UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM 10-K

(Mark One)

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

                   For the fiscal year ended December 31, 1999

                                       OR

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

                        For the transition period from to

                         Commission file number 0-24097

                        CNL HOSPITALITY PROPERTIES, INC.
             (Exact name of registrant as specified in its charter)

            Maryland                                 59-3396369
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)

                             450 South Orange Avenue
                             Orlando, Florida 32801
          (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code: (407) 650-1000

           Securities registered pursuant to Section 12(b) of the Act:

    Title of each class:               Name of exchange on which registered:
            None                                 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 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 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 No X

         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. [ ]

         Aggregate market value of the voting stock held by nonaffiliates of the
registrant: The registrant registered an offering of shares of common stock (the
"Shares")  on Form S-11 under the  Securities  Act of 1933,  as  amended.  As of
February 17, 2000,  29,939,869 shares were beneficially owned by non-affiliates.
Since no established market for such Shares exists, there is no market value for
such Shares. Each Share was originally sold at $10 per Share.

         The number of Shares of common  stock  outstanding  as of February  17,
2000, was 31,371,829.


<PAGE>


                      DOCUMENTS INCORPORATED BY REFERENCE:

         Registrant  incorporates  by reference  portions of the CNL Hospitality
Properties,  Inc.  Definitive  Proxy  Statement  for the 2000 Annual  Meeting of
Stockholders  (Items  10,  11, 12 and 13 of Part III) to be filed no later  than
April 30, 2000.


<PAGE>


                                     PART I

Item 1.  Business

         CNL Hospitality Properties,  Inc. was organized pursuant to the laws of
the  state of  Maryland  on June 12,  1996.  CNL  Hospitality  GP Corp.  and CNL
Hospitality  LP  Corp.  are  wholly  owned   subsidiaries   of  CNL  Hospitality
Properties,  Inc.,  each of which were  organized in Delaware in June 1998.  CNL
Hospitality  Partners,  LP is a Delaware limited partnership (the "Partnership")
formed in June 1998. CNL  Hospitality GP Corp. and CNL  Hospitality LP Corp. are
the general and limited partners, respectively, of CNL Hospitality Partners, LP.
Properties acquired are generally expected to be held by the Partnership and, as
a result, owned by CNL Hospitality Properties, Inc. through the Partnership. The
terms "Company" or "Registrant" include,  unless the context otherwise requires,
CNL Hospitality Properties,  Inc., CNL Hospitality Partners, LP, CNL Hospitality
GP Corp.,  CNL Hospitality LP Corp. and CNL  Philadelphia  Annex,  LLC (formerly
known as Courtyard  Annex L.L.C.).  The Company  operates for federal income tax
purposes as a real estate investment trust (a "REIT").

         The  Company  was  formed   primarily   to  acquire   properties   (the
"Properties")  located  across  the  United  States to be leased on a  long-term
(generally,  10 to 20 years,  plus renewal  options for up to an  additional  20
years),   "triple-net"  basis,  which  means  that  the  tenants  generally  are
responsible for repairs,  maintenance,  property taxes, utilities and insurance.
The Properties are leased to operators of selected national and regional limited
service,  extended stay and full service hotel chains (the "Hotel Chains").  The
Company  structures  the leases of its Properties to provide for payment of base
rent with (i) automatic increases in base rent and/or (ii) percentage rent based
on a  percentage  of gross sales above a specified  level.  The Company may also
provide Mortgage Loans (the "Mortgage Loans") in the aggregate  principal amount
of approximately 5% to 10% of the gross offering proceeds.  The Company also may
offer furniture, fixture and equipment financing ("Secured Equipment Leases") to
operators  of Hotel  Chains.  Secured  Equipment  Leases will be funded from the
proceeds of financing to be obtained by the Company.  The aggregate  outstanding
principal  amount of  Secured  Equipment  Leases  will not  exceed  10% of gross
proceeds from the Company's offerings of Shares of common stock.

         On July 9, 1997, the Company  commenced an offering to the public of up
to 16,500,000 shares of common stock (the "Shares") ($165,000,000) (the "Initial
Offering")  pursuant  to  a  registration  statement  on  Form  S-11  under  the
Securities  Act of 1933, as amended.  Of the  16,500,000  Shares of common stock
offered, 1,500,000 ($15,000,000) were available only to stockholders who elected
to  participate  in the  Company's  reinvestment  plan.  Upon  completion of the
Initial  Offering  on  June  17,  1999,  the  Company  had  received   aggregate
subscription  proceeds of $150,072,637  (15,007,264  Shares),  including $72,637
(7,264 Shares) through the Company's reinvestment plan. Following the completion
of its Initial  Offering,  the Company  commenced a second  offering  (the "1999
Offering") of up to  27,500,000  Shares of common stock  ($275,000,000).  Of the
27,500,000  Shares of common stock  offered,  2,500,000  are  available  only to
stockholders purchasing Shares through the reinvestment plan. As of December 31,
1999, the Company had received subscription proceeds of $138,885,350 (13,888,535
Shares)  from its 1999  Offering,  including  43,118  Shares  ($431,182)  issued
pursuant to the  reinvestment  plan.  The price per Share and the other terms of
the 1999 Offering, including the percentage of gross proceeds payable (i) to the
managing  dealer for selling  commissions  and expenses in  connection  with the
offering and (ii) to the Advisor for  acquisition  fees, are  substantially  the
same as those for the Initial Offering.

         As of December 31,  1999,  net proceeds to the Company from its Initial
Offering and 1999 Offering of Shares and capital contributions from the Advisor,
after  deduction of selling  commissions,  marketing  support and due  diligence
expense  reimbursement  fees and  organizational  and offering  expenses totaled
approximately $257,000,000. The Company has used net proceeds from the offerings
to  invest,  directly  or  indirectly,  approximately  $136,500,000  in 11 hotel
Properties, to pay $7,940,800 as deposits on six additional hotel Properties, to
redeem  12,885  Shares of common  stock for  $118,542  and to pay  approximately
$15,000,000 in acquisition fees and expenses,  leaving approximately $97,500,000
available for investment in Properties and Mortgage Loans.


<PAGE>


         On October 26, 1999, the Company filed a registration statement on Form
S-11 with the Securities and Exchange Commission in connection with the proposed
sale by the Company of up to an  additional  45,000,000  Shares of common  stock
($450,000,000)  (the  "2000  Offering")  in an  offering  expected  to  commence
immediately  following the  completion of the 1999  Offering.  Of the 45,000,000
Shares of common  stock to be offered,  up to  5,000,000  will be  available  to
stockholders  purchasing  Shares  through the  reinvestment  plan. The price per
Share and the other terms of the 2000  Offering,  including  the  percentage  of
gross proceeds  payable (i) to the managing  dealer for selling  commissions and
expenses in connection with the offering and (ii) to the Advisor for acquisition
fees,  are  substantially  the same as those for the Initial  Offering  and 1999
Offering.

         During the period January 1, 2000 through January 21, 2000, the Company
received  additional net offering  proceeds of approximately  $8,000,000 and had
approximately  $106,500,000  available for investment in Properties and Mortgage
Loans.  The  Company  expects  to use the  uninvested  net  proceeds,  plus  any
additional  net proceeds from the sale of shares from the 1999 Offering and 2000
Offering to purchase  additional  Properties and, to a lesser extent,  invest in
Mortgage  Loans.  In  addition,  the Company  intends to borrow money to acquire
additional Properties, to invest in Mortgage Loans and Secured Equipment Leases,
and to pay  certain  related  fees.  The Company  intends to encumber  assets in
connection with such borrowings. The Company currently has a $30,000,000 line of
credit  available,  as described below.  Borrowings on the line of credit may be
repaid with  offering  proceeds,  working  capital or permanent  financing.  The
maximum  amount the Company may borrow,  absent a  satisfactory  showing  that a
higher  level of  borrowing  is  appropriate  as  approved  by a majority of the
Independent Directors, is 300% of the Company's net assets. The Company believes
that the net proceeds  received  from the 1999  Offering and 2000  Offering will
enable  the  Company  to  continue  to grow and take  advantage  of  acquisition
opportunities  until such time,  if any,  that the Company  lists it shares on a
national securities exchange or  over-the-counter  market,  although there is no
assurance that listing ("Listing") will occur. In addition,  if Listing does not
occur by December  31, 2007,  the Company will  commence the orderly sale of its
assets and the distribution of the proceeds. Listing does not assure liquidity.

         The Company's primary investment  objectives are to preserve,  protect,
and enhance the Company's assets while (i) making quarterly distributions;  (ii)
obtaining  fixed income  through the receipt of base rent,  and  increasing  the
Company's income (and distributions) and providing  protection against inflation
through automatic  increases in base rent and/or receipt of percentage rent, and
obtaining  fixed income  through the receipt of payments from Mortgage Loans and
Secured  Equipment  Leases;  (iii)  continuing  to qualify as a REIT for federal
income  tax  purposes;  and (iv)  providing  stockholders  of the  Company  with
liquidity of their investment  within two to seven years,  either in whole or in
part,  through  (a)  Listing or (b) the  commencement  of  orderly  sales of the
Company's  assets and distribution of the proceeds thereof (outside the ordinary
course of business and consistent  with its objectives of qualifying as a REIT).
There can be no assurance that these investment objectives will be met.

         For the next three to eight years, the Company  intends,  to the extent
consistent with the Company's  objective of qualifying as a REIT, to reinvest in
additional  Properties or Mortgage  Loans any proceeds of the sale of a Property
or Mortgage  Loan that are not required to be  distributed  to  stockholders  in
order to preserve the  Company's  REIT status for federal  income tax  purposes.
Similarly,  and to the extent  consistent with REIT  qualification,  the Company
plans to use the  proceeds  of the  sale of a  Secured  Equipment  Lease to fund
additional  Secured Equipment Leases, or to reduce its outstanding  indebtedness
on the line of credit.  The Company  will not sell any assets if such sale would
not be  consistent  with the Company's  objective of  qualifying as a REIT.  The
Company  intends to provide  stockholders of the Company with liquidity of their
investment,  either in whole or in part,  through  Listing  of the Shares of the
Company (although  liquidity cannot be assured thereby) or by commencing orderly
sales of the  Company's  assets.  If  Listing  occurs,  the  Company  intends to
reinvest in additional  Properties,  Mortgage Loans and Secured Equipment Leases
any net sales proceeds not required to be distributed to  stockholders  in order
to  preserve  the  Company's  status  as  a  REIT.  The  Company's  Articles  of
Incorporation  provide,  however,  that if Listing  does not occur,  the Company
thereafter will undertake the orderly liquidation of the Company and the sale of
the Company's assets and will distribute any net sales proceeds to stockholders.



<PAGE>


         In deciding the precise timing and terms of Property sales, the Advisor
will consider  factors such as national and local market  conditions,  potential
capital  appreciation,  cash flows, and federal income tax  considerations.  The
terms of certain leases,  however, may require the Company to sell a Property at
an earlier time if the tenant  exercises its option to purchase a Property after
a specified  portion of the lease term has  elapsed.  The  Company  will have no
obligation  to sell all or any  portion of a Property  at any  particular  time,
except as may be required  under  property  or joint  venture  purchase  options
granted to certain  tenants.  In  connection  with  sales of  Properties  by the
Company,  purchase money obligations may be taken by the Company as part payment
of the sales price.  The terms of payment will be affected by custom in the area
in which the  Property is located and  prevailing  economic  conditions.  When a
purchase  money  obligation  is  accepted  in lieu of cash  upon  the  sale of a
Property,  the Company will  continue to have a mortgage on the Property and the
proceeds  of the sale will be  realized  over a period of years  rather  than at
closing of the sale.

         The Company currently does not anticipate selling any Secured Equipment
Leases  prior to  expiration  of the lease  term,  except in the event  that the
Company undertakes orderly  liquidation of its assets. In addition,  the Company
currently does not anticipate selling any Mortgage Loans prior to the expiration
of the loan term,  except in the event (i) the Company owns the  Property  (land
only)  underlying the building  improvements  which secure the Mortgage Loan and
the sale of the Property occurs, or (ii) the Company  undertakes an orderly sale
of its assets.

Leases

         As of  December  31,  1999,  the  Company had  acquired  directly  four
Properties  which are subject to  long-term,  triple-net  leases.  In  addition,
during  1999  the  Company  invested  in  CNL  Hotel  Investors,   Inc.  ("Hotel
Investors"),  an  unconsolidated  subsidiary,  which acquired seven  Properties.
Although there are variations in the specific terms of the leases, the following
is a summarized  description of the general  structure of the Company's  leases.
The leases of the  Properties  generally  provide for initial  terms of 15 to 19
years and expire  between 2014 and 2018.  The leases are on a triple-net  basis,
and in most cases the tenants  are  required  to pay all  repairs,  maintenance,
property taxes, utilities,  and insurance.  The tenants also are required to pay
for special  assessments,  sales and use taxes,  and the cost of any renovations
permitted  under the leases.  The leases of the  Properties  provide for minimum
base annual  rental  payments  (payable in monthly  installments)  ranging  from
approximately $1,204,000 to $6,500,000.  In addition to minimum rent, the tenant
must generally pay the Company  "percentage rent" and/or automatic  increases in
the minimum annual rent at predetermined intervals during the term of the lease.
Percentage rent is generally computed as a percentage of the gross sales above a
specified  level at a particular  Property.  The leases of the  Properties  also
provide for the tenant to fund, in addition to its lease payment, a reserve fund
up to a pre-determined amount. Generally,  money in that fund may be used by the
tenant to pay for  replacement  of furniture  and  fixtures.  The Company may be
responsible for capital  expenditures or repairs in excess of the amounts in the
reserve fund, and the tenant generally would be responsible for replenishing the
reserve fund and to pay a specified return on the amount of capital expenditures
or repairs paid for by the Company in excess of amounts in the reserve fund.

         Generally,  the  leases  provide  for  up to  four,  five-year  renewal
options. During the initial term of each lease, the tenant must pay the Company,
as  landlord,  minimum  annual  rent  equal  to a  specified  percentage  of the
Company's cost of purchasing the Property  payable in monthly  installments.  If
the  Company is  acquiring a Property  that is to be  constructed  or  renovated
pursuant to a development  agreement,  the costs of purchasing the Property will
include the purchase price of the land,  including all fees, costs, and expenses
paid by the Company in connection  with its purchase of the land,  and all fees,
costs,  and  expenses  disbursed  by the  Company for  construction  of building
improvements.  In addition  to the minimum  annual  rent,  the leases  generally
provide for  percentage  rent based on a  percentage  of the gross sales above a
specified amount to be paid by the tenant.




<PAGE>


Major Tenants

         During 1999, two lessees,  STC Leasing  Associates,  LLC ("STC") (which
operates and leases two Properties) and WI Hotel Leasing,  LLC (which leases the
seven  Properties in which the Company owns an interest through Hotel Investors,
an  unconsolidated  subsidiary),  each  contributed more than ten percent of the
Company's total rental income (including the Company's share of the total rental
income from Hotel  Investors).  In addition,  all of the Company's rental income
(including the Company's share of rental income from Hotel Investors) was earned
from  Properties  operating as  Marriott  brand chains.  Although   the  Company
intends to acquire  Properties  located in  various  states and  regions  and to
carefully  screen its tenants in order to reduce  risks of  default,  failure of
these lessees or the Marriott chains could  significantly  impact the results of
operations of the Company. However,  management believes that the risk of such a
default is reduced due to the essential or important  nature of these Properties
for the ongoing operations of the lessees. It is expected that the percentage of
total rental income  contributed  by STC will decrease as additional  Properties
are acquired and leased by the Company in subsequent years.

Joint Venture Arrangements

         In February 1999, the Company executed a series of agreements with Five
Arrows Realty Securities II L.L.C. ("Five Arrows") pursuant to which the Company
and Five Arrows  formed a jointly  owned real  estate  investment  trust,  Hotel
Investors,  for the  purpose of  acquiring  up to eight  hotel  Properties  from
various sellers affiliated with Western International. At the time the agreement
was entered  into,  the eight  Properties  were either newly  constructed  or in
various stages of completion.

         In February 1999 and June 1999, Hotel Investors  purchased seven of the
eight Properties for an aggregate  purchase price of approximately  $167 million
and paid $3 million as a deposit on the one remaining  Property.  The Properties
acquired were a Courtyard by Marriott located in Plano, Texas, a Marriott Suites
located in Dallas,  Texas,  a Residence  Inn by  Marriott  located in Las Vegas,
Nevada,  a Residence  Inn by Marriott  located in Plano,  Texas,  a Courtyard by
Marriott  located in  Scottsdale,  Arizona,  a Courtyard by Marriott  located in
Seattle, Washington and a Residence Inn by Marriott located in Phoenix, Arizona.
The $3 million  deposit  relating to the eighth  Property  was refunded to Hotel
Investors  by the  seller  in  January  2000  as a  result  of  Hotel  Investors
exercising its option to terminate its obligation to purchase the Property under
the purchase and sale agreement.

         In order to fund these  purchases,  Five Arrows invested  approximately
$48  million  and the  Company  invested  approximately  $38  million  in  Hotel
Investors.  Hotel Investors  funded the remaining  amount of  approximately  $88
million with permanent  financing,  collateralized by Hotel Investors' interests
in the Properties (the "Hotel Investors Loan").

         In return for their respective investments,  Five Arrows received a 51%
common stock  interest and the Company  received a 49% common stock  interest in
Hotel Investors. Five Arrows received 48,337 shares of Hotel Investors' 8% Class
A  cumulative,  preferred  stock  ("Class A Preferred  Stock"),  and the Company
received 37,979 shares of Hotel Investors'  9.76% Class B cumulative,  preferred
stock ("Class B Preferred  Stock").  The Class A Preferred Stock is exchangeable
upon  demand into  common  stock of the  Company,  as  determined  pursuant to a
formula  that is  intended  to make the  conversion  not  dilutive to funds from
operations (based on the revised definition adopted by the Board of Governors of
the  National  Association  of Real  Estate  Investment  Trusts  which means net
earnings determined in accordance with generally accepted accounting principles,
excluding gains or losses from debt  restructuring  and sales of property,  plus
depreciation  and  amortization of real estate assets and after  adjustments for
unconsolidated  partnerships  and joint  ventures)  per  Share of the  Company's
common stock.

