UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D. C. 20549
 **FORM
        10-K/A**
 (Amendment
        No. 1)
 *(Mark
        One)*
 
 þ
              ANNUAL
                  REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934
 
 For
                  the fiscal year ended:
              December
                  31, 2005
 
 OR
 
 o
              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 0-24097
 
 **CNL
        HOTELS & RESORTS, INC.**
 *(Exact
        name of registrant as specified in its charter)*
 
 **Maryland**
              
              **59-3396369**(State
                  of other jurisdiction
                of
                  incorporation or organization)
              
              (I.R.S.
                  Employer
                Identification
                  No.)
 
 **420
                  South Orange Avenue**
                **Orlando,
                  Florida**
              
              **32801**(Address
                  of principal executive offices)
              
              (Zip
                  Code)
 **(407)
                      650-1510**(Registrant's
                      telephone number, including area
                      code)
 
 Securities
        registered pursuant to Section 12(b) of the Act:
 
 *Title
                  of each class:*
                None
              *Name
                  of exchange on which registered:*
                Not
                  Applicable
 
 Securities
        registered pursuant to Section 12(g) of the Act:
 Common
        Stock, $0.01 par value per share
 *(Title
        of class)*
  Indicate
        by check mark if the registrant is a well-known seasoned issuer, as defined
        in
        Rule 405 of the Securities Act.
 Yes
        [ ]
        No [x]
 
 Indicate
        by check mark if the registrant is not required to file reports pursuant
        to
        Section 13 or Section 15(d) of the Act.
 Yes
        [ ]
        No [x]
  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 [ ]
 
 Indicate
        by check mark if disclosure of delinquent filers pursuant to Item 405 of
        Regulation S-K is not contained herein, and will not be contained, to the
        best
        of registrant's knowledge, in definitive proxy or information statements
        incorporated by reference in Part III of this Form 10-K or any amendment
        to this
        Form 10-K. [ ]
 
 Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer. See definition of “accelerated
        filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
 Large
        accelerated filer [
        ]
        Accelerated filer  [
        ]
        Non-accelerated filer  [x]
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
 Yes [
        ] No [x]
 
 *Aggregate
        market value of the voting common stock held by non-affiliates of the
        registrant:* No
        established market exists for the Registrant’s shares of common stock, so there
        is no market value for such shares. Based on the $20 share price from our
        last
        best-efforts common stock offering, $3,057,461,240 of our common stock was
        held
        by non-affiliates as of April 24, 2006.
 
 The
        number of Shares of common stock outstanding as of April 24, 2006, was
        152,883,062.
 
 *DOCUMENTS
        INCORPORATED BY REFERENCE*
 
 Not
        applicable.
  
  
 
 CONTENTS
 
 PageExplanatory
                  Note
              
              3Part
                  III.Item
                  10.
              Directors
                  and Executive Officers of the Registrant
              3Item
                  11.
              Executive
                  Compensation
              7Item
                  12.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              9Item
                  13.
              Certain
                  Relationships and Related Transactions
              10Item
                  14.
              Principal
                  Accountant Fees and Services
              17Part
                  IV.Item
                  15.
              Exhibits
              19Signatures
              
              21Exhibits
 
  2
  **EXPLANATORY
        NOTE**
 
 CNL
        Hotels & Resorts, Inc. (the “Company”) is filing this Amendment No. 1 to its
        Annual Report on Form 10-K for the Company’s fiscal year ended December 31, 2005
        pursuant to General Instruction G(3) to Form 10-K for the sole purpose of
        filing
        the information required to be disclosed pursuant to Part III of Form 10-K.
        In
        addition, the cover page and the list of exhibits of the Form 10-K have been
        updated and amended. As a result of this amendment, the Company is also filing
        as exhibits to this Form 10-K/A the certifications required under Section
        302 of
        the Sarbanes-Oxley Act of 2002. Because no financial statements are contained
        within this Form 10-K/A, the Company is not including certifications pursuant
        to
        Section 906 of the Sarbanes-Oxley Act of 2002. Except for the amendments
        described above, this Form 10-K/A does not modify or update the disclosures
        in,
        or exhibits to, the Form 10-K.
 
 **PART
        III**
 
 **Item
        10. Directors and Executive Officers of the Registrant**
 
 **THE
        BOARD OF DIRECTORS**
 
 Our
        Board
        of Directors (the “Board”) currently consists of nine members, a majority of
        whom are independent Directors. Pursuant to our Articles of Amendment and
        Restatement, as amended (the “Charter”), each of our Directors is elected
        annually by our stockholders to serve until the next annual meeting or until
        his
        or her successor is duly elected and qualified. Our Executive Officers all
        serve
        at the pleasure of our Board.
 
 The
        following table sets forth certain information concerning the individuals
        who
        are our current Directors:
 
 **Name**
              
              **Age**
              
              **Position**James
                  M. Seneff, Jr.
              
              59
              
              Director
                  and Chairman of the BoardRobert
                  A. Bourne
              
              59
              
              Director
                  and Vice Chairman of the BoardThomas
                  J. Hutchison III
              
              64
              
              Chief
                  Executive Officer and DirectorJohn
                  A. Griswold
              
              57
              
              President,
                  Chief Operating Officer and DirectorJ.
                  Douglas Holladay
              
              59
              
              Independent
                  DirectorJack
                  F. Kemp
              
              70
              
              Independent
                  DirectorCraig
                  M. McAllaster
              
              54
              
              Independent
                  DirectorDianna
                  F. Morgan
              
              54
              
              Independent
                  DirectorRobert
                  E. Parsons, Jr.
              
              50
              
              Independent
                  Director
 
 Set
        forth
        below is a brief description of the business experience during at least the
        past
        five years for each Director.
 
 *James
        M. Seneff, Jr.* has
        served as one of our Directors since our inception in June 1996 and as the
        Chairman of the Board since June 1997. Mr. Seneff served as our Chief
        Executive Officer from June 1997 through February 2003, and he served as
        Co-Chief Executive Officer from February 2003 through May 2003.
        Mr. Seneff is a director, Chairman of the Board of Directors and served as
        Co-Chief Executive Officer until April 2005 of our advisor, CNL Hospitality
        Corp. (“CHC”). Mr. Seneff has served as a director and as Chairman of the
        Board of Directors of CNL Hotel Investors, Inc. since February 1999 and served
        as Chief Executive Officer from February 1999 to June 2004. Mr. Seneff is
        a
        principal stockholder of CNL Holdings, Inc., the parent company of CNL Financial
        Group, Inc. (“CFG”), a diversified real estate company, and has served as a
        director, Chairman of the Board and Chief Executive Officer of CFG and its
        subsidiaries since the formation of a CFG affiliate in 1973. CFG is the parent
        company, either directly or indirectly through subsidiaries, of (1) CNL
        Real Estate Group, Inc. (“CREG”), which is the parent company of the various CNL
        advisors to certain unlisted REITs, including CHC, CNL Retirement Corp. and
        CNL
        Income Corp.; (2) CNL Capital Markets Corp., which is the parent company of
        CNL Securities Corp., a registered broker-dealer that has served as managing
        dealer for various CNL-affiliated public and private offerings, including,
        our
        five previous public offerings, and (3) CNL Fund Advisors Company (f/k/a
        CNL Fund Advisors, Inc. and CNL Institutional Advisors, Inc.), a federally
        registered advisory firm. CFG and the entities it has established have grown
        to
        more than $17 billion in assets. Mr. Seneff also serves as a director and
        Chairman of the Board of Directors of CNL Retirement Properties, Inc., a
        public,
        unlisted REIT, as well as CNL Retirement Corp., its advisor. Since August,
        2003
        Mr. Seneff has served as a director and Chairman of the Board of Directors
        of
        CNL Income Properties, Inc., a public, unlisted, REIT. Mr. Seneff currently
        serves as a director and Chairman of the Board of Directors for CNL Income
        Corp., the advisor for CNL Income Properties, Inc., and served as the Chief
        Executive Officer from July 2003 to February 2004. Mr. Seneff served as a
        director from 1994 to 2005, as Chairman of the Board of Directors from 1996
        to
        2005 and as Chief Executive Officer from 1994 to 2004 of Commercial Net Lease
        Realty, Inc., a public real estate investment trust that is listed on The
        New
        York Stock Exchange, Inc. (“NYSE”). In addition, he served as a director and
        Chairman of the Board of Directors since inception in 1994 through February
        2005, as Chief Executive Officer from 1994 through August 1999 and co-Chief
        Executive Officer from December 2000 through September 2003, of CNL Restaurant
        Properties, Inc. CNL Restaurant Properties, Inc. was a public, unlisted REIT
        until February 2005, when it merged with U.S. Restaurant Properties, Inc.
        Mr.
        Seneff serves as Chairman of the Board of Trustreet Properties, Inc., the
        successor of the merger between CNL Restaurant Properties, Inc. and U.S.
        Restaurant Properties, Inc. Trustreet Properties, Inc. is a public REIT that
        is
        listed on the NYSE. Mr. Seneff has also served as a director and Chairman
        of the Board of Directors of CNL Securities Corp. since 1979 and as its Chief
        Executive Officer from 1991 to 2004. He served as Chief Executive Officer
        from
        2000 to 2004, and as a director from 1990, and Chairman of the Board of
        Directors from 2000, of CNL Investment Company until its merger with CNL
        Capital
        Markets Corp. in 2005. Mr. Seneff formerly served as a director of First
        Union
        National Bank of Florida, N.A. and currently serves as a director and the
        Chairman of the Board of CNLBank. He served on the Florida State Commission
        on
        Ethics and is a former member and past Chairman of the State of Florida
        Investment Advisory Council, which advises the state of Florida retirement
        system. He is a former member of the Florida State University Foundation’s Board
        of Directors. Currently, Mr. Seneff serves as Chairman of the Governor’s Council
        for the Economic Development Commission and Vice Chairman of the Board of
        Directors for the Orlando Performing Arts Center. He is a member of the Board
        of
        Overseers of the Crummer Graduate School of Business at Rollins College and
        a
        resident member of the Board of The Florida Council of 100. He also serves
        as a
        board member for Atlantic Blue Trust, Inc. and is a member of the Alexis
        de
        Tocqueville Society of the Heart of Florida United Way. Mr. Seneff is a member
        of the Board of Trustees of United Arts of Central Florida, Inc. the Board
        of
        Directors of Orlando Regional Healthcare and a number of other non-profit
        organizations. He is a graduate of Florida State University with a B.S. in
        Business Administration.
 3
 
 *Robert
        A. Bourne* currently
        serves as one of our Directors and is Vice Chairman of our Board of Directors.
        Mr. Bourne previously served as Director from our inception in June 1996
        until February 2003. He was then re-elected as a Director in June 2003. Mr.
        Bourne previously served as our Vice Chairman of our Board of Directors from
        January 1999 through February 2003. He was re-appointed as Vice Chairman
        of our
        Board of Directors in July 2004. Mr. Bourne served as our Treasurer from
        September 2001 until July 2004. From February 1999 to July 2002, he served
        as
        President of CNL Hotel Investors, Inc. Since February 1999 he has served
        as a
        director and since June 2001 he has served as Treasurer of CNL Hotel Investors,
        Inc. Mr. Bourne also serves as a director, Vice Chairman of the Board of
        Directors and as Treasurer of CHC. Mr. Bourne served as President of our
        Company and of CHC from 1997 to June 2002. Mr. Bourne is also the President
        of CFG and a director, Vice Chairman of the Board of Directors and Treasurer
        of
        CNL Retirement Properties, Inc., as well as serves as a director and Vice
        Chairman of the Board of Directors and served as Treasurer from June 2001
        to
        March 2006 of CNL Retirement Corp. Mr. Bourne served as President of CNL
        Retirement Properties, Inc. and CNL Retirement Corp. from 1998 and 1997,
        respectively, to June 2002. Mr. Bourne also serves as a director, Vice
        Chairman of the Board of Directors of CNL Income Properties, Inc., as well
        as
        serves as director and Vice Chairman of the Board of Directors, and served
        as
        Treasurer from July 2003 to March 2006 of CNL Income Corp., its advisor.
        Mr. Bourne also serves as a director of CNLBank. He served as a director
        from May 1994 to June 2005 and as Vice Chairman of the Board of Directors
        from
        May 1996 to June 2005 of Commercial Net Lease Realty, Inc., a public REIT
        that
        is listed on the NYSE. Mr. Bourne served as a director from 1994 through
        February 2005, President from 1994 through February 1999, Treasurer from
        February 1999 through August 1999, and Vice Chairman of the Board of Directors
        from February 1999 through February 2005, of CNL Restaurant Properties,
        Inc.(formerly CNL American Properties Fund, Inc.). CNL Restaurant Properties,
        Inc. was a public, unlisted REIT until February 2005, when it merged with
        U.S.
        Restaurant Properties, Inc. Mr. Bourne serves as a director of Trustreet
        Properties, Inc., the successor of the merger between CNL Restaurant Properties,
        Inc. and U.S. Restaurant Properties, Inc. Trustreet Properties, Inc. is a
        public
        REIT that is listed on the NYSE. Mr. Bourne also serves as a director,
        Chief Executive Officer, and Treasurer for various affiliates of CFG, including
        CNL Investment Company, CNL Securities Corp., and CNL Institutional Advisors,
        Inc. CFG and the entities it has established or acquired have grown to more
        than
        $17 billion in assets. Mr. Bourne began his career as a certified public
        accountant employed by Coopers & Lybrand, Certified Public Accountants,
        from 1971 through 1978, where he attained the position of tax manager in
        1975.
        Mr. Bourne graduated from Florida State University in 1970, where he
        received a B.A. in Accounting, with honors.
 
