revenues actually
decreased. Decreases in revenue and operating income can be attributed to
declines in occupancy of 3.2% offset in part by an increase in ADR of 1.9%.

   Wyndham Luxury Resorts represent approximately 4.3% and 4.4% of total
revenue for the six months ended June 30, 2001 and 2000, respectively. Total
revenue was $52,366,000 compared to $57,496,000 for the six months ended June
30, 2001 and 2000, respectively. Operating income was $14,594,000 compared to
$17,257,000 for the three months ended June 30, 2001 and 2000, respectively.
The decreases in both revenues and operating income can be attributed to
decreases in ADR and occupancy of 5.9% and 4.8% respectively.

   Wyndham Gardens(R) represents approximately 2.9% and 3.7% of total revenue
for the six months ended June 30, 2001 and 2000, respectively. Total revenue
was $35,540,000 compared to $48,689,000 for the six months ended June 30, 2001
and 2000, respectively. Operating income was $6,128,0000 compared to
$9,011,000 for the six months ended June 30, 2001 and 2000, respectively.
Decreases in both revenue and operating income were impacted by decreases in
occupancy of 9.5% and the sale of six Wyndham Garden hotels in June of 2000.
Hotel revenue and operating income included in the six months ended June 30,
2000 for those assets sold were $7,444,000 and $1,350,000.

   Summerfield Suites by Wyndham(TM) represents approximately 5.7% as compared
to 5.3% of total revenue for the six months ended June 30, 2001 and 2000,
respectively. Total revenue was $69,035,000 compared to $69,743,000 for the
six months ended June 30, 2001 and 2000, respectively. Operating income was
$12,480,000 compared to $15,857,000 for the six months ended June 30, 2001 and
2000, respectively. Revenues remained relatively stable between periods.
Operating income was impacted by the absorption of certain job functions and
costs by the hotels that were previously performed by the Wichita divisional
office that was closed March 31, 2000 and a 1.2% decrease in occupancy.

   Other proprietary branded properties represent approximately 0.2% and 2.0%
of total revenue for the six months ended June 30, 2001 and 2000,
respectively. Total revenue was $2,433,000 compared to $26,977,000 for the six
months ended June 30, 2001 and 2000, respectively. Operating income was
$224,000 and $7,451,000 for the six months ended June 30, 2001 and 2000,
respectively. The decrease in both revenues and operating income was primarily
as a result of the sale of the Clubhouse branded hotels in June 2000, and the
sale of the Malmaison properties in November 2000. As of June 30, 2001, only
one hotel remains in this segment.

   Non-proprietary branded properties, including Hilton(R), Holiday Inn(R),
Marriott(R), Ramada(R), Radisson(R), and other major hotel franchises,
represent approximately 36.1% and 36.3% of total revenue for the six months
ended June 30, 2001 and 2000, respectively. Total revenue was $435,016,000
compared to $478,216,000 for the six months ended June 30, 2001 and 2000,
respectively. Operating income was $113,308,000 and $133,728,000 for the six
months ended June 30, 2001 and 2000, respectively. The decrease in both
revenue and operating income was due primarily to the sale of non-proprietary
branded assets and the conversion of one hotel asset to a Wyndham branded.
These assets had revenues and operating income of $34,511,000 and $15,423,000,
respectively, for the six months ended June 30, 2000. The remaining decrease
is attributable to declines in occupancy of 5.7%.

                                      21
<PAGE>

   Other represents revenue from various operating businesses including
management and other service companies. Expenses in this segment are primarily
interest, depreciation, amortization and corporate general and administrative
expenses. Total revenue for the other segment was $19,663,000 and $47,548,000
for the six months ended June 30, 2001 and 2000, respectively. The overall
$27,885,000 decrease was primarily the result of lost management fees from
contracts sold and terminated, including a $14,746,000 termination fee
recognized in 2000. Operating losses for the segment were $282,335,000 and
$411,790,000 for the six months ended June 30, 2001 and 2000, respectively.
The decrease in the loss is primarily attributable to decreases in certain
expenses such as impairment expenses and depreciation expense. The decrease in
depreciation expense of $41,375,000 was primarily a result of the number of
assets held for sale. In accordance with SFAS No. 121, depreciation is no
longer recorded once management has identified an asset held for sale. In
addition, in the second quarter of 2000, the Company recorded $77,300,000 of
impairment charges. No impairment charges were taken in 2001.