         Cash  available for  distributions  of Hotel  Investors is  distributed
first to Five Arrows with respect to dividends  payable on the Class A Preferred
Stock.  Such dividends are calculated based on Five Arrows' "special  investment
amount," or $1,294.78 per share, representing the sum of its investment in Hotel
Investors and its approximately $14 million investment in the Company,  on a per
share basis,  adjusted for any dividends  received from the Company.  Then, cash
available for  distributions  is  distributed to the Company with respect to its
Class B Preferred Stock.  Next, cash available for  distributions is distributed
to 100  associates of CNL  Holdings,  Inc. and its  affiliates  who each own one
share of Class C preferred  stock in Hotel  Investors,  to provide a  quarterly,
cumulative, compounded 8% return. All remaining cash available for distributions
is distributed pro rata with respect to the interest in the common shares.

         Five  Arrows  also  invested  approximately  $14 million in the Company
through the purchase of common stock pursuant to the Company's  Initial Offering
and the 1999  Offering,  the  proceeds of which were used by the Company to fund
approximately  38% of its funding  commitment to Hotel  Investors.  During 1999,
approximately $3.7 million of this amount was initially treated as a loan due to
the  stock  ownership   limitations  specified  in  the  Company's  Articles  of
Incorporation at the time of investment.  Subsequently,  this loan was converted
to common stock.

         In  addition  to the above  investments,  Five  Arrows  purchased a 10%
interest in the  Advisor.  In  connection  with Five Arrow's  investment  in the
Company,  the Advisor and Hotel  Investors,  certain  affiliates  have agreed to
waive certain fees otherwise payable to them by the Company. The Advisor is also
the advisor to Hotel Investors  pursuant to a separate advisory  agreement.  The
Company will not pay the Advisor fees,  including the Company's pro rata portion
of Hotel  Investors'  advisory  fees,  in excess of  amounts  payable  under its
advisory agreement.

         On  November  16,  1999,  the Company  acquired an 89%  interest in CNL
Philadelphia Annex, LLC (the "LLC") (formerly known as Courtyard Annex,  L.L.C.)
for approximately  $58 million.  The sole purpose of the LLC is to own and lease
the Courtyard by Marriott hotel Property located in Philadelphia,  Pennsylvania.
This historic  Property was recently  renovated and converted into a hotel which
commenced  operations  in late  November  1999.  The LLC is  included  with  the
accounts  of the  Company  except for the 11%  interest  which is  reflected  as
minority interest in the accompanying consolidated financial statements.

Certain Management Services

         Pursuant to an advisory  agreement (the "Advisory  Agreement") with the
Company,  the Advisor provides management services relating to the Company,  the
Properties,  the Mortgage Loans and the Secured  Equipment Lease program.  Under
this  agreement,  the  Advisor  is  responsible  for  assisting  the  Company in
negotiating  leases,  Mortgage Loans,  the line of credit and Secured  Equipment
Leases;  collecting rental,  Mortgage Loan and Secured Equipment Lease payments;
inspecting the Properties and the tenants' books and records;  and responding to
tenants  inquiries  and notices.  The Advisor also provides  information  to the
Company about the status of the leases, the Properties,  the Mortgage Loans, the
line of credit and the Secured Equipment Leases. In exchange for these services,
the  Advisor  is  entitled  to  receive  certain  fees  from  the  Company.  For
supervision of the Properties and the Mortgage Loans,  the Advisor  receives the
asset management fee, which is payable monthly in an amount equal to one-twelfth
of .60% of the total amount invested in the Properties, exclusive of acquisition
fees and acquisition  expenses (the "Real Estate Asset Value") plus  one-twelfth
of .60% of the outstanding principal amount of any Mortgage Loans, as of the end
of the preceding month. For negotiating Secured Equipment Leases and supervising
the Secured  Equipment  Lease program,  the Advisor will receive,  upon entering
into each lease, a Secured  Equipment  Lease  servicing fee,  payable out of the
proceeds  of the  line of  credit,  equal  to 2% of the  purchase  price  of the
equipment   subject  to  each  Secured  Equipment  Lease.  For  identifying  the
Properties,  structuring  the  terms  of  the  acquisition  and  leases  of  the
Properties and  structuring  the terms of the Mortgage  Loans,  the Advisor will
receive a fee equal to 4.5% of gross  proceeds,  loan  proceeds  from  permanent
financing and amounts  outstanding on the line of credit, if any, at the time of
Listing,  but excluding that portion of the permanent  financing used to finance
Secured Equipment Leases.

         The Advisory  Agreement  continues  until June 16, 2000, and thereafter
may be extended  annually  upon  mutual  consent of the Advisor and the Board of
Directors of the Company unless terminated at an earlier date upon 60 days prior
written notice by each party.

Borrowing

         On July  31,  1998,  the  Company  entered  into a line of  credit  and
security  agreement to be used by the Company to acquire hotel  Properties.  The
line of credit provides that the Company will be able to receive  advances of up
to $30,000,000 until July 30, 2003, with an annual review to be performed by the
bank to ensure that there has been no substantial  deterioration,  as determined
by the bank in its reasonable  discretion,  of the credit  quality.  Interest on
each advance shall be payable  monthly,  with all unpaid  interest and principal
due no later than five years from the date of the  advance.  Advances  under the
line of credit  will bear  interest  at either (i) a rate per annum equal to 318
basis points above the London Interbank  Offered Rate (LIBOR) or (ii) a rate per
annum equal to 30 basis points above the bank's base rate, whichever the Company
selects at the time  advances are made.  In addition,  a fee of 0.5% per advance
will be due and  payable to the bank on funds as  advanced.  Each  advance  made
under the line of credit will be  collateralized  by an  assignment of rents and
leases.  In addition,  the line of credit  provides that the Company will not be
able to further  encumber the applicable  hotel Property  during the term of the
advance  without the bank's  consent.  The  Company  will be  required,  at each
closing, to pay all costs, fees and expenses arising in connection with the line
of credit.  The Company must also pay the bank's  attorney's fees,  subject to a
maximum cap, incurred in connection with the line of credit and each advance. In
connection with the line of credit, the Company incurred a commitment fee, legal
fees and closing  costs of  approximately  $138,000.  Proceeds  from the line of
credit were used in connection with the purchase of two hotel Properties and the
commitment to acquire three  additional  Properties  during 1998. As of December
31, 1999, the Company had no amounts  outstanding under the line of credit.  The
Company has not yet received a commitment for any permanent  financing and there
is no  assurance  that the  Company  will  obtain  any  long-term  financing  on
satisfactory terms.

         The  Company  expects to use net  proceeds  it  receives  from the 1999
Offering, plus any net proceeds from the sale of Shares in the 2000 Offering, to
purchase  additional  Properties and, to a lesser extent,  to invest in Mortgage
Loans. In addition,  the Company  intends to borrow money to acquire  additional
Properties, to invest in Mortgage Loans and Secured Equipment Leases, and to pay
certain  related fees. The Company intends to encumber assets in connection with
such  borrowing.  The Company  currently  plans to obtain one or more  revolving
lines of credit in an aggregate  amount initially of up to $100,000,000 and may,
in addition,  also obtain permanent financing.  The line of credit may be repaid
with offering  proceeds,  working capital or permanent  financing.  Although the
Board of Directors  anticipates  that the line of credit will initially be in an
amount  up to  $100,000,000  and  that the  aggregate  amount  of any  permanent
financing will not exceed 30% of the Company's total assets,  the maximum amount
the Company may borrow,  absent a  satisfactory  showing  that a higher level of
borrowing is appropriate as approved by a majority of the independent directors,
is 300% of the Company's net assets.

Competition

         The  hotel  industry  is  generally  characterized  as being  intensely
competitive.  The operators of the hotels  located on the Properties do, and are
expected to in the future, compete with independently owned hotels, hotels which
are part of local or regional chains,  and hotels in other  well-known  national
chains, including those offering different types of accommodations.

         The Company will be in competition with other persons and entities both
to locate  suitable  Properties  to  acquire  and to locate  purchasers  for its
Properties.  The Company also will compete with other financing  sources such as
banks,  mortgage lenders, and sale/leaseback  companies for suitable Properties,
tenants, Mortgage Loan borrowers and equipment tenants.

Employees

         Reference is made to Item 10.  Directors and Executive  Officers of the
Registrant for a listing of the Company's Executive Officers. The Company has no
other employees.

Item 2.  Properties

         As of  December  31,  1999,  the  Company  owned  directly  four  hotel
Properties  located  in three  states.  In  addition,  during  1999 the  Company
invested in Hotel Investors, an unconsolidated subsidiary,  which acquired seven
Properties  located in four  states.  Reference  is made to the Schedule of Real
Estate and Accumulated  Depreciation filed with this report for a listing of the
Properties and their respective  costs,  including  acquisition fees and certain
acquisition expenses. The Company is presently negotiating to acquire additional
Properties, but as of January 21, 2000, had not acquired any such Properties.

         Generally, Properties acquired or to be acquired by the Company consist
of both land and building;  although in some cases,  the Company may acquire the
land  underlying  the building with the building  owned by the tenant or a third
party,  or may acquire the  building  only with the land owned by a third party.
The 11 Properties directly or indirectly owned by the Company as of December 31,
1999, conform generally to the following  specifications of size, cost, and type
of land and buildings.

         Hotel  Properties.  The  lot  sizes  generally  range  up to  10  acres
depending on product,  market and design considerations,  and are available at a
broad range of pricing.  The hotel sites are  generally  in primary or secondary
urban,  suburban,  airport,  highway or resort markets which have been evaluated
for past and future anticipated lodging demand trends.

         The hotel buildings generally are mid-rise construction. The Properties
consist of limited  service,  extended  stay or full service  hotel  Properties.
Limited service hotels generally minimize non-guest room space and offer limited
food  service  such as  complimentary  continental  breakfasts  and do not  have
restaurant or lounge facilities on-site.  Extended stay hotels generally contain
guest  suites with a kitchen  area and living area  separate  from the  bedroom.
Extended  stay  hotels  vary  with  respect  to  providing  on-site   restaurant
facilities.  Full service hotels generally have conference or meeting facilities
and on-site food and beverage facilities.  The Properties include equipment.  In
addition, the Properties are one of Marriott's approved designs.

         The tenants generally are required by the lease agreements to make such
capital  expenditures  as may be  reasonably  necessary to refurbish  buildings,
premises,  signs,  and  equipment so as to comply with the tenant's  obligations
under the  franchise  agreement to reflect the current  commercial  image of its
Hotel Chain.  These capital  expenditures  generally  will be paid by the tenant
during the term of the lease. Some Property leases however,  obligate the tenant
to fund, in addition to its lease payment, a reserve fund up to a pre-determined
amount.  Generally,  money  in that  fund may be used by the  tenant  to pay for
replacement  of  furniture  and  fixtures.  The Company may be  responsible  for
capital  expenditures or repairs. The tenant is responsible for replenishing the
reserve fund and to pay a specified return on the amount of capital expenditures
paid for by the Company in excess of amounts in the reserve fund.

         Leases with Major  Tenants.  The terms of the leases with the Company's
major  tenants as of December 31, 1999 (see Item 1.  Business - Major  Tenants),
are substantially the same as those described in Item 1. Business - Leases.

         STC Leasing Associates,  LLC leases two Residence Inn by Marriott hotel
Properties.  The initial  term of each lease is 19 years  (expiring in 2017) and
the aggregate minimum base annual rent is approximately $2,900,000.

         WI  Leasing,  LLC  leases  seven  Properties,  indirectly  owned by the
Company through its investment in Hotel Investors, an unconsolidated subsidiary,
three  Residence Inn by Marriott hotel  Properties,  three Courtyard by Marriott
hotel  Properties  and one  Marriott  Suites.  The initial term of each lease is
approximately 19 years (expiring in 2018) and the aggregate  minimum base annual
rent is approximately $17,200,000.

         Management   considers  the  Properties  to  be   well-maintained   and
sufficient for the Company's operations.


<PAGE>


Item 3.  Legal Proceedings

         Neither  the  Company,  nor its  Advisor,  nor any of their  respective
Properties,   is  a  party  to,  or  subject  to,  any  material  pending  legal
proceedings.

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

         None.
                                     PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

(a) As of February 17, 2000, there were 11,047  stockholders of record of common
stock.  There is no public  trading  market for the Shares,  and even though the
Company  intends  to list  the  Shares  on a  national  securities  exchange  or
over-the-counter  market  within  three to eight years of, there is no assurance
that one will  develop  and it is not known at this time if a public  market for
the Shares will develop.  The Company is not aware of trades in its shares other
than  purchases  made in its public  offering and  redemptions  of shares by the
Company.  Prior to such time, if any, as Listing occurs,  any stockholder (other
than the Advisor)  may present all or any portion  equal to at least 25% of such
stockholder's  Shares to the Company for  redemption  at any time, in accordance
with the  procedures  outlined in the Company's  prospectus.  At such time,  the
Company may, at its sole option, redeem such Shares presented for redemption for
cash to the extent it has sufficient funds  available.  The price to be paid for
any Share  transferred  other than pursuant to the redemption plan is subject to
negotiation  by the  purchaser and the selling  stockholder.  For the year ended
December 31, 1999,  12,885 Shares were  transferred,  or retired pursuant to the
redemption plan.

         As of December 31, 1999, the offering price per Share was $10.

         The Company expects to make distributions to the stockholders  pursuant
to the provisions of the Articles of Incorporation. For the years ended December
31, 1999 and 1998, the Company  declared cash  distributions  of $10,765,881 and
$1,168,145,  respectively,  to  the  stockholders.  No  amounts  distributed  to
stockholders  for the years ended December 31, 1999 and 1998, are required to be
or have been  treated  by the  Company as a return of capital  for  purposes  of
calculating the stockholders'  return on their invested  capital.  The following
table presents total distributions and distributions per Share:


<TABLE>
<CAPTION>

1999 Quarter                                  First        Second         Third        Fourth       Year
------------                                ---------    ----------     ---------    ----------  -----------

<S> <C>


Total distributions declared                 $998,652    $2,053,964    $3,278,456    $4,434,809  $10,765,881
Distributions per Share                         0.175         0.181         0.181         0.181        0.718

1998 Quarter                                  First        Second         Third        Fourth       Year
------------                                ---------    ----------     ---------    ----------  -----------

Total distributions declared                 $101,356      $155,730      $362,045      $549,014   $1,168,145
Distributions per Share                         0.075         0.075         0.142         0.175        0.467

</TABLE>


         On  January  1,  2000  and  February  1,  2000,  the  Company  declared
distributions totaling $1,745,931 and $1,835,433,  respectively,  or $0.0604 per
Share of common  stock,  payable in March  2000,  to  stockholders  of record on
January 1, 2000 and February 1, 2000, respectively.

         The Company  intends to continue  to declare  distributions  of cash to
stockholders  on a monthly  basis  during the  offering  period,  and  quarterly
thereafter.

(b) The information  required by this item is set forth in Item 7.  Management's
Discussion and Analysis of Financial  Condition and Results of Operations and is
hereby incorporated by reference.



<PAGE>


Item 6.  Selected Financial Data

<TABLE>
<CAPTION>

                                              1999            1998               1997 (1)         1996 (2)
                                       ----------------  ----------------     ------------      ------------

<S> <C>


Year Ended December 31:
    Revenues                                  $  10,677,505     $  1,955,461 $     46,071       $         --
    Net earnings                                  7,515,988          958,939       22,852                 --
    Cash flows from operating activities         12,890,161        2,776,965       22,469                --
    Cash distributions declared                  10,765,881        1,168,145       29,776                 --
    Funds from operations (3)                    10,478,103        1,343,105       22,852                 --
    Earnings per share:
        Basic                                          0.47             0.40         0.03                 --
        Diluted                                        0.45             0.40         0.03                 --
    Cash distributions declared per share              0.72             0.47         0.05                 --
    Weighted average number of shares
         outstanding (4):
             Basic                               15,890,212        2,402,344      686,063                 --
             Diluted                             21,437,859        2,402,344      686,063                 --

At December 31:
    Total assets                               $266,968,274      $48,856,690    $9,443,476          $598,190
    Total stockholders' equity                  253,054,839       37,116,491     9,233,917          $200,000

</TABLE>


(1)      No operations  commenced until the Company  received  minimum  offering
         proceeds and funds were released from escrow on October 15, 1997.

(2)      Selected  financial  data for 1996  represents the period June 12, 1996
         (date of inception) through December 31, 1996.

(3)      Funds from operations ("FFO"),  based on the revised definition adopted
         by the Board of Governors of the  National  Association  of Real Estate
         Investment  Trusts  ("NAREIT")  and as used herein,  means net earnings
         determined in accordance with generally accepted accounting  principles
         ("GAAP"),  excluding gains or losses from debt  restructuring and sales
         of property,  plus  depreciation and amortization of real estate assets
         and  after  adjustments  for  unconsolidated   partnerships  and  joint
         ventures.  (Net earnings determined in accordance with GAAP include the
         noncash effect of straight-lining  rent increases  throughout the lease
         terms. This  straight-lining is a GAAP convention requiring real estate
         companies to report  rental  revenue based on the average rent per year
         over the life of the leases.  During the years ended  December 31, 1999
         and 1998, net earnings included $35,238 and $44,160,  respectively,  of
         these  amounts.  No such  amounts  were  earned  during  1997.) FFO was
         developed by NAREIT as a relative  measure of performance and liquidity
         of an equity  REIT in order to  recognize  that  income-producing  real
         estate  historically  has not depreciated on the basis determined under
         GAAP. However, FFO (i) does not represent cash generated from operating
         activities  determined  in  accordance  with GAAP  (which,  unlike FFO,
         generally  reflects all cash effects of  transactions  and other events
         that  enter  into  the  determination  of net  earnings),  (ii)  is not
         necessarily  indicative  of cash flow  available to fund cash needs and
         (iii)  should  not be  considered  as an  alternative  to net  earnings
         determined  in  accordance  with GAAP as an indication of the Company's
         operating  performance,  or to  cash  flow  from  operating  activities
         determined in accordance with GAAP as a measure of either  liquidity or
         the Company's ability to make distributions.  Accordingly,  the Company
         believes  that in  order to  facilitate  a clear  understanding  of the
         consolidated historical operating results of the Company, FFO should be
         considered  in  conjunction  with the  Company's  net earnings and cash
         flows as reported in the accompanying consolidated financial statements
         and notes thereto.

(4)      The weighted  average  number of shares  outstanding  is based upon the
         period the Company was operational.