 *Thomas
        J. Hutchison III* has
        served as our Chief Executive Officer since May 2003 and has served as a
        Director since July 2004. Mr. Hutchison previously served as our Executive
        Vice President from May 2000 through June 2002, as President from June 2002
        through March 2003 and as Co-Chief Executive Officer from February 2003 through
        May 2003. Mr. Hutchison served as Co-Chief Executive Officer of CHC from
        February 2003 until April 2005, and has been a director of CHC since August
        2000. From June 2002 through March 2003, Mr. Hutchison served as our
        President and President of CHC. From May 2000 to June 2002, Mr. Hutchison
        served as Executive Vice President and Executive Vice President of CHC. From
        May
        2000 to July 2002, he served as Executive Vice President, from July 2002
        to
        September 2004 as President, and since June 2004, he has served as Chief
        Executive Officer, of CNL Hotel Investors, Inc. From January 2000 to September
        2005, Mr. Hutchison served as President and Chief Operating Officer of
        CREG, the parent company of CNL Retirement Corp. and of CHC. He served as
        the
        President and Chief Operating Officer of CNL Realty & Development Corp.
        from August 2000 to July 2005. Mr. Hutchison currently serves as Chief
        Executive Officer of CNL Hotel Development Company. He previously served
        as
        Executive Vice President from October 2000 to July 2002 and as President
        from
        July 2002 to January 2005. Mr. Hutchison served as President of CNL Retirement
        Properties, Inc. from June 2002 to September 2005. Mr. Hutchison also served
        as
        Chief Executive Officer of CNL Retirement Properties, Inc. and as President
        from
        June 2002 until September 2005 and as Chief Executive Officer of CNL Retirement
        Corp., its advisor, from August 2003 to September 2005. From February 2000
        to
        June 2002, Mr. Hutchison served as Executive Vice President of CNL
        Retirement Properties, Inc. and from May 2000 to June 2002 served as Executive
        Vice President of CNL Retirement Corp. Mr. Hutchison also served as Chief
        Executive Officer of CNL Income Properties, Inc. a public, unlisted REIT,
        and as
        Chief Executive Officer and a director of CNL Income Corp., the advisor to
        CNL
        Income Properties, Inc., from February 2004 to August 2005. Mr. Hutchison
        joined CFG in January 2000 with more than 30 years of senior management and
        consulting experience in the real estate development and services industries.
        Prior to joining CFG, Mr. Hutchison was President and owner of numerous
        real estate services and development companies. From 1990 to 2000, he was
        Chairman and Chief Executive Officer of Atlantic Realty Services, Inc. and
        TJH
        Development Corporation. Since 1990, he has fulfilled a number of long-term
        consulting assignments for large corporations, including managing a number
        of
        large international joint ventures. From 1990 to 1991, Mr. Hutchison was
        the court-appointed President and Chief Executive Officer of General Development
        Corporation, a real estate community development company. From 1986 to 1990,
        he
        was the Chairman and Chief Executive Officer of a number of real estate-related
        companies engaged in the master planning and land acquisition of forty
        residential, industrial and office development projects. From 1978 to 1986,
        Mr. Hutchison was the President and Chief Executive Officer of Murdock
        Development Corporation and Murdock Investment Corporation, as well as Murdock’s
        nine service divisions. In this capacity, he managed an average of
        $350 million of new development per year for over nine years. Additionally,
        he expanded the commercial real estate activities to a national basis, and
        established both a new extended care division and a hotel division that grew
        to
        14 properties. Mr. Hutchison attended Purdue University and the University
        of Maryland Business School.
 4
 
 *John
        A. Griswold* has
        served as our President since March 2003, as our Chief Operating Officer
        since
        October 2003 and as one of our Directors since July 2004. The functions of
        Portfolio and Asset Management, and Planning, Design, and Construction, report
        to Mr. Griswold. Mr. Griswold also has served as a director and
        President of CHC since March 2003 and has been CHC’s Chief Operating Officer
        since October 2003, and has over 30 years of experience in the hospitality
        industry. Mr. Griswold has served as President of CNL Hotel Development Company
        since January 2005. From January 1999 to February 2003, Mr. Griswold served
        as one of our independent Directors. From 1985 to March 2003, Mr. Griswold
        served as a senior executive, including as president from 1999 to March 2003,
        of
        Tishman Hotel Corporation, an operating unit of Tishman Realty &
Construction Co., Inc., founded in 1898. Tishman Hotel Corporation is one
        of the
        nation’s largest developers, owners and operators of upscale full service hotels
        and resorts. The Tishman Corporation provided such services for more than
        85
        hotels totaling more than 30,000 rooms. Tishman’s major developments included
        the Walt Disney World Swan and Dolphin resorts in Orlando, the Sheraton Chicago
        Hotel and Towers, the Westin Rio Mar Beach Resort in Puerto Rico and the
        Westin
        New York at Times Square. From 1981 to 1985, Mr. Griswold served as general
        manager of the Buena Vista Palace Hotel in The Walt Disney World Resort.
        From
        1978 to 1981, he served as vice president and general manager of the Homestead
        Resort, a luxury condominium resort in Glen Arbor, Michigan. In addition,
        Mr. Griswold served as an operations manager for The Walt Disney Company
        from 1971 to 1978. He was responsible for operational, financial and future
        planning for multi-unit dining facilities in Walt Disney World and Lake Buena
        Vista Country Club. He is a past Chairman of Orlando/Orange County
        Convention & Visitors Bureau, Inc. and a member of the board of the
        First Orlando Foundation. Mr. Griswold received a B.S. from the School of
        Hotel Administration at Cornell University in June 1971.
 
 *James
        Douglas Holladay* has
        served as one of our independent Directors since July 2004. Mr. Holladay
        has served as general partner of two firms: Thornton Group, LLC from 1996
        to
        2002, which invests in start-up business ventures and advises public and
        private
        companies, and since 1998, he has also served as general partner of Park
        Avenue
        Equity Partners, LP, a private equity fund that makes investments in operating
        companies. Mr. Holladay is a director of Sunrise Senior Living, Inc.
        Mr. Holladay was a senior officer with Goldman, Sachs & Co., an
        international investment banking firm, until 1995. He also previously held
        senior positions of responsibility in both the White House and Department
        of
        State. Mr. Holladay has served as an advisor and Board member to numerous
        organizations, both private and public, including Morehouse College, Harvard
        University, Heidrick & Struggles, an executive search firm, Hughes
        Supply, a wholesale distributor, and United Way International. Mr. Holladay
        received a B.A. in 1969 from the University of North Carolina and an M.A.
        in
        1978 from Princeton Theological Seminary and an M. Litt. in 1981 from Oxford
        University.
 
 *Jack
        F. Kemp* has
        served as one of our independent Directors since July 2004. Currently, Mr.
        Kemp
        is the Founder and Chairman of Kemp Partners. In 1993, Mr. Kemp co-founded
        Empower America, a public policy and advocacy organization, and has since
        served
        as co-director of the organization. In August 1996, he received the Republican
        Party’s nomination for Vice President under presidential candidate Bob Dole.
        Prior to founding Empower America, Mr. Kemp served as Secretary of Housing
        and Urban Development from 1990 to 1993, and as a U.S. Representative for
        western New York from 1971 to 1989. Before his election to Congress,
        Mr. Kemp played 13 years as a professional football quarterback and
        co-founded the American Football League Players Association. He received
        a B.A.
        in 1957 from Occidental College. Mr. Kemp also currently serves as a director
        for Hawk Corporation, IDT Corporation, InPhonic, Six Flags, Inc. World Space,
        Inc. and Oracle Corporation.
 
 *Craig
        M. McAllaster, Ed.D.* has
        served as one of our independent Directors since 1999. Dr. McAllaster is
        Dean of the Roy E. Crummer Graduate School of Business at Rollins College.
        He
        directed the Executive MBA program from 1994 through 2000, has been on the
        management faculty and served as Executive Director of the international
        consulting practicum programs at the Crummer School. Prior to Rollins College,
        Dr. McAllaster was on the faculty at the School of Industrial and Labor
        Relations and the Johnson Graduate School of Management, both at Cornell
        University and the University of Central Florida. Dr. McAllaster spent over
        ten years in the consumer services and electronics industry in management,
        organizational and executive development positions. He is a consultant to
        a
        variety of domestic and international companies in the areas of strategy
        and
        leadership. Dr. McAllaster received a B.S. from the University of Arizona
        in 1972, an M.S. from Alfred University in 1980 and an M.A. in 1985 and
        Doctorate in 1987, both from Columbia University.
 
 *Dianna
        F. Morgan* has
        served as one of our independent Directors since July 2004. Ms. Morgan had
        a 30-year career with Walt Disney World Company, most recently serving as
        Senior
        Vice President of Public Affairs from 1993 to 2001, where she was responsible
        for government, community and media relations, as well as the Disney Institute.
        She was appointed by Governor Jeb Bush to the University of Florida Board
        Of
        Trustees where she serves as Vice Chair, and previously served as a member
        of
        the Orange County Tourist Development Commission, the Florida Tourism Commission
        and Enterprise Florida. Ms. Morgan received a B.A. in 1995 from Rollins
        College.
 
 *Robert
        E. Parsons, Jr.* has
        served as one of our independent Directors since September 2003. Since July
        2004, Mr. Parsons has served as Executive Vice President and Chief
        Financial Officer of Exclusive Resorts, a Denver-based luxury residence club.
        Mr. Parsons is also the Managing Director of Wasatch Investments, which provides
        advisory and consulting services to the real estate and lodging industries.
        Prior to Wasatch Investments, Mr. Parsons spent 22 years at Host
        Marriott Corporation, a REIT that owns full service hotel properties, where,
        from 1995 to 2003, he served as Executive Vice President and Chief Financial
        Officer. He also previously served as Chairman of the Hotel Development Council
        of the Urban Land Institute. Mr. Parsons also serves as a director of TenFold
        Corporation. Mr. Parsons received a B.A. in 1979 and an M.B.A. in 1981 from
        Brigham Young University.
 