Statistical Information

   During 2001, the Company's portfolio of 167 owned and leased hotels
experienced growth in average ADR of approximately 0.3% and 1.9% for the three
and six months ended June 30, 2001 as compared to the same periods in the
prior year. The Company experienced a decrease in revenue per available room
("RevPAR") of 6.0% and 2.6% for the three and six months ended June 30, 2001
as compared to the same periods in the prior year. In addition the Company
also experienced decreases in occupancy of 6.2% and 4.3% for the three and six
months ended June 30, 2001 and 2000 as compared to the same periods in the
prior year. Management attributes these changes to the weakened economy. The
following table sets forth certain statistical information for the Company's
167 owned and leased hotels for 2001 and 2000 as if the hotels were owned or
leased for the entire periods presented.

<TABLE>
<CAPTION>
                                 Three months ended June 30,                  Six months ended June 30,
                          ------------------------------------------- -------------------------------------------
                          Occupancy         ADR           REVPAR      Occupancy         ADR           REVPAR
                          ----------  --------------- --------------- ----------  --------------- ---------------
                          2001  2000   2001    2000    2001    2000   2001  2000   2001    2000    2001    2000
                          ----  ----  ------- ------- ------- ------- ----  ----  ------- ------- ------- -------
<S>                       <C>   <C>   <C>     <C>     <C>     <C>     <C>   <C>   <C>     <C>     <C>     <C>
Wyndham Hotels &
 Resorts................  74.5% 78.5% $128.46 $128.39 $ 95.67 $100.71 72.6% 75.0% $138.75 $136.22 $100.68 $102.13
Wyndham Luxury Resorts..  70.3% 77.6% $276.59 $295.89 $194.39 $229.68 70.9% 74.5% $317.07 $337.10 $224.95 $251.24
Wyndham Garden Hotels...  63.5% 72.5% $ 91.69 $ 89.09 $ 58.23 $ 64.58 62.6% 69.2% $ 93.73 $ 90.82 $ 58.65 $ 62.79
Summerfield Suites by
 Wyndham................  82.5% 85.1% $122.49 $123.88 $101.01 $105.34 80.4% 81.4% $125.06 $123.73 $100.55 $100.67
Non-Proprietary Branded
 Hotels.................  69.2% 74.8% $110.66 $109.97 $ 76.55 $ 82.20 67.8% 71.9% $113.23 $110.10 $ 76.77 $ 79.93
                          ----  ----  ------- ------- ------- ------- ----  ----  ------- ------- ------- -------
Weighted average........  72.4% 77.2% $120.52 $120.21 $ 87.24 $ 92.78 70.7% 73.9% $127.03 $124.70 $ 89.87 $ 92.25
                          ====  ====  ======= ======= ======= ======= ====  ====  ======= ======= ======= =======
</TABLE>

Liquidity and Capital Resources

   Cash and cash equivalents as of June 30, 2001 were $59.7 million and
restricted cash was $108.5 million. Cash and cash equivalents as of June 30,
2000 were $102.6 million and restricted cash was $131.7 million.

  Cash Flow Provided by Operating Activities

   The Company's principal source of cash flow is from the operations of the
hotels that it owns, leases and manages. Cash flows from operating activities
were $131.2 million and $100.0 million for six months ended June 30, 2001 and
2000, respectively.

                                      22
<PAGE>

  Cash Flows from Investing and Financing Activities

   Cash flows used by investing were $3.6 million for the six months ended
June 30, 2001, resulting primarily from renovation expenditures at certain
hotels. This was offset by proceeds received from asset sales during the
period. Cash flows used by financing of $121.0 million for the six months
ended June 30, 2001 were primarily related to principal payments made on
mortgage debt, distributions made to limited partners and dividend payments
made on preferred stock.

   Cash flows provided by investing activities were $29.5 million for the six
months ended June 30, 2000, resulting primarily from the proceeds from asset
sales during the year, partially offset by the acquisition of hotel
properties, improvements and additions to hotel properties and the payment of
a contingent liability. Cash flows used in financing activities of $181.9
million for the six months ended June 30, 2000 resulted primarily from the
repayment of debt and dividend payments on its preferred stock. In addition,
during the first quarter of 2000, the Company paid $34.4 million in premiums
to enter into financial derivatives with a total notional amount of $1.5
billion to limit its exposure to rising interest rates.