<PAGE>



Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations

         The following information, including, without limitation, the Year 2000
Readiness  Disclosure,  that are not historical  facts,  may be  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section  21E of the  Securities  Act of 1934.  These  statements  generally  are
characterized  by the  use of  terms  such as  "believe,"  "expect"  and  "may."
Although  the  Company  believes  that  the   expectations   reflected  in  such
forward-looking statements are based upon reasonable assumptions,  the Company's
actual   results   could  differ   materially   from  those  set  forth  in  the
forward-looking  statements.  Certain factors that might cause such a difference
include the following: changes in general economic conditions,  changes in local
and national real estate  conditions,  availability  of capital from  borrowings
under  the  Company's   line  of  credit  and  security   agreement,   continued
availability of proceeds from the Company's offering, the ability of the Company
to obtain permanent  financing on satisfactory terms, the ability of the Company
to identify suitable investments,  the ability of the Company to locate suitable
tenants for its  properties  and  borrowers  for its mortgage  loans and secured
equipment leases, and the ability of such tenants and borrowers to make payments
under their respective leases, mortgage loans or secured equipment leases. Given
these  uncertainties,  readers are cautioned not to place undue reliance on such
statements.

                                  Introduction

The Company

         CNL Hospitality Properties,  Inc. was organized in Maryland on June 12,
1996. CNL  Hospitality  GP Corp.  and CNL  Hospitality LP Corp. are wholly owned
subsidiaries of CNL Hospitality Properties,  Inc., organized in Delaware in June
1998. CNL Hospitality  Partners,  LP is a Delaware limited partnership formed in
June 1998. CNL Hospitality GP Corp. and CNL Hospitality LP Corp. are the general
and limited partner,  respectively,  of CNL Hospitality  Partners,  LP. The term
"Company"  includes,  unless the context  otherwise  requires,  CNL  Hospitality
Properties,  Inc., CNL Hospitality  Partners,  LP, CNL Hospitality GP Corp., CNL
Hospitality  LP  Corp,  and CNL  Philadelphia  Annex,  LLC  (formerly  known  as
Courtyard Annex,  L.L.C.).  The Company was formed to acquire properties located
across  the United  States to be leased on a  long-term,  "triple-net"  basis to
operators of selected  national and regional limited service,  extended stay and
full service hotel chains.

         The Company may also provide mortgage financing and furniture,  fixture
and equipment  financing to operators of Hotel Chains.  Secured Equipment Leases
will be funded from the proceeds of financing to be obtained by the Company. The
aggregate  outstanding  principal  amount of Secured  Equipment  Leases will not
exceed 10% of gross  proceeds from the  Company's  offerings of shares of common
stock.

                         Liquidity and Capital Resources

Common Stock Offerings

         The Company was formed in June 1996, at which time it received  initial
capital  contributions  of $200,000  for 20,000  Shares of common stock from CNL
Hospitality Corp. (formerly known as CNL Hospitality Advisors,  Inc.) On July 9,
1997, the Company commenced an offering to the public of up to 16,500,000 Shares
of common stock ($165,000,000) pursuant to a registration statement on Form S-11
under the Securities Act of 1933, as amended. Of the 16,500,000 Shares of common
stock offered,  1,500,000  ($15,000,000) were available only to stockholders who
elected to participate in the Company's  Reinvestment  Plan.  Upon completion of
the Initial  Offering on June 17,  1999,  the  Company  had  received  aggregate
subscription  proceeds of $150,072,637  (15,007,264  Shares),  including $72,637
(7,264 Shares) through the Company's Reinvestment Plan. Following the completion
of its  Initial  Offering,  the  Company  commenced  a second  offering of up to
27,500,000  Shares of common stock  ($275,000,000).  Of the 27,500,000 Shares of
common stock offered,  2,500,000 are available only to  stockholders  purchasing
Shares through the  Reinvestment  Plan. As of December 31, 1999, the Company had
received subscription proceeds of $138,885,350 (13,888,535 Shares) from its 1999
Offering, including 43,118 Shares ($431,182) issued pursuant to the Reinvestment
Plan.  The price per Share and the other terms of the 1999  Offering,  including
the percentage of gross proceeds  payable (i) to the managing dealer for selling
commissions and expenses in connection with the offering and (ii) to the Advisor
for  acquisition  fees,  are  substantially  the same as those  for the  Initial
Offering.

         As of December 31,  1999,  net proceeds to the Company from its Initial
Offering and 1999 Offering of Shares and capital contributions from the Advisor,
after  deduction of selling  commissions,  marketing  support and due  diligence
expense  reimbursement  fees and  organizational  and offering  expenses totaled
approximately $257,000,000. The Company has used net proceeds from the offerings
to  invest,  directly  or  indirectly,  approximately  $136,500,000  in 11 hotel
Properties, to pay $7,940,800 as deposits on six additional hotel Properties, to
redeem  12,885  shares of common  stock for  $118,542  and to pay  approximately
$15,000,000 in acquisition fees and expenses,  leaving approximately $97,500,000
available for investment in Properties and Mortgage Loans.

         On October 26, 1999, the Company filed a registration statement on Form
S-11 with the Securities and Exchange Commission in connection with the proposed
sale by the Company of up to an  additional  45,000,000  Shares of common  stock
($450,000,000)  in an offering  expected to commence  immediately  following the
completion of the 1999 Offering.  Of the 45,000,000 Shares of common stock to be
offered,  up to 5,000,000 will be available to  stockholders  purchasing  Shares
through the  Reinvestment  Plan.  The price per Share and the other terms of the
2000 Offering,  including the  percentage of gross  proceeds  payable (i) to the
managing  dealer for selling  commissions  and expenses in  connection  with the
offering and (ii) to the Advisor for  acquisition  fees, are  substantially  the
same as those for the Initial Offering and 1999 Offering.

         During the period January 1, 2000 through January 21, 2000, the Company
received  additional net offering  proceeds of approximately  $8,000,000 and had
approximately  $106,500,000  available for investment in Properties and Mortgage
Loans.  The  Company  expects  to use the  uninvested  net  proceeds,  plus  any
additional  net proceeds from the sale of Shares from the 1999 Offering and 2000
Offering to purchase  additional  Properties and, to a lesser extent,  invest in
Mortgage  Loans.  In  addition,  the Company  intends to borrow money to acquire
additional Properties, to invest in Mortgage Loans and Secured Equipment Leases,
and to pay  certain  related  fees.  The Company  intends to encumber  assets in
connection with such borrowings. The Company currently has a $30,000,000 line of
credit  available,  as described below.  Borrowings on the line of credit may be
repaid with  offering  proceeds,  working  capital or permanent  financing.  The
maximum  amount the Company may borrow,  absent a  satisfactory  showing  that a
higher  level of  borrowing  is  appropriate  as  approved  by a majority of the
Independent Directors, is 300% of the Company's net assets.

Redemptions

         In  October  1998,  the Board of  Directors  elected to  implement  the
Company's  redemption  plan.  Under the redemption  plan, the Company elected to
redeem Shares,  subject to certain  conditions and limitations.  During the year
ended  December  31,  1999,  12,885  Shares  were  redeemed  at $9.20  per Share
($118,542) and retired from Shares  outstanding of common stock;  no Shares were
redeemed in 1998 or 1997.

Line of Credit and Security Agreement

         On July  31,  1998,  the  Company  entered  into a line of  credit  and
security  agreement  with a bank to be  used by the  Company  to  acquire  hotel
Properties. The line of credit provides that the Company will be able to receive
advances of up to $30,000,000  until July 30, 2003,  with an annual review to be
performed   by  the  bank  to  ensure   that  there  has  been  no   substantial
deterioration,  as determined by the bank in its reasonable  discretion,  of the
credit  quality.  Interest on each advance  shall be payable  monthly,  with all
unpaid  interest and principal due no later than five years from the date of the
advance.  Advances  under the line of credit will bear  interest at either (i) a
rate per annum equal to 318 basis points above the London Interbank Offered Rate
(LIBOR) or (ii) a rate per annum equal to 30 basis  points above the bank's base
rate,  whichever the Company selects at the time advances are made. In addition,
a fee of 0.5%  per  advance  will be due and  payable  to the  bank on  funds as
advanced.  Each advance made under the line of credit will be  collateralized by
an assignment of rents and leases. In addition, the line of credit provides that
the Company will not be able to further  encumber the applicable  hotel Property
during the term of the advance without the bank's  consent.  The Company will be
required,  at each  closing,  to pay all  costs,  fees and  expenses  arising in
connection  with  the line of  credit.  The  Company  must  also pay the  bank's
attorney's fees,  subject to a maximum cap, incurred in connection with the line
of credit and each advance.  In connection with the line of credit,  the Company
incurred  a  commitment  fee,  legal  fees and  closing  costs of  approximately
$138,000.  Proceeds  from the line of credit  were used in  connection  with the
purchase of two hotel  Properties and the commitment to acquire three additional
Properties  during 1998.  As of December  31,  1999,  the Company had no amounts
outstanding  under  the line of  credit.  The  Company  has not yet  received  a
commitment  for any  permanent  financing  and  there is no  assurance  that the
Company will obtain any long-term financing on satisfactory terms.

Market Risk

         The  Company  may  be  subject  to  interest   rate  risk  through  any
outstanding  balances  on its  variable  rate line of credit.  The  Company  may
mitigate this risk by paying down any outstanding balances on the line of credit
from offering proceeds should interest rates rise  substantially.  There were no
amounts outstanding on its variable line of credit at December 31, 1999.

Property Acquisitions and Investments

         As of December  31,  1998,  the  Company  owned two  Properties  in the
Atlanta,  Georgia  area  which were being  operated  by the tenant as  Residence
Inn(R) by  Marriott(R).  In  February  1999,  the  Company  executed a series of
agreements  with Five Arrows Realty  Securities II L.L.C.  pursuant to which the
Company and Five Arrows formed a jointly owned real estate investment trust, CNL
Hotel  Investors,  Inc.  ("Hotel  Investors") for the purpose of acquiring up to
eight  hotel   Properties   from  various   sellers   affiliated   with  Western
International.  At the time the agreement was entered into, the eight Properties
were either newly constructed or in various stages of completion.

         In February 1999 and June 1999, Hotel Investors  purchased seven of the
eight Properties for an aggregate  purchase price of approximately  $167 million
and paid $3 million as a deposit on the one remaining  Property.  The Properties
acquired were a Courtyard by Marriott located in Plano, Texas, a Marriott Suites
located in Dallas,  Texas,  a Residence  Inn by  Marriott  located in Las Vegas,
Nevada,  a Residence  Inn by Marriott  located in Plano,  Texas,  a Courtyard by
Marriott  located in  Scottsdale,  Arizona,  a Courtyard by Marriott  located in
Seattle, Washington and a Residence Inn by Marriott located in Phoenix, Arizona.
The $3 million  deposit  relating to the eighth  Property  was refunded to Hotel
Investors  by the  seller  in  January  2000  as a  result  of  Hotel  Investors
exercising its option to terminate its obligation to purchase the Property under
the purchase and sale agreement.

         In order to fund these  purchases,  Five Arrows invested  approximately
$48  million  and the  Company  invested  approximately  $38  million  in  Hotel
Investors.  Hotel Investors  funded the remaining  amount of  approximately  $88
million with permanent  financing,  collateralized by Hotel Investors' interests
in the Properties.

         In return for their respective investments,  Five Arrows received a 51%
common stock  interest and the Company  received a 49% common stock  interest in
Hotel Investors. Five Arrows received 48,337 shares of Hotel Investors' 8% Class
A cumulative,  preferred  stock and the Company  received 37,979 shares of Hotel
Investors'  9.76% Class B  cumulative,  preferred  stock.  The Class A Preferred
Stock  is  exchangeable  upon  demand  into  common  stock  of the  Company,  as
determined  pursuant to a formula  that is intended to make the  conversion  not
dilutive to funds from operations  (based on the revised  definition  adopted by
the Board of  Governors of the National  Association  of Real Estate  Investment
Trusts which means net earnings determined in accordance with generally accepted
accounting  principles,  excluding gains or losses from debt  restructuring  and
sales of property,  plus depreciation and amortization of real estate assets and
after adjustments for unconsolidated  partnerships and joint ventures) per Share
of the Company's common stock.

         Cash  available for  distributions  of Hotel  Investors is  distributed
first to Five Arrows with respect to dividends  payable on the Class A Preferred
Stock.  Such dividends are calculated based on Five Arrows' "special  investment
amount," or $1,294.78 per share, representing the sum of its investment in Hotel
Investors and its approximately $14 million investment in the Company,  on a per
share basis,  adjusted for any dividends  received from the Company.  Then, cash
available for  distributions  is  distributed to the Company with respect to its
Class B Preferred Stock.  Next, cash available for  distributions is distributed
to 100 CNL Holdings,  Inc. and affiliates'  associates who each own one share of
Class C preferred stock in Hotel Investors, to provide a quarterly,  cumulative,
compounded eight percent return.  All remaining cash available for distributions
is distributed pro rata with respect to the interest in the common shares.

         Five  Arrows  also  invested  approximately  $14 million in the Company
through the purchase of common stock pursuant to the Company's  Initial Offering
and the 1999  Offering,  the  proceeds of which were used by the Company to fund
approximately  38% of its funding  commitment to Hotel  Investors.  During 1999,
approximately $3.7 million of this amount was initially treated as a loan due to
the  stock  ownership   limitations  specified  in  the  Company's  Articles  of
Incorporation at the time of investment.  Subsequently,  this loan was converted
to common stock.

         In  addition  to the above  investments,  Five  Arrows  purchased a 10%
interest in the  Advisor.  In  connection  with Five Arrow's  investment  in the
Company,  the Advisor and Hotel  Investors,  certain  affiliates  have agreed to
waive certain fees otherwise payable to them by the Company. The Advisor is also
the advisor to Hotel Investors  pursuant to a separate advisory  agreement.  The
Company will not pay the Advisor fees,  including the Company's pro rata portion
of Hotel  Investors'  advisory  fees,  in excess of  amounts  payable  under its
Advisory Agreement.

         On  November  16,  1999,  the Company  acquired an 89%  interest in CNL
Philadelphia  Annex,  LLC  (formerly  known  as  Courtyard  Annex,  L.L.C.)  for
approximately  $58 million.  The sole purpose of the LLC is to own and lease the
Courtyard by Marriott hotel Property located in Philadelphia, Pennsylvania. This
historic  Property  was  recently  renovated  and  converted  into a hotel which
commenced  operations  in late  November  1999.  The LLC is  included  with  the
accounts  of the  Company  except for the 11%  interest  which is  reflected  as
minority interest in the accompanying consolidated financial statements.

         In  addition,  on  December  10,  1999,  the  Company  acquired a newly
constructed  Property located in Mira Mesa,  California for approximately  $15.5
million.  The  Property is being  operated  by the tenant as a Residence  Inn by
Marriott.

         Hotel Investors, the LLC and the Company, as lessors, have entered into
long-term,  triple-net leases with operators of Hotel Chains, as described below
in "Liquidity Requirements."

Commitments

         As of January 21, 2000, the Company had initial  commitments to acquire
directly six hotel  Properties  for an anticipated  aggregate  purchase price of
approximately  $148  million.  The  acquisition  of each of these  Properties is
subject to the  fulfillment  of certain  conditions.  In order to acquire  these
Properties,  the Company  must obtain  additional  funds  through the receipt of
additional  offering  proceeds  and/or  advances  on  the  line  of  credit.  In
connection  with three of these  agreements,  the Company has a deposit,  in the
form  of a  letter  of  credit,  collateralized  by a  certificate  of  deposit,
amounting to $5 million. In connection with two of the remaining agreements, the
Company has a deposit of approximately $1.6 million held in escrow. There can be
no  assurance  that  any or all of the  conditions  will  be  satisfied  or,  if
satisfied, that one or more of these Properties will be acquired by the Company.
The Company is presently negotiating to acquire additional Properties, but as of
January 21, 2000,  the Company had not acquired any such  Properties  or entered
into any Mortgage  Loans.  In addition,  as of January 21, 2000, the Company had
not entered  into any other  arrangements  creating a reasonable  probability  a
particular Property, Mortgage Loan or Secured Equipment Lease would be funded.

Cash and Cash Equivalents

         Until Properties are acquired,  or Mortgage Loans are entered into, net
offering proceeds are held in short-term (defined as investments with a maturity
of three months or less),  highly  liquid  investments,  such as demand  deposit
accounts  at  commercial  banks,  certificates  of  deposits  and  money  market
accounts.   This  investment  strategy  provides  high  liquidity  in  order  to
facilitate  the Company's use of these funds to acquire  Properties at such time
as Properties suitable for acquisition are located or to fund Mortgage Loans. At
December  31, 1999,  the Company had  $101,972,441  invested in such  short-term
investments as compared to $13,228,923 at December 31, 1998. The increase in the
amount invested in short-term  investments is primarily attributable to proceeds
received  from  the  sale of  common  stock  in the  Initial  Offering  and 1999
Offering.  These funds will be used to purchase additional  Properties,  to make
Mortgage Loans, to pay offering and acquisition  expenses,  to pay distributions
to stockholders and other Company expenses and, in management's  discretion,  to
create cash reserves.

Liquidity Requirements

         The  Company  expects to meet its  short-term  liquidity  requirements,
other than for offering expenses,  acquisition and development of Properties and
investment in Mortgage  Loans and Secured  Equipment  Leases,  through cash flow
provided by operating  activities.  The Company believes that cash flow provided
by operating  activities will be sufficient to fund normal  recurring  operating
expenses,  regular debt service  requirements and distributions to stockholders.
To the extent that the Company's  cash flow provided by operating  activities is
not sufficient to meet such short-term  liquidity  requirements as a result, for
example,  of unforeseen  expenses due to tenants  defaulting  under the terms of
their  lease  agreements,  the  Company  will use  borrowings  under its line of
credit.

         Due to the fact that the Company  leases its Properties on a triple-net
basis,  meaning  that  tenants  are  generally  required  to pay all repairs and
maintenance,  property  taxes,  insurance  and  utilities,  management  does not
believe that working  capital  reserves are  necessary at this time.  Management
believes that the Properties are adequately  covered by insurance.  In addition,
the Advisor has obtained  contingent  liability  and  property  coverage for the
Company.  This insurance policy is intended to reduce the Company's  exposure in
the unlikely  event a tenant's  insurance  policy lapses or is  insufficient  to
cover a claim  relating  to a Property.  The  Company  expects to meet its other
short-term  liquidity  requirements,  including  payment of  offering  expenses,
Property  acquisitions  and  development  and  investment in Mortgage  Loans and
Secured Equipment Leases,  with additional advances under its line of credit and
proceeds from its offerings. The Company expects to meet its long-term liquidity
requirements through short or long-term,  unsecured or secured debt financing or
equity financing.

