<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 September 30, 1999

                                      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)

                                   Delaware
        (State or other jurisdiction of incorporation or organization)

                                  94-2878485
                     (I.R.S. Employer Identification No.)

                       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 of common stock,
par value $.01 per share, as of the close of business on November 10, 1999,
was 167,661,671.

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<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

                                     INDEX

                         PART I--FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Item 1. Financial Statements..............................................   2

Wyndham International, Inc.:
  Condensed Consolidated Balance Sheets as of September 30, 1999
   (unaudited) and December 31, 1998......................................   3
  Condensed Consolidated Statements of Operations for the three and nine
   month periods ended September 30, 1999 and 1998 (unaudited)............   4
  Condensed Consolidated Statements of Cash Flows for the nine month
   periods ended September 30, 1999 and 1998 (unaudited)..................   5
  Notes to Condensed Consolidated Financial Statements as of September 30,
   1999 (unaudited).......................................................   6

Item 2. Management's Discussion and Analysis of Financial Condition and
       Results of Operations..............................................  23

Item 3. Qualitative and Quantitative Disclosures about Market Risks.......  39

                           PART II--OTHER INFORMATION

Item 1. Legal Proceedings.................................................  40

Item 2. Changes in Securities and Use of Proceeds.........................  43

Item 4. Submission of Matters to Vote of Security Holders.................  43

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

    Exhibits..............................................................  43

    Reports on Form 8-K...................................................  43

Signatures................................................................  44
</TABLE>

                                       2
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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

                         PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                      September 30, December 31,
                                                          1999          1998
                                                      ------------- ------------
                                                       (unaudited)
<S>                                                   <C>           <C>
                       ASSETS
Current assets:
 Cash and cash equivalents..........................   $   113,763   $  123,085
 Restricted cash....................................       102,321       35,869
 Accounts and lease revenue receivable..............       192,813      194,583
 Inventories........................................        23,832       23,583
 Prepaid expenses and other assets..................        32,526       35,346
                                                       -----------   ----------
  Total current assets..............................       465,255      412,466
                                                       -----------   ----------
Investment in real estate and related improvements
 net of accumulated depreciation of $438,644 in 1999
 and $252,580 in 1998...............................     5,498,237    5,585,616
Investment in unconsolidated subsidiaries...........       177,164      146,912
Mortgage notes and other receivables from
 unconsolidated subsidiaries........................         1,982       78,403
Notes and other receivables.........................        37,456       41,334
Management contract costs, net of accumulated
 amortization $23,649 in 1999 and $11,258 in 1998...       124,610      194,014
Leasehold costs, net of accumulated amortization of
 $12,976 in 1999 and $5,989 in 1998.................       135,431      179,922
Trade names and franchise costs, net of accumulated
 amortization of $9,882 in 1999 and $6,670 in 1998..       104,722      125,974
Deferred acquisition costs..........................        17,234       16,144
Goodwill and intangibles, net of accumulated
 amortization of $27,778 in 1999 and $20,895 in
 1998...............................................       364,733      553,889
Deferred expenses, net of accumulated amortization
 of $41,318 in 1999 and $29,136 in 1998.............        97,925       37,998
Other assets........................................        46,760       42,998
                                                       -----------   ----------
  Total assets......................................   $ 7,071,509   $7,415,670
                                                       ===========   ==========
        LIABILITES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable and accrued expenses..............   $   237,521   $  313,657
 Deposits...........................................        35,663       26,392
 Current portion of borrowings credit facility, term
  loans, mortgage notes and capital lease
  obligations.......................................       131,499    1,274,918
                                                       -----------   ----------
  Total current liabilities.........................       404,683    1,614,967
                                                       -----------   ----------
Borrowings under credit facility, term loans,
 mortgage notes and capital lease obligations.......     3,418,041    2,582,603
Deferred income taxes...............................       730,946      123,463
Due to unconsolidated subsidiaries..................           374        7,919
Deferred income.....................................        15,956          174
Minority interest in the Operating Partnerships.....        23,590      253,970
Minority interest in other consolidated
 subsidiaries.......................................       167,203      229,537
Commitments and contingencies
Shareholders' equity:
 Preferred stock, $0.01 par value; authorized:
  150,000,000 shares; shares issued and outstanding:
  10,170,599 in 1999................................           102          --
 Preferred stock, $0.01 par value; authorized:
  100,000,000 shares; shares issued and outstanding:
  8,981,886 in 1998.................................           --            90
 Excess stock, $0.01 par value; authorized:
  750,000,000 shares; no shares issued and
  outstanding.......................................           --           --
 Common stock, $0.01 par value; authorized:
  750,000,000 shares; shares issued and outstanding:
  167,240,510 in 1999 and 213,521,647 in 1998.......         1,672        4,270
 Additional paid in capital.........................     3,737,252    3,024,540
 Receivable from shareholders and affiliates........       (16,984)     (16,364)
 Unearned stock compensation, net of accumulated
  amortization of $19,144 in 1999 and $13,447 in
  1998..............................................          (409)      (5,494)
 Unrealized loss on securities available for sale...        (1,060)      (1,245)
 Unrealized foreign exchange gain...................           294        2,749
 Accumulated deficit................................    (1,410,151)    (405,509)
                                                       -----------   ----------
  Total shareholders' equity........................     2,310,716    2,603,037
                                                       -----------   ----------
   Total liabilities and shareholders' equity.......   $ 7,071,509   $7,415,670
                                                       ===========   ==========
</TABLE>

           See notes to condensed consolidated financial statements.

                                       3
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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

<TABLE>
<CAPTION>
                                   Three Months Ended     Nine Months Ended
                                     September 30,          September 30,
                                   -------------------  ----------------------
                                     1999      1998        1999        1998
                                   --------  ---------  ----------  ----------
<S>                                <C>       <C>        <C>         <C>
Revenue:
 Hotel revenue...................  $562,720  $ 554,331  $1,829,882  $1,266,985
 Participating and land lease
  revenue........................       341      8,932         929      49,627
 Racecourse facility.............       --       9,955       4,561      34,945
 Management fee and service fee
  income.........................    13,968     24,358      57,186      61,574
 Interest and other income.......     2,252      6,274       8,951      12,949
                                   --------  ---------  ----------  ----------
 Total revenue...................   579,281    603,850   1,901,509   1,426,080
                                   --------  ---------  ----------  ----------
Expenses:
 Hotel expenses..................   429,370    417,814   1,325,646     924,471
 Racing facility operations......       --       8,810       3,867      29,667
 General and administrative......    32,238     26,571     143,596      64,558
 Cost of acquiring leaseholds and
  license agreements.............       --       3,940         803      61,000
 Restructuring costs.............     3,906        --      189,288         --
 Interest expense................    85,478     82,739     266,678     172,191
 Depreciation and amortization...    75,653     68,236     232,558     155,165
 Net (gain) loss on sale of
  assets.........................    (1,104)       --        4,223         --
 Treasury lock settlement........       --      49,225         --       49,225
                                   --------  ---------  ----------  ----------
 Total expenses..................   625,541    657,335   2,166,659   1,456,277
                                   --------  ---------  ----------  ----------
Operating loss...................   (46,260)   (53,485)   (265,150)    (30,197)
 Equity in (losses) earnings of
  unconsolidated subsidiaries....      (931)     1,888       3,000       7,375
                                   --------  ---------  ----------  ----------
Loss before income tax provision,
 minority interests and
 extraordinary item..............   (47,191)   (51,597)   (262,150)    (22,822)
Income tax benefit (provision)...     3,386     (6,783)   (651,053)    (11,273)
                                   --------  ---------  ----------  ----------
Loss before minority interests
 and extraordinary item..........   (43,805)   (58,380)   (913,203)    (34,095)
Minority interest in the
 Operating Partnerships..........       --       4,722       6,642       6,169
Minority interest in other
 consolidated subsidiaries.......      (760)    (4,500)     (4,824)     (7,514)
                                   --------  ---------  ----------  ----------
Loss before extraordinary item...   (44,565)   (58,158)   (911,385)    (35,440)
Extraordinary loss from early
 extinguishment of debt, net of
 minority interest and income
 taxes...........................       --      (1,257)     (9,838)    (31,817)
                                   --------  ---------  ----------  ----------
 Net loss........................  $(44,565) $ (59,415) $ (921,223) $  (67,257)
                                   ========  =========  ==========  ==========
Basic loss attributable to common
 shareholders:
 Net loss........................   (44,565)   (59,415)   (921,223)    (67,257)
 Adjustment for equity forwards..       --         --      (19,372)        --
 Preferred stock dividends.......   (24,375)    (2,695)    (25,276)     (4,250)
                                   --------  ---------  ----------  ----------
 Basic net loss..................  $(68,940) $ (62,110) $ (965,871) $  (71,507)
                                   ========  =========  ==========  ==========
Basic loss per common share:
 Loss before extraordinary item..  $  (0.41) $   (0.39) $    (6.00) $    (0.30)
 Extraordinary loss..............       --       (0.01)      (0.06)      (0.24)
                                   --------  ---------  ----------  ----------
 Net loss per common share.......  $  (0.41) $   (0.40) $    (6.06) $    (0.54)
                                   ========  =========  ==========  ==========
Diluted loss to common
 shareholders:
 Net loss........................  $(44,565) $ (59,415) $ (921,223) $  (67,257)
 Adjustment for equity forwards..       --     (95,063)    (39,322)   (122,431)
 Preferred stock dividends.......   (24,375)    (2,695)    (25,276)     (4,250)
                                   --------  ---------  ----------  ----------
 Diluted net loss................  $(68,940) $(157,173) $ (985,821) $ (193,938)
                                   ========  =========  ==========  ==========
Diluted loss per common share:
 Loss before extraordinary item..  $  (0.41) $   (1.01) $    (6.13) $    (1.22)
 Extraordinary loss..............       --       (0.01)      (0.06)      (0.24)
                                   --------  ---------  ----------  ----------
 Net loss per common share.......  $  (0.41) $   (1.02) $    (6.19) $    (1.46)
                                   ========  =========  ==========  ==========
</TABLE>

           See notes to condensed consolidated financial statements.

                                       4
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                    (in thousands, except per share amounts)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                         Nine Months Ended
                                                           September 30,
                                                      ------------------------
                                                         1999         1998
                                                      -----------  -----------
<S>                                                   <C>          <C>
Cash flows from operating activities:
 Net loss............................................ $  (921,223) $   (67,257)
 Adjustments to reconcile net loss to net cash
  provided by operating activities:
  Depreciation.......................................     190,714      120,864
  Amortization of unearned stock compensation........       5,697        4,818
  Amortization of deferred loan costs................      29,633       18,075
  Amortization of management contracts and trade
   names.............................................      15,498       15,523
  Amortization of goodwill and other assets..........      26,346       18,778
  Cost of acquiring leaseholds.......................         --        55,638
  Treasury lock settlement...........................         --        49,225
  Net loss on sale of assets.........................       4,223          --
  Issuance of stock for bonuses and directors' fee...         174          --
  Equity in earnings of unconsolidated
   subsidiaries......................................      (3,000)         880
  Minority interest in Operating Partnerships........      (6,642)      (7,375)
  Minority interest in other consolidated
   subsidiaries......................................       4,824       (6,169)
  Deferred income taxes..............................     622,025        7,514
  Write-down of real estate assets...................      53,524       (5,352)
  Write-off of intangible assets.....................     119,751          --
  Bad debt expense...................................       5,495          --
  Extraordinary loss from early extinguishment of
   debt..............................................       9,838       32,235
  Other..............................................         428          --
 Changes in assets and liabilities:
  Accounts and lease revenue receivable and other
   assets............................................     (14,207)     (25,272)
  Inventories........................................         184       (1,137)
  Accounts payable and accrued expenses..............     (39,124)      20,282
                                                      -----------  -----------
    Net cash provided by operating activities........     104,158      231,270
                                                      -----------  -----------
Cash flows from investing activities:
 Acquisition of hotel properties and related working
  capital assets.....................................     (69,951)  (1,349,705)
 Improvements and additions to hotel properties......    (146,542)    (187,695)
 Net proceeds from asset sales.......................      70,108       17,734
 Acquisition of management contracts.................      (5,695)     (32,299)
 Cash received in acquisition of real estate and
  hotel leases.......................................       1,100       98,312
 Collections on other notes receivable...............       2,681        9,563
 Advances on other notes receivable..................     (11,229)         --
 Increase in restricted cash accounts................     (62,973)      (8,283)
 Investment in unconsolidated subsidiaries...........     (13,720)     (13,985)
 Deferred acquisition costs..........................      (7,230)     (34,780)
 Net payments collected from unconsolidated
  subsidiaries.......................................         --         5,976
 Investment in mortgage and other notes receivable...         --        (3,688)
 Collections on mortgage and other notes receivable..       1,973          --
 Proceeds from termination of management contracts...      16,086          --
 Other...............................................       5,065       (1,467)
                                                      -----------  -----------
    Net cash used in investing activities............    (220,327)  (1,500,317)
                                                      -----------  -----------
Cash flows from financing activities:
 Borrowings under credit facility, term loans,
  mortgage notes and capital lease obligations.......   2,718,430    2,749,394
 Net repayments on credit facility and other debt....  (3,036,685)  (1,524,481)
 Payment of deferred loan costs......................    (107,244)     (32,729)
 Settlement of forward equity contracts..............    (329,481)         --
 Proceeds from issuance of preferred stock...........   1,000,000          --
 Cost to retire Patriot series B preferred stock.....     (13,966)         --
 Cash settlement with Interstate upon spinoff........     (17,102)         --
 Proceeds from issuance of common stock..............         --       277,474
 Payment of offering costs...........................     (76,942)      (3,805)
 Contributions received from minority interest in
  consolidated subsidiaries..........................         --         3,440
 Collections on notes receivable from shareholders
  and affiliates.....................................         --         2,999
 Distribution to minority interest holders...........     (23,168)         --
 Dividends and distributions paid....................      (8,211)    (131,038)
 Foreign currency translation adjustment.............         994          --
 Other...............................................         222        3,647
                                                      -----------  -----------
    Net cash provided by financing activities........     106,847    1,344,901
                                                      -----------  -----------
Net (decrease) increase in cash and cash
 equivalents.........................................      (9,322)      75,854
                                                      -----------  -----------
Cash and cash equivalents at beginning of period.....     123,085       42,431
                                                      -----------  -----------
Cash and cash equivalents at end of period........... $   113,763  $   118,285
                                                      ===========  ===========
</TABLE>
           See notes to condensed consolidated financial statements.

                                       5
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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

1. ORGANIZATION AND BASIS OF PRESENTATION

  Patriot American Hospitality, Inc. (collectively with its subsidiaries,
"Patriot"), was formed April 17, 1995 as a self-administered real estate
investment trust ("REIT") for the purpose of acquiring equity interests in
hotel properties. Wyndham International, Inc. (collectively with its
subsidiaries, "Old Wyndham") was formed in connection with Patriot's merger
with and into California Jockey Club and Bay Meadows Operating Company on July
1, 1997. Patriot and Old Wyndham are both Delaware corporations.

  Prior to June 30, 1999, the shares of common stock of Patriot were paired
and traded together with the shares of Old Wyndham, on a one for one basis, as
a single unit pursuant to a stock pairing arrangement, and were referred to as
a paired share.

  Effective June 30, 1999, Patriot and Old Wyndham completed a series of
transactions (See Note 4) which included a restructuring of their existing
organizational structure. As a result of this restructuring, a wholly-owned
subsidiary of Old Wyndham was merged with and into Patriot, with Patriot being
the surviving entity. As such, Patriot is now a wholly-owned subsidiary of Old
Wyndham, and this combined entity, together with all subsidiaries, is
hereafter referred to as Wyndham. When the term Wyndham is used relating to a
period prior to June 30, 1999, such term refers to the combined entity of Old
Wyndham and Patriot. In connection with this restructuring, the pairing
agreement between Patriot and Old Wyndham was terminated, Patriot's status as
a real estate investment trust terminated effective January 1, 1999, and
Patriot became a taxable corporation as of that date.

  The restructuring was reflected as a reorganization of two companies under
common control and was accounted for in a manner similar to that used in
pooling of interests accounting. As such, there was no revaluation of the
assets and liabilities of Old Wyndham or Patriot. The 1999 financial
statements of Wyndham are presented on a consolidated basis, representing the
operations of the corporation and its subsidiaries, including Patriot. The
1998 financial statements of Wyndham are presented on a combined basis,
representing the combined results of both Old Wyndham and Patriot.

  Unless otherwise stated herein, all information with respect to shares
refers to Wyndham common stock since June 30, 1999 and to paired shares for
periods before June 30, 1999.

  Patriot, through its wholly-owned subsidiary, PAH GP, Inc., is the sole
general partner and the holder of a 1% general partnership interest in Patriot
American Hospitality Partnership, L.P. (the "Patriot Partnership"). In
addition, Patriot, through its wholly-owned subsidiary, PAH LP, Inc., owns an
approximate 99% limited partnership interest in the Patriot Partnership.
Wyndham owns a 1% general partnership interest and an approximate 99% interest
in Wyndham International Operating Partnership, L.P. (the "Wyndham
Partnership") as of September 30, 1999. The Patriot Partnership and the
Wyndham Partnership are collectively referred to as the Operating
Partnerships.

  The Patriot Partnership principally owns, directly or indirectly, interests
in hotel properties and third party leaseholds. The Wyndham Partnership,
directly or indirectly, principally leases hotel properties from the Patriot
Partnership, owns interests in other hotel properties, and manages and
franchises hotels for third parties.

  As of September 30, 1999, Wyndham, through the Operating Partnerships and
other subsidiaries, owned interests in 175 hotels with an aggregate of over
43,000 guest rooms and leased 39 hotels from third parties with over 5,700
rooms. In addition, Wyndham manages 89 hotels for third party owners with over
21,000 guest rooms and franchises 11 hotels with over 2,600 guest rooms.

                                       6
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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


 Principles of consolidation and combination

  The unaudited consolidated financial statements for 1999 include the
accounts of Wyndham, its wholly-owned subsidiaries, including Patriot, and the
partnerships, corporations and limited liability companies in which Wyndham
owns a controlling interest.