   As of June 30, 2001, the Company had approximately $75 million outstanding
under its revolving credit facility, $1.3 billion outstanding on term loans,
and $608 million outstanding under increasing rate loans. Additionally, the
Company had outstanding letters of credit totaling $52.6 million. As of such
date, the Company also had over $1.3 billion of mortgage debt outstanding that
encumbered 57 hotels and capital leases and other debt of $47.2 million,
resulting in total indebtedness of approximately $3.3 billion. Included in the
total indebtedness of $3.3 billion is approximately $453.5 million of debt
associated with assets held for sale. As of June 30, 2001, the Company had
$372.4 million of additional availability under the revolving credit facility.

  Renovations and Capital Improvements

   During the first six months of 2001, the Company invested approximately
$100.7 million in capital improvements and renovations. These capital
expenditures included (i) costs related to converting hotels to one of the
Company's proprietary brands, (ii) costs related to enhancing the revenue-
producing capabilities of the Company's hotels, and (iii) costs related to
recurring maintenance.

   The Company attempts to schedule renovations and improvements during
traditionally lower occupancy periods in an effort to minimize disruption to
the hotel's operations. Therefore, management does not believe such
renovations and capital improvements will have a material effect on the
results of operations of the hotels. Capital expenditures will be financed
through capital expenditure reserves or with working capital.

  Inflation

   Operators of hotels in general possess the ability to adjust room rates
quickly. However, competitive pressures may limit the Company's ability to
raise room rates in the face of inflation.

  Seasonality

   The hotel industry is seasonal in nature; however, the periods during which
the Company's hotel properties experience higher revenues vary from property
to property and depend predominantly on the property's location. The Company's
revenues typically have been higher in the first and second quarters than in
the third or fourth quarters.

  Newly Issued Accounting Standards

   In June 2001, the Financial Accounting Standards Board ("FASB") approved
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS
No. 141 requires that the purchase method of accounting be used for all
business

                                      23
<PAGE>

combinations initiated after June 30, 2001. SFAS No. 142 will be effective for
fiscal years beginning after December 15, 2001 and will require 1) intangible
assets (as defined in SFAS No. 141) to be reclassified into goodwill, 2)
goodwill amortization to cease, and 3) the testing of goodwill for impairment
at transition and at interim periods (if an event or circumstance would result
in an impairment). The Company will adopt SFAS No. 142 on January 1, 2002. The
Company has not yet determined the impact of SFAS No. 142 on the Company's
results of operations and financial position.

ITEM 3. Qualitative and Quantitative Disclosures About Market Risks

   There were no material changes to our exposures to market risk since
December 31, 2000.

                                      24
<PAGE>

                          PART II: OTHER INFORMATION

Item 1. Legal Proceedings

   On May 7, 1999, Doris Johnson and Charles Dougherty filed a lawsuit in the
Northern District of California against Patriot, Wyndham, their respective
operating partnerships and Paine Webber Group, Inc. This action, Johnson v.
Patriot American Hospitality, Inc., et al., No. C-99-2153, was commenced on
behalf of all former holders of Bay Meadows stock during a class period from
June 2, 1997 to the date of filing. The action asserts securities fraud claims
and alleges that the purported class members were wrongfully induced to tender
their shares as part of the Patriot/Bay Meadows merger based on a fraudulent
prospectus. The action further alleges that defendants continued to defraud
shareholders about their intentions to acquire numerous hotels and saddle
Patriot and Wyndham with massive debt during the class period. Three other
actions against the same defendants subsequently were filed in the Northern
District of California: (i) Ansell v. Patriot American Hospitality, Inc.,
et al., No. C-99-2239 (filed May 14, 1999), (ii) Sola v. Paine Webber Group,
Inc., et al., No. C-99-2770 (filed June 11, 1999), and (iii) Gunderson v.
Patriot American Hospitality, Inc., et al., No. C 99-3040 (filed June 23,
1999). Another action with substantially identical allegations, Susnow v.
Patriot American Hospitality, Inc., et al., No. 3-99-CV1354-T (filed June 15,
1999), also subsequently was filed in the Northern District of Texas. By order
of the Judicial Panel on Multidistrict Litigation, these actions along with
certain actions identified below have been consolidated in the Northern
District of California for consolidated pretrial purposes. On or about
October 13, 2000, the defendants moved to dismiss the actions. The Court heard
legal arguments on motions to dismiss the actions on December 14, 2000 but has
not yet rendered a decision. Wyndham intends to defend the suits vigorously.