Distributions

         During the years ended  December 31, 1999,  1998 and 1997,  the Company
generated  cash  from  operations  of   $12,890,161,   $2,776,965  and  $22,469,
respectively.  Based on cash from  operations  and  dividends due to the Company
from Hotel  Investors at December 31, 1999 (and received in January  2000),  the
Company  declared and paid  distributions  to its  stockholders  of $10,765,881,
$1,168,145 and $29,776 during the years ended December 31, 1999,  1998 and 1997,
respectively.   In  addition,   on  January  1,  2000,   the  Company   declared
distributions  to stockholders of record on January 1, 2000 totaling  $1,745,931
($0.0604 per share), payable in March 2000.

         For the years ended December 31, 1999, 1998 and 1997,  approximately 75
percent, 76 percent and 100 percent, respectively, of the distributions received
by  stockholders  were  considered to be ordinary  income and  approximately  25
percent and 24 percent were  considered  a return of capital for federal  income
tax purposes for the years ended  December 31, 1999 and 1998,  respectively.  No
amounts  distributed to the  stockholders for the years ended December 31, 1999,
1998 and 1997 are required to be or have been treated by the Company as a return
of  capital  for  purposes  of  calculating  the  stockholders'  return on their
invested capital.

Related Party Transactions

         During the years ended December 31, 1999, 1998 and 1997,  affiliates of
the Company incurred on behalf of the Company $3,257,822, $459,250 and $638,274,
respectively,  for  certain  organizational  and  offering  expenses,  $653,231,
$392,863  and  $26,149,  respectively,  for certain  acquisition  expenses,  and
$325,622,  $98,212 and $11,003 respectively,  for certain operating expenses. As
of December 31, 1999 and 1998,  the Company  owed the Advisor and other  related
parties  $1,085,343 and $318,937,  respectively,  for  expenditures  incurred on
behalf of the Company and for acquisition fees. The Advisor has agreed to pay or
reimburse  to the Company  all  offering  expenses  (excluding  commissions  and
marketing  support and due diligence  expense  reimbursement  fees) in excess of
three percent of gross offering proceeds.

         During 1999,  the Company opened three bank accounts in a bank in which
certain  officers and directors of the Company serve as directors,  and in which
an affiliate of the Advisor is a  stockholder.  The amount  deposited  with this
affiliate was $15,275,629 at December 31, 1999.

Other

         As of December 31, 1999 and 1998,  the tenants of the  Properties  have
established  reserve funds which will be used for the replacement and renewal of
furniture,  fixtures and equipment  relating to the hotel  Properties (the "FF&E
Reserve"). Funds in the FF&E Reserve have been paid, granted and assigned to the
Company,  or in the case of the  seven  Properties  owned  indirectly,  to Hotel
Investors.  For the years ended December 31, 1999 and 1998, revenues relating to
the  FF&E  Reserve  of the  Properties  directly  owned by the  Company  totaled
$320,356 and $98,099, of which $275,630 and $82,407, respectively, is classified
as restricted  cash. No such amounts were outstanding or earned during 1997. For
the year ended December 31, 1999,  revenues  relating to the FF&E Reserve of the
Properties  indirectly owned through Hotel Investors totaled $343,264,  of which
$288,644 is classified as restricted  cash.  Due to the fact that the Properties
are leased on a long-term,  triple-net  basis,  management does not believe that
other working  capital  reserves are necessary at this time.  Management has the
right  to cause  the  Company  to  maintain  additional  reserves  if,  in their
discretion,  they  determine  such  reserves are required to meet the  Company's
working capital needs.

                              Results of Operations

Comparison of year ended December 31, 1999 to year ended December 31, 1998

         As of December  31,  1999,  the  Company  owned 11  Properties,  either
directly or  indirectly,  consisting  of land,  buildings  and equipment and had
entered  into  long-term,   triple-net  lease   agreements   relating  to  these
Properties.  The Property leases provide for minimum base annual rental payments
ranging  from  approximately  $1,204,000  to  $6,500,000,  which are  payable in
monthly  installments.  In addition,  certain of the leases also  provide  that,
commencing  in the second lease year,  the annual base rent  required  under the
terms of the leases, will increase.  In addition to annual base rent, the tenant
pays  contingent  rent  computed as a percentage of gross sales of the Property.
The Company's leases also require the  establishment  of the FF&E Reserves.  The
FF&E Reserves  established for the Properties,  directly or indirectly  owned by
the Company,  have been reported as additional rent for the years ended December
31, 1999 and 1998.

         During the years ended  December 31, 1999 and 1998,  the Company earned
rental income from operating  leases,  contingent rental income and FF&E Reserve
revenue of $4,230,995 and $1,316,599,  respectively. No contingent rental income
was earned for the year ended  December  31, 1998.  The 221%  increase in rental
income, contingent rental income and FF&E Reserve income is due to the fact that
the Company owned two  Properties  for the full year ended December 31, 1999, as
compared to two  Properties for  approximately  six months during the year ended
December  31,  1998.  In  addition,  the  Company  invested  in  two  additional
Properties  during  1999.  Because the Company has not yet  acquired  all of its
Properties,  revenues for the year ended  December 31,  1999,  represent  only a
portion of revenues which the Company is expected to earn in future periods.

         During the year ended  December  31,  1999,  the Company  acquired  and
leased seven Properties indirectly through its investment in Hotel Investors, as
described  above in "Liquidity  Capital  Resources - Property  Acquisitions  and
Investments".   In  connection  with  its  investment,  the  Company  recognized
$2,753,506 in dividend  income and $778,466 in equity in loss after deduction of
preferred  stock  dividends,  resulting  in net  earnings  attributable  to this
investment of $1,975,040.

         During the years ended  December  31, 1999 and 1998,  the Company  also
earned   $3,693,004  and  $638,862,   respectively,   in  interest  income  from
investments  in  money  market  accounts  and  other  short-term  highly  liquid
investments and other income. The 478% increase in interest income was primarily
attributable  to  increased   offering   proceeds  in  the  current  year  being
temporarily invested in money market accounts or other short-term, highly liquid
investments  pending investment in Properties or Mortgage Loans. As net offering
proceeds  from the Company's  offerings  are invested in Properties  and used to
make  Mortgage  Loans,  the  percentage  of the  Company's  total  revenues from
interest  income from  investments in money market accounts or other short term,
highly liquid investments is expected to decrease.

         During the year ended  December  31,  1999,  two  lessees,  STC Leasing
Associates,  LLC ("STC") (which operates and leases two Properties) and WI Hotel
leasing,  LLC (which  leases the seven  Properties  in which the Company owns an
interest through Hotel Investors), each contributed more than ten percent of the
Company's  total rental income  (including  the Company's  share of total rental
income from Hotel  Investors).  In addition,  all of the Company's rental income
(including the Company's share of total rental income from Hotel  Investors) was
earned from  Properties  operating as  Marriott(R)  brand  chains.  Although the
Company intends to acquire  additional  Properties located in various states and
regions and to carefully screen its tenants in order to reduce risks of default,
failure of these lessees or the Marriott chains could  significantly  impact the
results of operations of the Company. However, management believes that the risk
of such a default is reduced due to the  essential or important  nature of these
Properties  for the ongoing  operations of the lessees.  It is expected that the
percentage of total rental income contributed by STC will decrease as additional
Properties are acquired and leased during 2000 and subsequent years.

         Operating  expenses,  including  interest  expense and depreciation and
amortization  expense, were $2,318,717 and $996,522 for the years ended December
31,  1999  and  1998,  respectively  (21.7%  and  51%,  respectively,  of  total
revenues). The increase in operating expenses during the year ended December 31,
1999, as compared to 1998,  was primarily as a result of the Company  owning two
Properties  for  approximately  six months  during 1998  compared to a full year
during  1999.  Additionally,   general  operating  and  administrative  expenses
increased as a result of Company growth,  while interest expense  decreased from
$350,322  for the year ended  December  31, 1998 to $248,094  for the year ended
December 31, 1999. The decrease in interest expense of 29.2% was a result of the
line of credit  being  outstanding  for two  months in 1999 as  compared  to the
majority of 1998.

         Pursuant  to  the  Advisory  Agreement,  the  Advisor  is  required  to
reimburse the Company the amount by which the total  operating  expenses paid or
incurred by the Company  exceed in any four  consecutive  fiscal  quarters,  the
greater of two  percent of average  invested  assets or 25 percent of net income
(the  "Expense  Cap").  For the year ended  December  31,  1999,  the  Company's
operating  expenses did not exceed the Expense Cap. For the year ended  December
31, 1998, the Company's  operating expenses exceeded the Expense Cap by $92,733;
therefore, the Advisor reimbursed the Company such amount in accordance with the
Advisory Agreement.

         The dollar amount of operating  expenses is expected to increase as the
Company acquires additional  Properties and invests in Mortgage Loans.  However,
general operating and administrative  expenses as a percentage of total revenues
is  expected  to decrease as the  Company  acquires  additional  Properties  and
invests in Mortgage Loans.

Comparison of year ended December 31, 1998 to year ended December 31, 1997

         Operations  of the  Company  commenced  on  October  15,  1997 when the
Company received the minimum offering proceeds of $2,500,000. As of December 31,
1998,  the  Company  had  acquired  two  Properties,  each  consisting  of land,
buildings  and  equipment,  and had entered into a long-term,  triple-net  lease
agreement  relating to each of the Properties.  The Company earned $1,316,599 in
rental  income  from  operating  leases  and FF&E  Reserve  income  from the two
Properties during the year ended December 31, 1998.

         During the years ended  December 31, 1998 and 1997,  the Company earned
$638,862 and $46,071, respectively, in interest income from investments in money
market accounts and other short-term highly liquid investments. The increase was
attributable  to offering  proceeds being  temporarily  invested in money market
accounts or other short term, highly liquid investments.

         Operating  expenses,  including  interest  expense and depreciation and
amortization expense, were $996,522 and $23,219 for the years ended December 31,
1998 and 1997, respectively.  Operating expenses increased during the year ended
December 31, 1998 as compared to the year ended December 31, 1997,  primarily as
a result of the fact that the Company did not commence  operations until October
15, 1997 and due to the fact that the Company  acquired  Properties and received
advances under the line of credit during 1998. As discussed  above, for the year
ended December 31, 1998, the Company's  operating  expenses exceeded the Expense
Cap by $92,733;  therefore,  the Advisor  reimbursed  the Company such amount in
accordance  with the Advisory  Agreement.  For the year ended December 31, 1997,
the Expense Cap was not applicable.

Other

         The Company has made an election  under Section  856(c) of the Internal
Revenue Code of 1986, as amended (the  "Code"),  to be taxed as a REIT under the
Code  beginning  with its taxable year ended  December 31, 1997. As a REIT,  for
federal  income  tax  purposes,  the  Company  generally  will not be subject to
federal  income tax on income that it distributes  to its  stockholders.  If the
Company  fails to qualify as a REIT in any taxable  year,  it will be subject to
federal income tax on its taxable income at regular corporate rates and will not
be permitted to qualify for treatment as a REIT for federal  income tax purposes
for four years  following the year during which  qualification  is lost. Such an
event could materially affect the Company's net earnings.  However,  the Company
believes  that it is  organized  and operates in such a manner as to qualify for
treatment as a REIT for the years ended  December 31,  1999,  1998 and 1997.  In
addition, the Company intends to continue to operate the Company so as to remain
qualified as a REIT for federal income tax purposes.

         The Company  anticipates that its leases will continue to be triple-net
leases and will contain  provisions that  management  believes will mitigate the
effect of inflation.  Such provisions will include clauses requiring the payment
of percentage  rent based on certain gross sales above a specified  level and/or
automatic  increases  in base rent at  specified  times  during  the term of the
lease. Management expects that increases in gross sales volumes due to inflation
and real sales growth  should  result in an increase in rental income over time.
Continued  inflation  also  may  cause  capital  appreciation  of the  Company's
Properties.  Inflation and changing  prices,  however,  also may have an adverse
impact on the sales of the Properties and on potential  capital  appreciation of
the Properties.

         Management of the Company currently knows of no trends that will have a
material  adverse  effect  on  liquidity,   capital   resources  or  results  of
operations.

                         Year 2000 Readiness Disclosure

Overview of Year 2000 Compliance Issues

         The year 2000 compliance  issues concern the ability of information and
non-information   technology   systems  to   properly   recognize   and  process
date-sensitive  information  beyond  January 1, 2000.  The failure to accurately
recognize  the year  2000  could  result  in a  variety  of  problems  from data
miscalculations to the failure of entire systems.

Readiness Status

         The Advisor and its affiliates generally provide all services requiring
the use of information and some  non-information  technology systems pursuant to
the Advisory Agreement with the Company. The Company generally does not directly
own information  technology systems.  The non-information  technology systems of
the Advisor,  its affiliates and the Company are primarily  facility related and
include hotel and building security systems, elevators, fire suppressions, HVAC,
electrical systems and other utilities. In early 1998, affiliates of the Advisor
formed a year 2000 committee (the "Y2K Team") that assessed the readiness of any
systems  that  were date  sensitive  and  completed  upgrades  for the  hardware
equipment and software that was not year 2000 compliant, as necessary.  The cost
for these upgrades and other  remedial  measures was the  responsibility  of the
Advisor and its  affiliates.  The Company has not incurred,  and the Advisor and
its  affiliates  do not  expect  that  the  Company  will  incur,  any  costs in
connection  with the year 2000  remedial  measures.  In  addition,  the Y2K team
requested and received  certifications  of compliance  from other companies with
which the Advisor,  its  affiliates,  and the Company have material  third party
relationships.

         In assessing the risks  presented by the year 2000  compliance  issues,
the Y2K Team identified  potential worst case scenarios involving the failure of
the information  and  non-information  technology  systems used by the Company's
transfer agent,  financial institutions and tenants. As of January 21, 2000, the
Company did not experience material disruption or other significant  problems in
its information and non-information  technology systems. In addition,  as of the
same date, the Advisor was not aware of any material year 2000 compliance issues
relating to information and non-information  technology systems of third parties
with which the Company maintains material relationships,  including those of the
Company's transfer agent, financial institutions and tenants.  Additionally, the
Company's  interactions  with  the  systems  of its  transfer  agent,  financial
institutions and tenants,  have functioned  normally.  Until the Company's first
distribution  in 2000 and the delivery of the  information by the transfer agent
to  stockholders  in early 2000,  the Advisor will  continue to monitor the year
2000  compliance of the transfer agent.  In addition,  the Advisor  continues to
monitor the systems  used by the  Company  and to  maintain  contact  with third
parties with which the Company has material  relationships  with respect to year
2000  compliance  and any year 2000 issues  that may arise at a later date.  The
Advisor will develop  contingency  plans relating to ongoing year 2000 issues at
the time that such issues are identified and such plans are deemed necessary.

         Based on the  information  provided to the Y2K Team,  the  upgrades and
remedial measures by the Advisor and its affiliates,  and the normal functioning
to  date of  information  and  non-information  technology  systems  used by the
Company and those third parties,  the Advisor does not foresee significant risks
associated with its year 2000 compliance at this time. In addition,  the Advisor
and its  affiliates  do not  expect to incur any  material  additional  costs in
connection  with the year  2000  compliance  efforts.  However,  there can be no
assurance that the Advisor and its affiliates or any third parties will not have
ongoing  year  2000  compliance  issues  that may have  adverse  effects  on the
Company.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

         See Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations - Market Risk for information  related to quantitative
and qualitative disclosure about market risk.

Item 8.   Financial Statements and Supplementary Data






<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES


                                    CONTENTS






                                                              Page

Report of Independent Certified Public Accountants              20

Financial Statements:

  Consolidated Balance Sheets                                   21

  Consolidated Statements of Earnings                           22

  Consolidated Statements of Stockholders' Equity               23

  Consolidated Statements of Cash Flows                         24

  Notes to Consolidated Financial Statements                    26


<PAGE>







               Report of Independent Certified Public Accountants



To the Board of Directors
CNL Hospitality Properties, Inc.



In our  opinion,  the  consolidated  financial  statements  listed  in the index
appearing under Item 14(a)(1)  present  fairly,  in all material  respects,  the
financial position of CNL Hospitality Properties,  Inc. (a Maryland corporation)
and its  subsidiaries  at December  31, 1999 and 1998,  and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting  principles  generally accepted
in the United  States.  In addition,  in our opinion,  the  financial  statement
schedule listed in the index appearing  under Item 14(a)(2)  present fairly,  in
all  material  respects,   the  information  set  forth  therein  when  read  in
conjunction with the related consolidated financial statements.  These financial
statements  and  financial  statement  schedule  are the  responsibility  of the
Company's  management;  our  responsibility  is to  express  an opinion on these
financial  statements  based on our  audits.  We  conducted  our audits of these
statements  in  accordance  with auditing  standards  generally  accepted in the
United  States,  which  require  that we plan and  perform  the  audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.





/s/ PRICEWATERHOUSECOOPERS  LLP

Orlando, Florida
January 21, 2000



<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                                    December 31,
                                                                              1999                1998
                                                                          --------------      -------------


<S> <C>

                             ASSETS
Land, buildings and equipment on operating leases, net                     $112,227,771        $28,368,383
Investment in unconsolidated subsidiary                                      38,364,157                 --
Cash and cash equivalents                                                   101,972,441         13,228,923
Restricted cash                                                                 275,630             82,407
Certificate of deposit                                                        5,000,000          5,000,000
Dividends receivable                                                          1,215,993                 --
Receivables                                                                     112,184             44,832
Prepaid expenses                                                                 41,165              9,391
Organization costs, less accumulated amortization of
    $5,221                                                                           --             19,752
Loan costs, less accumulated amortization of $86,627 and
    $12,980, respectively                                                        51,969             78,282
Accrued rental income                                                            79,399             44,160
Other assets                                                                  7,627,565          1,980,560
                                                                         ---------------
                                                                                             --------------

                                                                           $266,968,274        $48,856,690
                                                                         ===============     ==============


                  LIABILITIES AND STOCKHOLDERS' EQUITY
Line of credit                                                             $         --        $ 9,600,000
Interest payable                                                                     --             66,547
Accounts payable and accrued expenses                                           405,855            333,726
Due to related parties                                                        1,085,343            318,937
Security deposits                                                             5,042,054          1,417,500
Rents paid in advance                                                           255,568              3,489
                                                                         ---------------     --------------
       Total liabilities                                                      6,788,820         11,740,199
                                                                         ---------------     --------------

Commitments and contingencies

Minority interest                                                             7,124,615                 --
                                                                         ---------------     --------------

Stockholders' equity:
    Preferred stock, without par value.
       Authorized and unissued  3,000,000  shares                                    --                 --
    Excess shares,  $.01 par value per share.
       Authorized and unissued 63,000,000 shares                                     --                 --
    Common stock, $.01 par value per share. 60,000,000
       authorized shares, issued and outstanding  28,902,914
       and 4,321,908 shares, respectively                                       289,029             43,219
    Capital in excess of par value                                          256,231,833         37,289,402
    Accumulated distributions in excess of net earnings                      (3,466,023 )         (216,130 )
                                                                         ---------------     --------------
       Total stockholders' equity                                           253,054,839         37,116,491
                                                                         ---------------     --------------

                                                                           $266,968,274        $48,856,690
                                                                         ===============     ==============


</TABLE>

          See accompanying notes to consolidated financial statements.