 5
 **EXECUTIVE
        OFFICERS**
 
 Our Executive Officers are as follows:
 
 **Name**
              
              **Age**
              
              **Position**Thomas
                  J. Hutchison III
              
              64
              
              Chief
                  Executive OfficerJohn
                  A. Griswold
              
              57
              
              President
                  and Chief Operating OfficerC.
                  Brian Strickland
              
              43
              
              Executive
                  Vice President, Chief Financial Officer and TreasurerBarry
                  A.N. Bloom
              
              41
              
              Senior
                  Vice President of Portfolio Management and AdministrationMark
                  E. Patten
              
              42
              
              Senior
                  Vice President and Chief Accounting OfficerMarcel
                  Verbaas
              
              36
              
              Senior
                  Vice President and Chief Investment OfficerGreerson
                  G. McMullen
              
              43
              
              Chief
                  General Counsel, Senior Vice President and
                  Secretary
 
 
 *C. Brian
        Strickland* has ** served
        as
        our Executive Vice President since 2002 and as our Chief Financial Officer
        since
        January 2004. Mr. Strickland has also served as our Treasurer since
        February 2005. Previously he served as our Vice President of Finance and
        Administration from 1998 through 2000, as Senior Vice President of Finance
        and
        Administration from 2000 through 2002 and as Corporate Secretary from April
        2004
        through November 2005. Mr. Strickland has served as Executive Vice President
        of
        CHC since July 2002 and Chief Financial Officer of CHC since October 2004.
        Mr. Strickland also serves as Executive Vice President and Corporate
        Secretary for CNL Hotel Development Company and CNL Hotel Investors, Inc.
        He
        previously served as Vice President of Finance and Administration from 1999
        through 2000 and as Senior Vice President of Finance and Administration from
        2000 through 2002 of CNL Hotel Investors, Inc. From 1989 to 1997,
        Mr. Strickland served as Director of Tax for Wyndham Hotels and Resorts.
        Prior to 1989, Mr. Strickland was senior tax accountant for Trammell Crow
        Company. From 1986 to 1988, Mr. Strickland was a tax consultant with
        Ernst & Whinney, where he was a member of the real estate practice
        group. Mr. Strickland is a certified public accountant and received a B.A.
        in Accounting from Texas Tech University in 1985.
 
 *Barry
        A.N. Bloom* has
        served as our Senior Vice President of Portfolio Management and Administration
        since May 2003 and as Executive Vice President since April 1, 2006. Mr. Bloom
        also has served as Senior Vice President of CHC since July 2004. He previously
        served as our Senior Vice President from October 2003 until July 2004.
        Mr. Bloom is responsible for the oversight of select hotel assets, as well
        as directing efforts in management and franchise agreement administration,
        real
        estate ownership issues, hotel technology and integrating acquisitions into
        our
        existing portfolio management systems. Immediately prior to joining CHC,
        Mr. Bloom served as Vice President — Investment Management for Hyatt
        Development Corporation for three years. At Hyatt, he was responsible for
        providing ownership discipline and oversight for over 50 hotels and provided
        direction and decision making for capital expenditures and real estate issues.
        Prior to serving as Vice President of Hyatt, Mr. Bloom was a First Vice
        President at Tishman Hotel Corporation, where he spent over 10 years in a
        variety of capacities including investment banking, asset management and
        property management. Prior to joining Tishman, he worked for VMS Realty Partners
        and Pannell Kerr Forster. Mr. Bloom received an MBA from the Johnson School
        at Cornell University in 2001 and a B.S. from the School of Hotel Administration
        at Cornell University in 1986.
 
 *Mark
        E. Patten* has
        served as our Senior Vice President and Chief Accounting Officer since April
        2004 and ** has
        served as the Senior Vice President and Chief Accounting Officer of CHC since
        February 2004. Mr. Patten is primarily responsible for our financial
        accounting and reporting areas and Securities and Exchange Commission (“SEC”)
        compliance. In these capacities, Mr. Patten works closely with our Audit
        Committee and our Chief Financial Officer in, among other things, establishing
        and maintaining efficient and effective disclosure controls and compliance
        with
        SEC rules and regulations. Mr. Patten brings 19 years of experience in
        the areas of accounting, SEC reporting and corporate finance. Prior to his
        employment with CHC, Mr. Patten served for less than one year as the Chief
        Financial Officer of SRK Management Company, served two years with Danka
        Office
        Imaging Systems, a publicly-traded provider of office imaging equipment and
        services as Vice President of Finance, two years as Chief Financial Officer
        of
        World Commerce Online, a publicly-traded software development firm, and nearly
        two years as Chief Accounting Officer and Assistant Corporate Secretary for
        Vistana Inc., a publicly-traded developer and operator of timeshare resorts.
        During Mr. Patten’s tenure as Chief Financial Officer of World Commerce
        Online, World Commerce Online filed a petition pursuant to Chapter 11 of
        the federal bankruptcy laws. In addition, Mr. Patten spent 13 years
        with KPMG, including two years in KPMG’s Department of Professional Practice in
        New York and was elected into the partnership of KPMG in 1997. Mr. Patten
        received a B.A. in accounting from the University of Florida in 1986 and
        received his certification as a public accountant in 1988.
 
 *Marcel
        Verbaas* has
        served as our  Senior
        Vice President of Real Estate Services since December 2004 and Chief Investment
        Officer since March 2005. He previously served as our Vice President from
        August
        2002 to March 2003 and as our Senior Vice President of Project Finance from
        March 2003 to June 2003. Mr. Verbaas also served as Chief Investment Officer
        from July 2003 to December 2004 and Senior Vice President from September
        2003 to
        December 2004 of CNL Retirement Corp., the advisor to CNL Retirement Properties,
        Inc. Mr. Verbaas previously served as Vice President of Real Estate Finance
        from
        August 2000 to September 2002, Vice President of Structured Investments from
        September 2002 to March 2003 and as Senior Vice President of Project Finance
        from March 2003 through July 2003 for CHC. Prior to joining CNL, he served
        as
        Director of Corporate Finance for Stormont Trice Development Corporation,
        a
        private hotel development company with substantial expertise in public-private
        ventures, from July 1998 to August 2000. His responsibilities included the
        negotiation of all debt and equity investments for development projects,
        as well
        as the analysis of development and acquisition opportunities. Mr. Verbaas
        acquired extensive real estate finance expertise through various originations
        and underwriting positions with GE Capital Corp. and Ocwen Financial Corp.
        During his tenure at Ocwen Financial Corp., he assisted in the formation
        of its
        affiliated REIT. At both GE Capital Corp. and Ocwen Financial Corp. he
        originated, structured and underwrote transactions in all types of commercial
        real estate, Mr. Verbaas primarily focused on providing financing in the
        hospitality industry. A native of The Netherlands, Mr. Verbaas received a
        master’s degree in business economics from Erasmus University of Rotterdam The
        Netherlands in, 1993.
 
 *Greerson
        G. McMullen* has
        served as our Chief General Counsel, Senior Vice President and
        Secretary since November 2005 and as Senior Vice President and Chief
        General Counsel of CHC since October 2005. Prior to joining us, Mr. McMullen
        was
        Executive Vice President, General Counsel and Secretary of Global Signal,
        Inc.,
        a NYSE-listed company, from July 2004 to September 2005. From December 1996
        to
        July 2004, he held various executive positions with General Electric Company’s
        Transportation, Industrial Systems and Energy divisions (“GE”). Prior to GE, he
        was a corporate attorney for Tropicana Products, Inc. and an attorney with
        the
        law firms of Sullivan & Cromwell and Kennedy Covington Lobdell &
Hickman, L.L.P. Mr. McMullen received a B.S.F.S. from Georgetown University,
        School of Foreign Service in 1983, and a J.D. from the University of Virginia
        School of Law in 1988.
 
 The
        backgrounds of Messrs. Hutchison and Griswold are described above under
“THE BOARD OF DIRECTORS.”
 6
 
 **AUDIT
        COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT**
 
 We
        have a
        standing Audit Committee, the members of which are selected by our Board
        annually. The Audit Committee operates under a written charter adopted by
        our
        Board, a copy of which was attached as Appendix F to the Company’s
        definitive proxy statement filed on June 21, 2004. The members of our Audit
        Committee are Robert E. Parsons, Jr., Craig M. McAllaster, and Dianna F.
        Morgan,
        all of whom qualify as “independent Directors” under our Charter, the NYSE
        listing standards and applicable SEC rules. Mr. Parsons serves as Chairman
        of the Audit Committee, and our Board has determined that he is an audit
        committee financial expert as defined in Item 401 of Regulation S-K.
        We believe that each of our Audit Committee members is financially sophisticated
        and able to read and understand our financial statements. The Audit Committee
        met fifteen times during the year ended December 31, 2005.
 
 The
        Audit
        Committee helps to ensure the integrity of our financial statements and
        evaluates the qualifications and independence of our independent accountants
        and
        oversees the performance of our internal audit function. The Audit Committee’s
        functions are to select, assist and meet with the independent accountants,
        oversee each annual audit and quarterly review performed by the independent
        accountants, ensure that we establish and maintain our internal audit controls
        and approve the report that federal securities laws require be included in
        our
        annual proxy statement. In addition, the Audit Committee has established
        procedures for handling any complaints we receive regarding accounting, internal
        accounting controls, or auditing matters or business practices, as well as
        any
        confidential, anonymous submissions by any of our employees regarding concerns
        about questionable accounting or auditing matters. We will provide appropriate
        funding, as determined by the Audit Committee, to our independent accountants,
        internal auditors, any advisors the Audit Committee employs and for other
        expenses of the Audit Committee.
 
 **SECTION 16(a)
        BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**
 
 Section
        16(a) of the Securities Exchange Act requires our Officers and Directors,
        and
        persons who own more than 10% of a registered class of our equity securities
        (collectively, the "Reporting Persons"), to file reports of ownership and
        changes in ownership on Forms 3, 4 and 5 with the SEC. Reporting Persons
        are
        required by the SEC’s regulations to furnish us with copies of all Forms 3, 4
        and 5 that they file.
 
 Based
        solely upon a review of Section 16(a) reports furnished to us for 2005, written
        representations that no other reports were required and other information
        known
        to us, we believe that the Reporting Persons complied with all filing
        requirements for 2005, other than as described below.
 
 In
        December 2005, we provided notice to J. Douglas Holladay, Craig M. McAllaster
        and Robert E. Parsons, Jr. that their receipt of quarterly grants of shares
        of
        our common stock would be deferred in accordance with the terms of their
        deferred fee agreements with us (the “Notice”). Due to an administrative
        oversight of the Company, Form 4s for these individuals were not properly
        filed
        by the end of the second business day following the date of the Notice. Reports
        were filed for each Director promptly upon the discovery of this oversight
        on
        April 4, 2006.
 
 **CODE
        OF ETHICS**
 
 We
        have
        adopted a code of ethics that applies to our Principal Executive Officer,
        Principal Financial Officer, Principal Accounting Officer, and persons
        performing similar functions. Our code of ethics, which is entitled “Code of
        Business Conduct,” is available on the Internet at our website at http://www.cnlhotels.com by
        accessing the “Investor Relations” link and then the “Corporate Governance”
link.
 
 **Item
        11. Executive Compensation**
 
 **COMPENSATION
        OF DIRECTORS AND EXECUTIVE OFFICERS**
 
 **Compensation
        of Directors**
 
 Prior
        to
        July 2004, each independent Director received $1,000 per Board meeting
        attended ($500 for each telephonic meeting in which the Director participated).
        Beginning with the fiscal quarter ending on September 30, 2004, each
        independent Director was entitled to receive $10,000 quarterly in cash for
        serving on our Board, and a quarterly stock grant of shares having a value
        equal
        to $10,000 (based on a deemed price of $20 per share), and an attendance
        fee of
        $2,000 per meeting of our Board or any committee of the Board, whether
        attended in person or telephonically. Directors who are employees of CHC
        will
        not receive compensation for their services as Directors. During 2004, each
        independent Director received initial stock grants under the terms of our
        long-term incentive plan, as follows:
 
 •
              All
                  existing Directors who served prior to the 2004 Annual Meeting
                  of
                  Stockholders received a stock grant of 5,000 shares;•
              Members
                  of the special committee formed in connection with our proposed
                  merger
                  with CHC (the “Special Committee”) received an additional stock grant of
                  2,500 shares; and•
              New
                  Directors elected in July 2004 who did not provide services prior
                  to the
                  2004 Annual Meeting of Stockholders received a stock grant of
                  2,500 shares.
 