  The 1998 financial statements of Wyndham are presented on a combined basis,
representing the combined results of both Old Wyndham and Patriot. All
significant intercompany accounts and transactions have been eliminated.

  Partnerships--control is determined in accordance with generally accepted
accounting principles ("GAAP"). 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--control is determined in
accordance with GAAP. The condition for control is the ownership of a majority
voting interest.

  These financial statements have been prepared in accordance with 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 nine month periods ended September 30,
1999 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1999. For further information, refer to the
combined financial statements and footnotes thereto included in Patriot's and
Old Wyndham's Joint Annual Report on Form 10-K, as amended, for the year ended
December 31, 1998. Certain prior period amounts have been reclassified to
conform to current period presentation with no effect to previously reported
net income or retained earnings.

2. ACQUISITIONS AND DISPOSALS

 Disposals

  In February 1999, Patriot and Old Wyndham sold their interest in the Bay
Meadows Racecourse located in San Mateo, California. Patriot and Old Wyndham
received cash proceeds of approximately $3,446 after payment of legal costs
and other closing costs. Patriot and Old Wyndham recognized an estimated
impairment loss on assets held for sale of $42,278 related to the racecourse
facility in 1998. The actual loss on the sale of the racecourse facility was
$42,766.

  In March 1999, Patriot sold the Holiday Inn Crockett, realizing net cash
proceeds of approximately $18,000 and recognized a gain of approximately
$2,586.

  On April 30, 1999, Patriot sold the following hotels; Hampton Inn Rochester,
Hampton Inn Jacksonville, Hampton Inn Cleveland, and the Hampton Inn Canton,
for net proceeds of approximately $23,469 and recognized a loss of
approximately $1,353.

  On May 11, 1999, Patriot sold the Holiday Inn Sebring for net proceeds of
approximately $4,100 and recognized a gain of approximately $570.

  On July 30, 1999, Wyndham sold the Holiday Inn Redmont for net cash proceeds
of $1,830 and recognized a loss of approximately $191.

                                       7
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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


 Acquisitions

  In January 1999, Patriot acquired the remaining 25% minority interests in
each of the five following hotels; Embassy Suites Schaumburg, the Hilton
Dania, the Marriott Suites at Valley Forge, the Marriott Boston Andover and
the Marriott Tysons Corner from CIGNA. The acquisition of these interests was
financed through additional mortgage indebtedness totaling $49,800 and the
sale of an additional 10% interest in the Marriott Warner Center.

  In April 1999, Patriot acquired the remaining 10% minority interests in each
of the four following hotels; the Radisson Akron; the Courtyard Beachwood; the
Holiday Inn Westlake; the Radisson Beachwood from IAH Snavely L.L.C.
("Snavely"). In addition, Patriot sold the Holiday Inn Beachwood to Snavely.
The transaction generated net proceeds of approximately $8,770. Patriot
recorded a loss of approximately $6,625.

  On May 7, 1999, Patriot exercised its option to purchase ISIS 2000, formerly
owned by certain related parties and Old Wyndham senior executive officers,
for a cash payment of $3,073. Subsequent to the exercise of the option,
Wyndham owns 100% of this entity which provides reservations and other
services to Wyndham.

  On May 18, 1999, Patriot purchased the Billerica hotel for a total purchase
price of approximately $23,775 including assumed indebtedness of approximately
$16,411.

  On July 30, 1999, a wholly-owned subsidiary of Wyndham merged with Gencom
Interest, Inc. As a result of the merger, Wyndham acquired the remaining
34.52% interest in the Omni Baltimore hotel, and 421,161 shares of Wyndham
Class A common stock owned by Gencom Interest, Inc. The total purchase
consideration for the merger was approximately $6,043 which consisted of
1,336,276 shares of Wyndham Class A common stock.

  On September 10, 1999, Wyndham acquired the remaining 75% interest in Le
Manoir de Gressey, an 86 room hotel located near Paris, France for a total
purchase price of approximately FRF 41,500 (approximately $6,658 based on
exchange rates at the time of closing) and assumed debt of approximately FRF
51,000 (approximately $8,182 based on exchange rates at the date of closing).

 Like-Kind Exchange of Properties

  On September 3, 1999, Wyndham sold certain land located in San Mateo,
California, to the Susan W. Lakatos Separate Property Trust Agreement, the Rot
Family Trust, and Ernest Weil Family Trust U.T.A. for a gross purchase price
of $3,500, and recognized a gain of approximately $985. These funds were
placed in a restricted trust account in order to facilitate a tax-deferred,
like-kind exchange through the acquisition of a suitable hotel property.

3. INTERSTATE'S THIRD-PARTY HOTEL MANAGEMENT BUSINESS

  On May 27, 1998, Old Wyndham and Interstate Hotels Company ("Old
Interstate") entered into a settlement agreement, as amended, with Marriott
International, Inc. ("Marriott"), which addressed certain claims asserted by
Marriott in connection with Old Wyndham's then proposed merger with Old
Interstate. The settlement agreement provided for the dismissal of litigation
brought by Marriott, and allowed Old Wyndham's merger with Old Interstate to
close. In addition to dismissal of the Marriott litigation, the settlement
agreement provides for the re-branding of ten Marriott hotels under the
Wyndham name, the assumption by Marriott of the management of ten Marriott
hotels formerly managed by Old Interstate for the remaining term of the
Marriott franchise agreement, and the spin-off by Wyndham of the third-party
management business.


                                       8
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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

  Effective June 18, 1999, Old Wyndham distributed approximately 92% of
Interstate Hotels Corporation ("Interstate") in the form of a dividend to
shareholders. Shareholders of record on June 7, 1999 received one share of
newly issued Interstate stock for every thirty paired shares owned of Patriot
and Old Wyndham. The remaining 8% is owned equally by Wyndham and Marriott.

  As a result of the spin-off, Wyndham now also owns an approximate 55% non-
controlling interest in the subsidiary of Interstate which now operates the
existing third-party management business that Wyndham acquired from Old
Interstate. As of September 30, 1999, Wyndham's investment in the entity was
$52,837 and is reflected in investment in unconsolidated subsidiaries.

4. RESTRUCTURING AND NEW FINANCING TRANSACTIONS

  Effective June 30, 1999, Wyndham entered into a series of transactions as
follows; 1) a $1 billion equity investment, 2) an organizational
restructuring, 3) closing of a $2,450,000 credit facility, and 4) closing of
new mortgage notes totaling $581,000, as follows:

 Equity investment

  Effective June 30, 1999, Wyndham completed a $1 billion equity investment
with a group of investors. Pursuant to the terms of this investment, Wyndham
issued 9.55 million shares of series B convertible preferred stock in exchange
for gross proceeds of $955,000. On July 1, 1999, the remaining $45,000 was
funded through the transfer of one of the investor's loan receivable from PAH
Realty Company, LLC which is secured by a mortgage on the Battery March Hotel,
to Wyndham International Inc. for the purchase of 450,000 shares of series B
convertible preferred stock. Wyndham has incurred approximately $77,479 in
costs attributable to the equity investment. This series B convertible
preferred stock has the following terms, among others:

  . dividends payable quarterly, on a cumulative basis, at a rate of 9.75%
    per year;

  . for the first six years, the dividends are structured to ensure an
    aggregate fixed cash dividend payment of $29,250 per year, so long as
    there is no redemption or conversion of the investors' series B
    convertible preferred stock; therefore, for that period, dividends are
    payable partly in cash and partly in additional shares of series B
    convertible preferred stock, with the cash component initially equal to
    30% for the first dividend and declining over the period to approximately
    19.8% for the final dividend in year six;

  . for the next four years, dividends are payable in cash or additional
    shares of series B convertible preferred stock as determined by the Board
    of Directors; and, after year 10, dividends are payable solely in cash;

  . if any dividends are paid on the Wyndham common stock, additional
    dividends will be paid in the amount that would have been paid on the
    shares of Wyndham common stock into which the series B preferred stock is
    then convertible;

  . if a change in control or a liquidation of Wyndham occurs within six
    years following the investment, any dividends remaining for the six years
    will be accelerated and paid;

  . not redeemable by Wyndham for six years, except that up to $300 million
    of the series B convertible preferred stock may be redeemed during the
    170 day period following the closing of the investment;

  . voting with the Wyndham common stock on an as-converted basis on matters
    submitted to the common stockholders and voting as a separate class on
    specified matters, with special rules applying to the election of
    directors; and

  . convertible, at the holder's option, into a number of shares of Wyndham
    common stock equal to $100.00 divided by the conversion price, initially
    equal to $8.59 but subject to potential downward adjustments.

                                       9
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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


  The investors will also have preemptive rights for the first five years
following their investment as long as they own more than 15% of the Wyndham
common stock.

  As noted above, for a period of 170 days following the completion of the
investment, Wyndham may redeem up to $300 million of the series B convertible
preferred stock at a redemption price of $102.00 per share (102% of the stated
amount) plus all accrued dividends. In connection with the settlement of the
class action litigation related to its restructuring discussed below, Wyndham
intends to fund this redemption with the proceeds of its offering to its
stockholders and the limited partners in the Operating Partnerships of rights
to purchase up to three million shares of its series A convertible preferred
stock, which generally has the same economic terms as the series B convertible
preferred stock, but has no voting rights, except as required by law and
except for a limited right to elect two directors if dividends are in arrears
for six quarterly periods. The record date for the rights offering is
September 30, 1999. The registration statement for the rights offering was
declared effective on November 8, 1999, and the rights offering is scheduled
to expire on December 8, 1999.

 Organizational restructuring

  As a condition of this investment, Old Wyndham was required to terminate the
pairing agreement with Patriot and restructure the existing organization. As
such, a subsidiary of Old Wyndham was merged with and into Patriot and Patriot
became a wholly-owned subsidiary of Wyndham. Patriot's status as a real estate
investment trust terminated effective January 1, 1999, and Patriot became a
taxable corporation as of that date.

  Wyndham recorded a one-time charge of $675,000 to establish a deferred tax
liability that resulted from Patriot's change in tax status from a REIT to a C
corporation, as required by Statement of Financial Accounting Standard No.
109. This charge is included in income tax expense in the accompanying 1999
condensed consolidated statement of operations.

  Wyndham also recorded a restructuring charge of $189,288 as a result of the
termination of the paired share structure, and management's decision to exit
out of certain activities resulting in the write-down of certain non-strategic
assets, and costs to sever certain employees.

  Wyndham recorded a charge of approximately $83,094 for the write off of the
unamortized intangible asset associated with the paired share structure which
was abandoned June 30, 1999. In addition, Wyndham incurred approximately
$4,675, in severance and employee related costs for seven employees in the New
York corporate office and two employees in the Dallas corporate office. The
New York office was closed on June 30, 1999 and its employees were terminated
at that time. Wyndham paid $4,175 in the form of cash and forgiveness of debt;
the remaining unpaid portion of $500 has been included in accrued liabilities
at September 30, 1999. Wyndham has also paid $573 in professional fees
associated with the restructuring.

  Wyndham recorded a charge of $82,957 for the write-down of assets to
estimated fair value, including goodwill of $28,394 as a result of
management's strategy to exit from the European market for their non-branded
assets which will be sold. In addition, Wyndham recorded costs of $7,226
associated with staffing reductions and other exit costs necessary to reduce
Wyndham's infrastructure in Arcadian International, Wyndham's management
division in Europe. Included in accounts payable and accrued expenses at
September 30, 1999 was $3,345 related to severance costs to terminate 67
employees in the European office and $2,783 related to other exit costs for
those actions, primarily lease cancellations, that have not yet been completed
as of September 30, 1999. Wyndham expects these actions to be completed by
December 31, 1999.


                                      10
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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

  In addition, a charge of $8,263 for the tradename intangibles attributable
to the Carefree brand was recorded, as management has decided that none of the
owned or managed assets will carry the Carefree brand now or in the future.

  On August 11, 1999, Wyndham announced its plan to realign its luxury
division, in its continuing efforts to streamline its organization. As a
result, the Phoenix division office was closed on September 10, 1999. Wyndham
recorded costs of $2,006 associated with severance payments for staffing
reductions of 19 employees, and $494 for other exit costs. As of September 30,
1999, included in accounts payable and accrued expenses was $2,251 related to
severance costs and other exit costs that have not yet been completed as of
September 30, 1999. Wyndham expects these actions to be completed by March 31,
2000.

  Also as a part of the restructuring, the preferred stockholders of Old
Wyndham were offered an opportunity to exchange their preferred stock for
Wyndham class A common stock. Each of the 1,781,173 shares of Old Wyndham
series A preferred stock and each of the 1,781,181 shares of Old Wyndham
series B preferred stock were exchanged for one share of Wyndham class A
common stock.

  Pursuant to the merger of a wholly-owned subsidiary of Old Wyndham with
Patriot, each outstanding paired share and share of Patriot series A preferred
stock was converted into a single share of Wyndham class A common stock, and
each outstanding share of Patriot series B preferred stock was converted into
$25 per share and $1.61 of accrued dividends, or an aggregate of $14,862 in
cash.

  Additionally, the third party limited partners in both the Patriot
Partnership, and the Wyndham Partnership were offered an opportunity to
exchange their limited partnership interests for Wyndham class A common stock.
As a result, an additional 15,097,354 shares of Wyndham class A common stock
were issued in exchange for limited partnership units in the Operating
Partnerships. The effect of the exchange of certain limited partners interests
for Wyndham class A common stock, resulted in an adjustment to the basis of
certain assets in accordance with Emerging Issues Task Force ("EITF") 95-7.
This adjustment is reflected in the accompanying balance sheet as a reduction
in the basis of Wyndham's investment in real estate and related improvements
of $37,150, investment in unconsolidated subsidiaries of $2,562 and goodwill
and intangibles of $78,433.

  Generally, the assets of Old Wyndham, Patriot and the Operating Partnerships
remained in the entity that owned them prior to restructuring, except that the
non-voting stock of the non-controlled subsidiaries was transferred from the
Patriot Partnership to Patriot.

 New credit facility

  Concurrent with the closing of the $1 billion equity investment described
above, Wyndham closed on a new $2,450,000 credit facility which consists of: a
$1.3 billion term loan with a seven year term, a $500,000 revolving credit
facility with a five year term, and a $650,000 increasing rate loan facility
with a five year term. Proceeds, net of closing costs and fees of
approximately $41,125 from the term loan and the revolving credit facility,
and proceeds, net of closing costs and fees of approximately $17,875 from the
increasing rate loan facility, were used to retire existing indebtedness. At
September 30, 1999, $100,000 was drawn on the new revolving credit facility.

  Interest rates are based upon LIBOR plus spreads varying from 2.75% to 3.50%
per annum for the term loan, and 1.25% to 2.75% per annum for the revolving
credit facility, based both on Wyndham's leverage ratio, as defined, and
whether any increasing rate loans are outstanding. If any of the increasing
rate loan facility remains outstanding, the applicable margins shall be
increased by 0.25%. The term loan, and the revolving credit facility are
guaranteed by the domestic subsidiaries of Wyndham, and are secured by pledges
of equity interests

                                      11
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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

held by Wyndham and its subsidiaries. Wyndham's ability to borrow under its
revolving credit facility is subject to Wyndham's compliance with a number of
customary financial and other covenants, including total leverage and interest
coverage ratios.

  Interest rates for the increasing rate loans are based on LIBOR rates (less
statutory reserves), plus 3.50% through September 30, 1999, and increasing
0.50% every three months, with a cap of LIBOR plus 4.75%. The lender under the
increasing rate loans receives the benefit of the same guarantees and pledges
of security provided under the new term loan, and revolving credit facility.

 New mortgage debt

  Effective June 30, 1999, Wyndham also closed on a $346 million mortgage loan
with Bear, Stearns Funding, Inc., which is secured by twenty-five properties.
The loan matures on July 1, 2004 and bears interest at the LIBOR rate plus
3.25% per annum. Proceeds from the mortgage debt were used to retire existing
mortgage indebtedness.

  Additionally, effective June 30, 1999, Wyndham closed on a $235 million
mortgage loan with Lehman Brothers Holdings Inc. which is secured by ten
properties. The mortgage loan has a three-year term, with a one year extension
option, and bears interest at the LIBOR rate plus 3.50% per annum, plus an
additional 1.75% on the principal amount payable at maturity. Proceeds from
this mortgage loan were used to retire existing mortgage indebtedness.

  At September 30, 1999, the LIBOR rate was 5.4% and averaged 5.1% during the
nine month period ended September 30, 1999.

5. CREDIT FACILITY, TERM LOANS, MORTGAGES AND OTHER NOTES

 Credit facility and term loans

  Prior to June 30, 1999, Wyndham's credit facilities were led by Chase
Manhattan Bank, Chase Securities, Inc. and Paine Webber Real Estate
Securities, Inc. and included a $900,000 revolving credit facility (the
"Credit Facility") and a series of term loans in the aggregate amount of up to
$1,800,000 (the "Term Loans"). Proceeds from the Credit Facility were used to
fund certain of Wyndham's mergers, as well as to refinance certain outstanding
indebtedness. Interest rates were based on Wyndham's leverage ratio and varied
from 1.5% to 3.0% over LIBOR.

  The Term Loans and the Credit Facility, along with accrued interest and
fees, were repaid in full on June 30, 1999 with proceeds from the new credit
facility and the $1 billion equity investment. As a result of this repayment,
Wyndham incurred an extraordinary loss on early extinguishment of debt of
$9,838, net of minority interest and income tax effects.

 Paine Webber Mortgage Financing

  Effective June 30, 1999, a loan with an affiliate of Paine Webber Real
Estate Securities, Inc. ("Paine Webber Real Estate") for $103,000, including
accrued interest, was repaid with proceeds from the new financings described
above.

                                      12
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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


  Effective June 30, 1999, Wyndham repaid two loans with Paine Webber Real
Estate of $35,000 and $160,000 which were entered into in connection with the
acquisition of the Wyndham Emerald Plaza Hotel located in San Diego California
and the Arcadian acquisition, respectively, with proceeds from the new
financings described above.