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>

                                                                Year Ended December 31,
                                                   1999                1998              1997
                                                ------------       -------------      ------------

<S> <C>

Revenues:
    Rental income from
       operating leases                         $3,910,639          $1,218,500        $       --
    FF&E reserve income                            320,356              98,099                --
    Dividend income                              2,753,506                  --                --
    Interest and other income                    3,693,004             638,862            46,071
                                              -------------       -------------     -------------
                                                10,677,505           1,955,461            46,071
                                              -------------       -------------     -------------

Expenses:
    Interest and loan cost amortization
                                                   248,094             350,322                --
    General operating and administrative           626,649
                                                                       167,951            22,386
    Professional services                           69,318              21,581                --
    Asset management fees to
       related party                               106,788              68,114                --
    Depreciation and amortization                1,267,868             388,554               833
                                              -------------       -------------     -------------
                                                 2,318,717             996,522            23,219
                                              -------------       -------------     -------------
Earnings Before Equity in Loss of
    Unconsolidated Subsidiary
    After Deduction of Preferred
    Stock Dividends and Minority
    Interest                                     8,358,788             958,939            22,852

Equity in Loss of Unconsolidated
    Subsidiary After Deduction of
    Preferred Stock Dividends                     (778,466 )                --                --

Minority Interest                                  (64,334 )                --                --
                                              -------------       -------------     -------------

Net Earnings                                    $7,515,988           $ 958,939         $  22,852
                                              =============       =============     =============

Earnings Per Share of Common Stock:
    Basic                                         $   0.47            $   0.40          $   0.03
                                              =============       =============     =============
    Diluted                                       $   0.45            $   0.40          $   0.03
                                              =============       =============     =============

Weighted Average Number of Shares of
    Common Stock Outstanding:
       Basic                                    15,890,212           2,402,344           686,063
                                              =============       =============     =============
       Diluted                                  21,437,859           2,402,344           686,063
                                              =============       =============     =============

</TABLE>







          See accompanying notes to consolidated financial statements.


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  Years Ended December 31, 1999, 1998 and 1997


<TABLE>
<CAPTION>
                                                                                    Accumulated
                                                                                   distributions
                                            Common stock           Capital in        in excess
                                         Number         Par        excess of           of net
                                       of Shares       value       par value          earnings          Total
                                       -----------   ----------  ---------------   ---------------  ---------------

<S> <C>

Balance at December 31, 1996               20,000        $  200       $  199,800     $        --        $  200,000

Subscriptions received for
    common stock through public
    offering and distribution
    reinvestment plan                   1,132,540        11,325       11,314,077              --        11,325,402

Stock issuance costs                           --            --       (2,284,561 )            --        (2,284,561 )

Net earnings                                   --            --               --          22,852            22,852

Distributions declared and paid
    ($.05 per share)                           --            --               --         (29,776 )         (29,776 )
                                      ------------    ----------  ---------------  --------------    --------------

Balance at December 31, 1997            1,152,540        11,525        9,229,316          (6,924 )       9,233,917

Subscriptions received for
    common stock through public
    offering and distribution
    reinvestment plan                   3,169,368        31,694       31,661,984              --        31,693,678

Stock issuance costs                           --            --       (3,601,898 )            --        (3,601,898 )

Net earnings                                   --            --               --         958,939           958,939

Distributions declared and paid
    ($.47 per share)                           --            --               --      (1,168,145 )      (1,168,145 )
                                      ------------    ----------  ---------------  --------------    --------------

Balance at December 31, 1998            4,321,908        43,219       37,289,402        (216,130 )      37,116,491

Subscriptions received for
    common stock through public
    offerings and distribution
    reinvestment plan                  24,593,891       245,939      245,692,968              --       245,938,907

Retirement of common stock                (12,885)         (129)        (118,413 )            --          (118,542 )

Stock issuance costs                           --            --      (26,632,124 )            --       (26,632,124 )

Net earnings                                   --            --               --       7,515,988         7,515,988

Distributions declared and paid
    ($.72 per share)                           --            --               --     (10,765,881 )     (10,765,881 )
                                      ------------    ----------  ---------------  --------------    --------------

Balance at December 31, 1999           28,902,914      $289,029     $256,231,833     $(3,466,023 )    $253,054,839
                                      ============    ==========  ===============  ==============    ==============

</TABLE>

          See accompanying notes to consolidated financial statements.


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                                              1999            1998             1997
                                                          -------------    ------------     ------------

<S> <C>


Cash flows from operating activities:
   Net earnings                                            $ 7,515,988      $  958,939         $ 22,852
    Adjustments to reconcile net earnings
      to net cash provided by operating
      activities:
        Depreciation                                         1,230,499         384,166               --
        Amortization                                           130,769          17,368              833
        Distribution from investment in
          unconsolidated subsidiary, net
          of equity in loss                                  1,478,111              --               --
        Minority interest                                       64,334              --               --
        Changes in operating assets and
          liabilities:
            Dividends receivable                            (1,215,993 )            --               --
            Receivables                                        (67,352 )       (44,832 )             --
            Prepaid expenses                                   (31,774 )         1,788          (11,179 )
            Accrued rental income                              (35,239 )       (44,160 )             --
            Interest payable                                   (66,547 )        66,547               --
            Accounts payable and accrued
              expenses                                          (2,191 )         5,322            3,822
            Due to related parties -
              operating expenses                                12,923          10,838            6,141
            Security deposits                                3,624,554       1,417,500               --
            Rents paid in advance                              252,079           3,489               --
                                                        ---------------   -------------    -------------

              Net cash provided by
                 operating  activities                      12,890,161       2,776,965           22,469
                                                        ---------------   -------------    -------------

Cash flows from investing activities:
    Additions to land, buildings and
       equipment on operating leases                       (85,089,887 )   (28,752,549 )             --
    Investment in affiliates                               (39,879,638 )            --               --
    Investment in certificate of deposit                            --      (5,000,000 )             --
    Increase in restricted cash                               (193,223 )               )             --
                                                                               (82,407
    Additions to other assets                               (5,068,727 )      (676,026 )       (463,470 )
                                                        ---------------   -------------    -------------

              Net cash used in investing
                 activities                               (130,231,475 )   (34,510,982 )       (463,470 )
                                                        ---------------   -------------    -------------


</TABLE>







          See accompanying notes to consolidated financial statements.


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>

                                                                   Years Ended December 31,
                                                           1999              1998             1997
                                                      ---------------     ------------     ------------

<S> <C>

Cash flows from financing activities:
    Proceeds from borrowings on line of
      credit                                                     --          9,600,000               --
    Repayment of borrowings on line of                   (9,600,000 )               --               --
      credit
    Payment of loan costs                                   (47,334 )          (91,262 )             --
    Contributions from minority interest
      of consolidated subsidiary                          7,150,000                 --               --
    Subscriptions received from
      stockholders                                      245,938,907         31,693,678       11,325,402
    Distributions to stockholders                       (10,765,881 )       (1,168,145 )        (29,776 )
    Retirement of common stock                             (118,542 )               --               --
    Payment of stock issuance costs                     (26,472,318 )       (3,948,669 )     (1,979,371 )
    Other                                                        --              7,500           (7,500 )
                                                     ---------------     --------------  ---------------

      Net cash provided by financing
         activities                                     206,084,832         36,093,102        9,308,755
                                                     ---------------     --------------  ---------------

Net increase in cash and cash equivalents                88,743,518          4,359,085        8,867,754

Cash and cash equivalents at beginning of
    year                                                 13,228,923          8,869,838            2,084
                                                     ---------------     --------------  ---------------

Cash and cash equivalents at end of year              $ 101,972,441        $13,228,923      $ 8,869,838
                                                     ===============     ==============  ===============


Supplemental disclosures of cash flow information:

Cash paid during the year for interest                $  240,994           $   270,795      $       --
                                                     ===============     ==============  ===============

Supplemental schedule of non-cash financing
  activities:

      Distributions declared not paid to
        minority interest                             $   89,719           $        --      $       --
                                                     ===============     ==============  ===============


</TABLE>




          See accompanying notes to consolidated financial statements.


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  Years Ended December 31, 1999, 1998 and 1997


1.   Significant Accounting Policies:

     Organization and Nature of Business - CNL Hospitality Properties,  Inc. was
     organized in Maryland on June 12, 1996.  CNL  Hospitality  GP Corp. and CNL
     Hospitality  LP Corp.  are wholly  owned  subsidiaries  of CNL  Hospitality
     Properties,  Inc.,  organized  in  Delaware in June 1998.  CNL  Hospitality
     Partners,  LP is a Delaware  limited  partnership  formed in June 1998. CNL
     Hospitality  GP Corp.  and CNL  Hospitality  LP Corp.  are the  general and
     limited partners,  respectively,  of CNL Hospitality Partners, LP. The term
     "Company" includes,  unless the context otherwise requires, CNL Hospitality
     Properties,  Inc., CNL Hospitality Partners,  LP, CNL Hospitality GP Corp.,
     CNL Hospitality LP Corp. and CNL Philadelphia Annex, LLC (see note 4).

     The Company was formed primarily to acquire  properties (the  "Properties")
     located across the United States to be leased on a long-term,  "triple-net"
     basis to hotel operators.  The Company may also provide mortgage  financing
     (the  "Mortgage  Loans") and  furniture,  fixture and  equipment  financing
     ("Secured  Equipment  Leases") to operators of hotel chains.  The aggregate
     outstanding  principal  amount of Secured  Equipment Leases will not exceed
     10% of gross  proceeds  from the  Company's  offerings  of shares of common
     stock.

     The Company was a development  stage  enterprise from June 12, 1996 through
     October  15,  1997.  Since  operations  had not begun,  activities  through
     October 15, 1997 were devoted to organization of the Company.

     Principles  of  Consolidation  - The  accompanying  consolidated  financial
     statements  include the accounts of CNL Hospitality  Properties,  Inc., and
     its wholly owned subsidiaries, CNL Hospitality GP Corp. and CNL Hospitality
     LP Corp., as well as the accounts of CNL Hospitality  Partners,  LP and CNL
     Philadelphia  Annex,  LLC (an 89% owned  limited  liability  company).  All
     significant  intercompany balances and transactions have been eliminated in
     consolidation.  Interest  of  unaffiliated  third  party  is  reflected  as
     minority interest.

     Real Estate and Lease  Accounting - The Company  records the acquisition of
     land,  buildings and equipment at cost,  including  acquisition and closing
     costs. Land,  buildings and equipment are leased to unrelated third parties
     on a triple-net basis, whereby the tenant is generally  responsible for all
     operating  expenses  relating to the Property,  including  property  taxes,
     insurance, maintenance and repairs.

     The Property leases are accounted for using the operating method. Under the
     operating  method,  land,  building  and  equipment  are  recorded at cost,
     revenue is recognized as rentals are earned and  depreciation is charged to
     operations as incurred.  Buildings and  equipment  are  depreciated  on the
     straight-line  method  over their  estimated  useful  lives of 40 and seven
     years,  respectively.  When  scheduled  rentals vary during the lease term,
     income is recognized on a  straight-line  basis so as to produce a constant
     periodic  rent over the lease term  commencing  on the date the Property is
     placed in service. Accrued rental income represents the aggregate amount of
     income  recognized on a straight-line  basis in excess of scheduled  rental
     payments to date.




<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998 and 1997


1.   Significant Accounting Policies - Continued:

     When the Properties or equipment are sold, the related cost and accumulated
     depreciation,  plus any accrued  rental  income,  will be removed  from the
     accounts  and any gain or loss  from  sale  will be  reflected  in  income.
     Management reviews its Properties for impairment whenever events or changes
     in circumstances indicate that the carrying amount of the assets may not be
     recoverable through operations. Management determines whether impairment in
     value has occurred by comparing  the  estimated  future  undiscounted  cash
     flows, including the residual value of the Property, with the carrying cost
     of the individual Property.  If an impairment is indicated,  the assets are
     adjusted to their fair value.

     Cash and  Cash  Equivalents  - The  Company  considers  all  highly  liquid
     investments with a maturity of three months or less to be cash equivalents.
     Cash and cash  equivalents  consist of demand deposits at commercial  banks
     and money market funds (some of which are backed by government securities).
     Cash  equivalents  are  stated  at  cost  plus  accrued   interest,   which
     approximates market value.

     Cash  accounts  maintained  on behalf of the Company in demand  deposits at
     commercial  banks  and money  market  funds may  exceed  federally  insured
     levels;  however,  the  Company  has not  experienced  any  losses  in such
     accounts.  The Company limits  investment of temporary cash  investments to
     financial  institutions  with high credit standing;  therefore,  management
     believes it is not exposed to any significant  credit risk on cash and cash
     equivalents.

     Loan Costs - Loan costs  incurred in connection  with the Company's line of
     credit and a  $5,000,000  letter of credit  have been  capitalized  and are
     being  amortized  over the term of the loan and the term of the  letter  of
     credit  commitment,  respectively,  using the  straight-line  method  which
     approximates the effective interest method.

     Income  Taxes - The  Company  has  made an  election  to be taxed as a real
     estate  investment  trust  ("REIT")  under  Sections 856 through 860 of the
     Internal  Revenue Code of 1986, as amended,  and related  regulations.  The
     Company  generally will not be subject to federal corporate income taxes on
     amounts  distributed to stockholders,  providing it distributes at least 95
     percent of its REIT taxable income and meets certain other requirements for
     qualifying as a REIT.  Accordingly,  no provision for federal  income taxes
     has  been  made  in the  accompanying  consolidated  financial  statements.
     Notwithstanding  the Company's  qualification  for taxation as a REIT,  the
     Company is subject to certain state taxes on its income and Properties.

     Earnings Per Share - Basic  earnings per share ("EPS") is calculated  based
     upon the  weighted  average  number of shares of common  stock  outstanding
     during each year and diluted  earnings per share is  calculated  based upon
     weighted  average  number of common  shares  outstanding  plus  potentially
     dilutive common shares (see Note 12).

     Reclassification  - Certain items in the prior years' financial  statements
     have been reclassified to conform with the 1999  presentation,  including a
     change in the presentation of the cash flow from the direct to the indirect
     method.  These  reclassifications  had no effect on stockholders' equity or
     net earnings.



<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  Years Ended December 31, 1999, 1998 and 1997

1.   Significant Accounting Policies - Continued:

     Use of Estimates - Management of the Company has made a number of estimates
     and assumptions relating to the reporting of assets and liabilities and the
     disclosure  of  contingent   assets  and   liabilities   to  prepare  these
     consolidated  financial  statements in conformity  with generally  accepted
     accounting principles. Actual results could differ from those estimates.

2.   Public Offerings:

     On June 17, 1999, the Company  completed its offering of 16,500,000  shares
     of common stock  ($165,000,000)  (the "Initial  Offering"),  which included
     1,500,000 shares  ($15,000,000)  available only to stockholders who elected
     to participate in the Company's reinvestment plan. Following the completion
     of the  Initial  Offering,  the  Company  commenced  an  offering  of up to
     27,500,000  additional  shares of common  stock  ($275,000,000)  (the "1999
     Offering").  Of the  27,500,000  shares  of  common  stock  to be  offered,
     2,500,000 will be available only to stockholders  purchasing shares through
     the  reinvestment  plan.  The price  per share and other  terms of the 1999
     Offering,  including the  percentage of gross  proceeds  payable (i) to the
     managing dealer for selling commissions and expenses in connection with the
     offering  and  (ii)  to  CNL  Hospitality  Corp.  (formerly  known  as  CNL
     Hospitality  Advisors,  Inc.) (the  "Advisor")  for  acquisition  fees, are
     substantially the same for the Company's  Initial Offering.  As of December
     31, 1999, the Company received total subscription proceeds from the Initial
     Offering  and  the  1999  Offering  of  $289,157,987  (28,915,799  shares),
     including $503,819 (50,382 shares) through the reinvestment plan.

     On October 26, 1999,  the Company  filed a  registration  statement on Form
     S-11 with the  Securities  and Exchange  Commission in connection  with the
     proposed  sale by the  Company  of up to  45,000,000  additional  shares of
     common stock  ($450,000,000)  (the "2000 Offering") in an offering expected
     to commence  immediately  following the  completion  of the Company's  1999
     Offering.  Of the  45,000,000  shares of common stock to be offered,  up to
     5,000,000 will be available to stockholders  purchasing  shares through the
     reinvestment  plan.  The  price  per  share  and  other  terms  of the 2000
     Offering,  including the  percentage of gross  proceeds  payable (i) to the
     managing dealer for selling commissions and expenses in connection with the
     offering and (ii) to the Advisor for  acquisition  fees, are  substantially
     the same for the Company's  1999 Offering.  The Company  expects to use the
     net proceeds from the 2000 Offering to purchase additional  Properties and,
     to a lesser extent, make Mortgage Loans.

3.   Investment in Unconsolidated Subsidiary:

     In February  1999,  the Company  executed a series of agreements  with Five
     Arrows Realty  Securities II L.L.C.  ("Five Arrows")  pursuant to which the
     Company  and Five  Arrows  formed a jointly  owned real  estate  investment
     trust, CNL Hotel Investors,  Inc. ("Hotel  Investors"),  for the purpose of
     acquiring up to eight hotel Properties from various sellers affiliated with
     Western  International.  At the time the agreement  was entered  into,  the
     eight  Properties  (four as  Courtyard(R) by Marriott(R)  hotels,  three as
     Residence Inn(R) by Marriott(R)  hotels,  and one as a Marriott  Suites(R))
     were either newly constructed or in various stages of completion.