 Prior
        to
        July 1, 2004, the members of the Audit Committee were entitled to receive
        $1,000
        (or $1,500, in the case of the Chairman of the Audit Committee) per Audit
        Committee Meeting attended in person or telephonically. In addition to the
        above
        compensation, the Chairman of the Audit Committee was entitled to receive
        $1,500 per meeting attended with our independent accountants in person or
        telephonically and for each meeting with our independent accountants in which
        the Chairman participated as the representative of the Audit
        Committee.
 
 Beginning
        in the fiscal quarter ended September 30, 2004, the Audit Committee Chairman
        was
        entitled to receive compensation of $3,750 in cash for serving as Chairman,
        the
        Chairman of our Compensation Committee was entitled to receive $2,500 in
        cash
        and the Chairman of our Nominating and Corporate Governance Committee, as
        well
        as our other Board committee chairs (except as determined by our Board),
        was
        entitled to receive $1,250 in cash. In each case, this compensation is earned
        on
        a quarterly basis.
 
 Directors
        who are members of the Special Committee, formed in connection with the proposed
        merger with CHC, are entitled to receive additional fees for services as
        members
        of the Special Committee. The members of the Special Committee received
        compensation as follows: Mr. Parsons, the committee Chairman, received
        payment of $90,000 in 2004; Craig McAllaster (a current member of the Special
        Committee) received a payment of $60,000 in 2004; and each of the three received
        $1,500 per meeting. Mr. Kemp received $30,000 in 2005 for his participation
        on the Special Committee and has also received $1,500 per each Special Committee
        meeting that he attended. In March 2006, our Board of Directors approved
        and we
        paid additional compensation to Mr. Parsons, Mr. McAllaster and Mr. Kemp
        for
        their continued service on the Special Committee of $90,000, $60,000 and
        $30,000, respectively.
 
   7
  In
        December 2004, a special litigation committee, comprised of our three
        independent Directors who are not defendants in the pending securities class
        action litigation, was formed for the purpose of monitoring the arbitration
        proceedings regarding us and our Directors’ rights and obligations concerning
        indemnification as it pertains to legal defense and liability associated
        with
        the class action litigation and subsequent administration of indemnification
        and
        to approve local counsel to represent us in connection with the arbitration
        proceedings. On March 3, 2005, the authority of the Special Litigation Committee
        was extended to include, within certain limitations, the power to consider
        any
        settlement offer to be made by us to the plaintiffs in such pending securities
        class action litigation. On January 26, 2006, the authority of the Special
        Litigation Committee was further extended to include, within certain
        limitations, the power to review (including reviewing the course of
        negotiations) and approve any settlement of such pending securities class
        action
        litigation on our behalf. On January 26, 2006, the authority of the Special
        Litigation Committee was also extended to include the determination of any
        claims or rights that we may have with respect to such settlement, such pending
        securities class action litigation or their subject matter, including, but
        not
        limited to, claims for indemnification, contribution or insurance.
 
 Directors
        are also entitled to reimbursement for expenses incurred in fulfilling their
        duties as our Directors and receive complimentary hotel rooms, food and
        beverages and related services at our hotels and resorts when on personal
        travel, including reimbursement for associated taxes.
 
 On
        May
        13, 2005, the Board approved an amendment to our bylaws pertaining to specified
        amounts of compensation for Directors’ services or activities. The amendment
        relates to the section of the bylaws that addresses Director compensation
        and
        provides that our Directors will be entitled to receive compensation as may
        be
        determined by the Board by resolution (including the affirmative vote of
        a
        majority of Independent Directors) for the services or activities they perform
        or engage in as Directors. Directors who are affiliates of CHC are not entitled
        to and do not receive compensation for their services or activities in
        accordance with our bylaws.
 
 In
        2005,
        we implemented a deferred compensation program for our Directors, allowing
        them
        to defer all or a portion of their cash and stock-based
        compensation.
 
 The
        following table summarizes the compensation that was paid to or deferred
        by each
        independent Director for the year ended December 31, 2005:
 
 Independent
                  Director
              
              Cash
                  Payments
              
              Stock
                  Grants *J.
                  Douglas Holladay**
              
              $
                  98,750
              
              2,000
              ***Jack
                  F. Kemp**
              
              181,750
              
              3,250Craig
                  M. McAllaster**
              
              176,500
              
              2,000
              ***Robert
                  E. Parsons, Jr.**
              
              220,000
              
              2,000
              ***Dianna
                  F. Morgan**
              
              174,750
              
              2,000
 
 *****
              ****Shares
                  of common stock.**
              Each
                  of our independent Directors was entitled to receive shares of
                  our common
                  stock having a value equal to $10,000 (based on a deemed price
                  of $20 per
                  share) for their services during the fourth quarter of 2005, which
                  had not
                  been issued as of December 31, 2005.***
              Includes
                  shares deferred pursuant to the terms of a deferred fee agreement
                  between
                  us and such Director.
 
 **Executive
        Officer Compensation**
 
 We
        did
        not pay any compensation to our Officers and Directors who also served as
        officers and directors of CHC or its affiliates. No annual or long-term
        compensation was paid by us to any Officers for services rendered in any
        capacity to us during the years ended December 31, 2005, 2004 and 2003.
 
 In
        addition, none of our Officers received an annual salary or bonus from us
        during
        the years ended December 31, 2005, 2004 and 2003. Our Officers were also
        employees and Officers of CHC or its affiliates and received compensation
        from
        CFG and its affiliates in part for services provided to us. See “Certain
        Relationships and Related Transactions” for a description of the fees payable
        and expenses reimbursed to CHC and its affiliates.
 
 If
        a
        merger with CHC were to occur, our Officers would become our employees and
        would
        be compensated by us. It is also anticipated that if such a merger were to
        occur, our Officers would receive grants of stock units under the terms of
        employment agreements and/or our long-term incentive plan, which is administered
        and implemented by the Compensation Committee. For additional information
        related to the possible merger with CHC, see “Item 13. Certain Relationships and
        Related Transactions.” Also see “Item 13.” for a discussion of certain
        employment agreements that are expected to become effective upon consummation
        of
        a merger with CHC.
 
 *Compensation
        Committee Interlocks and Insider Participation*
 
 The
        current members of our Compensation Committee are Ms. Morgan and Messrs.
        Parsons
        and Kemp. No member of the Compensation Committee has a relationship that
        would
        constitute an interlocking relationship with our Executive Officers or other
        Directors.
   8
  **Item
        12. Security Ownership of Certain Beneficial Owners and Management and Related
        Stockholder Matters**
 
 The
        following table sets forth, as of December 31, 2005, the number and percentage
        of outstanding shares of common stock, par value $0.01 per share, beneficially
        owned by each Director, by each of our Executive Officers, and by all Executive
        Officers and Directors as a group, based upon information furnished to us
        by
        such Directors and Executive Officers. We are not aware of any person or
        group
        that is the beneficial owner of more than five percent of our outstanding
        common
        stock. Unless otherwise listed, the address of each of the persons listed
        below
        is c/o CNL Hotels & Resorts, Inc., CNL Center II at City Commons, 420 South
        Orange Avenue, Orlando, Florida 32801.
 
 NAME
                  AND ADDRESS OF
                BENEFICIAL
                  OWNER
              
              TOTAL
                  NUMBER OF SHARES BENEFICIALLY OWNED
              
              
              PERCENT
                  OF CLASSBarry
                  A.N. Bloom
              
              --
              (3)
              
              --Robert
                  A. Bourne
              
              12,500
              (1)
              
              *John
                  A. Griswold
              
              --
              (3)
              
              --J.
                  Douglas Holladay
              
              5,500**
              
              
              *Thomas
                  J. Hutchison III
              
              --
              (3)
              
              --Jack
                  F. Kemp
              
              5,500
              
              
              *Craig
                  M. McAllaster
              
              10,500**
              
              
              *Dianna
                  F. Morgan
              
              5,500
              
              
              *Robert
                  E. Parsons, Jr.
              
              10,500**
              
              
              *James
                  M. Seneff, Jr.
              
              22,500
              (1)
                  (2)
              
              *C.
                  Brian Strickland
              
              --
              (3)
              
              --Greerson
                  G. McMullen
              
              --
              
              
              --Mark
                  E. Patten
              
              --
              
              
              --Marcel
                  Verbaas
              
              --
              
              
              --All
                  Directors and Executive Officers as a group (13 persons)
              
              60,000
              
              
              *
 
 *
        Less
        than one percent of the total amount of our outstanding shares of common
        stock.
 
 **
        Includes shares deferred pursuant to the terms of a deferred fee agreement
        between us and such Director.
 
 (1)
        Represents 12,500 shares held by Orion Holdings, LLC, an entity in which
        both
        Messrs. Seneff and Bourne are beneficial owners. Shares are presented as
        beneficially owned by both Messrs. Seneff and Bourne, but are included in
        the
        total share count once.
 
 (2)
        Includes 10,000 shares held by CHC, of which Mr. Seneff is a director. Mr.
        Seneff and his spouse share beneficial ownership of CHC through their ownership
        of CFG, which they hold through ownership of its parent company, CNL Holdings,
        Inc. CHC is a majority owned subsidiary of CFG.
 
 (3)
        Does
        not include an aggregate of 2,153,400 shares of stock units to be granted
        pursuant to the Employment Agreements (defined in Item 13. “Certain
        Relationships and Related Transactions” pursuant to the 2004 Omnibus Long-Term
        Incentive Plan).
 9
 
 **Equity
        Compensation Plan Information**
 
 The
        following shares **** have
        been
        authorized for issuance under our long-term incentive plan (share amounts
        in
        thousands):
 
 Number
                  of securities to be issued upon exercise of outstanding options,
                  warrants
                  and rights
              
              Number
                  of securities issued
              
              Weighted
                  average exercise price of outstanding options, warrants and
                  rights
              
              Number
                  of securities available for future issuance under equity compensation
                  plansLong-term
                  incentive plan approved by stockholders
              1,788.0
              
              9.5
              
              n/a
              
              1,778.5
 
 Our
        long-term incentive plan was approved by our stockholders at our 2004 Annual
        Meeting of Stockholders. Awards may be granted under the plan in the form
        of
        options to purchase shares of common stock, restricted common stock awards,
        stock appreciation rights, deferred shares, stock units, performance shares
        and
        performance units to our employees, Directors and consultants or any of our
        affiliates’ employees, directors and consultants. A total of 1,788,000 shares
        were initially reserved for issuance as stock awards. No one participant
        may
        receive awards for more than 1.0 million shares of common stock in any one
        calendar year. The plan is administered by the Compensation Committee of
        our
        Board.
 
 **Item
        13. Certain Relationships and Related Transactions**
 
 **CERTAIN
        RELATIONSHIPS AND RELATED TRANSACTIONS**
 
 *Advisory
        Agreement and Other Services*
 
 Since
        our
        inception, pursuant to an advisory agreement which has been renewed annually,
        we
        have retained CNL Hospitality Corp. (“CHC”) as our advisor, whereby CHC provides
        us with management, acquisition, development, advisory and certain
        administrative services. Some of our Directors and all of our Officers,
        including Messrs. Seneff, Bourne, Hutchison, Griswold, Strickland, Bloom,
        Patten and McMullen, hold similar positions with CHC. In addition,
        Mr. Bourne is an officer of CNL Securities Corp. (“CSC”), an affiliate of
        CHC and the managing dealer of our five prior best efforts public offerings
        of
        shares of common stock and a wholly-owned subsidiary of CNL Financial Group,
        Inc. (“CFG”).
 
 Pursuant
        to our Advisory Agreement, effective as of April 1, 2004, between us and
        CHC
        (the “Advisory Agreement”), CHC provides
        management services relating to our business, the hotel and resort properties
        (the “Properties”) and, if applicable, any mortgage
        loans we may provide to other hotel and resort operators .
        Under
        the terms of this Advisory Agreement, CHC is
        responsible for assisting us in negotiating leases, permanent financing, mortgage
        loans to other hotel and resort operators and
        short-term loans or lines of credit: collecting rents and payments on any mortgage
        financing we provide: inspecting the Properties and the tenants' or managers’ books and records: and
        responding to tenants' or managers’ inquiries and notices. CHC also provides us
        with services pertaining to the expansion, renovation, refurbishment,
        development, and construction of our Properties (the “PD&C Services”), and
        with accounting, technical and other administrative services (the
“Administrative Services”). In exchange for the management services,
        CHC  is
        entitled to receive an asset management fee (the “Asset Management Fee”). The
        Asset Management Fee is calculated monthly as the amount equal to one-twelfth
        of
        0.60 percent of the total amount invested in our Properties, exclusive of
        Acquisition Fees (as described below) paid to CHC and acquisition expenses,
        plus
        one-twelfth of 0.60 percent of the outstanding principal amount of any mortgage
        loans made by
        us as of the end of the preceding month. The fees we pay CHC for the PD&C
        Services reflect a negotiated percentage (typically four to five percent)
        of
        anticipated project costs and may include an incentive fee based on the amount
        a
        project is completed under the anticipated project costs. The fees we pay
        CHC
        for Administrative Services are predetermined based upon an hourly rate for
        the
        specific personnel of CHC or its affiliates performing such services for
        us.
 