 Other mortgage debt

  During 1999, Beacon Capital Partners, L.P. ("Beacon") loaned $45,000 to
Wyndham. The loan, which bore interest at LIBOR plus 2.5% was to mature on
July 1, 1999. The loan was secured by a first mortgage on the Wyndham Boston
hotel, a property under construction in Boston, Massachusetts. Wyndham paid
Beacon a financing fee of 2.5% of the loan principal in May 1999. On July 1,
1999 the loan was transferred from Beacon to Wyndham International, Inc. for
the purchase of 450,000 shares of Series B convertible preferred stock.

  In connection with the acquisition of Billerica, Wyndham assumed a
construction note totaling $16,411. The loan bears interest at 9.5%, and
matures May 17, 2000.

  In connection with the acquisition of Le Manoir de Gressey, Wyndham assumed
mortgage debt of approximately $8,282; the loan bears interest at the French
interbank base rate plus 1.5% and matures April 30, 2007.

 El Conquistador and Condado Hotel & Casino Financing

  On June 25, 1999, Wyndham entered into an agreement with Citicorp Real
Estate, Inc. to extend $90,000 of mortgage debt related to the El Conquistador
Partnership, L.P., which was set to mature on June 30, 1999. Per the terms of
the extension agreement, the interest rate was amended such that the loan
bears interest at the LIBOR rate plus 2.75% through December 31, 1999 and then
LIBOR plus 3.25% through maturity on June 30, 2000.

  Additionally, on June 29, 1999, Wyndham refinanced $55,000 of debt on the
Condado Hotel & Casino with The Bank of Nova Scotia. Principal payments on the
loan are due in monthly amounts of $306 beginning on July 22, 1999 through
maturity on July 22, 2004 at which time a balloon payment of $36,972 is due.
The interest rate on the first $50,000 is based upon LIBOR spreads varying
from 2.50% to 3.25% per annum, and on amounts over $50,000 is based upon LIBOR
spreads varying from 3.00% to 3.75% per annum, based on a ratio of earnings to
total debt service, as defined.

 Royal Bank of Scotland and Coutts & Company

  On August 12, 1999, Wyndham renegotiated its debt obligations to both the
Royal Bank of Scotland and Coutts & Company. The debt with the Royal Bank of
Scotland of approximately $63,870 at September 30, 1999 bears interest at the
UK Base Rate plus 1.3% and matures August 2000 with an option to extend for an
additional six months. The debt is secured by first lien mortgages encumbering
11 hotels of Arcadia. The agreement provides that 75% of the gross sale
proceeds from each of the first eight hotels that are sold should be used to
repay the outstanding obligation. To the extent that any amount of the debt
remains outstanding, then 100% of the gross sales proceeds of the remaining
three hotels should be applied to the outstanding balance. The debt with the
Coutts & Company of approximately $32,256 at September 30, 1999 bears interest
at Sterling Libor plus 2.5% and matures December 31, 2003. The debt is secured
by first lien mortgages encumbering 5 Malmaison hotels.


                                      13
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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

6. FINANCIAL DERIVATIVES

 Interest rate swaps and caps

  Wyndham enters into interest rate swap and cap agreements to modify the
interest characteristics of its outstanding debt. These agreements involve the
exchange of amounts based on a variable interest rate for amounts based on
fixed interest rates over the life of the agreement without an exchange of the
notional amount upon which the payments are based. The differential to be paid
or received as interest rates change is accrued and recognized as an
adjustment of interest expense related to the debt using a method which
approximates the effective interest method (the accrual accounting method).
The related amount payable to or receivable from counterparties is included in
accrued expenses or other assets.

  Wyndham also enters into interest rate cap agreements that are designed to
limit its exposure to increasing interest rates and are designated as hedges
of its outstanding debt. An interest rate cap entitles Wyndham to receive a
payment from the counterparty equal to the excess, if any, of the hypothetical
interest expense (strike price) on a specified notional amount at a current
market interest rate over an amount specified in the agreement. The only
amount Wyndham is obligated to pay the counterparty is an initial premium. The
cost of the agreements (the initial premium) is included in other assets and
amortized to interest expense ratably during the life of the agreement.

  As of September 30, 1999, Wyndham had entered into three additional interest
rate swap arrangements. The arrangements swap floating rate LIBOR-based
interest rates for a fixed rate interest amount as a hedge against $50,987 of
the outstanding balance on specific property related debt, and $400,000 of
other indebtedness. The interest rate swap fixes the LIBOR portion of the debt
interest rate at 5.31% per annum through January 2000 ($19,987), 5.42% per
annum through March 2001 ($31,000) and 5.91% per annum through February 2000
(400,000). At September 30, 1999, Wyndham has various interest rate swap
arrangements as a hedge against $1,272.1 of the outstanding balance of certain
floating rate debt.

  Additionally during 1999, Wyndham entered into two interest rate cap
arrangements as follows; an interest rate cap that limits LIBOR to 7% on up to
$1,500,000 of indebtedness through April 2000, and an interest rate cap that
limits LIBOR to 6.75% on up to $19,475 of indebtedness through March 2001.

  The fair value of interest rate swap and cap agreements and changes in the
fair value as a result of changes in market interest rates are not recognized
in the financial statements. The unrealized gain on these derivative
instruments was approximately $5,699 at September 30, 1999, which represents
the net proceeds Wyndham would receive if the derivatives were sold.

7. COMPREHENSIVE LOSS

  SFAS No. 130, "Reporting Comprehensive Income", establishes standards for
reporting and displaying comprehensive loss and its components. Wyndham
adopted SFAS No. 130 beginning with their interim financial statements for the
first quarter of 1998. Total comprehensive loss for the periods is as follows:

<TABLE>
<CAPTION>
                                        Three Months
                                            Ended         Nine Months Ended
                                        September 30,       September 30,
                                      ------------------  -------------------
                                        1999      1998      1999       1998
                                      --------  --------  ---------  --------
   <S>                                <C>       <C>       <C>        <C>
   Net loss.......................... $(44,565) $(59,415) $(921,223) $(67,257)
   Unrealized (loss) gain on
    securities available for sale....     (676)     (767)       185    (1,388)
   Unrealized foreign exchange gain
    (loss)...........................    9,935     4,313     (2,455)    4,323
                                      --------  --------  ---------  --------
     Total comprehensive loss........ $(35,306) $(55,869) $(923,493) $(64,322)
                                      ========  ========  =========  ========
</TABLE>

                                      14
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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


8. COMPUTATION OF EARNINGS PER SHARE

  Earnings per share have been computed as follows:

<TABLE>
<CAPTION>
                                      Three Months Ended   Three Months Ended
                                      September 30, 1999   September 30, 1998
                                      -------------------- --------------------
                                       Basic    Diluted(1)  Basic    Diluted(1)
                                      --------  ---------- --------  ----------
   <S>                                <C>       <C>        <C>       <C>
   Loss before extraordinary item...  $(44,565)  $(44,565) $(58,158) $ (58,158)
   Adjustment for equity
    forwards(2).....................       --         --        --     (95,063)
   Preferred stock dividends........   (24,375)   (24,375)   (2,695)    (2,695)
                                      --------   --------  --------  ---------
   Loss attributable to common
    shareholders before
    extraordinary item..............   (68,940)   (68,940)  (60,853)  (155,916)
   Extraordinary loss...............       --         --     (1,257)    (1,257)
                                      --------   --------  --------  ---------
   Net loss attributable to common
    shareholders....................  $(68,940)  $(68,940) $(62,110) $(157,173)
                                      ========   ========  ========  =========
   Weighted average number of common
    shares outstanding..............   166,954    166,954   154,510    154,510
                                      ========   ========  ========  =========
   Loss per share:
     Loss before extraordinary
      item..........................  $  (0.41)  $  (0.41) $  (0.39) $   (1.01)
     Extraordinary loss.............       --         --      (0.01)     (0.01)
                                      --------   --------  --------  ---------
       Net loss.....................  $  (0.41)  $  (0.41) $  (0.40) $   (1.02)
                                      ========   ========  ========  =========
</TABLE>
--------
(1) For the three months ended September 30, 1999, the dilutive effect of
    unvested stock grants of 733, the option to purchase common stock of 19
    and preferred stock of 116,414 were not included in the computation of
    diluted earnings per share because they are anti-dilutive. For the three
    months ended September 30, 1998, the dilutive effect of unvested stock
    grants of 798, the option to purchase common stock of 494, preferred stock
    of 8,423 and common stock of 2,981 in connection with the forward equity
    contracts were not included in the computation of diluted earnings per
    share because they were anti-dilutive.
(2) The adjustment relates to the mark-to-market and yield adjustment for the
    forward equity contracts which could be settled in cash or stock, at
    Wyndham's option.

                                      15
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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


<TABLE>
<CAPTION>
                                    Nine Months Ended      Nine Months Ended
                                    September 30, 1999     September 30, 1998
                                   ---------------------  ---------------------
                                     Basic    Diluted(1)    Basic    Diluted(1)
                                   ---------  ----------  ---------  ----------
   <S>                             <C>        <C>         <C>        <C>
   Loss before extraordinary
    item.........................  $(911,385) $(911,385)  $ (35,440) $ (35,440)
   Adjustment for equity forwards
    (2)..........................    (19,372)   (39,322)        --    (122,431)
   Preferred stock dividends.....    (25,276)   (25,276)     (4,250)    (4,250)
                                   ---------  ---------   ---------  ---------
   Loss attributable to common
    shareholders before
    extraordinary item...........   (956,033)  (975,983)    (39,690)  (162,121)
   Extraordinary loss............     (9,838)    (9,838)    (31,817)   (31,817)
                                   ---------  ---------   ---------  ---------
   Net loss attributable to
    common shareholders..........  $(965,871) $(985,821)  $ (71,507) $(193,938)
                                   =========  =========   =========  =========
   Weighted average number of
    common shares outstanding....    159,254    159,254     132,450    132,450
                                   =========  =========   =========  =========
   Loss per share:
     Loss before extraordinary
      item.......................  $   (6.00) $   (6.13)  $   (0.30) $   (1.22)
     Extraordinary loss..........      (0.06)     (0.06)      (0.24)     (0.24)
                                   =========  =========   =========  =========
       Net loss..................  $   (6.06) $   (6.19)  $   (0.54) $   (1.46)
                                   =========  =========   =========  =========
</TABLE>
--------
(1)  For the nine months ended September 30, 1999, the dilutive effect of
     unvested stock grants of 795, the option to purchase common stock of 32
     and preferred stock of 44,785 were not included in the computation of
     diluted earnings per shares because they are anti-dilutive. For the nine
     months ended September 30, 1998, the dilutive effect of unvested stock
     grants of 837, the option to purchase common stock of 1,175, preferred
     stock of 6,003 and common stock of 1,551 issued in connection with
     forward equity were not included in the computation of diluted earnings
     per share because they are anti-dilutive.
(2)  The adjustment relates to the mark-to-market and yield adjustment for the
     forward equity contracts which could be settled in cash or stock, at
     Wyndham's option.

9. COMMITMENTS AND CONTINGENCIES

 Forward equity contracts

  Wyndham's aggregate obligation under the forward equity transactions was
approximately $335.8 million at June 30, 1999. Effective June 30, 1999,
Wyndham settled in full all of the forward equity transactions in cash, with
part of the proceeds of the $1 billion equity investment. The 100.7 million
shares owned or held by the counterparties were retired effective June 30,
1999.

 Contingencies

  On June 29, 1992 an action for trademark infringement was filed in the New
York Supreme County of New York, Index No. 17474/92 titled Wyndham Hotel
Company, John Mados, and Suzanne Mados et al v. Wyndham Hotel Company, Ltd. It
is based upon the Madoses' alleged use of the mark WYNDHAM in connection with
the Wyndham Hotel located in Manhattan, New York City, and operated by the
Madoses since 1966 pursuant to a lease agreement entered into by the Madoses
on June 1, 1957. The case was tried in May 1996, and an order and partial
judgement was entered in March 1998. The order enjoins us from using the name
and mark "Wyndham" in connection with the advertising, promoting, managing or
operating a hotel in Manhattan, New York City, and places restrictions on
Wyndham's use of the name and mark "Wyndham" in all other areas of New York
outside

                                      16
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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

of Manhattan. In November 1998, an order was issued clarifying the original
order and a final judgment was entered. In December 1998, Wyndham appealed
that judgment to the New York Supreme Court, Appellate Division, First
Department. In January 1999, Wyndham moved for a stay of the injunction
pending appeal which motion was granted by the Appellate Division, First
Department on February 4, 1999. On May 18, 1999 the Appellate Division, First
Department rendered a decision and order affirming the final judgment. On May
24, 1999, Wyndham filed a motion for permission to appeal that decision to the
Court of Appeals of the State of New York. In July 1999, Wyndham received
notice that the Court of Appeals of the State of New York would not hear the
appeal.

  Patriot and Old Wyndham have received two letters dated November 11, 1998
and December 2, 1998 (the "Letters") from the counsel for the Koffman family
and its affiliates (collectively, "Koffman") in connection with a Registration
Rights Agreement entered into as of March 31, 1998 (the "Agreement") among
Patriot, Old Wyndham and the Holders as defined therein, which such Holders
include Koffman. Counsel has asserted in the Letters that, in connection with
Patriot's and Old Wyndham's exercise of their "black-out" rights under the
Agreement, on October 8, 1998 Patriot and Old Wyndham are in breach of their
obligations to Koffman under the Agreement. Counsel has stated in the Letters
that Koffman will seek relief from Patriot and Old Wyndham for any losses that
Koffman may have sustained in connection with Patriot's and Old Wyndham's
alleged breach of the Agreement and also have implied that Koffman may file
against Patriot and Old Wyndham unspecified claims allegedly arising under the
federal securities laws. If Patriot and Old Wyndham are sued, they plan to
vigorously defend this lawsuit.

  Patriot and Old Wyndham have disclosed various matters relating to Patriot
and Old Wyndham in their Form 8-K filed with the Securities and Exchange
Commission on November 9, 1998 including, without limitation, an assertion by
UBS AG, London Branch ("UBS") that Patriot and Old Wyndham are in default
under the terms of a forward contract by and among Patriot, Old Wyndham and
UBS. Patriot and Old Wyndham also have disclosed various matters in their
Joint Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on March 26, 1999, and in registration statements on Form S-3
(filed on April 28, 1999) and Form S-4 (filed on April 14, 1999).

  On January 12, 1999, a putative class action lawsuit was filed on behalf of
the shareholders of Patriot and Old Wyndham in the Delaware Chancery Court.
This lawsuit, captioned Charles Fraschilla v. Paul A. Nussbaum, et al., No.
16895-NC, names as defendants Patriot, the then Patriot directors ("Patriot
Directors"), and Apollo Real Estate Advisors, L.P., Apollo Management, L.P.,
The Thomas H. Lee Company, Beacon Capital Partners, Inc. and Rosen Consulting
Group (collectively, the "Investors"). This lawsuit alleges, among other
things, that the Patriot Directors breached their fiduciary duties to
Patriot's then shareholders with respect to Patriot's financial condition and
by "effectively selling control" of Patriot to the Investors for inadequate
consideration and without having adequately considered or explored all other
alternatives to the sale or having taken steps to maximize shareholder value;
and the Investors aided and abetted the Patriot Directors in their purported
breaches of fiduciary duty. In the complaint, the plaintiff seeks an
injunction preventing the consummation of the deal with the Investors (which
Investment now has been consummated) and monetary damages.

  On January 19, 1999, three additional and similar putative class action
lawsuits were filed in the same court by different purported class
representatives: Sybil R. Meisel and Steven Langsam, Trustees v. Paul A.
Nussbaum, et al., No 16905-NC; Crandon Capital Partners v. Paul A. Nussbaum,
et al., No. 16906-NC; and Robert A. Staub v. Paul A. Nussbaum, et al., No.
16907-NC. The four suits since have been consolidated under the Fraschilla
caption.

                                      17
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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


  The parties have negotiated and entered into a stipulation of settlement to
settle these four putative consolidated class action lawsuits, dated September
17, 1999. The stipulation of settlement sets forth the principal bases for the
settlement, which include, among other things, the modification of Wyndham's
obligations to make the optional $300 million rights offering (the "Rights
Offering") specified in Section 6.13 of the Securities Purchase Agreement, as
follows: (a) Wyndham shall make the Rights Offering; (b) the Rights Offering
shall be made no earlier than 60 days after the Closing Date, as defined in
the Securities Purchase Agreement (the "Closing Date"), and shall be held open
for a period of not less than 30 days, and Wyndham shall use its good faith
efforts to commence the Rights Offering no later than 120 days after the
Closing Date; provided, however, that Wyndham will not be required to make the
Rights Offering if: (i) the SEC does not declare effective any registration
statement with regard to securities of Wyndham to be offered in the Rights
Offering; (ii) there is a pending court order, motion, legal proceeding or
other action to enjoin, prevent or delay the Rights Offering; or (iii) the
Rights Offering cannot be completed, despite Wyndham's good faith efforts,
within 170 days of the Closing Date. The stipulation of settlement has been
approved by order of the Delaware Chancery Court dated November 1, 1999.

  In the court's order, the Court certified, for purposes of settlement, a
non-opt out, binding class of all persons and entities (exclusive of
defendants and their affiliates) who owned shares of Wyndham common stock
beneficially or of record, as of September 30, 1999 and/or sold shares of
Patriot or Wyndham common stock during the period from January 12, 1999 to and
including September 30, 1999 (the "Class"). The Court approved the settlement,
including dismissing with prejudice all claims of the plaintiffs and the Class
against the Defendants and others and approved an award of attorneys' fees to
counsel for the plaintiffs in the amount of $1.125 million. The Court order
has not yet become final.