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998 and 1997


3.   Investment in Unconsolidated Subsidiary - Continued:

     In February  1999 and June 1999,  Hotel  Investors  purchased  seven of the
     eight  Properties  for an aggregate  purchase price of  approximately  $167
     million and paid $3 million as a deposit on the one remaining Property. The
     Properties acquired were a Courtyard by Marriott located in Plano, Texas, a
     Marriott  Suites  located in Dallas,  Texas,  a  Residence  Inn by Marriott
     located in Las Vegas, Nevada, a Residence Inn by Marriott located in Plano,
     Texas, a Courtyard by Marriott located in Scottsdale,  Arizona, a Courtyard
     by Marriott located in Seattle,  Washington and a Residence Inn by Marriott
     located in Phoenix,  Arizona. The $3 million deposit relating to the eighth
     Property was refunded to Hotel Investors by the seller in January 2000 as a
     result of Hotel Investors exercising its option to terminate its obligation
     to purchase the  Property  under the  purchase  and sale  agreement.  As of
     December 31, 1999,  Hotel  Investors  owned seven of the newly  constructed
     hotels.

     In order to fund these purchases,  Five Arrows invested  approximately  $48
     million  and the  Company  invested  approximately  $38  million  in  Hotel
     Investors. Hotel Investors funded the remaining amount of approximately $88
     million  with  permanent  financing,  collateralized  by  Hotel  Investors'
     interests in the Properties (the "Hotel Investors Loan").

     In return for their  respective  investments,  Five  Arrows  received a 51%
     common stock interest and the Company  received a 49% common stock interest
     in Hotel Investors.  Five Arrows received 48,337 shares of Hotel Investors'
     8% Class A cumulative, preferred stock ("Class A Preferred Stock"), and the
     Company   received  37,979  shares  of  Hotel   Investors'  9.76%  Class  B
     cumulative,  preferred  stock  ("Class  B  Preferred  Stock").  The Class A
     Preferred  Stock is  exchangeable  upon  demand  into  common  stock of the
     Company,  using an  exchange  ratio based on the  relationship  between the
     Company's operating results and those of Hotel Investors.

     Cash available for distributions of Hotel Investors is distributed first to
     Five  Arrows  with  respect to  dividends  payable on the Class A Preferred
     Stock.  Such  dividends  are  calculated  based  on Five  Arrows'  "special
     investment  amount," or $1,294.78  per share,  representing  the sum of its
     investment in Hotel Investors and its approximately $14 million  investment
     in the Company,  on a per share basis,  adjusted for any dividends received
     from the Company.  Then, cash available for distributions is distributed to
     the  Company  with  respect  to its Class B  Preferred  Stock.  Next,  cash
     available for  distributions  is distributed to 100 CNL Holdings,  Inc. and
     affiliates' associates who each own one share of Class C preferred stock in
     Hotel  Investors,  to provide a  quarterly,  cumulative,  compounded  eight
     percent  return.   All  remaining  cash  available  for   distributions  is
     distributed pro rata with respect to the interest in the common shares.

     Five Arrows also invested  approximately $14 million in the Company through
     the purchase of common stock pursuant to the Company's Initial Offering and
     the 1999  Offering,  the proceeds of which were used by the Company to fund
     approximately  38% of its funding  commitment  to Hotel  Investors.  During
     1999,  approximately $3.7 million of this amount was initially treated as a
     loan due to the stock  ownership  limitations  specified  in the  Company's
     Articles of  Incorporation  at the time of investment.  Subsequently,  this
     loan was converted to 387,868  shares of common  stock.  For the year ended
     December 31, 1999, the Company incurred  approximately  $54,000 in interest
     expense on this convertible loan.

     In addition to the above investments,  Five Arrows purchased a 10% interest
     in the Advisor.  In connection with Five Arrow's investment in the Company,
     the Advisor,  Hotel Investors,  and certain affiliates have agreed to waive
     certain fees otherwise payable to them by the Company.  The Advisor is also
     the advisor to Hotel Investors  pursuant to a separate advisory  agreement.
     The Company will not pay the Advisor fees, including the Company's pro rata
     portion of Hotel  Investors'  advisory  fees, in excess of amounts  payable
     under its advisory agreement.



<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998 and 1997


3.   Investment in Unconsolidated Subsidiary - Continued:

     The following presents condensed financial  information for Hotel Investors
     as of and for the period from February 10, 1999 (inception) to December 31,
     1999:

       Land, buildings and equipment on operating leases, net    $165,088,059
       Cash and cash equivalents                                    4,884,014
       Loan costs, net                                                708,006
       Accrued rental income                                          283,914
       Prepaid expenses, receivables and other assets               3,283,306
       Liabilities                                                 92,229,193
       Redeemable preferred stock - Class A and Class B            85,361,864
       Stockholders' deficit                                       (2,915,614 )
       Revenues                                                    13,025,978
       Net earnings                                                 4,104,936
       Preferred stock dividends                                    5,693,642
       Loss applicable to common stockholders                      (1,588,706 )

     During the year ended December 31, 1999, the Company recorded $2,753,506 in
     dividend income and $778,466 in equity in loss after deduction of preferred
     stock  dividends,  resulting in net earnings of $1,975,040  attributable to
     this investment.

4.   Land, Buildings and Equipment on Operating Leases:

     During the year ended  December  31,  1999,  the  Company  acquired  an 89%
     interest in CNL Philadelphia Annex, LLC (formerly known as Courtyard Annex,
     L.L.C.) (the "LLC"), for approximately $58 million. The sole purpose of the
     LLC is to own and lease the Courtyard by Marriott hotel Property located in
     Philadelphia,  Pennsylvania.  This historic property was recently renovated
     and  converted  into a hotel which  commenced  operations  in late November
     1999.  The LLC is included with the accounts of the Company  except for the
     remaining  11%  interest  which is  reflected  as minority  interest in the
     accompanying consolidated financial statements.

     In addition,  during the year ended December 31, 1999, the Company acquired
     a  newly  constructed  Property  located  in  Mira  Mesa,   California  for
     approximately  $15.5 million.  The Property is being operated by the tenant
     as a Residence Inn by Marriott.




<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998 and 1997


4.   Land, Buildings and Equipment on Operating Leases - Continued:

     The Company  leases its land,  buildings and equipment to hotel  operators.
     The leases are accounted for under the provisions of Statement of Financial
     Accounting  Standards  No.  13,  "Accounting  for  Leases,"  and have  been
     classified as operating  leases.  The lease terms range from 15 to 19 years
     and provide for minimum and  contingent  rentals.  In addition,  the tenant
     pays all property taxes and assessments and carries insurance  coverage for
     public liability,  property damage,  fire and extended coverage.  The lease
     options  allow the  tenants  to renew  each of the  leases for two to three
     successive  five-year  to  ten-year  periods  subject to the same terms and
     conditions of the initial leases. The leases also require the establishment
     of capital expenditure reserve funds which will be used for the replacement
     and renewal of  furniture,  fixtures  and  equipment  relating to the hotel
     Properties  (the  "FF&E  Reserve").  Funds in the FF&E  Reserve  have  been
     earned,  granted and assigned to the Company as  additional  rent.  For the
     years ended  December  31, 1999 and 1998,  revenues  from the FF&E  Reserve
     totaled $320,356 and $98,099,  respectively, of which $275,630 and $82,407,
     respectively, is classified as restricted cash. No such amounts were earned
     or outstanding during 1997.

     Land,  buildings  and  equipment  on  operating  leases  consisted  of  the
     following at December 31:

                                               1999                1998
                                          -------------       -------------

       Land                               $ 12,337,950         $ 2,926,976
       Buildings                            92,220,370          23,476,442
       Equipment                             9,272,785           2,349,131
                                         --------------      --------------
                                           113,831,105          28,752,549
       Less accumulated depreciation        (1,603,334 )          (384,166 )
                                         ==============      ==============
                                          $112,227,771         $28,368,383
                                         ==============      ==============

     Certain  leases  provide  an  increase  in the  minimum  annual  rent  at a
     predetermined  interval  during  the terms of the  leases.  Such  amount is
     recognized on a straight-line basis over the terms of the leases commencing
     on the date the Property is placed in service. For the years ended December
     31,  1999  and  1998,   the  Company   recognized   $35,238  and   $44,160,
     respectively,  of such  rental  income.  This  amount is included in rental
     income from operating leases in the accompanying consolidated statements of
     earnings. No such amounts were earned during 1997.

     The following is a schedule of future minimum lease payments to be received
     on the noncancellable operating leases at December 31, 1999:


               2000                             $ 10,971,195
               2001                               10,971,195
               2002                               10,971,195
               2003                               10,971,195
               2004                               10,971,195
               Thereafter                        118,283,694
                                             ================
                                                $173,139,669
                                             ================

     Since  leases are  renewable  at the option of the tenant,  the above table
     only presents  future  minimum lease  payments due during the initial lease
     terms.  In  addition,  this table does not  include  any amounts for future
     contingent  rents which may be received on the leases based on a percentage
     of the tenant's gross sales.


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998 and 1997


5.   Other Assets:

     Other  assets  as of  December  31,  1999  and  1998  were  $7,627,565  and
     $1,980,560,   respectively,   which  consisted  of  acquisition   fees  and
     miscellaneous  acquisition  expenses  that  will  be  allocated  to  future
     Properties.

6.   Redemption of Shares:

     The  Company  has a  redemption  plan under  which the Company may elect to
     redeem shares,  subject to certain  conditions and limitations.  During the
     year ended  December 31, 1999,  12,885 shares of common stock were redeemed
     and retired. No shares were redeemed in 1998 or 1997.

7.   Line of Credit:

     On July 31, 1998,  the Company  entered into a revolving line of credit and
     security  agreement  with a bank to be used by the Company to acquire hotel
     Properties.  The line of  credit  provides  that the  Company  may  receive
     advances of up to $30,000,000 until July 30, 2003, with an annual review to
     be  performed  by the bank to indicate  that there has been no  substantial
     deterioration,  in the bank's reasonable discretion, of the credit quality.
     Interest expense on each advance shall be payable monthly,  with all unpaid
     interest  and  principal  due no later than five years from the date of the
     advance. Advances under the line of credit will bear interest at either (i)
     a rate per annum  equal to 318 basis  points  above  the  London  Interbank
     Offered  Rate  (LIBOR)  or (ii) a rate per annum  equal to 30 basis  points
     above the  bank's  base rate,  whichever  the  Company  selects at the time
     advances are made.  In  addition,  a fee of .5% per advance will be due and
     payable to the bank on funds as advanced.  Each advance made under the line
     of credit will be  collateralized by the assignment of rents and leases. In
     addition,  the line of credit provides that the Company will not be able to
     further  encumber  the  applicable  hotel  Property  during the term of the
     advance without the bank's consent.  The Company will be required,  at each
     closing, to pay all costs, fees and expenses arising in connection with the
     line of  credit.  The  Company  must also pay the  bank's  attorneys  fees,
     subject to a maximum cap,  incurred in  connection  with the line of credit
     and each advance.

     In connection  with the line of credit,  the Company  incurred a commitment
     fee, legal fees and closing costs of approximately $138,000. As of December
     31, 1999, the Company has no amounts outstanding under the line of credit.

8.   Stock Issuance Costs:

     The Company has incurred certain expenses of its offerings of common stock,
     including   commissions,   marketing  support  and  due  diligence  expense
     reimbursement  fees,  filing fees, legal,  accounting,  printing and escrow
     fees,  which have been deducted from the gross  proceeds of the  offerings.
     The  Advisor has agreed to pay all  organizational  and  offering  expenses
     (excluding  commissions  and marketing  support and due  diligence  expense
     reimbursement  fees)  which  exceed  three  percent  of the gross  proceeds
     received  from the sale of shares of the  Company  in  connection  with the
     offerings.

     During the years  ended  December  31,  1999,  1998 and 1997,  the  Company
     incurred   $26,632,124,   $3,606,871  and  $2,304,561,   respectively,   in
     organizational and offering costs,  including  $18,475,145,  $2,535,494 and
     $906,032,  respectively,  in  commissions  and  marketing  support  and due
     diligence  expense  reimbursement  fees  (see Note  10).  Of these  amounts
     $26,632,124, $3,601,898 and $2,284,561,  respectively, have been treated as
     stock issuance costs and $4,973 and $20,000,  have been treated as start-up
     and organization costs in 1998 and 1997,  respectively.  The stock issuance
     costs  have been  charged  to  stockholders'  equity  subject  to the three
     percent cap described above. The organization costs have been expensed.


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998 and 1997


9.   Distributions:

     For the years ended  December 31,  1999,  1998 and 1997,  approximately  75
     percent,  76 percent and 100 percent,  respectively,  of the  distributions
     paid to stockholders  were considered  ordinary  income,  and for the years
     ended December 31, 1999 and 1998,  approximately 25 percent and 24 percent,
     respectively,  were  considered  a return of  capital to  stockholders  for
     federal income tax purposes. No amounts distributed to the stockholders for
     the years ended December 31, 1999, 1998 and 1997 are required to be or have
     been  treated  by the  Company  as a return  of  capital  for  purposes  of
     calculating the stockholders' return on their invested capital.

10.  Related Party Transactions:

     Certain  directors and officers of the Company hold similar  positions with
     the Advisor and the managing dealer,  CNL Securities Corp. These affiliates
     are  entitled  to receive  fees and  compensation  in  connection  with the
     offerings,  and the  acquisition,  management and sale of the assets of the
     Company.  On June 12, 1996 (date of  inception),  CNL Fund  Advisors,  Inc.
     contributed   $200,000   in  cash  to  the  Company  and  became  its  sole
     stockholder.   In  February  1997,  the  Advisor  purchased  the  Company's
     outstanding  common stock from CNL Fund Advisors,  Inc. and became the sole
     stockholder of the Company.

     During the years  ended  December  31,  1999,  1998 and 1997,  the  Company
     incurred  $17,320,448,  $2,377,026  and $849,405  respectively,  in selling
     commissions due to CNL Securities Corp. for services in connection with its
     offerings. A substantial portion of these amounts ($16,164,488,  $2,200,516
     and $792,832, respectively) were or will be paid by CNL Securities Corp. as
     commissions to other broker-dealers.

     In  addition,  CNL  Securities  Corp.  is  entitled  to receive a marketing
     support and due diligence  expense  reimbursement  fee equal to 0.5% of the
     total  amount  raised  from the sale of  shares,  a portion of which may be
     reallowed  to other  broker-dealers.  During the years ended  December  31,
     1999, 1998 and 1997, the Company incurred $1,154,697, $158,468 and $56,627,
     respectively,  of such fees,  the majority of which were reallowed to other
     broker-dealers  and from which all bona fide due  diligence  expenses  were
     paid.

     CNL  Securities  Corp.  will also receive,  in connection  with the Initial
     Offering and the 2000 Offering,  a soliciting  dealer servicing fee payable
     annually by the Company  beginning on December 31 of the year following the
     year in which  the  offering  is  completed  in the  amount of 0.20% of the
     stockholders'  investment in the Company.  CNL Securities Corp. in turn may
     reallow all or a portion of such fee to  soliciting  dealers  whose clients
     hold shares on such date.  As of December 31,  1999,  no such fees had been
     incurred.

     In addition,  in connection with its current  offering of common stock, the
     Company  has  agreed  to  issue  and  sell   soliciting   dealer   warrants
     ("Soliciting  Dealer Warrants") to CNL Securities Corp.. The price for each
     warrant  will be $0.0008 and one warrant will be issued for every 25 shares
     sold by the  managing  dealer.  All or a portion of the  Soliciting  Dealer
     Warrants may be reallowed to soliciting dealers with prior written approval
     from,  and in the sole  discretion  of, the managing  dealer,  except where
     prohibited  by either  federal or state  securities  laws.  The holder of a
     Soliciting  Dealer Warrant will be entitled to purchase one share of common
     stock  from the  Company at a price of $12.00  during the five year  period
     commencing  the date the  current  offering  began.  No  Soliciting  Dealer
     Warrants,  however,  will be  exercisable  until  one year from the date of
     issuance.  As of December 31, 1999, in connection  with the 1999  Offering,
     CNL  Securities  Corp.  was entitled to  approximately  479,000  Soliciting
     Dealer Warrants; however, no such warrants had been issued as of that date.


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998 and 1997


10.  Related Party Transactions - Continued:

     The  Advisor  is  entitled  to receive  acquisition  fees for  services  in
     identifying   Properties  and  structuring  the  terms  of  leases  of  the
     Properties  and Mortgage  Loans equal to 4.5% of the gross  proceeds of the
     offerings,  loan proceeds from permanent  financing and amounts outstanding
     on the line of credit,  if any, at the time of listing,  but excluding that
     portion  of the  permanent  financing  used to  finance  Secured  Equipment
     Leases.  During the years  ended  December  31,  1999,  1998 and 1997,  the
     Company incurred  $10,956,455,  $1,426,216 and $509,643,  respectively,  of
     such fees.  Such fees are  included in land,  buildings  and  equipment  on
     operating leases and other assets.

     The Company incurs operating expenses which, in general, are those expenses
     relating to administration of the Company on an ongoing basis.  Pursuant to
     the  advisory  agreement  described  below,  the  Advisor  is  required  to
     reimburse the Company the amount by which the total operating expenses paid
     or incurred by the Company exceed in any four consecutive  fiscal quarters,
     the greater of two percent of average  invested assets or 25 percent of net
     income (the  "Expense  Cap").  For the year ended  December 31,  1999,  the
     Company's  operating  expenses  did not exceed the Expense  Cap. As of year
     ended  December 31, 1998,  the Company's  operating  expenses  exceeded the
     Expense Cap by $92,733;  therefore, the Advisor reimbursed the Company such
     amount  in  accordance  with the  advisory  agreement.  For the year  ended
     December 31, 1997, the Expense Cap was not applicable.

     The  Company  and the  Advisor  have  entered  into an  advisory  agreement
     pursuant to which the Advisor will receive a monthly asset  management  fee
     of  one-twelfth  of 0.60% of the Company's  real estate asset value and the
     outstanding  principal  balance of any Mortgage  Loans as of the end of the
     preceding  month.  The management fee, which will not exceed fees which are
     competitive for similar  services in the same  geographic  area, may or may
     not be taken, in whole or in part as to any year, in the sole discretion of
     the Advisor.  All or any portion of the  management fee not taken as to any
     fiscal year shall be  deferred  without  interest  and may be taken in such
     other fiscal year, as the Advisor shall  determine.  During the years ended
     December  31, 1999 and 1998,  the Company  incurred  $106,788  and $68,114,
     respectively,  of such fees.  No such fees were incurred by the Company for
     1997.