 For
        identifying Properties for us to acquire, structuring the terms of the
        acquisition and the taxable real estate investment trust subsidiary (“TRS”)
        leases for the Properties (as applicable) and structuring the terms of any mortgage
        loans related to the acquisition , CHC receives
        an acquisition fee (the “Acquisition Fee”), which prior to April 2005 was equal
        to 4.5 percent of gross proceeds from our equity offerings and/or loan proceeds
        from permanent financing that we used to acquire such Properties. Pursuant
        to
        the terms of an Amended and Restated Renewal Agreement executed by us and
        CHC
        (as more fully described below) in December 2005, the Acquisition Fee applicable
        under the Advisory Agreement for services rendered by CHC was adjusted to
        3.0
        percent effective as of April 1, 2005. For providing services in connection
        with
        the sale of our Properties, CHC may receive a subordinated disposition fee
        equal
        to the lesser of (i) one-half of a competitive real estate commission, as
        defined in the Advisory Agreement, or (ii) three percent of the sale price
        of
        such Properties. The subordinated disposition fee is only paid if our
        stockholders have received distributions in excess of a predefined minimum
        threshold. Certain of the above fees, including Acquisition Fees, ordinarily
        paid to CHC were not being paid prior to December 2005, pursuant to the terms
        of
        the Original Merger Agreement (as defined below) between us and CHC.
 
 On
        March
        31, 2005, we entered into an agreement with CHC (the “Renewal Agreement”), with
        respect to the Advisory Agreement, pursuant to which the Advisory Agreement
        was
        renewed for an additional one-year term commencing on April 1, 2005, and
        ending
        on March 31, 2006. Pursuant to the terms of the Renewal Agreement, the parties
        agreed to further review and negotiate the rate of Acquisition Fees under
        the
        Advisory Agreement.
 
 On
        December 30, 2005, we and CHC entered into an Amended and Restated Renewal
        Agreement (the “Amended and Restated Renewal Agreement”), which amended and
        restated the Renewal Agreement, and amended the Advisory Agreement (as so
        amended, the “Amended Advisory Agreement”). The Amended and Restated Renewal
        Agreement provides for a reduction in the rate of Acquisition Fees from 4.5%
        to
        3.0%, retroactive to April 1, 2005 .
 
 On
        March 30,
        2006, we and CHC entered into a Renewal Agreement with respect to the Amended
        Advisory Agreement, pursuant to which the Amended Advisory Agreement was
        renewed
        for a three-month period commencing on April 1, 2006 and terminating on June
        30,
        2006.
 10
 
 On
        December 30, 2005, we and CHC entered into a Payment Agreement (the “Payment
        Agreement”) which provides for certain payments in the aggregate amount of $37
        million (the “Payment Amount”) by us to CHC in full satisfaction of Acquisition
        Fees in the aggregate amount of approximately $82.7 million that were deferred
        (the “Payable Fees”) pursuant to the terms of the Original Merger
        Agreement.
 
 The
        Payment Agreement provides for the payment to CHC of an aggregate of $37
        million
        as follows: (i)
        $10
        million in cash to CHC, which was paid on December 30, 2005, and (ii) a
        promissory note to CHC in the original principal amount of $27 million, which
        was issued and delivered (the “Promissory Note”). The Promissory Note requires
        payment of principal, with any unpaid accrued interest, of $15 million on
        January 31, 2006, which payment was made, and $12 million on January 31,
        2007.
        Interest accrues under the terms of the Promissory Note at 6% per annum.
        Pursuant to the Payment Agreement, CHC agreed that (i) the Payment Amount
        is in
        full satisfaction and payment of all its rights and interests with respect
        to
        the Payable Fees and (ii) there are no other unpaid Acquisition Fees which
        have
        been incurred by us or earned by CHC on or prior to December 31, 2005, other
        than the Payable Fees. In addition, under the terms of the Payment Agreement,
        CHC acknowledged and agreed (i) to irrevocably waive the right to payment
        of all
        Acquisition Fees and Asset Management Fees (as defined in the Amended Advisory
        Agreement and as enumerated in Section 9(a) of the Amended Advisory Agreement)
        payable by us to CHC under the Amended Advisory Agreement for the period
        from
        and including January 1, 2006 through and including June 30, 2006 (collectively,
        the “Relinquished Fees”) and (ii) that the agreements, covenants and provisions
        in the Payment Agreement are in full satisfaction and payment of all its
        rights
        and interests with respect to the Relinquished Fees. The Payment Agreement
        also
        provides (i) that except for the Payment Amount with respect to the Payable
        Fees
        and the waiver of the Relinquished Fees, all other advisory fees under the
        Amended Advisory Agreement incurred by us and earned by CHC shall be payable
        in
        accordance with the terms and conditions of the Amended Advisory Agreement,
        (ii)
        for mutual releases, and (iii) that to the extent that Section 8.13 of the
        Original Merger Agreement is inconsistent with the terms and conditions of
        the
        Payment Agreement, the Payment Agreement shall supersede Section 8.13 of
        the
        Original Merger Agreement. We have capitalized approximately $23 million
        of the
        Payment Amount to the acquisitions applicable to the Payable Fees and $14
        million has been treated as prepaid Asset Management Fees which will be
        recognized ratably over the first six months of 2006.
 
 Certain
        of our Directors and Officers hold similar positions with CHC and its
        affiliates. These affiliates are by contract entitled to receive fees and
        compensation for services provided in connection with the acquisition,
        development, management and sale of the Company’s assets. During 2005, CSC, the
        managing dealer of our prior offerings, conducted a compliance review relative
        to recent rule changes implemented by the NASD. Based upon this review, CSC
        determined that certain commissions, totaling $2.1 million, accrued in 2004
        and
        paid in January 2005, by us, should not have been paid to CSC as they had
        reached the cap on such costs that could be passed through to us. CSC refunded
        these commissions to us in November 2005.
 
 In
        addition, CSC determined that we had exceeded the stock issuance cost cap
        in
        connection with the third best-efforts public offering in April 2002, by
        an
        amount of $0.4 million. CSC refunded these costs to us in November 2005.
  Amounts
        incurred (refunded) relating to these transactions with affiliates were as
        follows for the years ended December 31 (in thousands):
 
 2005
              
              
              2004CNL
                  Securities Corp.:Selling
                  commissions (refund), net*
              $
              (2,103
              )
              $
              47,519Marketing
                  support fee and due diligence expense reimbursements (refund),
                  net
                  *
              
              (394
              )
              
              3,072(2,497
              )
              
              50,591CHC
                  and its affiliates:Acquisition
                  fees
              
              23,000
              
              
              30,235Development
                  fees
              
              3,001
              
              
              2,224Asset
                  management fees
              
              27,868
              
              
              26,50553,869
              
              
              58,964$
              51,372
              
              $
              109,555
 
 *
              The
                  majority of the fees and reimbursements incurred in 2004 were paid
                  to
                  unaffiliated broker-dealer firms.
 
 Approximately
        $27.0 million and $5.9 million are included in due to related parties in
        our
        consolidated balance sheets as of December 31, 2005 and 2004,
        respectively.
 
 CHC
        and
        its affiliates provide various administrative services to us, including,
        but not
        limited to: services related to legal administration; accounting; financial,
        tax, insurance administration and regulatory compliance reporting; stockholder
        distributions and reporting; due diligence and marketing; and investor relations
        (including administrative services in connection with our best-efforts
        offerings), on a day-to-day basis.  The expenses incurred for these
        services were $4.5 million and $12.5 million for the years ended December
        31,
        2005 and 2004, respectively.
 11
 
 The
        expenses incurred for these services were classified as follows for the years
        ended December 31 (in thousands):
 
 2005
              
              
              2004Stock
                  issuance costs
              $
              —
              
              $
              8,188General
                  operating and administrative expenses
              
              4,515
              
              
              4,328$
              4,515
              
              $
              12,516
 
 *Original
        Merger Agreement*
 
 In
        April
        2004, we entered into a merger agreement with, among others, CHC, as amended
        as
        of June 17, 2004 (the “Original Merger Agreement”). The Original Merger
        Agreement provided for the merger of CHC into a wholly-owned subsidiary of
        ours
        (the “Original Merger”) and was approved by our stockholders at our 2004 Annual
        Meeting of Stockholders. Completion of the Original Merger was subject to
        the
        satisfaction or waiver, where permissible, of a number of conditions, some
        of
        which can no longer be fulfilled and would require waivers. Under the terms
        of
        the Original Merger Agreement, either party may have terminated the Original
        Merger Agreement, although neither party did so. The Original Merger Agreement
        provided that during the period from the execution of the Original Merger
        Agreement, April 29, 2004, until the earlier of (i) the Original
        Merger becoming effective or (ii) the Original Merger Agreement being
        terminated, CHC would earn and be paid the following fees: (a) monthly
        Asset Management Fees as described above and (b) development fees earned by
        CHC or its subsidiaries in the ordinary course of business. Additionally,
        CHC
        would continue to be reimbursed for expenses incurred in the ordinary course
        of
        business in accordance with the terms of the Advisory Agreement, including
        but
        not limited to, accounting fees. Under the Original Merger Agreement, CHC
        was
        not entitled to receive any other fees from us to which it otherwise would
        have
        been entitled under the Advisory Agreement. For the years ended December
        31,
        2005 and 2004, we paid CHC Asset Management Fees of $27.9 million and $26.5
        million, respectively, and PD&C fees of $3.0 million and $2.2 million,
        respectively. Prior to entering into the Original Merger Agreement, we paid
        CHC
        Acquisition Fees of 4.5 percent of equity raised through the sale of common
        stock in connection with our fifth best-efforts offering and in connection
        with
        the acquisition of long-term debt. During the years ended December 31, 2005
        and
        2004, we paid acquisition fees totaling $23.0 million and $30.2 million in
        connection with our fifth best-efforts offering of common stock and the
        acquisition of long-term debt, respectively.
 
 *Amended
        and Restated Merger Agreement*
 
 On
        April 3, 2006, we entered into an amended and restated agreement and plan
        of merger with CHC, CREG, Five Arrows Realty Securities II L.L.C. (“Five
        Arrows”), the other stockholders of CHC identified therein, CNL Hotels &
Resorts Acquisition, LLC (“Acquisition Sub”), CNL Hospitality Properties
        Acquisition Corp., and CFG (the “Amended Merger Agreement”). Our Board approved
        the Amended Merger Agreement after receiving the recommendation of the Special
        Committee. Pursuant to the Amended Merger Agreement, CHC will merge with
        and
        into Acquisition Sub, all of the membership interests of which are owned
        by us
        (the “Amended Merger”), and the separate corporate existence of CHC will cease.
        The Amended Merger Agreement amends and restates the Original Merger Agreement.
 