  On February 3, 1999, McNeill Investment Company, Inc. filed a lawsuit
against Patriot in the United States District Court for the Western District
of Pennsylvania. In the lawsuit, captioned McNeill Investment Company, Inc. v.
Patriot American Hospitality, Inc., No 99-165, the plaintiff alleges that
Patriot breached its obligations under a registration rights agreement that
Patriot became obligated under through its merger transaction with Interstate
Hotels Corporation. On March 26, 1999, Patriot filed an answer to the
complaint in which it denied all liability. Wyndham plans to vigorously defend
this lawsuit.

  On May 7, 1999, a putative class action lawsuit was filed in the United
States District Court for the Northern District of California on behalf of
former shareholders of California Jockey Club and Bay Meadows Operating
Company (collectively, "Bay Meadows") who subsequently became shareholders of
Patriot, Patriot American Hospitality Operating Company and Wyndham as a
result of the merger (the "Merger") of the above companies on or about July 1,
1997 (the "Class"). This lawsuit, captioned Johnson, et al. v. Patriot
American Hospitality, Inc. et al., C-99-2153-SI, names as defendants Patriot
American Hospitality, Inc., Wyndham International, Inc., PAH GP, Inc. PAH LP,
Inc., Patriot American Hospitality Partnership, L.P., Wyndham International
Operating Partnership, L.P. and PaineWebber Group, Inc. This action 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 (May 7, 1999). This action
asserts securities fraud claims and alleges that the purported class members
wrongfully were induced to tender their Bay Meadows shares as part of the
Patriot/Bay Meadows merger based on a fraudulent prospectus. This action
further alleges that defendants continued to defraud shareholders about their
intentions to acquire numerous hotels and saddle 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

                                      18
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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

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 Multi-district litigation, the California actions have been
consolidated with the Susnow action and certain other actions listed below for
consolidated pretrial purposes in the Northern District of California. To
date, none of the defendants have been required to answer, move or otherwise
respond to the complaints and no discovery has been taken. Wyndham plans to
vigorously defend those lawsuits.

  On or about June 22, 1999, a putative class action lawsuit captioned Levitch
v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1416-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 Wyndham.
The complaint was filed on behalf of all shareholders who purchased Patriot
American and Wyndham stock during that period. Two other actions, Gallagher v.
Patriot American Hospitality, Inc., et al., No. 3-99-CV1429-L, filed on June
23, 1999, and Szekely v. Patriot American Hospitality, Inc., 3-99-CV1866-D
filed August 23, 1999, allege substantially the same allegations and claims as
mentioned above. By order of the Judicial Panel on Multi-district litigation,
these actions have been consolidated with the Susnow action for consolidated
pretrial purposes in the Northern District of California. To date, none of the
defendants have been required to answer, move or otherwise respond to the
complaints and no discovery has been taken. Wyndham plans to vigorously defend
those lawsuits.

  On May 18, 1999, Patriot received correspondence from Deborah Szekely
("Szekely"), one of the sellers of Golden Door Spa, which Patriot purchased on
May 28, 1998. In that correspondence, Szekely threatened to file a complaint
sounding in securities fraud based upon allegedly misleading financial
information provided to Szekely by Patriot. On May 21, 1999, Patriot received
correspondence from counsel for Szekely stating that Szekely would prosecute a
civil action against Patriot and related entities. Counsel enclosed a draft
Tolling Agreement with that letter. Patriot and potential litigants entered
into a Tolling Agreement on May 26, 1999, which extended the period for the
sellers to file a complaint to June 29, 1999. The Tolling Agreement
subsequently was extended to July 15, 1999 and then to August 2, 1999. Counsel
has provided Patriot with a draft complaint which purports to assert claims
under California state law for securities fraud, fraud in the inducement,
common law fraud, breach of fiduciary duty and deceit. To the best of
Patriot's knowledge, Szekely has not yet commenced that action but instead has
commenced the action listed above. If a complaint is filed and served on
Patriot, Patriot plans to vigorously defend this lawsuit.

  Patriot, a subsidiary of Patriot (the "Subsidiary"), which is the general
partner of a partnership (the "Partnership") and an affiliate of the
Subsidiary, which is a limited partner of the Partnership, are parties to a
dispute with another limited partner of the Partnership relating to a proposed
hotel development in Jacksonville, Florida. The case is captioned C&M
Investors Limited v. Patriot American Hospitality, Inc. et al., originally
filed in the Florida Circuit Court, Fourth Judicial Circuit, in and for Duval
County, Florida, but later removed and now pending in the United States
District Court, Middle District of Florida, Jacksonville Division, Civil
Action No. 98-1236-Civ. J 20B. Wyndham plans to vigorously defend this
lawsuit.

  On September 17, 1999, Starwood Hotels & Resorts Worldwide Inc. ("Starwood")
filed a lawsuit against Fred J. Kleisner, Richard Mahoney and Wyndham in the
United States District Court for the Southern District of New York. In the
lawsuit, captioned Starwood Hotels & Resorts Worldwide Inc. v. Fred J.
Kleisner et al, No. 99 Civ. 9811. The plaintiff alleged that Wyndham
tortiously interfered with alleged employment contracts between Starwood and
Kleisner and Mahoney, that the defendants misapproriated trade secrets
belonging to Starwood, that the defendants tortiously interfered with
Starwood's prospective business relationships and that the defendants are
unfairly competing with Starwood. The complaint sought injunctive relief and
other damages.

                                      19
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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


  On November 12, 1999, Starwood and Wyndham, Kleisner and Mahoney (the
"Wyndham Defendants") entered into a Settlement Agreement and Mutual Release
(the "Settlement Agreement") under the terms of which all claims against the
Wyndham Defendants were dismissed with prejudice and the Wyndham Defendants
paid no damages. Under the Settlement Agreement, Wyndham agreed to
restrictions on its ability to hire and solicit for employment certain
Starwood employees until July 2000.

10. RELATED PARTY TRANSACTIONS

 Consulting agreements

  On February 26, 1999, Wyndham and Paul A. Nussbaum entered into a Separation
Agreement (the "Separation Agreement") whereby Mr. Nussbaum resigned his
position as Chairman of the Board of Directors and Chief Executive Officer of
Patriot. Pursuant to the Separation Agreement, Mr. Nussbaum will remain as a
Director of Wyndham.

  In accordance with terms of the Separation Agreement, Wyndham shall pay
severance of $3,200 reduced by any interest payments made by Wyndham on the
NationsBank Loan through June 30, 1999.

  On August 13, 1999, in accordance with the terms of the separation
agreement, Wyndham repaid the outstanding balance of the NationsBank Loan, and
executed a promissory note and security agreement ("Promissory Note") with Mr.
Nussbaum in an amount of $7,846. The Promissory Note is secured by 449,818
shares of common stock ("Collateral Shares") and any and all distributions and
dividends which may from time to time be paid or payable on the Collateral
Shares. The Promissory Note bears interest at 5.5% per annum compounded
annually, and matures on August 13, 2005.

  Additionally, Mr. Nussbaum's outstanding unvested options to purchase
Wyndham shares vested and will remain fully exercisable for the period of
their respective terms. Mr. Nussbaum elected to exchange his options on a
Black Scholes neutral basis for new options with an exercise price equal to
the fair market value of a share on the election date. On June 1, 1999, Mr.
Nussbaum exchanged 3,078,406 options at varying prices from $11.18 to $33.58
for 1,154,448 options at $5.1875. Mr. Nussbaum will also receive 250,000
shares equally over a three year period, of which 83,334 have vested as of
September 30, 1999. Additionally any restrictions were lifted from existing
shares held by Mr. Nussbaum.

  As a condition to receiving the second and third installments of the shares,
Mr. Nussbaum has agreed to provide non-exclusive consulting services to
Wyndham for a period of two years following the resignation date.
Additionally, Mr. Nussbaum will receive other amounts as provided for in the
Separation Agreement.

 Other related party transactions

  In 1999, Wyndham amended its management contract for the Wyndham Anatole
Hotel to provide that the owners of the hotel may terminate the management
contract following the first annual meeting of Wyndham stockholders after the
completion of the $1 billion equity investment if Mr. Nussbaum continues on
the Board of Directors of Wyndham. Mr. Nussbaum has delivered a letter to
Wyndham stating that he would not stand for re-election to the Board of
Directors if it would result in a termination of the management contract.
Additionally, the owners of the Wyndham Anatole Hotel may terminate the
management contract if James D. Carreker ceases to be an executive officer of
Wyndham.

  On April 30, 1999, Wyndham's option to purchase certain interests in Kinetic
Group Limited Partnership, which provides management information services to
Wyndham, expired without being exercised. Kinetic Group Limited Partnership is
owned 50% by Trammell Crow Company and 50% by an entity owned by Crow family
members and certain of Wyndham's senior executive officers.

  In connection with the merger with Gencom Interests, Inc., Mr. Karim
Alibhai, an independent director, received 400,883 shares of Wyndham Class A
common stock. These shares were issued in consideration of Mr. Alibhai's
ownership interests in Gencom Interests, Inc. and valued at approximately
$1,813 on the date of merger.

                                      20
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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


11. DIVIDENDS

  On May 4, 1998, Patriot declared a dividend of $0.298 per share for the
first quarter of 1998. The dividend was paid on May 29, 1998 to shareholders
of record on May 20, 1998.

  On January 25, 1999, Patriot paid a stock dividend of $.44 per share of
common stock for the fourth quarter of 1998 to shareholders of record on
December 30, 1998. Earnings per common share, weighted average shares
outstanding and all stock option activity have been restated to reflect the
stock dividend.

  On September 30, 1999, Wyndham paid a 9.75% dividend on the series B
convertible preferred stock. The dividend was paid partly in cash, and partly
in additional shares of series B preferred stock. Wyndham paid a total of
$7,315 in cash, representing approximately 30% of the dividend and issued
170,599 shares of series B convertible preferred shares representing
approximately 70% of the dividend.

12. SEGMENT REPORTING

  Wyndham classifies its business into proprietary owned brands and non-
proprietary brand hotel divisions, under which it manages the business.

  Among its proprietary branded hotels, Wyndham is positioned in the luxury
segment under the Grand Bay Hotel & Resorts(R) brand; in the upscale segment
under WyndhamTM; and in the mid-priced segment under the ClubHouse brand.
Additionally, Wyndham offers proprietary branded all-suite accommodations
through its upscale Summerfield Suites brand and its mid-priced Sierra Suites
brand. Other proprietary hotel brands owned and developed by Wyndham include
Malmaison and Grand Heritage(R).

 Description of reportable segments

  Wyndham has six reportable segments: Wyndham hotel properties, resort
properties, all suite properties, non-proprietary branded properties, other
proprietary branded hotel properties and other.

  . Wyndham hotel properties include Wyndham Hotels, Wyndham Gardens and
    Wyndham Grand Heritage. The Wyndham hotel properties are full-service
    properties that generally offer a full range of meeting and conference
    facilities and banquet space. Facilities generally include restaurants
    and lounge areas, gift shops and recreational facilities, including
    swimming pools. Full-service hotels generally provide a significant array
    of guest services, including room service, valet services and laundry.

  . Resort properties include Wyndham Resorts, Grand Bay resort properties
    and other resort properties. Resorts are designed to offer unique
    destinations which appeal to today's sophisticated vacation traveler and
    to blend with their environment, enhancing the natural surroundings with
    design that fits the locale. Each resort's recreational activities are of
    the highest caliber and are designated to capitalize on the natural
    attractions of the location. Many offer a combination of golf, tennis,
    skiing, health spa, hiking and other sports.

  . All suite properties include the Summerfield and Sierra Suite properties.
    The Summerfield and Sierra Suite properties generally target the business
    travelers who usually anticipate a one to two week stay. The suites
    generally have limited public space and offer limited food and beverage
    service. However, the suites provide guests with larger rooms and work
    space.

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

  . Other proprietary branded hotel properties include Malmaison, Grand
    Heritage, Clubhouse and hotels acquired in the Arcadian acquisition.

                                      21
<PAGE>

                          WYNDHAM INTERNATIONAL, INC.

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


  . Other includes participating lease revenues, racecourse facility revenue
    and expenses, management fee and service fee income, interest and other
    income, general and administrative costs, interest expense, depreciation
    and amortization and other one-time charges. General and administrative
    costs, interest expenses and depreciation and amortization are not
    allocated to each reportable segment; therefore, they are reported in the
    aggregate within this segment.

 Measurement of segment profit or loss

  Wyndham 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.

 Factors management used to identify the reportable segments

  Wyndham'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.

<TABLE>
<CAPTION>
                                                         Non-        Other
                         Wyndham             Suite    proprietary Proprietary
                          Hotels  Resorts  Properties   Branded     Branded     Other      Total
                         -------- -------- ---------- ----------- ----------- ---------  ----------
<S>                      <C>      <C>      <C>        <C>         <C>         <C>        <C>
Three Months Ended
 September 30, 1999
Total revenue........... $127,636 $111,827  $ 37,128   $258,978     $27,150   $  16,562  $  579,281
Operating income
 (loss)................. $ 31,916 $ 11,667  $  8,253   $ 61,492     $ 8,317   $(167,905) $  (46,260)
Three Months Ended
 September 30, 1998
Total revenue........... $119,200 $ 93,344  $ 34,295   $281,066     $26,426   $  49,519  $  603,850
Operating income
 (loss)................. $ 26,264 $  7,886  $  9,499   $ 57,403     $ 8,885   $(163,422) $  (53,485)
Nine Months Ended
 September 30, 1999
Total revenue........... $417,572 $397,482  $105,433   $835,535     $73,860   $  71,627  $1,901,509
Operating income
 (loss)................. $114,762 $ 98,824  $ 22,663   $197,971     $21,794   $(721,164) $ (265,150)
Nine Months Ended
 September 30, 1998
Total revenue........... $388,847 $293,570  $ 44,470   $484,406     $55,691   $ 159,096  $1,426,080
Operating income
 (loss)................. $ 99,045 $ 67,058  $ 10,313   $118,424     $18,945   $(343,982) $  (30,197)
</TABLE>

  The following table represents revenue information by geographic area for
the three and nine month periods ending September 30, 1999 and 1998. Revenues
are attributed to the United States and its territories and Europe based on
the location of hotel properties. The hotel properties in Europe were acquired
on April 6, 1998. Prior to this date, all of Wyndham's business was attributed
to hotel properties located in the United States and its territories.

<TABLE>
<CAPTION>
                                                United States Europe    Total
                                                ------------- ------- ----------
Three months ended September 30, 1999
-------------------------------------
<S>                                             <C>           <C>     <C>
Revenues.......................................  $  556,918   $22,363 $  579,281
<CAPTION>
Three months ended September 30, 1998
-------------------------------------
<S>                                             <C>           <C>     <C>
Revenues.......................................  $  583,025   $20,825 $  603,850
<CAPTION>
Nine months ended September 30, 1999
------------------------------------
<S>                                             <C>           <C>     <C>
Revenues.......................................  $1,841,991   $59,518 $1,901,509
<CAPTION>
Nine months ended September 30, 1998
------------------------------------
<S>                                             <C>           <C>     <C>
Revenues.......................................  $1,387,027   $39,053 $1,426,080
</TABLE>

                                      22
<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 Patriot's and Wyndham's Joint Annual Report on Form 10-
K, as amended, for the year ended December 31, 1998.

  Certain statements in this Form 10-Q constitute "forward-looking statements"
as that term is defined under the Private Securities Litigation Reform Act of
1995 (the "Act"). 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, forward-looking statements involve
known and unknown risks, uncertainties and other factors, which may cause the
actual results, performance or achievement of Wyndham to differ materially
from anticipated future results, performance or achievements expressed or
implied by such forward-looking statements. Wyndham 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 Wyndham, Wyndham's ability to integrate new acquisitions into its
operations and management; risks associated with the course of litigation;
Wyndham's ability to effect sales of assets on favorable terms and conditions;
risks associated with the hotel industry and real estate markets in general;
competition within the lodging industry; the ability of the Company, owners of
properties it manages or franchises and others to address the Year 2000 issue;
the impact of general economic conditions in the United States; risks
associated with debt financing; and other risks and uncertainties set forth in
the Company's annual, quarterly and current reports and proxy statements.

  THE COMPANY

  Effective June 30, 1999, Patriot and Old Wyndham completed a series of
transactions which included a restructuring of their existing organizational
structure. As a result of this restructuring, a wholly-owned subsidiary of Old
Wyndham was merged with and into Patriot, with Patriot being the surviving
entity. As such, Patriot is now a wholly-owned subsidiary of Old Wyndham, and
this combined entity, together with all subsidiaries, is hereafter referred to
as Wyndham. In connection with this restructuring, the pairing agreement
between Patriot and Old Wyndham was terminated. Patriot's status as a real
estate investment trust terminated effective January 1, 1999, and Patriot
became a taxable corporation as of that date.

  The restructuring was reflected as a reorganization of two companies under
common control and was accounted for in a manner similar to that used in
pooling of interests accounting. As such, there was no revaluation of the
assets and liabilities of Old Wyndham or Patriot. The 1999 financial
statements of Wyndham are presented on a consolidated basis, representing the
operations of the corporation and its subsidiaries, including Patriot. The
1998 financial statements of Wyndham are presented on a combined basis,
representing the combined results of both Old Wyndham and Patriot. All
significant intercompany accounts and transactions have been eliminated.

  At September 30, 1999, Wyndham, directly or through its subsidiaries, owned
interests in 175 hotels totaling over 43,000 rooms and leased 39 hotels from
third parties totaling over 5,700 rooms. In addition, Wyndham managed 89
hotels with over 21,000 rooms for third party owners and franchised 11 hotels
under the Wyndham, Summerfield or ClubHouse brands with over 2,600 rooms. The
hotels are diversified by franchise or brand affiliation and serve primarily
major U.S. business centers. In addition to hotels catering primarily to
business travelers, Wyndham's portfolio includes world-class resort hotels and
prominent hotels in major tourist destinations.


                                      23
<PAGE>

 Asset sales and acquisitions

  In January 1999, Patriot acquired the remaining 25% minority interests in
each of the five following hotels; Embassy Suites Schaumburg, the Hilton
Dania, the Marriott Suites at Valley Forge, the Marriott Boston Andover and
the Marriott Tysons Corner from CIGNA. The acquisition of such interests was
financed through additional mortgage indebtedness totaling $49.8 million and
the sale of an additional 10% interest in the Marriott Warner Center.