   On or about June 22, 1999, a lawsuit captioned Levitch v. Patriot American
Hospitality, Inc., et al., No. 3-99-V1416-D, was filed in the Northern
District of Texas against Patriot, Wyndham, James D. Carreker and Paul A.
Nussbaum. This action asserts securities fraud claims and alleges that, during
the period from January 5, 1998 to December 17, 1998, the defendants defrauded
shareholders by issuing false statements about Patriot and Wyndham. The
complaint was filed on behalf of all shareholders who purchased Patriot and
Wyndham stock during that period. Three other actions, Gallagher v. Patriot
American Hospitality, Inc., et al., No. 3-99-CV1429-L, filed on June 23, 1999,
David Lee Meisenburg, et al. v. Patriot American Hospitality, Inc., Wyndham
International, Inc., James D. Carreker, and Paul A. Nussbaum, Case
No. 3-99-CV1686-X, filed July 27, 1999 and Deborah Szekely v. Patriot American
Hospitality, Inc., et al., No. 3-99-CV1866-D, filed on or about August 27,
1999, allege substantially the same allegations. By orders of the Judicial
Panel on Multidistrict Litigation, these actions have been consolidated with
certain other shareholder actions and transferred to the Northern District of
California for consolidated pre-trial purposes. On or about October 20, 2000,
the defendants moved to dismiss the actions. The Court has heard arguments on
motions to dismiss the actions on December 14, 2000 but has not yet rendered a
decision. Wyndham intends to defend the suits vigorously.

   Wyndham has received a draft complaint which threatens to assert claims on
behalf of Golden Door, LLC, Golden Springs, LLC, Golden Door, Inc., Deer
Springs Ranch, LLC, Deborah Szekely and Sarah Livia Brightwood. The potential
plaintiffs appear to be the same as the plaintiffs who filed the action
referenced above, Deborah Szekely v. Patriot American Hospitality, Inc.,
etal., No. 3-99-CV1866-D, however the allegations of the complaints are not
the same. The draft complaint purports to assert claims against Patriot,
Wyndham and their respective operating partnerships for securities fraud under
California securities code, common law fraud, breach of fiduciary duty and
deceit in connection with the purchase by Patriot of the Golden Door Spa in
February 1998. The draft complaint seeks compensatory damages for the alleged
lost value of the potential plaintiff's stock and other unspecified damages.
Although the Company has received a draft complaint, to date no complaint has
been filed.

   On or about May 8, 2001, a demand for arbitration was filed on behalf of
John W. Cullen, IV, William F. Burruss, Heritage Hotel Management & Investment
Ltd. and GH-Resco, L.L.C. naming Wyndham International, Operating Partnership,
L.P. f/k/a Patriot American Operating Partnership, L.P..(the "Partnership") as
respondent.

                                      25
<PAGE>

A similar arbitration was originally filed on or about October 26, 2000
against Wyndham. The Supreme Court of the State of New York, however, ruled
that Wyndham International, Inc. did not agree to arbitrate any claims with
the claimants and stayed the arbitration with respect to Wyndham. Claimants
then recommended an identical arbitration, dropped Wyndham and named the
Partnership as a respondent. The Demand for Arbitration claims that the
claimants and the Partnership are parties to a Contribution Agreement dated
February 28, 1997 and that the Partnership is in breach of that agreement.
Claimants assert that the Partnership breached its agreement to pay
respondents additional consideration under the Contribution Agreement by,
among other things, allegedly denying claimants compensation due to them in
connection with various transactions initiated by claimants and provided to
the Partnership, which allegedly provided the Partnership with growth and
added revenue. In addition, claimants assert that the Partnership failed to
provide claimants with various other amounts due under the Contribution
Agreement, failed to indemnify claimants for certain expenses and
intentionally and negligently mismanaged the Partnership's business. Claimants
do not specify the amount of damages sought. The Partnership intends to defend
the claims vigorously.

   Wyndham has been served with purported class action complaints in
California (Bryant v. Wyndham International, Inc., San Diego County Superior
Court Case No. GIC76544 (filed April 10, 2001) and Judd v. Wyndham
International, Inc., San Francisco County Superior Court Case No. 322378
(filed June 25, 2001)), Florida (Soper, et. al v. Wyndham International, Inc.,
Dade County Circuit Court Case No. 01-15095 CA15 (filed June 25, 2001)) and
Illinois (Nicoloff v. Wyndham International, Inc., Madison County Circuit
Court Case No. GIC76544 (filed July 23, 2001)). Each of the actions allege
substantially the same allegations and claim, in sum, that it is an unfair
business practice for hotels to assess an "energy surcharge" in addition to
regular room rates when only the room rates are advertised. The suits seek
restitution, damages, including punitive damages, and injunctive relief.
Additionally, the Attorneys General of Florida and Texas are investigating
this same issue. Wyndham has conditionally settled the Bryant action, and has
not responded to the complaints in any of the other actions. Wyndham intends
to defend the suits vigorously.