     The Advisor and its affiliates provide various  administrative  services to
     the Company,  including services related to accounting;  financial, tax and
     regulatory compliance reporting;  stockholder  distributions and reporting;
     due   diligence   and   marketing;   and  investor   relations   (including
     administrative services in connection with the offerings),  on a day-to-day
     basis. The expenses incurred for these services were classified as follows:

<TABLE>
<CAPTION>

                                                                  Years Ended December 31,
                                                          1999              1998              1997
                                                      -------------     -------------     -------------

<S> <C>

               Stock issuance costs                     $3,854,739          $494,729          $185,335
               General operating and
                   administrative expenses                 351,846           140,376             6,889
               Land, buildings and equipment
                   on operating leases and
                   other assets                                124             9,084                --
                                                    --------------     -------------     -------------
                                                        $4,206,709          $644,189          $192,224
                                                     ==============    =============     =============

</TABLE>


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998 and 1997


10.  Related Party Transactions - Continued:

     The amounts due to related  parties  consisted of the following at December
     31:

<TABLE>
<CAPTION>

                                                                           1999               1998
                                                                        ------------      -------------

<S> <C>

               Due to the Advisor:
                    Expenditures incurred on behalf
                       of the Company for accounting
                       and administrative services                       $  477,533           $110,496
                    Acquisition fees                                        337,797            137,974
                    Management fees                                          19,642                 --
                                                                        ------------      -------------
                                                                            834,972            248,470
                                                                        ------------      -------------
               Due to CNL Securities Corp.:
                    Commissions                                             229,834             66,063
                    Marketing support and due diligence
                       expense reimbursement fee                             16,764              4,404
                                                                        ------------      -------------
                                                                            246,598             70,467
                                                                        ------------      -------------

               Due to other related party                                     3,773                 --
                                                                        ------------      -------------
                                                                         $1,085,343            $318,937
                                                                        ============      =============

</TABLE>

     During  1999,  the Company  opened  three bank  accounts in a bank in which
     certain  officers and directors of the Company  serve as directors,  and in
     which an affiliate of the Advisor is a  stockholder.  The amount  deposited
     with this affiliate was $15,275,629 at December 31, 1999.

11.  Concentration of Credit Risk:

     STC  Leasing  Associates,  LLC  ("STC")  (which  operates  and  leases  two
     Properties) contributed more than ten percent of the Company's total rental
     income for the years ended  December  31, 1999 and 1998.  In  addition,  WI
     Hotel Leasing LLC (which leases seven Properties) contributed more than ten
     percent of Hotel  Investor's total rental income.  In addition,  all of the
     Company's  rental income  (including  the Company's  share of rental income
     from Hotel  Investors) was earned from Properties  operating as Marriott(R)
     brand chains. Although the Company intends to acquire Properties located in
     various states and regions and to carefully  screen its tenants in order to
     reduce risks of default,  failure of these  lessees or the  Marriott  brand
     chains could significantly impact the results of operations of the Company.
     However, management believes that the risk of such a default is reduced due
     to the essential or important  nature of these  Properties  for the ongoing
     operations of the lessees.

     It is expected that the  percentage of total rental income  contributed  by
     STC will decrease as additional  Properties  are acquired and leased during
     2000 and subsequent years.



<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998 and 1997


12.  Earnings Per Share:

     Basic EPS excludes dilution and is computed by dividing income available to
     common  stockholders  by the  weighted  average  number  of  common  shares
     outstanding  for the period.  Diluted EPS reflects the  potential  dilution
     that could occur if other  contracts to issue  common stock were  exercised
     and shared in the earnings of the Company.  For the year ended December 31,
     1999,  approximately 5.5 million shares, related to the conversion of Hotel
     Investors'  Class A Preferred  Stock to the Company's  common  stock,  were
     considered  dilutive after the application of the "if converted method" and
     were  included  in the  denominator  of the diluted  EPS  calculation.  The
     numerator in the diluted EPS calculation includes an adjustment for the net
     earnings of Hotel Investors for the applicable  period.  The Company had no
     potentially dilutive common shares in 1998 or 1997.

     The  following  represents  the  calculation  of earnings per share and the
     weighted average number of shares of potentially  dilutive common stock for
     the years ended December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>

                                                                1999                 1998                1997
                                                            --------------       --------------      --------------

<S> <C>

Basic Earnings Per Share:
   Net earnings                                               $ 7,515,988          $   958,939           $  22,852
                                                            ==============       ==============      ==============

   Weighted average number of shares outstanding               15,890,212            2,402,344             686,063
                                                            ==============       ==============      ==============

   Basic earnings per share                                          0.47                 0.40                0.03
                                                            ==============       ==============      ==============

Diluted Earnings Per Share:
   Net earnings                                               $ 7,515,988          $    958,939          $   22,852

   Additional income attributable to investment in
      unconsolidated subsidiary assuming all Class A
      Preferred Shares were converted                           2,129,899                   --                  --
                                                            --------------       --------------      --------------

         Adjusted net earnings assuming dilution              $ 9,645,887          $   958,939           $  22,852
                                                            ==============       ==============      ==============

Weighted average number of shares outstanding                  15,890,212            2,402,344             686,063

Assumed conversion of Class A Preferred Stock                   5,547,647                   --                  --
                                                            --------------       --------------      --------------

         Adjusted weighted average number of
         shares outstanding                                    21,437,859            2,402,344             686,063
                                                            ==============       ==============      ==============

Diluted earnings per share                                    $      0.45          $      0.40            $   0.03
                                                            ==============       ==============      ==============


</TABLE>


<PAGE>


                        CNL HOSPITALITY PROPERTIES, INC.
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                  Years Ended December 31, 1999, 1998 and 1997


13.  Commitments and Contingencies:

     During 1998,  the Company  entered into  agreements  to acquire three hotel
     Properties for an  anticipated  aggregate  purchase price of  approximately
     $100  million.  In  connection  with these  agreements,  the  Company has a
     deposit in the form of a letter of  credit,  which is  collateralized  by a
     certificate  of  deposit,  amounting  to $5  million.  Additionally,  as of
     December 31, 1999,  the Company had a commitment  to acquire an  additional
     three hotel  Properties  for an  anticipated  aggregate  purchase  price of
     approximately $48 million.  In connection with this agreement,  the Company
     has a deposit of approximately $1.6 million held in escrow.

     In connection  with the  acquisition of two Properties in 1998, the Company
     may be required to make an additional  payment (the "Earnout Amount") of up
     to $1 million if certain earnout  provisions are achieved by July 31, 2001.
     After July 31,  2001,  the Company  will no longer be obligated to make any
     payments  under the earnout  provision.  The Earnout Amount is equal to the
     difference  between  earnings  before  interest,  taxes,  depreciation  and
     amortization expense adjusted by the earnout factor (7.44), and the initial
     purchase  price.  Rental income will be adjusted  upward in accordance with
     the lease  agreements  for any amount paid.  No Earnout  Amounts under this
     agreement have been payable as of December 31, 1999.

     In addition,  in connection with the acquisition of the 89% interest in the
     LLC,  the Company and the minority  interest  holder each have the right to
     obligate  the other to sell or buy,  respectively,  the 11% interest in the
     LLC. These rights are effective five years after the hotel's  opening which
     is  November  2004.  The price for the 11%  interest is equal to 11% of the
     lesser of (a) an amount  equal to the product of 8.5  multiplied  times net
     house profit  (defined as total hotel revenues less property  expenses) for
     the 13 period  accounting year preceding the notice of the option exercise,
     or (b) the appraised fair market value.

14.  Subsequent Events:

     During the period  January 1, 2000 through  January 21,  2000,  the Company
     received   subscription   proceeds  for  an   additional   901,779   shares
     ($9,017,790) of common stock.

     On January 1, 2000, the Company declared distributions totaling $1,745,931,
     or  $0.0604  per  share  of  common  stock,   payable  in  March  2000,  to
     stockholders of record on January 1, 2000.








<PAGE>


Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure

         None.

                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

         The  information  required by this Item is incorporated by reference to
the  Company's  Definitive  Proxy  Statement to be filed with the  Commission no
later than April 30, 2000.

Item 11.  Executive Compensation

         The  information  required by this Item is incorporated by reference to
the  Company's  Definitive  Proxy  Statement to be filed with the  Commission no
later than April 30, 2000.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

         The  information  required by this Item is incorporated by reference to
the  Company's  Definitive  Proxy  Statement to be filed with the  Commission no
later than April 30, 2000.

Item 13.  Certain Relationships and Related Transactions

         The  information  required by this Item is incorporated by reference to
the  Company's  Definitive  Proxy  Statement to be filed with the  Commission no
later than April 30, 2000.

                                                       PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)      The following documents are filed as part of this report.

         1.  Consolidated Financial Statements

                  Report of Independent Certified Public Accountants

                  Consolidated Balance Sheets at December 31, 1999 and 1998

                  Consolidated Statements of Earnings for the years ended
                  December 31, 1999, 1998 and 1997

                  Consolidated Statements of Stockholders' Equity for the years
                  ended December 31, 1999, 1998 and 1997

                  Consolidated Statements of Cash Flows for the years ended
                  December 31, 1999, 1998 and 1997

                  Notes to Consolidated Financial Statements
2.

<PAGE>


         Financial Statement Schedules

                  Schedule III - Real Estate and Accumulated Depreciation at
                  December 31, 1999

                  Notes to Schedule III - Real Estate and Accumulated
                  Depreciation at December 31, 1999

                  All other Schedules are omitted as the required information is
                  inapplicable  or is presented in the  financial  statements or
                  notes thereto.

         3.  Exhibits

         (a)   Exhibits:

               3.1       CNL  American  Realty Fund,  Inc.  Amended and Restated
                         Articles of  Incorporation  (Included as Exhibit 3.2 to
                         the Registration  Statement on Form S-11  (Registration
                         No.  333-9943) (the "1996 Form S-11") and  incorporated
                         herein by reference.)

               3.2       CNL American  Realty  Fund,  Inc.  Bylaws  (Included as
                         Exhibit  3.3 to the 1996  Form  S-11  and  incorporated
                         herein by reference.)

               3.3       CNL American Realty Fund, Inc. Articles of Amendment to
                         the Amended  and  Restated  Articles  of  Incorporation
                         (Included  as  Exhibit  3.4 to the 1996  Form  S-11 and
                         incorporated herein by reference.)

               3.4       Articles  of  Amendment  to the  Amended  and  Restated
                         Articles   of    Incorporation   of   CNL   Hospitality
                         Properties,  Inc.  dated  May  26,  1999  (Included  as
                         Exhibit 3.5 to the Registration  Statement on Form S-11
                         (Registration No. 333-67787) (the "1998 Form S-11") and
                         incorporated herein by reference.)

               4.1       Reinvestment  Plan (Included as Exhibit 4.4 to the 1996
                         Form S-11 and incorporated herein by reference.)

               4.2       CNL  American  Realty Fund,  Inc.  Amended and Restated
                         Articles of  Incorporation  (Included as Exhibit 3.2 to
                         the  1996   Form  S-11  and   incorporated   herein  by
                         reference.)

               4.3       CNL American  Realty  Fund,  Inc.  Bylaws  (Included as
                         Exhibit  3.3 to the 1996  Form  S-11  and  incorporated
                         herein by reference.)

               4.4       Articles  of  Amendment  to the  Amended  and  Restated
                         Articles of  Incorporation of CNL American Realty Fund,
                         Inc. dated June 3, 1998 (Included as Exhibit 3.4 to the
                         1996 Form S-11 and incorporated herein by reference.)

               4.5       Articles  of  Amendment  to the  Amended  and  Restated
                         Articles   of    Incorporation   of   CNL   Hospitality
                         Properties,  Inc.  (Included as Exhibit 3.5 to the 1998
                         Form S-11 and incorporated herein by reference.)

               10.1      Advisory Agreement,  dated as of June 17, 1999, between
                         CNL  Hospitality  Properties,  Inc. and CNL Hospitality
                         Advisors,  Inc.  (Formerly  CNL Real  Estate  Advisors,
                         Inc.)  (Included  as Exhibit  10.1 to the June 30, 1999
                         Form 10-Q and incorporated herein by reference.)


<PAGE>



               10.2      Indemnification   Agreement   between  CNL  Hospitality
                         Properties,  Inc. and Lawrence A. Dustin dated February
                         24,  1999.  Each  of  the  following  directors  and/or
                         officers has signed a substantially  similar  agreement
                         as follows:  James M. Seneff, Jr., Robert A. Bourne, G.
                         Richard Hostetter, J. Joseph Kruse, Richard C. Huseman,
                         Charles A. Muller,  John T. Walker,  Jeanne A. Wall and
                         Lynn E. Rose dated July 9,  1997,  C. Brian  Strickland
                         dated October 31, 1998,  John A. Griswold dated January
                         7, 1999, Charles E. Adams and Craig M. McAllaster dated
                         February 10, 1999 and Matthew W. Kaplan dated  February
                         24,  1999  (Included  as Exhibit  10.2 to the March 31,
                         1999 Form 10-Q and incorporated herein by reference.)

               10.3      Agreement  of Limited  Partnership  of CNL  Hospitality
                         Partners,  LP  (Included  as Exhibit  10.10 to the 1996
                         Form S-11 and incorporated herein by reference.)

               10.4      Hotel  Purchase  and  Sale  Contract  between  CNL Real
                         Estate   Advisors,    Inc.   and   Gwinnett   Residence
                         Associates,  LLC,  relating to the  Residence  Inn(R) -
                         Gwinnett  Place  (Included as Exhibit 10.11 to the 1996
                         Form S-11 and incorporated herein by reference.)

               10.5      Assignment  and Assumption  Agreement  between CNL Real
                         Estate Advisors, Inc. and CNL Hospitality Partners, LP,
                         relating  to the  Residence  Inn(R)  -  Gwinnett  Place
                         (Included  as  Exhibit  10.12 to the 1996 Form S-11 and
                         incorporated herein by reference.)

               10.6      Hotel  Purchase  and  Sale  Contract  between  CNL Real
                         Estate   Advisors,    Inc.   and   Buckhead   Residence
                         Associates,  LLC,  relating to the  Residence  Inn(R) -
                         Buckhead (Lenox Park) (Included as Exhibit 10.13 to the
                         1996 Form S-11 and incorporated herein by reference.)

               10.7      Assignment  and Assumption  Agreement  between CNL Real
                         Estate Advisors, Inc. and CNL Hospitality Partners, LP,
                         relating  to the  Residence  Inn(R) -  Buckhead  (Lenox
                         Park)  (Included as Exhibit 10.14 to the 1996 Form S-11
                         and incorporated herein by reference.)

               10.8      Lease Agreement  between CNL Hospitality  Partners,  LP
                         and STC Leasing Associates,  LLC, dated August 1, 1998,
                         relating  to the  Residence  Inn(R)  -  Gwinnett  Place
                         (Included  as  Exhibit  10.15 to the 1996 Form S-11 and
                         incorporated herein by reference.)

               10.9      Lease Agreement  between CNL Hospitality  Partners,  LP
                         and STC Leasing Associates,  LLC, dated August 1, 1998,
                         relating  to the  Residence  Inn(R) -  Buckhead  (Lenox
                         Park)  (Included as Exhibit 10.16 to the 1996 Form S-11
                         and incorporated herein by reference.)

               10.10     Master Revolving Line of Credit Loan Agreement with CNL
                         Hospitality Properties, Inc., CNL Hospitality Partners,
                         LP and Colonial Bank,  dated July 31, 1998 (Included as
                         Exhibit  10.17 to the 1996 Form  S-11 and  incorporated
                         herein by reference.)

               10.11     Master  Loan   Agreement   by  and  between  CNL  Hotel
                         Investors,  Inc.  and  Jefferson-Pilot  Life  Insurance
                         Company,  dated  February 24, 1999 (Included as Exhibit
                         10.18 to the 1996 Form S-11 and incorporated  herein by
                         reference.)

               10.12     Securities  Purchase  Agreement between CNL Hospitality
                         Properties,  Inc. and Five Arrows Realty  Securities II
                         L.L.C.,  dated  February 24, 1999  (Included as Exhibit
                         10.19 to the 1996 Form S-11 and incorporated  herein by
                         reference.)

               10.13     Subscription  and  Stockholders'  Agreement  among  CNL
                         Hotel Investors, Inc., Five Arrows Realty Securities II
                         L.L.C.,   CNL   Hospitality   Partners,   LP  and   CNL
                         Hospitality  Properties,  Inc., dated February 24, 1999
                         (Included  as  Exhibit  10.20 to the 1996 Form S-11 and
                         incorporated herein by reference.)

               10.14     Registration   Rights  Agreement  by  and  between  CNL
                         Hospitality  Properties,  Inc.  and Five Arrows  Realty
                         Securities II L.L.C., dated February 24, 1999 (Included
                         as Exhibit 10.21 to the 1996 Form S-11 and incorporated
                         herein by reference.)

               10.15     First   Amendment  to  Lease   Agreement   between  CNL
                         Hospitality  Partners,  LP and STC Leasing  Associates,
                         LLC, dated August 1, 1998, related to the Residence Inn
                         - Gwinnett  Place,  (amends Exhibit 10.8 above) and the
                         First Amendment to Agreement of Guaranty,  dated August
                         1, 1998  (amends  Agreement  of  Guaranty  attached  as
                         Exhibit I to 10.8 above)  (Included as Exhibit 10.15 to
                         the  September  30,  1999  Form  10-Q and  incorporated
                         herein by reference.)

               10.16     First   Amendment  to  Lease   Agreement   between  CNL
                         Hospitality  Partners,  LP and STC Leasing  Associates,
                         LLC, dated August 1, 1998, related to the Residence Inn
                         - Buckhead (Lenox Park) (amends Exhibit 10.9 above) and
                         the First  Amendment to  Agreement  of Guaranty,  dated
                         August 1, 1998 (amends  Agreement of Guaranty  attached
                         as Exhibit I to 10.9 above)  (Included as Exhibit 10.16
                         to the  September  30, 1999 Form 10-Q and  incorporated
                         herein by reference.)