  In February 1999, Patriot and Old Wyndham sold their interest in the Bay
Meadows Racecourse located in San Mateo, California. Patriot and Old Wyndham
received cash proceeds of approximately $3.4 million after payment of legal
costs and other closing costs. Patriot and Old Wyndham recognized an estimated
impairment loss on assets held for sale of $42.2 million related to the
racecourse facility in 1998. In connection with the transaction, Patriot
terminated its lease to Wyndham for the racecourse facilities. The actual loss
on the sale of the asset was $42.8 million.

  In March 1999, Patriot sold the Holiday Inn Crockett, realizing net cash
proceeds of approximately $18.0 million and recognized a gain of approximately
$2.6 million.

  In April 1999, Patriot acquired the remaining 10% minority interests in each
of the four following hotels; the Radisson Akron; the Courtyard Beachwood; the
Holiday Inn Westlake; the Radisson Beachwood from IAH Snavely L.L.C.
("Snavely"). In addition, Patriot sold the Holiday Inn Beachwood to Snavely.
The transaction generated net proceeds of approximately $8.8 million. Patriot
recorded a loss on the sale of approximately $6.6 million.

  On April 30, 1999, Patriot sold the following hotels: Hampton Inn Rochester,
Hampton Inn Jacksonville, Hampton Inn Cleveland, and the Hampton Inn Canton,
for net proceeds of approximately $23.5 million and recognized a loss of
approximately $1.4 million.

  On May 7, 1999, Patriot exercised its option to purchase the interest in
ISIS 2000, formerly owned by certain related parties and Old Wyndham senior
executive officers, for a cash payment of $3.1 million. Subsequent to the
exercise of the option, Wyndham owns 100% of this entity which provides
reservations and other services to Wyndham.

  On May 11, 1999, Wyndham sold the Holiday Inn Sebring for net proceeds of
approximately $4.1 million, and recognized a gain of approximately $0.6
million.

  On May 18, 1999, Wyndham purchased the Billerica hotel for a total purchase
price of approximately $23.8 million including the assumption of debt of $16.4
million.

  On July 30, 1999, Wyndham sold the Holiday Inn Redmont for net cash proceeds
of $1.8 million and recognized a loss of approximately $191,000.

  On July 30, 1999, a wholly-owned subsidiary of Wyndham merged with Gencom
Interest, Inc. As a result of the merger, Wyndham acquired the remaining
34.52% interest in the Omni Baltimore hotel, and 421,161 shares of Wyndham
class A common stock owned by Gencom Interest Inc. The total purchase
consideration for the merger was approximately $6.0 million which consisted of
1,336,276 shares of Wyndham class A common stock.

  On September 3, 1999, Wyndham sold certain land located in San Mateo,
California, to the Susan W. Lakatos Separate Property Trust Agreement, the Rot
Family Trust, and Ernest Weil Family Trust U.T.A. for a gross purchase price
of $3.5 million and recognized a gain of approximately $1.0 million.

  On September 10, 1999, Wyndham acquired the remaining 75% interest in Le
Manoir de Gressey, an 86 room hotel located near Paris, France for a total
purchase price of approximately FRF 41.5 million,

                                      24
<PAGE>

(approximately $6.7 million based on exchange rates at the time of closing)
and assumed debt of approximately FRF 51 million (approximately $8.2 million
based on exchange rates at the date of the closing).

 Equity investment

  Effective June 30, 1999, Wyndham completed a $1 billion equity investment
with a group of investors. Pursuant to the terms of this investment Wyndham
issued 9.55 million shares of series B convertible preferred stock in exchange
for gross proceeds of $955 million, representing an approximate 41% voting
control of Wyndham. The remaining $45 million of this investment was funded
through the transfer of one of the investor's loan receivable from PAH Realty
Company, LLC. to Wyndham International Inc. for the purchase of 450,000 shares
of series B convertible preferred stock. Wyndham incurred approximately $77.5
million in costs directly attributable to the equity investment. Among other
terms, this series B preferred stock pays quarterly dividends on a cumulative
basis, at a rate of 9.75% per year, and is convertible at the holders option
into Wyndham class B common stock.

  For a period of 170 days following the completion of the investment, Wyndham
may redeem up to $300 million of the series B convertible preferred stock at a
redemption price of $102.00 per share (102% of the stated amount) plus all
accrued dividends. Wyndham intends to fund this redemption with the proceeds
of its offering to its stockholders and to the limited partners in the
Operating Partnerships of rights to purchase up to three million shares of its
series A convertible preferred stock, which generally has the same economic
terms as the series B convertible preferred stock, but has no voting rights,
except as required by law and except for a limited right to elect two
directors if dividends are in arrears for six quarterly periods. The record
date for the rights offering is September 30, 1999. The registration statement
for the rights offering was declared effective on November 8, 1999, and the
rights offering will expire on December 8, 1999.

 Organizational restructuring

  As a condition of the above investment, Old Wyndham was required to
terminate its pairing agreement with Patriot and restructured its existing
organization such that Patriot became a wholly-owned subsidiary of Wyndham.
Patriot's status as a real estate investment trust terminated effective
January 1, 1999, and Patriot became a taxable corporation as of that date.

  Wyndham recorded a one-time charge of $675 million as required by SFAS No.
109 to establish a deferred tax liability that resulted from Patriot's change
in tax status from a REIT to a C corporation. This charge is included in
income tax expense in the accompanying 1999 condensed consolidated statement
of operations.

  Wyndham also recorded a restructuring charge of $189.3 million as a result
of the termination of the paired share structure, and management's decision to
exit out of certain activities, resulting in the write-down of certain
nonstrategic assets, and costs to sever certain employees.

  Wyndham recorded a charge of approximately $83.1 million for the write off
of the unamortized intangible asset associated with the paired share structure
which was abandoned on June 30, 1999. In addition, Wyndham incurred
approximately $4.7 million in severance and employee related costs for seven
employees in the New York corporate office and two employees in the Dallas
corporate office. The New York office was closed on June 30, 1999 and its
employees were terminated at that time. Wyndham has paid $4.2 million in the
form of cash and forgiveness of debt, the remaining unpaid portion of $0.5
million has been included in accrued liabilities at September 30, 1999.
Wyndham has also paid $0.5 million in professional fees associated with the
restructuring.

  Wyndham recorded a charge of $83.0 million for the write-down of assets to
estimated fair value including $28.4 million of goodwill as a result of
management's strategy to exit from the European market for their non-branded
assets which will be sold. In addition, Wyndham recorded costs of $7.2 million
associated with anticipated staffing reductions and other exits costs
necessary to reduce Wyndham's infrastructure in Arcadian International,
Wyndham's management division in Europe. Included in accounts payable and
accrued expenses

                                      25
<PAGE>

at September 30, 1999 was $3.3 million related to severance costs to terminate
67 employees in the European office and $2.8 million related to other exit
costs, primarily lease cancellations. Wyndham expects these actions to be
completed by December 31, 1999.

  In addition, a charge of $8.3 million for the tradename intangibles
attributable to the Carefree brand was recorded, as management has decided
that none of the owned or managed assets will carry the Carefree brand now or
in the future.

  On August 11, 1999, Wyndham announced its plan to realign its luxury
division in its continuing efforts to streamline its organization. As a
result, the Phoenix division office was closed on September 10, 1999. Wyndham
recorded costs of $2.0 million associated with severance payments for staffing
reductions of 19 employees, and $0.5 million for other exit costs. As of
September 30, 1999, included in accounts payable and accrued expenses was $2.3
million related to severance costs and other exit costs that have not yet been
completed as of September 30, 1999. Wyndham expects these actions to be
completed by March 31, 2000.

  As part of the restructuring, the preferred stockholders of Old Wyndham were
offered an opportunity to exchange their preferred stock for Wyndham class A
common stock. Each of the 1.78 million shares of Old Wyndham series A
preferred stock and each of the 1.78 million shares of Old Wyndham series B
preferred stock were exchanged for one share of Wyndham class A common stock.

  Pursuant to the merger of a wholly-owned subsidiary of Old Wyndham with
Patriot, each outstanding paired share and shares of Patriot series A
preferred stock was converted into a single share of Wyndham class A common
stock and each outstanding share of Patriot series B preferred stock was
converted into $25 per share and $1.61 of accrued dividends, or an aggregate
of $14.9 million in cash.

  Additionally, the third party limited partners in both the Patriot
Partnership and the Wyndham Partnership were offered an opportunity to
exchange their limited partnership interests for Wyndham class A common stock.
As a result, an additional 15.1 million shares of Wyndham class A common stock
were issued in exchange for limited partnership units in the Operating
Partnerships. The effect of the exchange of certain limited partners'
interests for Wyndham class A common stock, resulted in an adjustment to the
basis of certain assets from the application of EITF 95-7. This adjustment is
reflected in the accompanying condensed consolidated balance sheet as a
reduction in basis of Wyndham's investment in real estate and related
improvements of $37.2 million, investment in unconsolidated subsidiaries of
$2.6 million and goodwill and intangibles of $78.4 million.

 Interstate's third-party hotel management business

  On May 27, 1998, Old Wyndham and Old Interstate entered into a settlement
agreement, as amended, with Marriott which addressed certain claims asserted
by Marriott in connection with Old Wyndham's then proposed merger with Old
Interstate. The settlement agreement provided for the dismissal of litigation
brought by Marriott, and allowed Old Wyndham's merger with Old Interstate to
close. In addition to dismissal of the Marriott litigation, the settlement
agreement provides for the re-branding of ten Marriott hotels under the
Wyndham name, the assumption by Marriott of the management of ten Marriott
hotels formerly managed by Old Interstate for the remaining term of the
Marriott franchise agreement, and the spin-off by Wyndham of the third-party
management business.

  Effective June 18, 1999, Old Wyndham distributed approximately 92% of
Interstate in the form of a dividend to shareholders. Shareholders of record
on June 7, 1999 received one share of newly issued Interstate stock for every
thirty paired shares of Patriot and Old Wyndham. The remaining 8% is owned
equally by Wyndham and Marriott International, Inc.

  As a result of the spin-off, Wyndham now also owns an approximate 55% non-
controlling interest in the subsidiary of Interstate which now operates the
third-party management business that Wyndham acquired from Old Interstate.

                                      26
<PAGE>

 Forward equity contracts

  Wyndham's aggregate obligation under the forward equity contracts was
approximately $335.8 million at June 30, 1999. Effective June 30, 1999,
Wyndham settled in full all of the forward equity contracts in cash, with part
of the proceeds of the $1 billion equity investment. The 100.7 million shares
owned or held by the counterparties were retired effective June 30, 1999.

WYNDHAM INTERNATIONAL, INC.

 Results of operations: quarter ended September 30, 1999 compared with quarter
ended September 30, 1998

  For the three months ended September 30, 1999, Wyndham (including its
consolidated subsidiaries) had hotel revenues of $562,720,000 as compared to
$554,331,000 during the three months ended September 30, 1998. The increase of
$8,389,000 or 1.5% was primarily a result of several offsetting factors.
Revenues increased from the acquisition of leaseholds from DTR North Canton
Inc. (the "Doubletree Lessee") and North Coast Hotels, L.L.C. ("North Coast"),
the buyout of the controlling interest of two hotels, Crowne Plaza Ravinia and
Wyndham Windwatch, and by the opening of several hotels which were previously
under development. This increase was offset by a series of assets sales that
have occurred from November 1998 and the spin-off of Interstate's third party
management business, which also included several leased hotels. Hotel expenses
increased $11,556,000 from $417,814,000 to $429,370,000, as with revenues,
this 2.8% difference was a result of the offsetting factors as discussed
above.

  Participating lease revenue declined to $341,000 from $8,932,000, in the
third quarter of 1999 as a result of the acquisition of the leaseholds from
third party lessees as discussed above. At September 30, 1999, Wyndham owned
one hotel that was leased to a third party, as compared to fourteen at
September 30, 1998.

  Management fee and service fee income was $13,968,000 and $24,358,000 for
the three months ended September 30, 1999 and 1998, respectively. The decrease
is primarily the result of the spin-off of Interstate's third party management
business on June 18, 1999.

  Interest and other income decreased from $6,274,000 for the three months
ended September 30, 1998 to $2,252,000 for the three months ended September
30, 1999. This decrease is primarily the result of $2,623,000 of business
interruption insurance proceeds received in the third quarter of 1998 as a
result of hurricane Georges.

  Total revenues and expenses from the racecourse facility operations were
$9,955,000 and $8,810,000 respectively, for the three months ended September
30, 1998. There were no revenues or expenses for the same period in 1999, as
the racetrack operations were sold in February of 1999.

  General and administrative expenses were $32,238,000 for the three months
ended September 30, 1999 as compared to $26,571,000 for the same period last
year. This increase of $5,667,000 is due in part to increases in salaries and
costs to attract and retain top management in the Company. In addition,
Wyndham has also reflected in general and administrative expenses, costs of
$2,028,000 for the quarter associated with becoming Year 2000 compliant and
$2,000,000 of additional professional fees related to the reorganization of
the Company. The increase was partially offset by the spin-off of Interstate's
third party management business.

  As discussed in Note 4, Wyndham recorded a restructuring charge of
$3,906,000 for the third quarter of 1999. Wyndham recorded these costs
primarily due to realignment of the luxury division. This resulted in the
closure of the Phoenix division office, and costs associated with severance
payments for staffing reductions, and office lease cancellation costs.

  Depreciation and amortization expense was $75,653,000 for the three months
ended September 30, 1999, compared to $68,236,000 for the three months ended
September 30, 1998. The increase in depreciation was primarily due to the
increase in capital renovations during the year, as well as the placement in
service of additional assets that were previously under development.

  Interest expense for the three months ended September 30, 1999 was
$85,478,000 compared to $82,739,000 in 1998 resulting in an increase of
$2,739,000. This increase was primarily a result of lower capitalized interest

                                      27
<PAGE>

for the current period. In the third quarter of 1999, capitalized interest
totaled $575,000 as compared to $3,619,000 for the same period last year. This
decrease was a result of the placement in service of several hotels that were
under development in the third quarter of 1998.

  In connection with the acquisition of certain leaseholds and license
agreements, Wyndham recognized an expense of $3,940,000 related to the cost of
acquiring these agreements for the third quarter of 1998; no such expenses
were recognized for the same period in 1999.

  In the third quarter of 1998, $525 million in treasury interest rate locks
with specified interest rates of 6.06%, 6.07% and 5.62% were settled resulting
in a charge to earnings of $49,225,000, no such charge was recognized for the
same period in 1999.

  Wyndham's share of losses from unconsolidated subsidiaries was $931,000 for
the three months ended September 30, 1999 as compared to income of $1,888,000
in 1998. The decrease is primarily a result of two hotels, Crowne Plaza
Ravinia and Wyndham Windwatch, no longer being accounted for as an equity
investment. In June of 1999, Wyndham acquired the 1% controlling interest in
these hotels, and as a result they are now being accounted for on a
consolidated basis.

  Minority interest's share of loss associated with the Operating Partnerships
was $4,722,000 for the nine months ended September 30, 1998. There was no
minority interest's share of loss associated with the Operating Partnerships
for the third quarter of 1999 due to amendments in the partnership agreements
at June 30, 1999, which amended the allocation of profit and loss to the
limited partners.

  Minority interest's share of income in Wyndham's other consolidated
subsidiaries was $760,000 in the third quarter 1999 as compared to $4,500,000
in the same period in 1998. This reduction in minority interest is due
primarily to the acquisition of the third party's interests in four hotels
from Snavely, five hotels from CIGNA, and the Omni Baltimore.

  The benefit for income taxes was $3,868,000 for the three months ended
September 30, 1999 as compared to a provision of $6,783,000 for the three
months ended September 30, 1998. For federal income tax purposes, the taxable
income from these entities cannot be consolidated with Wyndham's taxable
income or loss, and hence cannot be offset by operating losses created at the
Wyndham Partnership.

  The extraordinary loss of $1,257,000 for the three months ended September
30, 1998, was a result of the charge for the write-off of deferred loan costs
associated with debt refinancing of certain mortgage debt; no such expenses
were recognized for the same period in 1999.

  Primarily as a result of the foregoing, the Company reported a net loss of
$44,565,000 for the three months ended September 30, 1999 compared to a net
loss of $59,415,000 for the three months ended September 30, 1998.

 Results of operations: nine months ended September 30, 1999 compared with
nine months ended September 30, 1998

  For the nine months ended September 30, 1999, hotel revenues were
$1,829,882,000 as compared to $1,266,985,000 during the nine months ended
September 30, 1998. Of the approximate $562,897,000 increase, approximately
$376,451,000 was attributable to the 1998 acquisitions including Interstate,
Summerfield, Arcadian International and WHG, net of the leases which were
included in the Interstate spin-off. In addition, the purchase of the
remaining third party leaseholds interests, primarily CHC Lease Partners,
NorthCoast Hotels, and Doubletree Lessee, in June 1998, December 1998 and
January 1999 led to increases of hotel revenue of $110,934,000 as the
operations of the hotels during 1999 were consolidated in the statement of
operations, whereas in 1998, Wyndham was receiving a participating rent
payment. Additionally, $20,421,000 can be attributed to the hotels now in
operation which were previously under development, and the consolidation of
two hotels which were previously accounted on as an equity investment. Hotel
expenses increased from $924,471,000

                                      28
<PAGE>

in 1998 to $1,325,646,000 in 1999. As with revenues, the vast majority of this
increase is a result of these acquisitions and the acquisition of the third
party leaseholds. As a percentage of revenue, gross operating profits remained
relatively constant between periods rising from 27.0% in 1998 to 27.6% in
1999.

  The contributing factor of the decline in participating lease revenue from
$49,627,000 during the nine months ended September 30, 1998, to $929,000 for
the same period in 1999 was the acquisition of the third party leaseholds as
discussed above.