Item 2. Changes in Securities and Use of Proceeds

   None.

Item 3. Defaults Upon Senior Securities

   None.

                                      26
<PAGE>

Item 4. Submission of Matters to a Vote of Security Holders

   Wyndham held its annual meeting of stockholders on May 24, 2001. During
this meeting, stockholders were asked to consider and vote upon three
proposals: to approve the Second Amendment and Restatement of the Company's
1997 Incentive Plan, to ratify the appointment of the Company's independent
auditors, and to elect certain individuals to the Board of Directors. As of
the record date for the annual meeting, a total of 167,887,723 shares of class
A common stock (aggregated to 167,887,723 votes) and 11,027,189. 658 shares of
series B preferred stock (equivalent to 128,371,926 votes) were outstanding
and entitled to vote. The holders of Class A common stock and Series B
preferred stock were entitled to vote together on all matters presented at the
meeting, except that only holders of class A common stock were entitled to
vote for the election of Class A Directors and only holders of series B
preferred stock were entitled to vote for the election of Class B Directors.
For each proposal, the results of the shareholder voting were as follows:

<TABLE>
<CAPTION>
                                                  Votes                Broker
                                     Votes FOR   AGAINST   Abstaining Non-Votes
                                    ----------- ---------- ---------- ---------
 <C>  <S>                           <C>         <C>        <C>        <C>
 1.   To approve the Second
      Amendment and Restatement
      of the Company's 1997
      Incentive Plan to (a)
      increase the number of
      shares available for
      issuance pursuant to awards
      made under such plan, (b)
      permit the grant of
      restricted unit awards upon
      the terms described in the
      proxy statement and (c)
      make certain other changes
      to the plan................   222,190,939 21,535,518  281,191        0
 2.   To ratify the appointment
      of PricewaterhouseCoopers
      LLP as the Company's
      independent auditors for
      the 2001 fiscal year.......   243,643,854    285,458   78,336        0
 3.   To elect to Wyndham's Board
      of Directors six directors,
      consisting of two Class A
      Directors, three Class B
      Directors and one Class C
      Director, to serve until
      2003 annual meeting of
      stockholders or until their
      respective successors are
      duly elected and qualified,
      as follows:
      Class A Directors
      Lynn Swann.................   121,325,590  2,214,651      --       --
      Sherwood M. Weiser.........   121,660,931  1,879,310      --       --
      Class B Directors
      Leon D. Black..............   120,467,407          0      --       --
      Lee S. Neibert.............   120,467,407          0      --       --
      Scott A. Schoen............   120,467,407          0      --       --
      Class C Director
      Norman Brownstein..........   241,792,997  2,214,651      --       --
</TABLE>

   The following directors shall continue in office after the Company's annual
meeting of stockholders held on May 24, 2001:

  Class A Directors--Karim Alibhai, Leonard Boxer, Milton Fine, Susan T.
  Groenteman, Fred J. Kleisner and Rolf E. Ruhfus

  Class B Directors--Thomas H. Lee, Alan M. Leventhal, William L. Mack, Marc
  J. Rowan and Scott M. Sperling

  Class C Directors--Paul Fribourg and Stephen T. Clark

Item 5. Other Information

   None.

                                      27
<PAGE>

Item 6. Exhibits and Reports on Form 8-K

   (a) Exhibits:

<TABLE>
<CAPTION>
 Item No. Description
 -------- -----------
 <C>      <S>
 10.1*    Loan Agreement, dated as of July 18, 2001, by and among W-Baltimore,
          LLC, Posadas De San Juan Associates, W-Atlanta, LLC, W-Boston, LLC
          and Travis Real Estate Group Joint Venture
          (wholly-owned subsidiaries of Wyndham) and Lehman Brothers Bank FSB
 10.2*    Form of Restricted Unit Award Agreement
</TABLE>
--------
*Filed herewith

   (b) Reports on Form 8-K for the quarter ended June 30, 2001:

   None.

                                       28
<PAGE>

                                   SIGNATURE

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                          Wyndham International, Inc.

                                                 /s/ Richard A. Smith
                                          By __________________________________
                                                     Richard A. Smith
                                            Executive Vice President and Chief
                                                     Financial Officer
                                             (Authorized Officer and Principal
                                                      Accounting and
                                                    Financial Officer)

DATED: August 13, 2001

                                       29