 Upon
        the
        closing of the Amended Merger (the “Closing”), all of the outstanding shares of
        capital stock of CHC (the “CHC Shares”) will be converted into the right to
        receive 3.6 million of our shares of common stock, which total number of
        shares
        was calculated by dividing $72.0 million by the Per Share Price (as defined
        in
        the Amended Merger Agreement), and the CHC Shares shall thereupon cease to
        be
        outstanding and shall be canceled, retired and cease to exist. In addition,
        at
        the Closing, (i) if the closing date is on or before June 30, 2006, we will
        assume and repay a note issued by CHC to Five Arrows, which as of March 31,
        2006 had an outstanding principal balance of approximately $7.9 million
        (the “Five Arrows Note”), or (ii) if the closing date is after June 30,
        2006, we will assume and repay a loan in the principal amount of
        $7.625 million, to be made by CREG or its affiliate to CHC, solely to
        enable CHC to pay the final principal installment under the Five Arrows Note
        due
        on June 30, 2006. Upon consummation of the Amended Merger, the surviving
        company, as the successor to CHC, will be a wholly-owned subsidiary of us,
        and
        CHC’s officers and other employees will become our employees. If the Amended
        Merger is consummated, the Advisory Agreement between us and CHC will be
        terminated and we will become self-advised.
 
 We
        and
        CHC, among others, have made representations, warranties and covenants in
        the
        Amended Merger Agreement. Consummation of the Amended Merger is subject to
        a
        number of closing conditions, including, among others, (i) approval of the
        Amended Merger by our stockholders, (ii) the approval by our stockholders,
        and
        the filing of certain amendments to our charter, (iii) receipt of certain
        consents and approvals, and (iv) receipt of certain legal opinions by
        CHC from our counsel. The Amended Merger Agreement may be terminated at any
        time prior to the effective time of the Amended Merger, including before
        or
        after approval of the Amended Merger and the Amended Merger Agreement by
        our
        stockholders, by mutual consent of us and CHC or by us or CHC, in certain
        circumstances. The Amended Merger Agreement also may be terminated after
        December 31, 2006 if the Amended Merger Agreement shall not have been
        consummated by such date.
 
 Certain
        of our Officers and Directors and their respective affiliates collectively
        own,
        directly or indirectly, an aggregate of 90% of the outstanding capital stock
        of
        CHC and will receive, directly or indirectly, an aggregate of 3.24 million
        of
        our common shares in the Amended Merger. Mr. Seneff, Jr., jointly with his
        wife
        has ownership and voting control of CNL Holdings, Inc., the parent company
        of
        CFG, which, in turn, wholly owns CREG, the owner of approximately 53.6% of
        the
        outstanding shares of common stock of CHC. Mr. Seneff also directly owns
        an
        additional approximately 7.5% of the outstanding shares of common stock of
        CHC.
        As a result of his direct and indirect holdings in CHC, Mr. Seneff will be
        entitled to receive approximately 2.2 million of our common shares in the
        Amended Merger. In addition, Mr. Bourne owns directly approximately 13.34%
        of
        the outstanding shares of common stock of CHC, which shares will entitle
        Mr.
        Bourne to receive approximately 480,240 shares of our common shares in the
        Amended Merger. Messrs. Hutchison, Griswold, Strickland, Verbaas, and Bloom,
        officers of us and CHC, own an aggregate of approximately 15.6% of the
        outstanding shares of common stock of CHC, which, in connection with the
        Amended
        Merger, will entitle them to receive an aggregate of approximately 559,440
        of
        our common shares. As part of the closing of the Amended Merger, we will
        enter
        into a registration rights agreement with the stockholders of CHC, which
        will
        require us to register, in certain instances, our common shares that CHC’s
        stockholders received in the Amended Merger.
 
 *Employment
        Agreements*
 
 On
        April 3, 2006, we also entered into employment agreements with the
        following officers of CHC: Messrs. Hutchison, Griswold, Strickland, and Bloom
        (the “Employment Agreements”). Each of such persons are currently officers of us
        and each has agreed to continue to serve as an officer of us, effective as
        of
        the Effective Time (as defined in the Amended Merger Agreement) of the Amended
        Merger. These agreements will become effective only if the Amended Merger
        is
        consummated.
 
 Thomas
        J. Hutchison III
 
 The
        employment agreement with Mr. Hutchison (the “Hutchison Employment Agreement)
        provides for Mr. Hutchison to serve as our Chief Executive Officer. The
        Hutchison Employment Agreement’s initial term is from the Effective Time of the
        Amended Merger through December 31, 2009.
 
 Under
        the
        Hutchison Employment Agreement, Mr. Hutchison will receive an annual salary
        of $900,000, and may receive an annual increase in the sole discretion of
        the
        Board. Mr. Hutchison is also eligible to participate in our bonus plan,
        which shall set forth various achievement or performance criteria that if
        achieved shall entitle Mr. Hutchison to receive a specified percentage of
        his salary. This bonus will be payable at three levels. At the threshold
        level,
        Mr. Hutchison will receive 50% of base salary; at the target level,
        Mr. Hutchison will receive 100% of base salary; at the superior level,
        Mr. Hutchison will receive 200% of base salary. In addition,
        Mr. Hutchison will participate in any group life, disability, health and
        other benefit plans that we adopt and will receive additional life insurance
        benefits.
 
 12
 Mr. Hutchison
        will be granted 153,090 shares in the form of stock units which will vest
        in
        equal installments on December 31, 2006, December 31, 2007,
        December 31, 2008, and December 31, 2009, if he remains in our
        service, and he will be granted 697,410 shares in the form of stock units
        which
        shall be subject to vesting based on the achievement of certain performance
        criteria on the last day of each calendar year through December 31, 2009.
  The
        Hutchison Employment Agreement provides that in the event Mr. Hutchison’s
        employment is terminated by us without cause or by Mr. Hutchison for good
        reason including a change in control (as defined in the agreement), he will
        be
        entitled to severance benefits. These benefits include an amount equal to
        three
        times the sum of his annual salary and the average bonus earned for the highest
        two of the last three years. Mr. Hutchison will also be entitled to
        continuing health benefits. Additionally, all of the outstanding and unvested
        shares that would have vested if the applicable performance criteria had
        been
        achieved in that calendar year employment terminates will be vested, except
        upon
        a change in control in which case all outstanding awards of shares will be
        vested. If the Hutchison Employment Agreement is not renewed, Mr. Hutchison
        will receive severance in an amount equal to one times his annual salary
        and
        bonus. Mr. Hutchison will be entitled to a tax gross-up payment if he
        becomes subject to the excise tax applicable to certain “golden parachute”
payments pursuant to Sections 280G and 4999 of the Internal Revenue Code of
        1986, as amended.
  John
        A. Griswold
 
 The
        employment agreement with Mr. Griswold (the “Griswold Employment Agreement”)
        provides for Mr. Griswold to serve as our President and Chief Operating
        Officer. The Griswold Employment Agreement’s initial term is from the Effective
        Time of the Amended Merger through December 31, 2009.
 
 Under
        the
        Griswold Employment Agreement, Mr. Griswold will receive an annual salary
        of $700,000, and may receive an annual increase in the sole discretion of
        the
        Board. Mr. Griswold is also eligible to participate in our bonus plan,
        which shall set forth various achievement or performance criteria that if
        achieved shall entitle Mr. Griswold to receive a specified percentage of
        his salary. This bonus will be payable at three levels. At the threshold
        level,
        Mr. Griswold will receive 50% of base salary; at the target level,
        Mr. Griswold will receive 125% of base salary; at the superior level,
        Mr. Griswold will receive 175% of base salary. In addition,
        Mr. Griswold will participate in any group life, disability, health and
        other benefit plans that we adopt and receive additional life and disability
        insurance benefits.
 
 Mr. Griswold
        will be granted 119,322 shares in the form of stock units which will vest
        in
        equal installments on December 31, 2006, December 31, 2007,
        December 31, 2008, and December 31, 2009, if he remains in our
        service, and he will be granted 543,578 shares in the form of stock units,
        which
        shall be subject to vesting based on the achievement of certain performance
        criteria on the last day of each calendar year through December 31, 2009.
 
 The
        Griswold Employment Agreement provides that in the event Mr. Griswold’s
        employment is terminated by us without cause or by Mr. Griswold for good
        reason including a change in control (as defined in the agreement), he will
        be
        entitled to severance benefits. These benefits include an amount equal to
        two
        times the sum of his annual salary and the average bonus earned for the highest
        two of the last three years. Mr. Griswold will also be entitled to
        continuing health benefits. Additionally, all of the outstanding and unvested
        shares that would have vested if the applicable performance criteria had
        been
        achieved in that calendar year employment terminates will be vested, except
        upon
        a change in control in which case all outstanding awards of shares will be
        vested. If the Griswold Employment Agreement is not renewed, Mr. Griswold
        will receive severance in an amount equal to one times his annual salary
        and
        bonus. Mr. Griswold will be entitled to a tax gross-up payment if he
        becomes subject to the excise tax applicable to certain “golden parachute”
payments pursuant to Sections 280G and 4999 of the Internal Revenue Code of
        1986, as amended.
 
 C.
        Brian Strickland
 
 The
        employment agreement with Mr. Strickland (the “Strickland Employment Agreement”)
        provides for Mr. Strickland to serve as our Executive Vice President and
        Chief Financial Officer. The Strickland Employment Agreement’s initial term is
        from the Effective Time of the Amended Merger through December 31, 2009.
        Under the Strickland Employment Agreement, Mr. Strickland will receive an
        annual salary of $526,000, and may receive an annual increase in the sole
        discretion of the Board. Mr. Strickland is also eligible to participate in
        our bonus plan, which shall set forth various achievement or performance
        criteria that if achieved shall entitle Mr. Strickland to receive a
        specified percentage of his salary. This bonus will be payable at three levels.
        At the threshold level, Mr. Strickland will receive 50% of base salary; at
        the target level, Mr. Strickland will receive 125% of base salary; at the
        superior level, Mr. Strickland will receive 175% of base salary. In
        addition, Mr. Strickland will participate in any group life, disability,
        health and other benefit plans that we adopt and receive additional disability
        insurance benefits.
 
 Mr. Strickland
        will be granted 83,700 shares in the form of stock units which will vest
        in
        equal installments on December 31, 2006, December 31, 2007,
        December 31, 2008, and December 31, 2009, if he remains in our
        service, and he will be granted 381,300 shares in the form of stock units
        which
        shall be subject to vesting based on the achievement of certain performance
        criteria on the last day of each calendar year through December 31, 2009.
 
 The
        Strickland Employment Agreement provides that in the event Mr. Strickland’s
        employment is terminated by us without cause or by Mr. Strickland for good
        reason including a change in control (as defined in the agreement), he will
        be
        entitled to severance benefits. These benefits include an amount equal to
        two
        times the sum of his annual salary and the average bonus earned for the highest
        two of the last three years. Mr. Strickland will also be entitled to
        continuing health benefits. Additionally, all of the outstanding and unvested
        shares that would have vested if the applicable performance criteria had
        been
        achieved in that calendar year employment terminates will be vested, except
        upon
        a change in control in which case all outstanding awards of shares will be
        vested. If the Strickland Employment Agreement is not renewed by us, Mr.
        Strickland will receive severance in an amount equal to one times his annual
        salary and bonus. Mr. Strickland will be entitled to a tax gross-up payment
        if
        he becomes subject to the excise tax applicable to certain “golden parachute”
payments pursuant to Sections 280G and 4999 of the Internal Revenue Code of
        1986, as amended.
 
 
  13
  Barry
        A. N. Bloom
 
 The
        employment agreement with Mr. Bloom (the “Bloom Employment Agreement”) provides
        for Mr. Bloom to serve as our Executive Vice President of Portfolio
        Management and Administration. The Bloom Employment Agreement’s initial term is
        from the Effective Time of the Amended Merger through December 31, 2009.
 
 Under
        the Bloom Employment Agreement, Mr. Bloom will receive an annual salary of
        $385,000, and may receive an annual increase in the sole discretion of the
        Board. Mr. Bloom is also eligible to participate in our bonus plan, which
        shall set forth various achievement or performance criteria that if achieved
        shall entitle Mr. Bloom to receive a specified percentage of his salary.
        This bonus will be payable at three levels. At the threshold level,
        Mr. Bloom will receive 50% of base salary; at the target level,
        Mr. Bloom will receive 100% of base salary; at the superior level,
        Mr. Bloom will receive 125% of base salary. In addition, Mr. Bloom
        will participate in any group life, disability, health and other benefit
        plans
        that we adopt and receive additional disability insurance benefits.
 