  Management fee and service fee income was $57,186,000 and $61,574,000 for
the nine months ended September 30, 1999 and 1998, respectively. The decrease
is primarily the result of a decrease in incentive fee income associated with
seventeen management contracts which were renewed in 1998 with no provision to
earn incentive fees, and management contracts lost during the period. This was
partially offset by the acquisition of third party management contracts
acquired through the Summerfield acquisition in June 1998, and the Interstate
management contracts also acquired in June 1998, but were included in the
Interstate spin-off on June 18, 1999.

  Interest and other income was $12,949,000 in 1998 as compared to $8,951,000
in 1999. The decrease of $3,998,000 resulted from a termination fee of
$2,950,000 and $2,623,000 of business interruption insurance proceeds received
in 1998.

  Total revenues from the racecourse facility operations (including interest
and other income) were $4,561,000 for the nine months ended September 30, 1999
compared to $34,945,000 for the same period last year. Total costs and
expenses associated with the racecourse operations (included marketing costs,
and general and administrative expenses) were $3,867,000 for the nine months
ended September 30, 1999 compared to $29,667,000 for the same period last
year. These decreases are due to the sale of Bay Meadows racecourse effective
February 1999.

  General and administrative expenses were $143,596,000 for the 1999 period
compared to $64,558,000 for the 1998 period. In part, the increase of
$79,038,000 is due to the increased overhead associated with the growth in the
portfolio of owned managed and leased hotels during 1998. However, the
significant portion of the increase was due to several factors as follows:

    As a result of the $1 billion equity investment, Wyndham incurred costs
  of $6,737,000 due to the acceleration of vesting of certain employees'
  stock awards and Wyndham incurred $3,818,000 of expenses in reviewing
  different strategic alternatives. The reorganization resulted in work
  associated with a high yield bond offering and a bond offering in Puerto
  Rico to cease, resulting in a write-off of costs associated with the
  offerings totaling $3,710,000 and $5,228,000 in other abandoned transaction
  costs.

    Wyndham also incurred $4,681,000 in legal and unwind fees in order to
  settle the forward equity contracts at September 30, 1999 and $5,095,000 of
  costs associated with the spin-off on Intestate's third-party management
  business.

    In addition, Wyndham has also reflected in general and administrative
  expenses, costs associated with becoming Year 2000 compliant of $5,703,000
  during 1999.

    Wyndham also recorded $4,695,000 in bad debt expense for the write-off of
  receivables from a hotel that Wyndham no longer intends to manage and has
  terminated the management contract.

  Cost of acquiring license agreements and leaseholds was $803,000 for the
nine months ended September 30, 1999 as compared to $61,000,000 for the same
period in 1998. This decrease is primarily due to the prior year amount
including the purchase of 17 leasehold interest acquired in connection with
the CHCI merger.

  As discussed in Note 4, Wyndham recorded $189,288,000 of costs associated
with the restructuring. The costs primarily consisted of the following:
$83,094,000 for the write off of an intangible asset associated with the
paired share structure which was abandoned on June 30, 1999, and $4,675,000
associated with severance payments due to the elimination of job
responsibilities. In addition, Wyndham reflected $82,957,000 in costs to
write-down assets to estimated fair values, including goodwill of $28,394,000
as a result of management's strategy to exit from the European market for non-
branded assets which will be sold, and $7,226,000 in staffing

                                      29
<PAGE>

reductions and other exit costs, primarily lease cancellations, necessary to
reduce Wyndham's infrastructure in Arcadian International, Wyndham's
management division in Europe. Wyndham also recorded a charge of $8,263,000
for the write-off of the Carefree trade name that will no longer be used with
any existing or future hotels. In the third quarter, Wyndham decided to close
its Phoenix division office and recorded $2,500,000 of costs associated with
severance, lease cancellations, and other exit costs, and $573,000 of
additional professional fees.

  Interest expense for the nine months ended September 30, 1999 was
$266,678,000 as compared to $172,191,000 for the same period last year. The
increase is due in part to the closing of $1.45 billion in debt in June 1998
for the merger with Old Interstate. Secondly, as a result of extending certain
maturities of the credit facilities, Wyndham paid $11,700,000 in fees which
has been reflected in interest expense. Finally, Wyndham assumed, and incurred
additional debt in order to finance the Summerfield, Interstate and Arcadian
transactions during 1998.

  In 1998, $525 million in treasury rate locks with specified interest rates
of 6.06%, 6.07%, and 5.62% were settled resulting in a charge to earnings of
$49,225,000. No such charge was recognized for the same period in 1999.

  Depreciation and amortization expense was $232,558,000 for the nine months
ended September 30, 1999 compared to $155,165,000 for the nine months ended
September 30, 1998. Of the $77,393,000 increase, $47,700,000 was attributable
to the significant transactions which occurred during the first nine months of
1998, which included Arcadian International in April 1998, and Summerfield,
CHCI, and Interstate in June 1998. The remaining increase is due to
depreciation on renovations at the hotels and amortization of goodwill.

  Wyndham's share of income from unconsolidated subsidiaries was $3,000,000
for the nine months ended September 30, 1999 as compared to $7,375,000 for the
nine months ended September 30, 1998. The decrease is primarily a result of
two hotels, Crowne Plaza Ravinia, and Wyndham Windwatch no longer being
accounted for as an equity investment. In June of 1999, Wyndham acquired the
1% controlling interest in these hotels, and thus are now being accounted for
on a consolidated basis. In addition, the decrease is due to the allocation of
losses from the company's approximate 55% investment in Interstate.

  The provision for income taxes increased from $11,273,000 for the nine
months ended September 30, 1998 to $651,053,000 for the nine months ended
September 30, 1999. The increase is primarily due to the $675,000,000 charge
recorded during June 1999 due to Patriot converting from a REIT to a C
corporation, and the operations of certain special purpose controlled
subsidiaries, which separately report and pay taxes on their taxable income.
For federal income tax purposes, the taxable income from these subsidiaries
cannot be consolidated with Wyndham's taxable income or loss and hence can not
be offset by operating losses created at the Wyndham Partnership.

  Minority interest's share of loss associated with the Operating Partnerships
was $6,642,000 for the nine months ended September 30, 1999 as compared to
$6,169,000 for the same period last year due to increased losses in the
Operating Partnerships prior to the amendments in the partnership agreements.

  Minority interest's share of income in Wyndham's other consolidated
subsidiaries was $4,824,000 in 1999 as compared to $7,514,000 in 1998. This
reduction in minority interest's share of income is due primarily to the
acquisition of the outside interests in four hotels from Snavely, five hotels
from CIGNA, and the Omni Baltimore.

  For the nine months ended 1998, certain debt obligations of Old Wyndham,
Interstate and Summerfield were repaid upon the merger and acquisition of
these entities. In addition, certain debt of WHG was refinanced in 1998. As a
result, Wyndham incurred certain prepayment penalties and wrote off the
remaining balance of unamortized deferred financing costs associated with such
debt resulting in an extraordinary loss of $31,817,000, net of minority
interest and income taxes. In connection with the new debt financing in 1999,
Wyndham wrote off the remaining balance of unamortized deferred financing
costs associated with the Old Credit facility resulting in an extraordinary
loss of $9,838,000, net of minority interest and income taxes.

  As a result, the net loss was $921,223,000 for the nine months ended
September 30, 1999 and $67,257,000 for the nine months ended September 30,
1998.

                                      30
<PAGE>

 Results of reporting segments: Quarter ended September 30, 1999 compared with
quarter ended September 30, 1998

  Wyndham's results of operations are classified into six reportable segments.
Those segments include Wyndham hotels, resort properties, all suite
properties, other proprietary branded properties, non-proprietary branded
properties and other.

  Wyndham hotel properties include Wyndham Hotels, Wyndham Gardens and Wyndham
Grand Heritage and represent approximately 22.0% and 19.7% of total revenue
for the three months ended September 30, 1999 and 1998, respectively. Total
revenue was $127,636,000 compared to $119,200,000 for the quarters ended
September 30, 1999 and 1998, respectively. Operating income for the Wyndham
hotels was $31,916,000 compared to $26,264,000 for the quarters ended
September 30, 1999 and 1998, respectively. The increases in both revenue and
operating income is primarily attributed to the opening of several Wyndham
branded hotels subsequent to the third quarter of 1998, such as Wyndham Dallas
Park Central, Wyndham Boston, Wyndham Downtown Atlanta, Wyndham Billerica, and
the acquisition of the controlling interest in the Wyndham Windwatch.

  Resort hotel properties, including Grand Bay and Wyndham represent
approximately 19.3% and 15.5% of total revenue for the quarters ended
September 30, 1999 and 1998, respectively. Total revenue was $111,827,000
compared to $93,344,000 for the quarters ended September 30, 1999 and 1998,
respectively. The increase of $18,483,000 is attributable in large part to
increased revenues at three resorts in Puerto Rico. These three hotels
experienced an increase in revenues of $16,372,000, primarily because their
revenues for the third quarter of 1998 were significantly affected by
hurricane Georges. Operating income for the resort properties was $11,667,000
compared to $7,886,000 for the quarters ended September 30, 1999 and 1998,
respectively. As with revenues, the increase in operating income of $3,781,000
can be attributed to the three resorts in Puerto Rico. These resorts reflected
a $3,745,000 increase from the prior quarter, as again the third quarter of
1998 was impacted by hurricane Georges.

  All suite properties, including Summerfield and Sierra, represent
approximately 6.4% and 5.7% of total revenue for the three months ended
September 30, 1999 and September 30, 1998. Total revenue and operating income
were $37,128,000 and $8,253,000, respectively, for the three months ended
September 30, 1999, compared to $34,295,000 and $9,499,000, respectively, for
the three months ended September 30, 1998. The increase in revenues can
primarily be attributed to the branding of the Plaza Park hotel as a
Summerfield Suites. In the third quarter of 1998, this hotel was leased to a
third party, NorthCoast hotels.

  Other proprietary branded properties, including Malmaison, Grand Heritage,
Clubhouse and hotels acquired in the Arcadian acquisition, represent
approximately 4.7% and 4.4% of total revenue for the quarters ended September
30, 1999 and 1998, respectively. Total revenue was $27,150,000 compared to
$26,426,000 for the quarters ended September 30, 1999 and 1998, respectively.
Operating income for these properties was $8,317,000 and $8,885,000 for the
quarters ended September 30, 1999 and 1998, respectively.

  Non-proprietary branded properties, including Hilton, Holiday Inn, Marriott,
Ramada, Radisson, Hampton and other major hotel franchises, represent
approximately 44.6% and 46.5% of total revenue for the quarters ended
September 30, 1999 and 1998, respectively. Total revenue was $258,978,000
compared to $281,066,000 for the quarters ended September 30, 1999 and 1998,
respectively. The decrease is due primarily to the spin-off of several leases
in connection with the Interstate spin-off on June 18, 1999, as well as the
sale of non-proprietary branded assets throughout the year. This decrease was
partially offset by the acquisitions of leaseholds from North Coast and the
Doubletree Lessee in November 1998 and January 1999. Operating income for
these properties was $61,492,000 and $57,403,000 for the quarters ended
September 30, 1999 and 1998, respectively. The increase in operating income is
primarily attributable to the acquisition of leaseholds from NorthCoast and
the Doubletree Lessee.

  Other represents revenue from various operating businesses including
management and other service companies, and participating lease revenue for
one hotel and a parcel of land. Expenses in this segment are primarily
interest, depreciation, amortization and corporate general and administrative
expenses. Wyndham recorded restructuring expenses that have also been included
in this segment. Total revenue for the other segment

                                      31
<PAGE>

was $16,562,000 and $49,519,000 for the quarters ended September 30, 1999 and
1998, respectively. The overall $31,488,000 decrease in this segment's revenue
was caused by several factors including, the sale of the Bay Meadows Race
Track operations and leasehold effective February 1, 1999 which reduced
revenue by approximately $9,955,000. The purchase of the remaining third party
leasehold interests, North Coast Hotels in June and December of 1998,
respectively, reduced participating lease revenue by $8,591,000 and third
party management fees decreased by $10,390,000 primarily from the spin-off of
Interstate's third party management business. Operating losses for the segment
were $167,905,000 and $163,422,000 for the quarters ended September 30, 1999
and 1998, respectively. In addition to the decrease in revenues, the increase
in the segment's operating loss is a result of increased expenses. Interest
expense increased $2,739,000, depreciation and amortization increased
$7,417,000 and corporate general and administrative expense increased
$5,667,000. The sale of the Bay Meadows Race Track accounted for an
approximate $8,810,000 decrease in expenses. Wyndham also recorded a
restructuring charge of $3,906,000.

 Results of reporting segments

  Nine months ended September 30, 1999 compared with nine months ended
September 30, 1998

  Wyndham hotel properties represent approximately 21.9% and 27.3% of total
revenue for the nine months ended September 30, 1999 and 1998, respectively.
Total revenue was $417,572,000 in 1999 as compared to $388,847,000 in 1998 or
an increase of 7.3%. Operating income was $114,762,000 in 1999 as compared to
$99,045,000 in 1998. The increase in both revenues and operating income is
primarily a result of the rebranding of certain hotels acquired in 1998 from
non-proprietary brand to Wyndham Hotels, as well as the opening of several
Wyndham hotels which were under development now placed in service.

  Resort hotel properties represent approximately 20.9% and 20.6% of total
revenue for the nine months ended September 30, 1999 and 1998 respectively.
Total revenue increased from $293,570,000 to $397,482,000 while operating
income increased from $67,058,000 in 1998 to $98,824,000 in 1999. The increase
is primarily due to the acquisition of the remaining partner's interest in
resorts acquired in the merger with WHG Casinos & Resorts Inc. ("WHG") in
March 1998. Prior to the acquisition, Wyndham accounted for its investment in
El Conquistador and El San Juan, on the equity basis of accounting. Subsequent
to the purchase of the partners' interest, the operations were consolidated
into the statement of operations. In addition, hurricane Georges adversely
affected 1998's third quarter revenues and earnings at several Wyndham resort
properties.

  All suite properties represent approximately 5.5% and 3.1% of total revenue
for the nine months ended September 1999, as compared to the same period in
1998. Total revenue increased from $44,470,000 to $105,433,000 and operating
income increased from $10,313,000 to $22,663,000 for the nine months ended
1998 to 1999, respectively. Summerfield was not acquired until June of 1998;
the timing of the acquisition is the primary reason for the increase of both
revenues and operating income.

  Other proprietary branded properties represent approximately 3.9% and 3.9%
of total revenue for the nine months ended September 1999, as compared to the
same period in 1998. Total revenue increased from $55,691,000 to $73,860,000
and operating income increased from $18,945,000 to $21,794,000 for the nine
months ended 1998 to 1999. The hotels acquired in the Arcadian acquisition
were not acquired until April of 1998, accounting primarily for the increase
of both revenues and operating income.

  Non-proprietary branded properties represent approximately 43.9% and 34.0%
of total revenue for the nine months ended September 1999, as compared to
1998. Total revenue increased from $484,406,000 to $835,535,000 and operating
income increased from $118,424,000 to $197,971,000 for the nine months ended
1998 to 1999, respectively. The increase is due primarily to the acquisition
of the owned and leased Interstate properties, and the leasehold interest in
CHC Lease Partners, NorthCoast, and the Doubletree Lessee. The increases were
partially offset by asset sales during the year, as well as the loss of
certain leaseholds in the Interstate spin-off.


                                      32
<PAGE>

  Other represents revenue from various operating businesses including
management and other service companies, and participating lease revenue for
one hotel and a parcel of land. Expenses in the segment are primarily
interest, depreciation and amortization and cooperate general and
administrative expenses. In 1999, Wyndham also recorded restructuring expenses
that have also been included in this segment. Total revenue for the other
segment was $71,627,000 and $159,096,000 for the nine months ended September
30, 1999 and September 30, 1998 respectively. The overall $87,469,000 decrease
in this segment's revenue was caused by several factors. The sale of Bay
Meadows Race Track operations and leasehold effective February 1, 1999 reduced
revenue by $30,384,000. The purchase of the third party leasehold interests,
primarily CHC Lease Partners and NorthCoast Hotels reduced participating lease
revenue by $48,698,000. Operating losses for the segment were $721,164,000 and
$343,982,000 for the nine months ended September 30, 1999 and 1998,
respectively. In addition to the decrease in revenues, the increase in the
segment's operating loss is a result of increased expenses resulting from the
mergers and acquisitions in 1998. Interest expense increased $94,487,000,
depreciation and amortization increased $77,393,000 and corporate and general
and administrative expenses increased $79,038,000. The sale of the Bay Meadows
Racetrack accounted for an approximate $25,800,000 decrease in expenses, and
the cost of acquiring the third party leaseholds in 1998 decreased expenses by
an additional $60,197,000. However, Wyndham recorded a restructuring charge in
1999 of $189,288,000 contributing to the loss in this segment.

 Statistical information

  During 1999, Wyndham's portfolio of owned and leased hotels experienced
moderate growth in both average daily rate ("ADR") and revenue per available
room ("REVPAR") of approximately 1.2% and 0.8% for the three months ended
September 30, 1999, and 2.0% and 1.2% for the nine months ended September 30,
1999, respectively, while occupancy remained relatively stable. Management
attributes this growth to continued marketing efforts throughout the portfolio
on hotels that have been newly renovated, and repositioned in certain cases,
as well as to the current market conditions in the U.S. lodging industry. The
following table sets forth certain statistical information for Wyndham's owned
and leased hotels for the three and nine month periods ended September 30,
1999 and 1998 as if the hotels were owned at the beginning of the periods
presented.