               10.17     Lease Agreement  between  Courtyard  Annex,  L.L.C. and
                         City Center Annex Tenant  Corporation,  dated  November
                         15,  1999,  relating to the  Courtyard  -  Philadelphia
                         (Included  as  Exhibit  10.22 to the 1996 Form S-11 and
                         incorporated herein by reference.)

               10.18     First Amended and Restated  Limited  Liability  Company
                         Agreement of Courtyard Annex,  L.L.C.,  relating to the
                         Courtyard - Philadelphia  (Included as Exhibit 10.23 to
                         the  1996   Form  S-11  and   incorporated   herein  by
                         reference.)

               10.19     Purchase   and   Sale   Agreement    between   Marriott
                         International,  Inc., CBM Annex, Inc., Courtyard Annex,
                         Inc., as Sellers, and CNL Hospitality Partners,  LP, as
                         Purchaser,  dated  November 15,  1999,  relating to the
                         Courtyard - Philadelphia  (Included as Exhibit 10.24 to
                         the  1996   Form  S-11  and   incorporated   herein  by
                         reference.)

               10.20     Lease Agreement between CNL Hospitality  Partners,  LP,
                         and RST4 tenant LLC, dated December 10, 1999,  relating
                         to the Residence  Inn - Mira Mesa  (Included as Exhibit
                         10.25 to the 1996 Form S-11 and incorporated  herein by
                         reference.)

               10.21     Purchase   and   Sale   Agreement    between   Marriott
                         International, Inc., Towneplace Management Corporation,
                         and  Residence Inn by Marriott,  Inc., as Sellers,  and
                         CNL  Hospitality  Partners,  L.P., as Purchaser,  dated
                         November 24, 1999, relating to the Residence Inn - Mira
                         Mesa  (Included as Exhibit  10.26 to the 1996 Form S-11
                         and incorporated herein by reference.)

               27.       Financial Data Schedule (Filed herewith.)

        (b)              The Registrant  filed two reports on Form 8-K reporting
                         the investment in Philadelphia  Annex,  LLC on November
                         16, 1999 and  acquisition  of one  Property on December
                         10, 1999.

(b)      Other Financial Information

       The  Company is  required  to file  audited  financial  information  of a
       guarantor,  Marriott  International,  Inc.  ("Marriott")  of  two  of its
       tenants as a result of Marriott  guaranteeing  lease  payments for two of
       the Company's  tenants which leased more than 20 percent of the Company's
       total assets for the year ended  December 31, 1999.  Marriott is a public
       company and as the date hereof, had not filed their Form 10-K; therefore,
       the financial  statements  are not available to the Company to include in
       this filing. The Company will file this financial information under cover
       of a Form 10-K/A as soon as it is available.




<PAGE>








                                   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 29th day of
February, 2000.

                        CNL HOSPITALITY PROPERTIES, INC.

                        By:      ROBERT A. BOURNE
                                 President

                                 /s/ Robert A. Bourne
                                 --------------------------
                                 ROBERT A. BOURNE


<PAGE>


         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.

<TABLE>
<CAPTION>

              Signature                                    Title                                   Date

<S> <C>

/s/ James M. Seneff, Jr.                   Chairman   of  the   Board  and  Chief             February 29, 2000
----------------------------               Executive      Officer      (Principal
James M. Seneff, Jr.                       Executive Officer)




/s/ Robert A. Bourne                       Vice Chairman and President                        February 29, 2000
---------------------------
Robert A. Bourne



/s/ Matthew W. Kaplan                      Director                                           February 29, 2000
---------------------------
Matthew W. Kaplan



/s/ C. Brian Strickland                    Vice     President,      Finance     &             February 29, 2000
---------------------------                Administration   (Principal  Financial
C. Brian Strickland                        and Accounting Officer)




/s/ Charles E. Adams                       Independent Director                               February 29, 2000
---------------------------
Charles E. Adams



/s/ Lawrence A. Dustin                     Independent Director                               February 29, 2000
---------------------------
Lawrence A. Dustin



/s/ John A. Griswold                       Independent Director                               February 29, 2000
----------------------------
John A. Griswold



/s/ Craig M. McAllaster                    Independent Director                               February 29, 2000
----------------------------
Craig M. McAllaster


</TABLE>

<PAGE>




                CNL HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1999


<TABLE>
<CAPTION>
                                                                                                          Costs Capitalized
                                                                                                              Subsequent
                                                                             Initial Cost                   To Acquisition
                                                Encum-          ---------------------------------         Improve-  Carrying
                                               brances          Land      Buildings     Equipment          ments     Costs
                                               -------          ----      ---------     ---------         --------  --------
<S> <C>


Properties the Company
  has Invested in Under
  Operating Leases:

    Residence Inn by Marriott:
         Atlanta, Georgia                                  $ 1,907,479   $13,459,040   $1,234,689        $35,485   $    --
         Duluth, Georgia                                     1,019,497    10,017,402    1,114,442         26,500        --
         Mira Mesa, California                               2,002,314    12,924,317    1,701,280             --        --
                                                           -----------   -----------   ----------        -------   -------

                                                             4,929,290    36,400,759    4,050,411         61,985        --

    Courtyard by Marriott:
         Philadelphia, Pennsylvania                          7,408,660    55,819,611    5,160,389             --        --
                                                           -----------   -----------   ----------        -------   -------

                                                           $12,337,950   $92,220,370   $9,210,800        $61,985        --
                                                           ===========   ===========   ==========        =======   =======

</TABLE>





<PAGE>

<TABLE>
<CAPTION>





                                                                                                     Life
                                                                                                   on Which
                                                                                                 Depreciation
                                                                                                   in Latest
    Gross Amount at Which Carried                                        Date                       Income
       at Close of Period (d)                          Accumulated      of Con-        Date       Statement is
  Land       Buildings      Equipment       Total     Depreciation     struction     Acquired       Computed
  ----       ---------      ---------       -----     ------------     ---------     --------     -------------

<S> <C>




$ 1,907,479  $13,459,040    $1,270,174    $ 16,636,693    $  731,622      1997         07/98            (c)
  1,019,497   10,017,402     1,140,942      12,177,841       584,111      1997         07/98            (c)
  2,002,314   12,924,317     1,701,280      16,627,911        34,124      1999         12/99            (c)
-----------  -----------    ----------    ------------    ----------

  4,929,290   36,400,759     4,112,396      45,442,445     1,349,857


  7,408,660   55,819,611     5,160,389      68,388,660       253,477      1999         11/99            (c)
-----------  -----------    ----------    ------------    ----------


$12,337,950  $92,220,370    $9,272,785    $113,831,105    $1,603,334
===========  ===========    ==========    ============    ==========
</TABLE>






                                       F-1


<PAGE>


                CNL HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

        NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                December 31, 1999

(a)  Transactions in real estate and accumulated  depreciation during 1999, 1998
     and 1997 are summarized as follows:

                                                    Accumulated
                                      Cost(b)(d)    Depreciation

    Properties the Company
      has Invested in Under
      Operating Leases:

        Balance, December 31, 1998   $          -   $        -
        Acquisitions                   28,752,549            -
        Depreciation expense (c)                -      384,166
                                     ------------   ----------

        Balance, December 31, 1998   $ 28,752,549   $  384,166
        Acquisitions                   85,078,556            -
        Depreciation expense (c)                -    1,219,168
                                     ------------   ----------

        Balance, December 31, 1999   $113,831,105   $1,603,334
                                     ============   ==========

(b)  As of December  31, 1999 and 1998,  the  aggregate  cost of the  Properties
     owned  directly  and  indirectly  by the Company and its  subsidiaries  for
     federal income tax purposes was $113,831,105 and $28,752,549, respectively.
     All of the leases are treated as  operating  leases for federal  income tax
     purposes.

(c)  Depreciation  expense is computed for buildings  and  equipment  based upon
     estimated lives of 40 and seven years, respectively.

(d)  During the years  ended  December  31,  1999,  1998 and 1997,  the  Company
     incurred  acquisition  fees  totalling   $4,470,836,   $1,507,010  and  $0,
     respectively,  paid to the Advisor.  Acquisition  fees are included in land
     and buildings on operating leases at December 31, 1999 and 1998.




                                       F-2



<PAGE>


                                    EXHIBITS


<PAGE>


                                  EXHIBIT INDEX


            Exhibit Number

               3.1       CNL  American  Realty Fund,  Inc.  Amended and Restated
                         Articles of  Incorporation  (Included as Exhibit 3.2 to
                         the Registration  Statement on Form S-11  (Registration
                         No.  333-9943) (the "1996 Form S-11") and  incorporated
                         herein by reference.)

               3.2       CNL American  Realty  Fund,  Inc.  Bylaws  (Included as
                         Exhibit  3.3 to the 1996  Form  S-11  and  incorporated
                         herein by reference.)

               3.3       CNL American Realty Fund, Inc. Articles of Amendment to
                         the Amended  and  Restated  Articles  of  Incorporation
                         (Included  as  Exhibit  3.4 to the 1996  Form  S-11 and
                         incorporated herein by reference.)

               3.4       Articles  of  Amendment  to the  Amended  and  Restated
                         Articles   of    Incorporation   of   CNL   Hospitality
                         Properties,  Inc.  dated  May  26,  1999  (Included  as
                         Exhibit 3.5 to the Registration  Statement on Form S-11
                         (Registration No. 333-67787) (the "1998 Form S-11") and
                         incorporated herein by reference.)

               4.1       Reinvestment  Plan (Included as Exhibit 4.4 to the 1996
                         Form S-11 and incorporated herein by reference.)

               4.2       CNL  American  Realty Fund,  Inc.  Amended and Restated
                         Articles of  Incorporation  (Included as Exhibit 3.2 to
                         the  1996   Form  S-11  and   incorporated   herein  by
                         reference.)

               4.3       CNL American  Realty  Fund,  Inc.  Bylaws  (Included as
                         Exhibit  3.3 to the 1996  Form  S-11  and  incorporated
                         herein by reference.)

               4.4       Articles  of  Amendment  to the  Amended  and  Restated
                         Articles of  Incorporation of CNL American Realty Fund,
                         Inc. dated June 3, 1998 (Included as Exhibit 3.4 to the
                         1996 Form S-11 and incorporated herein by reference.)

               4.5       Articles  of  Amendment  to the  Amended  and  Restated
                         Articles   of    Incorporation   of   CNL   Hospitality
                         Properties,  Inc.  (Included as Exhibit 3.5 to the 1998
                         Form S-11 and incorporated herein by reference.)

               10.1      Advisory Agreement,  dated as of June 17, 1999, between
                         CNL  Hospitality  Properties,  Inc. and CNL Hospitality
                         Advisors,  Inc.  (Formerly  CNL Real  Estate  Advisors,
                         Inc.)  (Included  as Exhibit  10.1 to the June 30, 1999
                         Form 10-Q and incorporated herein by reference.)

               10.2      Indemnification   Agreement   between  CNL  Hospitality
                         Properties,  Inc. and Lawrence A. Dustin dated February
                         24,  1999.  Each  of  the  following  directors  and/or
                         officers has signed a substantially  similar  agreement
                         as follows:  James M. Seneff, Jr., Robert A. Bourne, G.
                         Richard Hostetter, J. Joseph Kruse, Richard C. Huseman,
                         Charles A. Muller,  John T. Walker,  Jeanne A. Wall and
                         Lynn E. Rose dated July 9,  1997,  C. Brian  Strickland
                         dated October 31, 1998,  John A. Griswold dated January
                         7, 1999, Charles E. Adams and Craig M. McAllaster dated
                         February 10, 1999 and Matthew W. Kaplan dated  February
                         24,  1999  (Included  as Exhibit  10.2 to the March 31,
                         1999 Form 10-Q and incorporated herein by reference.)

               10.3      Agreement  of Limited  Partnership  of CNL  Hospitality
                         Partners,  LP  (Included  as Exhibit  10.10 to the 1996
                         Form S-11 and incorporated herein by reference.)

               10.4      Hotel  Purchase  and  Sale  Contract  between  CNL Real
                         Estate   Advisors,    Inc.   and   Gwinnett   Residence
                         Associates,  LLC,  relating to the  Residence  Inn(R) -
                         Gwinnett  Place  (Included as Exhibit 10.11 to the 1996
                         Form S-11 and incorporated herein by reference.)

               10.5      Assignment  and Assumption  Agreement  between CNL Real
                         Estate Advisors, Inc. and CNL Hospitality Partners, LP,
                         relating  to the  Residence  Inn(R)  -  Gwinnett  Place
                         (Included  as  Exhibit  10.12 to the 1996 Form S-11 and
                         incorporated herein by reference.)

               10.6      Hotel  Purchase  and  Sale  Contract  between  CNL Real
                         Estate   Advisors,    Inc.   and   Buckhead   Residence
                         Associates,  LLC,  relating to the  Residence  Inn(R) -
                         Buckhead (Lenox Park) (Included as Exhibit 10.13 to the
                         1996 Form S-11 and incorporated herein by reference.)

               10.7      Assignment  and Assumption  Agreement  between CNL Real
                         Estate Advisors, Inc. and CNL Hospitality Partners, LP,
                         relating  to the  Residence  Inn(R) -  Buckhead  (Lenox
                         Park)  (Included as Exhibit 10.14 to the 1996 Form S-11
                         and incorporated herein by reference.)

               10.8      Lease Agreement  between CNL Hospitality  Partners,  LP
                         and STC Leasing Associates,  LLC, dated August 1, 1998,
                         relating  to the  Residence  Inn(R)  -  Gwinnett  Place
                         (Included  as  Exhibit  10.15 to the 1996 Form S-11 and
                         incorporated herein by reference.)

               10.9      Lease Agreement  between CNL Hospitality  Partners,  LP
                         and STC Leasing Associates,  LLC, dated August 1, 1998,
                         relating  to the  Residence  Inn(R) -  Buckhead  (Lenox
                         Park)  (Included as Exhibit 10.16 to the 1996 Form S-11
                         and incorporated herein by reference.)

               10.10     Master Revolving Line of Credit Loan Agreement with CNL
                         Hospitality Properties, Inc., CNL Hospitality Partners,
                         LP and Colonial Bank,  dated July 31, 1998 (Included as
                         Exhibit  10.17 to the 1996 Form  S-11 and  incorporated
                         herein by reference.)

               10.11     Master  Loan   Agreement   by  and  between  CNL  Hotel
                         Investors,  Inc.  and  Jefferson-Pilot  Life  Insurance
                         Company,  dated  February 24, 1999 (Included as Exhibit
                         10.18 to the 1996 Form S-11 and incorporated  herein by
                         reference.)

               10.12     Securities  Purchase  Agreement between CNL Hospitality
                         Properties,  Inc. and Five Arrows Realty  Securities II
                         L.L.C.,  dated  February 24, 1999  (Included as Exhibit
                         10.19 to the 1996 Form S-11 and incorporated  herein by
                         reference.)

               10.13     Subscription  and  Stockholders'  Agreement  among  CNL
                         Hotel Investors, Inc., Five Arrows Realty Securities II
                         L.L.C.,   CNL   Hospitality   Partners,   LP  and   CNL
                         Hospitality  Properties,  Inc., dated February 24, 1999
                         (Included  as  Exhibit  10.20 to the 1996 Form S-11 and
                         incorporated herein by reference.)

               10.14     Registration   Rights  Agreement  by  and  between  CNL
                         Hospitality  Properties,  Inc.  and Five Arrows  Realty
                         Securities II L.L.C., dated February 24, 1999 (Included
                         as Exhibit 10.21 to the 1996 Form S-11 and incorporated
                         herein by reference.)

               10.15     First   Amendment  to  Lease   Agreement   between  CNL
                         Hospitality  Partners,  LP and STC Leasing  Associates,
                         LLC, dated August 1, 1998, related to the Residence Inn
                         - Gwinnett  Place,  (amends Exhibit 10.8 above) and the
                         First Amendment to Agreement of Guaranty,  dated August
                         1, 1998  (amends  Agreement  of  Guaranty  attached  as
                         Exhibit I to 10.8 above)  (Included as Exhibit 10.15 to
                         the  September  30,  1999  Form  10-Q and  incorporated
                         herein by reference.)

               10.16     First   Amendment  to  Lease   Agreement   between  CNL
                         Hospitality  Partners,  LP and STC Leasing  Associates,
                         LLC, dated August 1, 1998, related to the Residence Inn
                         - Buckhead (Lenox Park) (amends Exhibit 10.9 above) and
                         the First  Amendment to  Agreement  of Guaranty,  dated
                         August 1, 1998 (amends  Agreement of Guaranty  attached
                         as Exhibit I to 10.9 above)  (Included as Exhibit 10.16
                         to the  September  30, 1999 Form 10-Q and  incorporated
                         herein by reference.)

               10.17     Lease Agreement  between  Courtyard  Annex,  L.L.C. and
                         City Center Annex Tenant  Corporation,  dated  November
                         15,  1999,  relating to the  Courtyard  -  Philadelphia
                         (Included  as  Exhibit  10.22 to the 1996 Form S-11 and
                         incorporated herein by reference.)

               10.18     First Amended and Restated  Limited  Liability  Company
                         Agreement of Courtyard Annex,  L.L.C.,  relating to the
                         Courtyard - Philadelphia  (Included as Exhibit 10.23 to
                         the  1996   Form  S-11  and   incorporated   herein  by
                         reference.)

               10.19     Purchase   and   Sale   Agreement    between   Marriott
                         International,  Inc., CBM Annex, Inc., Courtyard Annex,
                         Inc., as Sellers, and CNL Hospitality Partners,  LP, as
                         Purchaser,  dated  November 15,  1999,  relating to the
                         Courtyard - Philadelphia  (Included as Exhibit 10.24 to
                         the  1996   Form  S-11  and   incorporated   herein  by
                         reference.)

               10.20     Lease Agreement between CNL Hospitality  Partners,  LP,
                         and RST4 tenant LLC, dated December 10, 1999,  relating
                         to the Residence  Inn - Mira Mesa  (Included as Exhibit
                         10.25 to the 1996 Form S-11 and incorporated  herein by
                         reference.)

               10.21     Purchase   and   Sale   Agreement    between   Marriott
                         International, Inc., Towneplace Management Corporation,
                         and  Residence Inn by Marriott,  Inc., as Sellers,  and
                         CNL  Hospitality  Partners,  L.P., as Purchaser,  dated
                         November 24, 1999, relating to the Residence Inn - Mira
                         Mesa  (Included as Exhibit  10.26 to the 1996 Form S-11
                         and incorporated herein by reference.)

               27.       Financial Data Schedule (Filed herewith.)