 Mr. Bloom
        will be granted 31,500 shares in the form of stock units which will vest
        in
        equal installments on December 31, 2006, December 31, 2007,
        December 31, 2008, and December 31, 2009, if he remains in our
        service, and he will be granted 143,500 shares in the form of stock units
        which
        shall be subject to vesting based on the achievement of certain performance
        criteria on the last day of each calendar year through December 31, 2009.
 
 The
        Bloom
        Employment Agreement provides that in the event Mr. Bloom’s employment is
        terminated by us without cause or by Mr. Bloom for good reason including a
        change in control (as defined in the agreement), he will be entitled to
        severance benefits. These benefits include an amount equal to two times the
        sum
        of his annual salary and the average bonus earned for the highest two of
        the
        last three years. Mr. Bloom will also be entitled to continuing health
        benefits. Additionally, all of the outstanding and unvested shares that would
        have vested if the applicable performance criteria had been achieved in that
        calendar year employment terminates will be vested, except upon a change
        in
        control in which case all outstanding awards of shares will be vested. If
        the
        Bloom Employment Agreement is not renewed by us, Mr. Bloom will receive
        severance in an amount equal to one times his annual salary and bonus.
        Mr. Bloom will be entitled to a tax gross-up payment if he becomes subject
        to the excise tax applicable to certain “golden parachute” payments pursuant to
        Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended.
 
 Each
        of the Employment Agreements includes covenants protecting our confidential
        information and intellectual property. The Employment Agreements also contain
        covenants regarding non-solicitation and non-competition. Each of the Employment
        Agreement resulted from an arms-length negotiation between us and the officer.
 
 *Other
        Related Transactions*
 
 WB
        Resort
        Partners, LP (“WB Resort Partners”), one of our unconsolidated entities, owned
        the Waikiki Beach Marriott Resort Property (the “WBR Property”). One of the
        limited partners of WB Resort Partners is Waikiki Beach Resort, Ltd. (“WBR
        Ltd.”). WBR Ltd. is a limited partnership in which a corporation controlled by
        Messrs. Seneff, Jr., and Bourne, is the general partner. Such corporation
        is
        also the holder of all of the limited partnership interests in WBR Ltd. We
        owned
        a 48.9 percent limited partnership interest and a general partnership interest
        in WB Resort Partners, WBR Ltd. owned a 36 percent limited partnership interest
        in WB Resort Partners and Marriott Rewards, Inc. owned the remaining limited
        partnership interests. WBR Ltd. received a loan (the “Limited Partner Loan”)
        from Marriott, to make its capital contributions to WB Resort Partners to
        fund
        the planned renovations of the WBR Property. In 2004, we and the other limited
        partners made pro-rata capital contributions to WB Resort Partners. Our capital
        contribution in 2004 was in the amount of approximately $103,000. WBR Ltd.
        received cash distributions of $0.4 million during the year ended December
        31,
        2005, which represents its pro-rata share of total cash distributions paid
        by WB
        Resort Partners.
  On
        October 9, 2005, WBM Resort, L.P., a subsidiary of WB Resort Partners, accepted
        a non-refundable deposit in connection with the expiration of a due diligence
        review period under an Agreement of Purchase and Sale, dated September 9,
        2005,
        with an Affiliate of Whitehall Street Global Real Estate Limited Partnership
        2005, which provided for the sale of all of WB Resort Partners’ interest in the
        WBR Property (the “WBR Sale”). The WBR Sale closed on November 7, 2005. As a
        result of the closing of the WBR Sale, WB Resort Partners distributed the
        net
        proceeds among the partners according to the Limited Partnership Agreement.
        As a
        result, we received approximately $50.1 million in distributions. In addition,
        WBR Ltd received a distribution of approximately $36.8 million, of which
        approximately $32.7 million was utilized to repay the Limited Partner Loan
        to
        Marriott in full.
  In
        April
        2005, KSL II Management Operations LLC (“KSL”), in its role as third-party
        management company of the Grand Wailea Resort and Spa (“GWR”), entered into an
        amenity license agreement with Exclusive Resorts Club Management, LLC (“ER”) to
        provide ER with access to the amenities at GWR and the right to use certain
        marks and photographs concerning GWR for the benefit of certain condominium
        units in the vicinity of GWR expected to be acquired by ER from an unaffiliated
        developer. As consideration for the amenity license and the use of marks
        and
        photographs, ER will pay a reservation fee for each condominium unit for
        which a
        license is purchased by ER and an annual license fee per unit commencing
        with
        the second year of the term, and such license fee increases each year through
        the last year of the term for each such unit. Subject to certain termination
        rights, the initial term is ten years with an option in favor of ER to extend
        the term for five additional years. The estimated financial benefit to GWR
        over
        the life of the agreement is approximately $8 million. Because one of the
        our
        Directors, Robert E. Parsons, Jr., is the Chief Financial Officer of and
        holds a
        participating interest in ER, the Company’s Board, with that Director
        abstaining, reviewed and approved the transaction with ER, pursuant to the
        Company’s Charter. Mr. Parsons has agreed to waive any distribution rights he
        had under his participation agreement with respect to this transaction. We
        received $130,000 for access fees for 2006 under the terms of this agreement
        during the year ended December 31, 2005. At December 31, 2005, such fees
        are
        deferred for recognition as income in future periods.
 14
 
 In
        May
        2005, we entered into indemnification agreements with three of our independent
        Directors, Douglas Holladay, Jack F. Kemp, Dianna F. Morgan and our assistant
        secretary, Stephanie J. Thomas and amended indemnification agreements with
        C.
        Brian Strickland, Mark E. Patten, Barry A. N. Bloom and Marcel Verbaas to
        conform them to other outstanding indemnification agreements. The
        indemnification agreements require, among other things, that we indemnify
        these
        Officers and Directors, to the fullest extent required or permitted by the
        Charter and by applicable law, for their actions and decisions on behalf
        of us,
        our subsidiaries and affiliates and CHC, as the case may be, to the extent
        such
        decisions and actions are performed on our behalf. The indemnification
        agreements also require that we advance to these Officers and Directors all
        related expenses; subject to reimbursement if it is subsequently determined
        that
        indemnification is not permitted. Each of these indemnification agreements
        is
        retroactive to the first date of service with us for the Officer or Director,
        as
        the case may be. On October 3, 2005, we entered into a similar agreement
        with
        Greerson G. McMullen, our Chief General Counsel, Senior Vice President and
        Secretary and Chief General Counsel and Senior Vice President of CHC.
 
 We
        own a
        9.901 percent interest, as a limited partner, in CNL Plaza, Ltd. (the “Owner”),
        a limited partnership that owns an office building located in Orlando, Florida,
        in which CHC and certain affiliates of CFG leased office space in 2005 and
        2006.
        CFG owns a controlling interest in the parent company of CHC and is indirectly
        wholly-owned by James M. Seneff, our Chairman of the Board, and his wife.
        Robert
        A. Bourne, our Vice-Chairman of the Board, is an officer of CFG. The remaining
        interests in the Owner are held by several entities with present or former
        affiliations with CFG, including: CNL Plaza Venture, Ltd., which has a 1
        percent
        interest as general partner of Owner and whose general partner is indirectly
        wholly-owned by Mr. Seneff and his wife; CNL Corporate Investors, Ltd., which
        is
        indirectly wholly-owned by Messrs. Seneff and Bourne, and which has a 49.495
        percent interest, as a limited partner, in Owner; CNL Retirement Properties,
        Inc. which has a 9.901 percent interest, as a limited partner, in Owner;
        Commercial Net Lease Realty, Inc., which has a 24.7525 percent interest,
        as a
        limited partner, in Owner; and CNL Corporate Investors, Ltd., which has a
        4.9505
        percent interest, as a limited partner, in Owner. We also own a 9.9 percent
        interest in CNL Plaza Venture, Ltd. (the “Borrower”), a Florida limited
        partnership, which is the general partner of Owner. The remaining interests
        in
        the Borrower are held by the same entities in the same proportion described
        above with respect to the Owner.
 
 In
        2002,
        we guaranteed a 16.67 percent share, or approximately $2.6 million, of a
        $15.5
        million unsecured promissory note of the Borrower. Our guaranty was a pro
        rata,
        several, payment guaranty commensurate with and limited to 16.67 percent
        of the
        promissory note. CFG negotiated a new $14 million unsecured loan to the Borrower
        to refinance the remaining balance of the promissory note. As with the
        promissory note, we executed a pro rata, several, payment guaranty commensurate
        with and limited to 16.67 percent, or approximately $2.3 million, on September
        30, 2005. Messrs. Hutchison III, Griswold, Bourne and Seneff, each a Director
        and Officer of ours are also directors and officers of CHC and an affiliate
        of
        CFG.
 
 In
        addition, in 2004, the Owner conveyed a portion of the premises underlying
        the
        parking structure adjacent to its office building to CNL Plaza II, Ltd.,
        a
        limited partnership in which Messrs. Seneff and Bourne own a 60% interest
        and 40% interest, respectively, as part of the development of the premises
        surrounding the building. The purpose of the conveyance was to adjust the
        percentage fee simple ownership under the parking structure so as to allow
        joint
        parking privileges for a new tower being developed and owned by CNL Plaza
        II,
        Ltd. In connection with this transaction, the Owner will receive an ownership
        interest in a cross-bridge and an anticipated benefit from a reduction in
        the
        allocation of its operating expenses for the garage. CNL Plaza II, Ltd. has
        paid
        the Owner $1.9 million representing the appraisal value of the land conveyance.
        CHC and certain affiliates of CFG currently lease office space in this
        building.
 
 We
        maintain bank accounts in a bank in which Messrs. Seneff and Bourne serve
        as
        directors, and in which CFG, an affiliate of CHC, is a stockholder. The amounts
        deposited with this bank were approximately $39.8 million and $41.7 million
        at
        December 31, 2005 and 2004, respectively.
 
 As
        more
        fully described in “Note 6 to our Consolidated Financial Statements in our
        Annual Report on Form 10-K for the year ended December 31, 2005, Investments
        in
        Unconsolidated Entities,” we own an unconsolidated interest in Desert Ridge
        Resort Partners, LLC (“DRR LLC”), a partnership in which a limited partner,
        Desert Ridge Resort, Ltd. (“DRR Ltd.”), is controlled by our Chairman, James M.
        Seneff, Jr. and Vice Chairman of the Board, Robert A. Bourne.
 15
 
 On
        April 3, 2006, our wholly-owned subsidiary, CNL DRR Investor, LP, a
        Delaware limited partnership (the “CNL DRR Investor”), entered into separate
        Purchase and Sale Agreements (the “DRR Purchase Agreements”) with each of DRR
        Ltd. and Marriott Hotel Services, Inc. (“MHS”) to purchase DRR Ltd.’s 45.84
        percent membership interest (the “DRR Ltd. Purchase Agreement”) and MHS’ 10.16
        percent membership interest (the “MHS Purchase Agreement”) (collectively, the
“DRR Transactions”) in DRR LLC, which owns the JW Marriott Desert Ridge Resort
& Spa located in Phoenix, Arizona (the “Resort”). We, through CNL DRR
        Investor, currently own the remaining 44 percent membership interest in DRR
        LLC.
  Under
        the
        DRR Purchase Agreements, CNL DRR Investor has agreed to pay DRR Ltd. $53,449,440
        and MHS $11,846,500 in cash, for an aggregate cash purchase price of
        approximately $65,295,940, plus closing price adjustments relating to working
        capital and cash flow of the Resort before closing (the “Total Payment”). CNL
        DRR Investor has deposited an aggregate of $488,000 with an escrow agent
        (the
“Deposits”). In certain circumstances the Deposits are non-refundable. If the
        closing of the DRR Transactions occurs, the Deposits will be applied against
        the
        Total Payment.
  The
        consummation of the DRR Transactions is conditioned on the simultaneous closing
        of the DRR Purchase Agreements and customary closing conditions. The closing
        of
        the DRR Ltd. Purchase Agreement also is conditioned upon the approval by
        the
        equity holders of DRR Ltd. and the receipt by DRR Ltd. of a fairness opinion,
        to
        the effect that the closing payment under the DRR Ltd. Purchase Agreement
        is
        fair from a financial point of view to DRR Ltd. The closing of the MHS Purchase
        Agreement is also conditioned upon receipt from DRR LLC’s existing lenders of
        releases of MHS from liability under certain guaranties and indemnities (which
        condition may be waived by MHS, in which event CNL DRR Investor shall indemnify
        MHS against liability under such guaranties and indemnities). The DRR Purchase
        Agreements contemplate the closing of the DRR Transactions to occur within
        ninety days after the date of the DRR Purchase Agreements, unless extended.
        There can be no assurance that the conditions to closing the DRR Transactions
        will be met, or if met, that the closing of the DRR Transactions will
        occur.
  DRR
        Ltd.
        is a limited partnership, the general partner of which is a corporation owned
        and controlled by our Chairman of the Board and Director, Mr. James M.
        Seneff, Jr., and our Vice Chairman of the Board and Director, Mr. Robert A.
        Bourne. Marriott International, Inc. is the manager of the Resort and Marriott
        International Capital Corporation holds security interests in subsidiaries
        of
        DRR LLC. Thirty-one of our properties are operating under various Marriott
        brands, including Marriott Hotels, Resorts, and Suites, The Ritz-Carlton,
        JW
        Marriott, Residence Inn by Marriott, TownePlace Suites by Marriott, Courtyard
        by
        Marriott, Fairfield Inn, Renaissance Hotels, and Spring Hill Suites by
        Marriott.
  CTM,
        which owned EMTG, LLC, engaged Dustin/Massagli LLC, a company in which one
        of
        our previous Directors is president, a director and a principal stockholder,
        to
        manage its business. In January 2005, EMTG, LLC was dissolved and we wrote
        off
        our remaining investment in CTM as of December 31, 2004.
 