<TABLE>
<CAPTION>
                                         Three months ended September 30
                                    -------------------------------------------
                                    Occupancy         ADR           REVPAR
                                    ----------  --------------- ---------------
                                    1999  1998   1999    1998    1999    1998
                                    ----  ----  ------- ------- ------- -------
<S>                                 <C>   <C>   <C>     <C>     <C>     <C>
Wyndham Branded Hotels............. 70.6% 70.7% $107.59 $105.17 $ 75.99 $ 74.35
Grand Bay Hotels & Resorts......... 67.2% 64.7% $232.88 $232.99 $156.42 $150.62
Summerfield and Sierra Suites...... 82.4% 85.7% $120.61 $116.98 $ 99.35 $100.21
Malmaison.......................... 84.8% 83.4% $121.65 $123.49 $103.15 $102.99
Clubhouse.......................... 60.5% 69.5% $ 65.90 $ 67.53 $ 39.88 $ 46.95
Arcadian........................... 66.3% 62.4% $143.30 $148.88 $ 94.94 $ 92.80
Non Proprietary Brands............. 72.3% 72.2% $101.88 $101.89 $ 73.66 $ 73.57
Weighted average................... 72.0% 72.3% $107.53 $106.21 $ 77.45 $ 76.83
<CAPTION>
                                         Nine months ended September 30
                                    -------------------------------------------
                                    Occupancy         ADR           REVPAR
                                    ----------  --------------- ---------------
                                    1999  1998   1999    1998    1999    1998
                                    ----  ----  ------- ------- ------- -------
<S>                                 <C>   <C>   <C>     <C>     <C>     <C>
Wyndham Branded Hotels............. 72.2% 72.6% $120.73 $117.71 $ 87.16 $ 85.48
Grand Bay Hotels & Resorts......... 71.3% 69.8% $279.76 $277.65 $199.36 $193.75
Summerfield and Sierra Suites...... 81.6% 83.3% $118.05 $117.12 $ 96.38 $ 97.56
Malmaison.......................... 84.0% 78.1% $124.23 $120.94 $104.30 $ 94.41
Clubhouse.......................... 60.1% 68.5% $ 66.91 $ 68.19 $ 40.21 $ 46.70
Arcadian........................... 65.0% 58.4% $135.09 $139.03 $ 87.81 $ 81.23
Non Proprietary Brands............. 71.7% 72.3% $103.56 $102.25 $ 74.29 $ 74.01
Weighted average................... 72.3% 72.9% $113.95 $111.74 $ 82.42 $ 81.46
</TABLE>


                                      33
<PAGE>

  LIQUIDITY AND CAPITAL RESOURCES

  Cash and cash equivalents as of September 30, 1999 were $216.1 million,
including restricted cash of $102.3 million. Cash and cash equivalents as of
September 30, 1998 were $147.4 million, including capital improvement reserves
of $29.1 million.

 Cash flow provided by operating activities

  Wyndham's principal source of cash to fund operating expenses and pay
dividends on its preferred stock is cash flow provided by operating
activities. Wyndham's principal source of cash flow is from the operation of
the hotels that it owns, leases and manages. Cash flows from operating
activities were $104.2 million for the nine months ended September 30, 1999,
and $231.3 million for the nine months ended September 30, 1998. The decrease
is primarily due to increased interest expense and general and administration
expenses related to evaluating strategic alternatives and certain severance
costs.

  As a result of the reorganization, Wyndham will pay significantly more in
federal income taxes, but will have the ability to retain significantly more
earnings than was previously the case because Wyndham is not required to
distribute at least 95% or more of its taxable income to its shareholders.
Wyndham anticipates that its enhanced ability to retain earnings will allow it
to utilize cash flow from operating activities to fund maintenance, capital
expenditures and acquisitions. Wyndham does not anticipate paying a dividend
to its common shareholders. However, for the first six years, dividends on the
series B convertible preferred stock are structured to ensure an aggregate
fixed cash dividend payment of $29.25 million per year, so long as there is no
redemption or conversion of the investors' preferred stock; therefore, for
that period, dividends are payable partly in cash and partly in additional
shares of preferred stock. For the following four years, dividends are payable
in cash or additional shares of series B convertible preferred stock as
determined by the Board of Directors. After year ten, dividends are payable
solely in cash. The series A convertible preferred stock, which has the same
economic terms as the series B convertible preferred stock, will also require
dividend payments in cash and additional shares of series A convertible
preferred stock, with the aggregate amounts being dependent upon the number of
shares of series A convertible stock purchased pursuant to the rights
offering.

 Cash flows from investing and financing activities

  Cash flows used in investing activities of Wyndham were $220.3 million for
the nine months ended September 30, 1999, resulting primarily from the
acquisition of hotel properties, property renovations and improvements, and
cash deposited as escrows and property improvement reserves. Cash flows
provided by financing activities of $106.8 million for the nine months ended
September 30, 1999 were primarily related to the net proceeds from the sale of
the series B preferred stock, the net proceeds from the new credit facility
and the net proceeds from the new mortgage debt, partially offset by the
repayment of the old credit facility, term loans, and the settlement of the
forward equity contracts.

  Cash flows used in investing activities of Wyndham were $1.5 billion for the
nine months ended September 30, 1998, resulting primarily from the acquisition
of hotel properties and management companies, renovation expenditures at
certain hotels, as well as cash deposited as collateral under the forward
equity contracts. Cash flows from financing activities of $1.3 billion for the
nine months ended September 30, 1998 were primarily related to borrowings
under the revolving credit facility and mortgage notes, and net proceeds from
private placements of equity securities, net of payments of dividends and
distributions.

  As of September 30, 1999, Wyndham had approximately $1.3 billion outstanding
under the term loan, $650 million outstanding under the increasing rate loan
facility, and $100 million outstanding under the revolving credit facility.
Additionally, Wyndham had outstanding letters of credit totaling $24.4
million. As of September 30, 1999, Wyndham also had over $1.5 billion of
mortgage debt outstanding that encumbered 84 hotels and approximately $35.6
million in other debt, resulting in total indebtedness of approximately $3.5
billion. As of September 30, 1999, Wyndham had $375.6 million of additional
availability under the new revolving credit facility.


                                      34
<PAGE>

 Forward equity transactions

  Wyndham's aggregate obligation under the forward equity transactions was
approximately $335.8 million at June 30, 1999. Effective June 30, 1999,
Wyndham settled in full all of the forward equity transactions in cash, with
part of the proceeds of the $1 billion equity investment. The 100.7 million
shares owned or held by the counterparties were retired effective June 30,
1999.

 Credit facility and term loan

  Wyndham's old credit facility with The Chase Manhattan Bank, Chase
Securities, Inc. and Paine Webber Real Estate consisted of a $900 million
revolving credit facility and a series of term loans in the aggregate amount
of $1.8 billion. Interest rates were based on Wyndham's leverage ratio and
varied from 1.5% to 3.0% over LIBOR. On June 30, 1999 the credit facility and
term loans were repaid with net proceeds of the $1 billion equity investment
and the new credit facilities.

 New credit facility

  Concurrent with the closing of the $1 billion equity investment, Wyndham
closed on a new $2.45 billion credit facility which consists of a $1.3 billion
term loan with a seven year term, a $500 million revolving credit facility
with a five year term, and a $650 million increasing rate loan facility with a
five year term. Proceeds, net of closing costs and fees of approximately $41.1
million from the term loan and the revolving credit facility, and proceeds,
net of closing costs and fees of approximately $17.9 million from the
increasing rate loan facilities, were used to retire existing indebtedness.

  Interest rates are based upon LIBOR spread varying from 2.75% to 3.50% per
annum for the term loan, and 1.25% to 2.75% per annum for the revolving credit
facility, based both on Wyndham's leverage ratio, as defined, and whether any
increasing rate loans are outstanding. If any of the increasing rate loan
facility remains outstanding, the applicable margins shall be increased by
0.25%. The term loan and the revolving credit facility are guaranteed by the
domestic subsidiaries of Wyndham, and are secured by pledges of equity
interest held by Wyndham and its subsidiaries. Wyndham's ability to borrow
under its revolving credit facility is subject to Wyndham's compliance with a
number of customary financial and other covenants, including total leverage
and interest coverage ratios.

  Interest rates for the increasing rate loans are based on LIBOR rates (less
statutory reserves), plus 3.50% through September 30, 1999, and increasing
0.50% every three months, with a cap of LIBOR plus 4.75%. The lender under the
increasing rate loans receive the benefit of the same guarantees and pledges
of security provided under the new term loan, and revolving credit facility.

 New mortgage debt

  Effective June 30, 1999, Wyndham also closed on a $346 million mortgage loan
with Bear, Stearns Funding, Inc., which is secured by twenty-five properties.
The loan matures on July 1, 2004 and bears interest at the LIBOR rate, plus
3.25% per annum. Proceeds from the mortgage debt were used to retire existing
mortgage indebtedness.

  Additionally, effective June 30, 1999, Wyndham closed on a $235 million
mortgage loan with Lehman Brothers Holdings Inc., which is secured by ten
properties. The mortgage loan has a three-year term, with a one year extension
option, and bears interest at the LIBOR rate plus 3.50% per annum, plus an
additional 1.75% on the principal amount payable at maturity. Proceeds from
this mortgage loan were used to retire existing mortgage indebtedness.

 Renovations and capital improvements

  During the first nine months of 1999, Wyndham invested approximately $146.5
million in capital improvements, development projects and renovations.
Management reserves an average of 4.0% of total hotel

                                      35
<PAGE>

revenues, and believes such amounts are sufficient to fund recurring capital
expenditures for the hotels. Capital expenditures, exclusive of renovations,
may exceed 4.0% of total hotel revenues in a single year.

  Wyndham 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 Wyndham's ability to raise
room rates in the face of inflation.

 Seasonality

  The hotel industry is seasonal in nature. Revenues for certain of Wyndham's
hotels are greater in the first and second quarters of a calendar year and at
other hotels in the second and third quarters of a calendar year. Seasonal
variations in revenue at the hotels may cause quarterly fluctuations in the
Wyndham's revenues.

 Year 2000 Compliance

  Many computer systems were not designed to interpret any dates beyond 1999,
which could lead to business disruptions in the United States and
internationally (the "Year 2000 issue"). Wyndham recognized the importance of
minimizing the number and seriousness of any disruptions that may occur as a
result of Year 2000 and implemented an extensive compliance program. The
compliance program involved three major program areas:

  . corporate information technology infrastructure and reservation systems

  . other electronic assets, which include automated time clocks; point-of-
    sale systems; non-information technology systems, such as embedded
    technologies that operate fire-life safety systems, phone systems, energy
    management systems; and other similar systems

  . third parties with whom Wyndham conducts business

  Wyndham applied a three phase approach to each program area:

  . Inventory Phase--identified systems and third parties that may be
    affected by Year 2000 issues

  . Assessment Phase--prioritized the inventoried systems and third parties,
    assessed their Year 2000 readiness, and planned corrective actions

  . Remediation Phase--implemented corrective actions, verified
    implementation, and formulated contingency plans

  Wyndham, working with its consultants, identified various systems that were
not Year 2000 compliant and developed appropriate remediation plans. To
determine which of its systems were not compliant, Wyndham inventoried and
assessed its corporate information technology infrastructure and reservation
systems, and the information technology and other electronic assets located in
Wyndham's hotels (the "Wyndham Compliance Hotels") for which it could
implement independently or was authorized to implement its Year 2000
compliance program. At September 30, 1999, Wyndham could not initiate
independently, nor was it authorized to implement, its compliance program at
72 hotels, of which 31 were either managed, but not owned, by Wyndham and 41
were owned, but not operated, by Wyndham (the "Third Party Compliance
Hotels").

  Wyndham believes that it has effected or will effect the necessary
remediation of its systems and other electronic assets that were identified as
failing to be Year 2000 compliant, and thereby will avoid substantial problems
arising from Year 2000 issues. Wyndham continues to monitor and randomly test
its systems to confirm the successful remediation of its systems. As a result
of those efforts, Wyndham may undertake additional

                                      36
<PAGE>

reprogramming, upgrading and systems replacements in limited circumstances in
order to further correct any problems that did not surface during the initial
implementation and testing of those systems. Other than those limited
circumstances, Wyndham has completed its remediation efforts involving its
corporate information technology infrastructure and reservation systems, and
the Wyndham Compliance Hotels other than 16 hotels that are expected to be
completed during November 1999. To avoid any additional Year 2000 induced
conflicts in its systems or introduction of additional non-compliant systems,
Wyndham expects to limit any non-essential changes to its information
technology systems and related equipment until after January 1, 2000.

  Of the 41 Third Party Compliance Hotels owned by Wyndham, the managers of 16
of those hotels have completed remediation plans and the managers of the other
25 hotels have recommended remediation plans to Wyndham and are expected to
complete those plans in the fourth quarter of 1999. Of the 31 Third Party
Compliance Hotels owned by third parties the owners of 26 hotels committed to
effecting their own remediation, without Wyndham's involvement, and as of
September 30, 1999, had informed Wyndham that 7 hotels were completed and the
remaining 19 were to be completed during the fourth quarter of 1999. The third
party owners of the remaining 5 Third Party Compliance Hotels have neither
informed Wyndham of whether they have undertaken any remediation nor
authorized Wyndham to effect any remediation on their behalf. At September 30,
1999 the 24 Third Party Compliance Hotels that were not owned by third parties
which had not yet completed or informed Wyndham of their compliance efforts
represent 11 percent of Wyndham's hotels (based on number of rooms).

  Wyndham has surveyed the Year 2000 compliance of the owners of the hotels
that are franchised under the Wyndham brand but are not managed by Wyndham.
Wyndham has informed those owners of the appropriate standards to make their
equipment, which operates or interacts with Wyndham's systems, Year 2000
compliant. As of September 30, 1999, 5 of the 11 franchisees had informed
Wyndham that their hotels were Year 2000 compliant. An additional 6
franchisees provided assurances to Wyndham that they would be in compliance
prior to the end of the fourth quarter of 1999. One franchisee has yet to
confirm the status of its hotel. As the systems at the franchised hotels are
not under Wyndham's control, Wyndham must rely on the information provided by
those owners or managers/operators and will not be able to test the assessment
or remediation effected at the franchised hotels.

  As of September 30, 1999, Wyndham had expended or committed to expend
approximately $24 million in connection with Year 2000 issues, and expects to
spend an additional $6 million. Wyndham does not expect the anticipated
expenditures to increase materially during the fourth quarter of 1999.

  As part of the settlement of litigation arising out of Wyndham's merger with
Old Interstate, Wyndham agreed to contribute to a new company the management
rights that were acquired in that merger, and then dispose of substantially
all of that new company's stock by means of a spin-off to stockholders or
otherwise. That spin-off was completed as of June 18, 1999, and Wyndham does
not expect to bear any of the costs related to the inventory, assessment or
remediation of those hotels.

  Wyndham identified the vendors and service providers critical to its
businesses and requested those parties to provide information concerning their
Year 2000 compliance and remediation efforts. Wyndham received responses from
59 percent of those vendors as of September 30, 1999. Based on preliminary
responses, Wyndham believes that its most critical vendors and service
providers will not cause Wyndham's operations to be materially disrupted as a
result of Year 2000 issues. Wyndham continues to seek additional information
from those parties that did not respond or did not provide sufficient
information, but cannot guarantee that all vendors or service providers will
comply with these requests. More importantly, Wyndham must rely on the
information provided by those third parties and will not be able to test their
compliance to verify the reported state of compliance. Wyndham intends to
continue to evaluate the extent to which it will be able to replace vendors
and service providers that are expected to be non-compliant. Considering the
lack of responses from vendors and due to the lack of alternate sources,
Wyndham expects it will be required to remain with potentially non-compliant
vendors and service providers.

  In addition to those systems within Wyndham's control and the control of
Wyndham's vendors and service providers, there are other systems that may
impact Wyndham's business as a result of failing to become Year 2000 compliant
by January 1, 2000. These systems could affect the operations of the air
traffic control system and airlines or other segments of the lodging and
travel industries, or the economy and travel generally. In

                                      37
<PAGE>

addition, the systems at the Third Party Compliance Hotels or the hotels
franchised under Wyndham's brands whose owners and managers/operators are
implementing their own compliance programs may fail to become Year 2000
compliant. The systems that are outside of Wyndham's control or influence
could adversely affect Wyndham's financial condition, results of operations or
its business reputation.

  Wyndham believes that the most likely consequences of Year 2000 induced
failures will be local in nature and result in disruptions to utilities,
transportation and food services. Wyndham has developed contingency plans to
address these types of potential Year 2000 induced failures in addition to
contingency plans that anticipate the failure of one or more information
systems. Wyndham's contingency plans are based on existing plans for
operations during storms and other natural disasters resulting in the
disruption of these types of services and are intended to permit a hotel to
continue its operations for a reasonable short-term period without these
services. While Wyndham has developed an individualized contingency plan for
each hotel it manages and operates, any disruption in utilities or other key
local services could have the effect of disrupting operations of several
hotels located in that geographic area, thereby eliminating the potential
back-up services from another hotel and impairing the implementation of the
contingency plans.

  Wyndham's financial condition, results of operations and its business
reputation could be affected adversely as a result of Year 2000 issues if:

  . Wyndham's remediation efforts were unsuccessful and its contingency plans
    were not effective or implemented successfully

  . third parties' failure to become Year 2000 compliant disrupts the
    operation of Wyndham's hotels or decreases the demand for Wyndham's
    services generally

  . the Third Party Compliance Hotels' remediation efforts were unsuccessful

  . the third-party managers/operators of hotels owned by Wyndham fail to
    develop effective contingency plans or to implement them successfully

  . demand for hotel services decreases due to travelers' general concerns in
    regard to Year 2000 issues

                                      38
<PAGE>

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS

  Wyndham's primary market risk exposure is to future changes in interest
rates related to its derivative financial instruments and other financial
instruments including debt obligations, interest rate swaps, interest rate
caps, and future debt commitments.

  Wyndham manages its debt portfolio by periodically entering into interest
rate swaps and caps to achieve an overall desired position of fixed and
floating rates or to limit its exposure to rising interest rates.

  The following table provides information about Wyndham's derivative and
other financial instruments that are sensitive to changes in interest rates.

  . For fixed rate debt obligations, the table presents principal cash flows
    and related weighted-average interest rates by expected maturity date and
    contracted interest rates at September 30, 1999. For variable rate debt
    obligations, the table presents principal cash flows by expected maturity
    date and contracted interest rates at September 30, 1999.

  . For interest rate swaps and caps, the table presents notional amounts and
    weighted-average interest rates or strike rates by expected (contractual)
    maturity dates. Notional amounts are used to calculate the contractual
    cash flows to be exchanged under the contract. Weighted average variable
    rates are based on implied forward rates in the yield curve at September
    30, 1999.

<TABLE>
<CAPTION>
                                                                                             Face       Fair
                            1999       2000       2001      2002      2003    Thereafter    Value      Value
                          --------  ----------  --------  --------  --------  ----------  ---------- ----------
                                                      (dollars in thousands)
<S>                       <C>       <C>         <C>       <C>       <C>       <C>         <C>        <C>
Debt
Long-term debt
 obligations including
 Current Portion
 Fixed Rate.............  $  1,167  $   33,790  $  8,288  $ 46,092  $  6,726  $  335,191  $  431,254 $  431,254
 Average Interest Rate..      8.59%       8.68%     7.83%     8.89%     8.55%       8.17%
 Variable Rate..........  $  6,588  $  178,060  $146,102  $280,110  $ 38,078  $2,469,348  $3,118,286 $3,118,286
 Average Interest Rate..      9.09%       7.65%     7.72%     8.50%     8.30%       8.78%
Interest Rate Derivative
 Financial Instruments..
 Related to Debt........
Interest Rate Swaps
 Pay Fixed/Receive
  Variable..............       --   $  491,603  $ 30,453  $500,000  $250,000         --   $1,272,056 $1,277,440
 Average Pay Rate.......      5.94%       5.94%     5.98%     6.00%     5.84%
 Average Receive Rate...      5.83%       5.88%     6.36%     6.58%     6.67%
Interest Rate Caps
 Notional Amount........  $208,750  $1,500,000  $ 57,475       --        --   $   28,600  $1,794,825 $1,795,140
 Strike Rate............      7.39%       7.04%     7.80%     8.50%     8.50%       8.50%
 Forward Rate...........      5.83%       5.88%     6.36%     6.58%     6.67%       6.73%
</TABLE>

                                      39
<PAGE>

                          PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

  On June 29, 1992 an action for trademark infringement was filed in the New
York Supreme County of New York, Index No. 17474/92 titled Wyndham Hotel
Company, John Mados, and Suzanne Mados et al v. Wyndham Hotel Company. Ltd. It
is based upon the Madoses' alleged use of the mark WYNDHAM in connection with
the Wyndham Hotel located in Manhattan, New York City, and operated by the
Madoses since 1966 pursuant to a lease agreement entered into by the Madoses
on June 1, 1957. The case was tried in May 1996, and an order and partial
judgement was entered in March 1998. The order enjoins us from using the name
and mark "Wyndham" in connection with the advertising, promoting, managing or
operating a hotel in Manhattan, New York City, and places restrictions on
Wyndham's use of the name and mark "Wyndham" in all other areas of New York
outside of Manhattan. In November 1998, an order was issued clarifying the
original order and a final judgment was entered. In December 1998, Wyndham
appealed that judgment to the New York Supreme Court, Appellate Division,
First Department. In January 1999, Wyndham moved for a stay of the injunction
pending appeal which motion was granted by the Appellate Division, First
Department on February 4, 1999. On May 18, 1999 the Appellate Division, First
Department rendered a decision and order affirming the final judgment. On May
24, 1999, Wyndham filed a motion for permission to appeal that decision to the
Court of Appeals of the State of New York. In July 1999, Wyndham received
notice that the Court of Appeals of the State of New York would not hear the
appeal.

  Patriot and Old Wyndham have received two letters dated November 11, 1998
and December 2, 1998 (the "Letters") from the counsel for the Koffman family
and its affiliates (collectively, "Koffman") in connection with a Registration
Rights Agreement entered into as of March 31, 1998 (the "Agreement") among
Patriot, Old Wyndham and the Holders as defined therein, which such Holders
include Koffman. Counsel has asserted in the Letters that, in connection with
Patriot's and Old Wyndham's exercise of their "black-out" rights under the
Agreement, on October 8, 1998 Patriot and Old Wyndham are in breach of their
obligations to Koffman under the Agreement. Counsel has stated in the Letters
that Koffman will seek relief from Patriot and Old Wyndham for any losses that
Koffman may have sustained in connection with Patriot's and Old Wyndham's
alleged breach of the Agreement and also have implied that Koffman may file
against Patriot and Old Wyndham unspecified claims allegedly arising under the
federal securities laws. If Patriot and Old Wyndham are sued, they plan to
vigorously defend this lawsuit.

  Patriot and Old Wyndham have disclosed various matters relating to Patriot
and Old Wyndham in their Form 8-K filed with the Securities and Exchange
Commission on November 9, 1998 including, without limitation, an assertion by
UBS AG, London Branch ("UBS") that Patriot and Old Wyndham are in default
under the terms of a forward contract by and among Patriot, Old Wyndham and
UBS. Patriot and Old Wyndham also have disclosed various matters in their
Joint Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on March 26, 1999, and in registration statements on Form S-3
(filed on April 28, 1999) and Form S-4 (filed on April 14, 1999).

  On January 12, 1999, a putative class action lawsuit was filed on behalf of
the shareholders of Patriot and Old Wyndham in the Delaware Chancery Court.
This lawsuit, captioned Charles Fraschilla v. Paul A. Nussbaum, et al., No.
16895-NC, names as defendants Patriot, the then Patriot directors ("Patriot
Directors"), and Apollo Real Estate Advisors, L.P., Apollo Management, L.P.,
The Thomas H. Lee Company, Beacon Capital Partners, Inc. and Rosen Consulting
Group (collectively, the "Investors"). This lawsuit alleges, among other
things, that the Patriot Directors breached their fiduciary duties to
Patriot's then shareholders with respect to Patriot's financial condition and
by "effectively selling control" of Patriot to the Investors for inadequate
consideration and without having adequately considered or explored all other
alternatives to the sale or having taken steps to maximize shareholder value;
and the Investors aided and abetted the Patriot Directors in their purported
breaches of fiduciary duty. In the complaint, the plaintiff seeks an
injunction preventing the consummation of the deal with the Investors (which
Investment now has been consummated) and monetary damages.


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  On January 19, 1999, three additional and similar putative class action
lawsuits were filed in the same court by different purported class
representatives: Sybil R. Meisel and Steven Langsam, Trustees v. Paul A.
Nussbaum, et al., No 16905-NC; Crandon Capital Partners v. Paul A. Nussbaum,
et al., No. 16906-NC; and Robert A. Staub v. Paul A. Nussbaum, et al., No.
16907-NC. The four suits since have been consolidated under the Fraschilla
caption.

  The parties have negotiated and entered into a stipulation of settlement to
settle these four putative consolidated class action lawsuits, dated on or
about September 17, 1999. The Stipulation of settlement sets forth the
principal bases for the settlement, which include, among other things, the
modification of Wyndham's obligations to make the optional $300 million rights
offering (the "Rights Offering") specified in Section 6.13 of the Securities
Purchase Agreement, as follows: (a) Wyndham shall make the Rights Offering;
(b) the Rights Offering shall be made no earlier than 60 days after the
Closing Date, as defined in the Securities Purchase Agreement (the "Closing
Date"), and shall be held open for a period of not less than 30 days, and
Wyndham shall use its good faith efforts to commence the Rights Offering no
later than 120 days after the Closing Date; provided, however, that Wyndham
will not be required to make the Rights Offering if: (i) the SEC does not
declare effective any registration statement with regard to securities of
Wyndham to be offered in the Rights Offering; (ii) there is a pending court
order, motion, legal proceeding or other action to enjoin, prevent or delay
the Rights Offering; or (iii) the Rights Offering cannot be completed, despite
Wyndham's good faith efforts, within 170 days of the Closing Date. The
Stipulation of Settlement has been approved by order of the Delaware Chancery
Court dated November 1, 1999.

  In the courts order, the Court certified, for purposes of settlement, a non-
opt out, binding class of all persons and entities (exclusive of defendants
and their affiliates) who owned shares of Wyndham common stock beneficially or
of record, as of September 30, 1999 and/or sold shares of Patriot or Wyndham
common stock during the period from January 12, 1999 to and including
September 30, 1999 (the "Class"). The Court approved the settlement, including
dismissing with prejudice all claims of the plaintiffs and the Class against
the Defendants and others and approved an award of attorneys' fees to counsel
for the plaintiffs in the amount of $1.125 million. The court order has not
yet become final.

  On February 3, 1999, McNeill Investment Company, Inc. filed a lawsuit
against Patriot in the United States District Court for the Western District
of Pennsylvania. In the lawsuit, captioned McNeill Investment Company, Inc. v.
Patriot American Hospitality, Inc., No 99-165, the plaintiff alleges that
Patriot breached its obligations under a registration rights agreement that
Patriot became obligated under through its merger transaction with Interstate
Hotels Corporation. On March 26, 1999, Patriot filed an answer to the
complaint in which it denied all liability. Wyndham plans to vigorously defend
this lawsuit.

  On May 7, 1999, a putative class action lawsuit was filed in the United
States District Court for the Northern District of California on behalf of
former shareholders of California Jockey Club and Bay Meadows Operating
Company (collectively, "Bay Meadows") who subsequently became shareholders of
Patriot, Patriot American Hospitality Operating Company and Wyndham as a
result of the merger (the "Merger") of the above companies on or about July 1,
1997 (the "Class"). This lawsuit, captioned Johnson, et al. v. Patriot
American Hospitality, Inc. et al., C-99-2153-SI, names as defendants Patriot
American Hospitality, Inc., Wyndham International, Inc., PAH GP, Inc. PAH LP,
Inc., Patriot American Hospitality Partnership, L.P., Wyndham International
Operating Partnership, L.P. and PaineWebber Group, Inc. This action 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 (May 7, 1999). This action
asserts securities fraud claims and alleges that the purported class members
wrongfully were induced to tender their Bay Meadows shares as part of the
Patriot/Bay Meadows merger based on a fraudulent prospectus. This action
further alleges that defendants continued to defraud shareholders about their
intentions to acquire numerous hotels and saddle 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

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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 Multi-district litigation the California actions have been
consolidated with the Susnow action and certain other actions listed below for
consolidated pretrial purposes in the Northern District of California. To
date, none of the defendants have been required to answer, move or otherwise
respond to the complaints and no discovery has been taken. Wyndham plans to
vigorously defend those lawsuits.

  On or about June 22, 1999, a putative class action lawsuit captioned Levitch
v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1416-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 Wyndham.
The complaint was filed on behalf of all shareholders who purchased Patriot
American and Wyndham stock during that period. Two actions, Gallagher v.
Patriot American Hospitality, Inc., et al., No. 3-99-CV1429-L, filed on June
23, 1999, and Szekely v. Patriot American Hospitality Inc., 3-99CY1866-D filed
August 23, 1999 allege substantially the same allegations and claims as
mentioned above. By order of the Judicial Panel on Multi-district litigation,
these actions have been consolidated with the Susnow action for consolidated
pretrial purposes in the Northern District of California. To date, none of the
defendants have been required to answer, move or otherwise respond to the
complaints and no discovery has been taken. Wyndham plans to vigorously defend
those lawsuits.

  On May 18, 1999, Patriot received correspondence from Deborah Szekely
("Szekely"), one of the sellers of Golden Door Spa, which Patriot purchased on
May 28, 1998. In that correspondence, Szekely threatened to file a complaint
sounding in securities fraud based upon allegedly misleading financial
information provided to Szekely by Patriot. On May 21, 1999, Patriot received
correspondence from counsel for Szekely stating that Szekely would prosecute a
civil action against Patriot and related entities. Counsel enclosed a draft
Tolling Agreement with that letter. Patriot and potential litigants entered
into a Tolling Agreement on May 26, 1999, which extended the period for the
sellers to file a complaint to June 29, 1999. The Tolling Agreement
subsequently was extended to July 15, 1999 and then to August 2, 1999. Counsel
has provided Patriot with a draft complaint which purports to assert claims
under California state law for securities fraud, fraud in the inducement,
common law fraud, breach of fiduciary duty and deceit. To the best of
Patriot's knowledge, Szekely has not yet commenced that action but instead has
commenced the action listed above. If a complaint is filed and served on
Patriot, Patriot plans to vigorously defend this lawsuit.

  Patriot, a subsidiary of Patriot (the "Subsidiary"), which is the general
partner of a partnership (the "Partnership") and an affiliate of the
Subsidiary, which is a limited partner of the Partnership, are parties to a
dispute with another limited partner of the Partnership relating to a proposed
hotel development in Jacksonville, Florida. The case is captioned C&M
Investors Limited v. Patriot American Hospitality, Inc. et al., originally
filed in the Florida Circuit Court, Fourth Judicial Circuit, in and for Duval
County, Florida, but later removed and now pending in the United States
District Court, Middle District of Florida, Jacksonville Division, Civil
Action No. 98-1236-Civ. J 20B. Wyndham plans to vigorously defend this
lawsuit.

  On September 17, 1999, Starwood Hotels & Resorts Worldwide Inc. ("Starwood")
filed a lawsuit against Fred J. Kleisner, Richard Mahoney and Wyndham in the
United States District Court for the Southern District of New York. In the
lawsuit, captioned Starwood Hotels & Resorts Worldwide Inc. v. Fred J.
Kleisner et al., No. 99 Civ. 9811. The plaintiff alleged that Wyndham
tortiously interfered with alleged employment contracts between Starwood and
Kleisner and Mahoney, that the defendants misappropriated trade secrets
belonging to Starwood, that the defendants tortiously interfered with
Starwood's prospective business relationships and that the defendants are
unfairly competing with Starwood. The complaint sought injunctive relief and
other damages.

  On November 12, 1999, Starwood and Wyndham, Kleisner and Mahoney (the
"Wyndham Defendants") entered into a Settlement Agreement and Mutual Release
(the "Settlement Agreement") under the terms of which all claims against the
Wyndham Defendants were dismissed with prejudice and the Wyndham Defendants
paid no damages. Under the Settlement Agreement, Wyndham agreed to
restrictions on its ability to hire and solicit for employment certain
Starwood employees until July 2000.

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ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

  Since June 30, 1999, Wyndham International, Inc. ("Wyndham") has issued
securities in private placements in reliance on an exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended, in the following
amounts and for the consideration set forth below.

  On July 1, 1999, Wyndham issued 450,000 shares of Series B convertible
preferred stock to Beacon Capital Partners, L.P. ("Beacon") for $45 million.
Beacon transferred its loan receivable from PAH Realty Company, LLC to Wyndham
International, Inc. for the purchase of these 450,000 shares of Series B
preferred stock. For the series B preferred stock, dividends are payable
quarterly, on a cumulative basis, at a rate of 9.75% per year. For the first
six years, the dividends are structured to ensure an aggregate fixed cash
dividend payment of $29.25 million per year, so long as there is no redemption
or conversion of the investors' series B preferred stock; therefore, for that
period, dividends are payable partly in cash and partly in additional shares
of series B preferred stock, with the cash component initially equal to 30%
for the first dividend and declining over the period to approximately 19.8%
for the final dividend in year six. For the next four years dividends are
payable in cash or additional shares of series B preferred stock as determined
by the Board of Directors; and after year 10, dividends are payable solely in
cash. If any dividends are paid on the Wyndham common stock, additional
dividends will be paid in the amount that would have been paid on the shares
of Wyndham common stock into which the series B preferred stock is then
convertible. If a change in control or a liquidation of Wyndham occurs within
six years following the investment, any dividends remaining for the six years
will be accelerated and paid. The series B preferred stock is not redeemable
by Wyndham for six years, except that $300 million of the series B preferred
stock may be redeemed during the 170 day period following the closing of the
investment. The series B preferred stock can vote with the Wyndham common
stock on an as-converted basis on matters submitted to the common stockholders
and voting as a separate class on specified matters, with special rules
applying to the election of directors. The series B preferred stock is also
convertible, at the holder's option, into a number of shares of Wyndham common
stock equal to $100.00 divided by the conversion price, initially equal to
$8.59 but subject to potential downward adjustments.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

  (a) Exhibits:

<TABLE>
<CAPTION>
   Item No. Description
   -------- -----------
   <C>      <S>
     10.1   Executive employment agreement dated April 19, 1999 between Wyndham
            International, Inc. and Anne L. Raymond.
     10.2   Executive employment agreement dated August 12, 1999 between
            Wyndham International, Inc. and Fred J. Kleisner.
     10.3   Executive employment agreement dated August 18, 1999 between
            Wyndham International, Inc. and James D. Carreker.
     10.4   Letter agreement dated July 7, 1999 between Wyndham International,
            Inc. and Karim Alibhai.
     27.1   Financial Data Schedule--Wyndham (filed herewith).
</TABLE>

  (b) Reports on Form 8-K for the quarter ended September 30, 1999.

    (1) Joint Current Report on Form 8-K of Patriot American Hospitality,
  Inc. and Wyndham International, Inc. dated March 26, 1999 filed March 29,
  1999 (Nos. 001-09319 and 001-09320), as amended May 10, 1999, May 24, 1999,
  and September 3, 1999 filing under Item 5 the pro forma financial
  information for the year ended December 31, 1998.

    (2) Current Report on Form 8-K of Wyndham International, Inc. dated
  August 19, 1999 (001-9320) reporting under Item 4, the change in its
  independent accountants from Ernst & Young LLP to PricewaterhouseCoopers
  LLP.

    (3) Current Report on Form 8-K of Wyndham International, Inc. dated
  September 17, 1999 (001-9320) reporting under Item 5, announcing the
  settlement of certain class action litigation and the record date for its
  rights offering.

    (4) Current Report on Form 8-K of Wyndham International, Inc. dated
  November 8, 1999 (001-9320) reporting under Item 5, announcing its earnings
  for the quarter ended September 30, 1999.

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                                   SIGNATURES

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

                                          Wyndham International, Inc.

                                                    /s/ Richard Mahoney
                                          By __________________________________
                                                      Richard Mahoney
                                                  Chief Financial Officer
                                             (Authorized Officer and Principal
                                             Accounting and Financial Officer)

DATED: November 15, 1999

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