 We
        may
        compete with certain of our affiliates who may seek to acquire properties
        that,
        while not directly in our industry, could satisfy our acquisition criteria.
        CNL
        Income Properties, Inc. (“CIP”), an entity in which two of our Directors
        also serve as directors, seeks to acquire leisure properties, such as marinas,
        golf course operations and ski resorts. Although those properties are not
        considered a part of our industry, a leisure property could contain a hotel
        or
        resort that satisfies the acquisition criteria of CIP and us. In the event
        that
        a property which includes a hotel or resort becomes available, and the property
        is a suitable investment for both CIP and us, CIP has given us a right of
        first
        offer if the hotel or resort has generated more than 50 percent of the revenues
        from such property during the immediately preceding 12 months. Further, in
        the
        event that a portfolio of properties which includes a hotel or resort becomes
        available and the portfolio is a suitable investment for both CIP and us,
        we
        have been granted a right of first offer if more than 50 percent of the revenues
        from such portfolio during the immediately preceding twelve months were
        generated by hotels or resorts. CIP may revoke our right of first offer at
        any
        time.
 
 In
        connection with the KSL Acquisition, we acquired a corporate plane which
        is
        subject to a capital lease with a remaining term of six years and operated
        by an
        unaffiliated third party. During the year ended December 31, 2004, CHC chartered
        the plane from the unaffiliated third-party operator on competitive terms.
        Neither CHC nor its officers chartered our plane during 2005. In connection
        with
        the charter activity, we received expense reimbursements of approximately
        $0.1
        million for the charges incurred by CHC. These payments have been recorded
        as a
        reduction in expenses. The agreement with the unaffiliated third party that
        operates the plane expired on September 30, 2004. In February 2006, we sold
        the plane to an unaffiliated third party and recognized a net loss of
        approximately $1.3 million resulting from the early termination fee of the
        underlying capital lease.
 
 16
  
 **Item
        14.**
 
 **Principal
        Accountant Fees and Services**
 
 **Audit
        Fees**
 
 The
        following table presents fees billed for services rendered by
        PricewaterhouseCoopers, LLP (“PwC”), our Independent Registered Certified Public
        Accounting Firm, for the fiscal years ended December 31, 2005 and 2004.
 **Fiscal
                  Year****2005**
              
              
              **2004**Audit
                  Fees(a)
              $
              1,658,350
              
              $
              1,971,180Audit-Related
                  Fees(b)
              
              393,660
              
              
              849,971Tax
                  Fees(c)
              
              541,654
              
              
              557,516All
                  Other Fees(d)
              
              —
              
              
              —Total
              $
              2,593,664
              
              $
              3,378,667
  (a)
              
              Audit
                  Fees — Consist of professional services rendered in connection with
                  the annual audit of our consolidated financial statements on
                  Form 10-K, quarterly reviews of our interim financial statements on
                  Form 10-Q and services performed in connection with our compliance
                  with the Sarbanes-Oxley Act. Audit fees also include fees for services
                  performed by PwC that are closely related to the audit and in many
                  cases
                  could only be provided by our independent accountants. Such services
                  include the issuance of comfort letters and consents related to
                  our
                  registration statements and capital raising activities, assistance
                  with
                  and review of other documents filed with the SEC and accounting
                  advice on
                  completed transactions.(b)
              
              Audit
                  Related Fees — Consist of services related to audits of properties
                  acquired, due diligence services related to contemplated property
                  acquisitions and accounting consultations.(c)
              
              Tax
                  Fees — Consist of services related to corporate tax compliance,
                  including review of corporate tax returns, review of the tax treatments
                  for certain expenses and tax due diligence relating to acquisitions.(d)
              
              All
                  Other Fees — There were no other professional services rendered by
                  PwC during the years ended December 31, 2005 and 2004.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  17
  **Pre-Approval
        Policies and Procedures**
 
 It
        is our
        policy and the policy of our Audit Committee that audit related services
        and
        non-audit related services, which are provided by our independent accountants
        falling into the categories below, do not require advance written approval
        by
        the Audit Committee unless they exceed $25,000 for individual engagements.
        Once
        individually insignificant assignments, which otherwise do not require written
        approval, exceed $150,000 during any fiscal year we must obtain prior written
        approval from the Audit Committee for subsequent assignments. Any services
        that
        fall outside the categories listed below, regardless of the cost, must be
        approved in writing by the Audit Committee prior to work commencing on the
        engagement. The Audit Committee, our independent accountants, and we understand
        that in order to maintain our independence from PwC, certain types of advisory
        and consulting services may not be provided to us by PWC. We generally limit
        the
        non-audit related services we receive from our independent accountants to
        the
        following:
 1. Advisory services in connection with ongoing accounting and
                  reporting issues including the implementation of new GAAP and SEC
                  requirements;2. Advisory services regarding accounting treatment in connection
                  with property acquisitions;3. Advisory services in connection with corporate transactions
                  (investments, merger transactions, etc.) which are limited to the
                  review
                  and evaluation of accounting systems and practices of target companies;4. Advisory and review services in connection with the filing of
                  registration statements with the SEC including, among other things,
                  amendments, pro forma financial statements, consents, other agreed
                  upon
                  procedures;5. Tax return preparation services;6. Advisory services in connection with ongoing corporate and state
                  income tax issues; and7. Advisory services regarding prospective tax issues in connection
                  with property acquisitions and other corporate transactions.
 
 During
        the fiscal years ended December 31, 2005 and December 31, 2004, all audit,
        audit-related and tax services performed by our independent accountants which
        required pre-approval, as defined in the Audit Committee’s policies and
        procedures, were pre-approved by the Audit Committee. Services other than
        audit,
        review, or attest services, which did not require pre-approval pursuant to
        those
        policies were brought to the attention of the Audit Committee and approved
        prior
        to the completion of our annual audit by the Chairman of the Audit Committee
        in
        accordance with SEC rules and regulations.
  18


**PART
      IV**





**Item
      1** **5.**  **Exhibits.**




(a)
            The
                following documents are filed as part of this report.3.
                Exhibits31.1
            
            Certification
                of Chief Executive Officer, Pursuant to Rule 13a-14(a), as Adopted
                Pursuant to Section 302 of the Sarbanes—Oxley Act of 2002 (Filed
                herewith.)31.2
            
            Certification
                of Principal Financial Officer, Pursuant to Rule 13a-14(a), as
                Adopted Pursuant to Section 302 of the Sarbanes—Oxley Act of 2002
                (Filed herewith.)32.1
            
            Certification
                of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as
                Adopted Pursuant to Section 906 of the Sarbanes—Oxley Act of 2002
                (Previously filed as Exhibit 32.1 to the Registrant’s Annual Report on
                Form 10-K file March 31, 2006 and incorporated herein by
                reference.)32.2
            
            Certification
                of Principal Financial Officer, Pursuant to 18 U.S.C. Section 1350,
                as Adopted Pursuant to Section 906 of the Sarbanes—Oxley Act of 2002
                (Previously filed as Exhibit 32.2 to the Registrant’s Annual Report on
                Form 10-K file March 31, 2006 and incorporated herein by reference.)


19


**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized, on the 1st day of May,
      2006.





CNL
                HOTELS & RESORTS, INC.By:
            /s/
                Thomas J. Hutchison IIITHOMAS
                J. HUTCHISON IIIChief
                Executive Officer and DirectorBy:
            /s/
                C. Brian StricklandC.
                BRIAN STRICKLANDExecutive
                Vice President, Chief Financial Officer and Treasurer(Principal
                Financial Officer)By:
            /s/
                Mark E. PattenMARK
                E. PATTENSenior
                Vice President and Chief Accounting Officer(Principal
                Accounting Officer)





20


Pursuant
      to the requirements of the Securities Exchange Act of 1934, this Report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated:




**Signature**
            
            **Title**
            
            **Date**/s/
                James M. Seneff, Jr.
              _________________________________
              James
                M. Seneff, Jr.
            
            Chairman
                of the Board
            
            May
                01, 2006/s/
                Robert A. Bourne
              _________________________________
              Robert
                A. Bourne
            
            Vice
                Chairman of the Board
            
            May
                01, 2006/s/
                John A. Griswold
              _________________________________
              John
                A. Griswold
            
            President,
                Chief Operating
              Officer
                and Director
            
            May
                01, 2006/s/
                Craig M. McAllaster
              _____________________________
              Craig
                M. McAllaster
            
            Director
            
            May
                01, 2006/s/
                Robert E. Parsons, Jr
              _____________________________
              Robert
                E. Parsons, Jr.
            
            Director
            
            May
                01, 2006/s/
                James Douglas Holladay
              _________________________________
              James
                Douglas Holladay
            
            Director
            
            May
                01, 2006/s/
                Jack Kemp
              _________________________________
              Jack
                Kemp
            
            Director
            
            May
                01, 2006/s/
                Dianna F. Morgan
              _________________________________
              Dianna
                F. Morgan
            
            Director
            
            May
                01, 2006/s/
                Thomas J. Hutchison III
              _________________________________
              Thomas
                J. Hutchison III
            
            Chief
                Executive Officer and Director
            
            May
                01, 2006/s/
                C. Brian Strickland
              _________________________________
              C.
                Brian Strickland
            
            Executive
                Vice President, Chief Financial Officer, and Treasurer
            
            May
                01, 2006/s/
                Mark E. Patten
              _________________________________
              Mark
                E. Patten
            
            Senior
                Vice President and Chief Accounting Officer
            
            May
                01, 2006


21


**EXHIBIT
      INDEX**








31.1
            
            Certification
                of Chief Executive Officer, Pursuant to Rule 13a-14(a), as Adopted
                Pursuant to Section 302 of the Sarbanes—Oxley Act of 2002 (Filed
                herewith.)31.2
            
            Certification
                of Principal Financial Officer, Pursuant to Rule 13a-14(a), as
                Adopted Pursuant to Section 302 of the Sarbanes—Oxley Act of 2002
                (Filed herewith.)32.1
            
            Certification
                of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, as
                Adopted Pursuant to Section 906 of the Sarbanes—Oxley Act of 2002
                (Previously filed as Exhibit 32.1 to the Registrant’s Annual Report on
                Form 10-K file March 31, 2006 and incorporated herein by
                reference.)32.2
            
            Certification
                of Principal Financial Officer, Pursuant to 18 U.S.C. Section 1350,
                as Adopted Pursuant to Section 906 of the Sarbanes—Oxley Act of 2002
                (Previously filed as Exhibit 32.2 to the Registrant’s Annual Report on
                Form 10-K file March 31, 2006 and incorporated herein by reference.)





22