<PAGE>

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K


[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the fiscal year ended December 29, 2000
     OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from ______________ to __________________

                        Commission File Number 1-13486

                          JOHN Q. HAMMONS HOTELS, L.P.
                   JOHN Q. HAMMONS HOTELS FINANCE CORPORATION
                 JOHN Q. HAMMONS HOTELS FINANCE CORPORATION II
           (Exact Name of Registrants as specified in their charters)

<TABLE>
 <S>                                               <C>
                 Delaware                                       43-1523951
                 Missouri                                       43-1680322
                 Missouri                                       43-1720400
         (State of Organization)                   (I.R.S. employer identification no.)

  300 John Q. Hammons Parkway, Ste. 900
          Springfield, Missouri                                   65806
 (Address of principal executive offices)                       (Zip Code)
</TABLE>

Registrant's telephone number, including area code: (417) 864-4300

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

     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 and (2) has been subject to such filing
requirements for the past 90 days.  YES X   NO  ___
                                        -

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
<PAGE>

                                    PART I

Item 1.  Business.

     As used herein, the term "Company" means John Q. Hammons Hotels, L.P., a
Delaware limited partnership, and its corporate and partnership subsidiaries
collectively, or, as the context may require, John Q. Hammons Hotels, L.P. only.
As used herein, the term "General Partner" means John Q. Hammons Hotels, Inc., a
Delaware corporation, or Hammons, Inc., a Missouri corporation, and the
predecessor general partner of the Company.  As used herein, the term "Finance
Corp." means John Q. Hammons Hotels Finance Corporation, a wholly owned
subsidiary of the Company which has nominal assets and does not conduct any
operations, and Finance Corp. II means John Q. Hammons Hotels Finance
Corporation II, each of which is co-obligor for the 1994 Notes and the 1995
Notes (as defined herein).  As used herein, the term "Registrants" means John Q.
Hammons Hotels, L.P., Finance Corp. and Finance Corp. II.

Overview

     The Company is a leading independent owner, manager and developer of
affordable upscale hotels in capital city, secondary and airport markets.  The
Company owns 47 hotels located in 20 states, containing 11,633 guest rooms or
suites (the "Owned Hotels"), including two new hotels opened in 2000.  The
Company also manages six additional hotels located in three states, containing
1,356 guest rooms (the "Managed Hotels").  The Company's existing Owned Hotels
and Managed Hotels (together, the "JQH Hotels") operate primarily under the
Holiday Inn and Embassy Suites trade names.  Most of the Company's hotels are
near a state capitol, university, airport or corporate headquarters, plant or
other major facility and generally serve markets with populations of up to
300,000 people (or larger populations in the case of airport markets and many of
the markets in which the Company has developed new hotels over the past several
years).

     The Company's strategy is to increase cash flow and thereby enhance
investor value primarily through (i) capitalizing on positive operating
fundamentals in the upscale full-service sector of its markets and improving the
operating results of its newer hotels, (ii) converting the franchises of its
existing hotels to franchise brands that are considered to be more upscale, and
(iii) selling certain mature assets and re-investing the net proceeds.

     The JQH Hotels are designed to appeal to a broad range of hotel customers,
including frequent business travelers, groups and conventions, as well as
leisure travelers.  Each of the JQH Hotels is individually designed by the
Company, and most contain an impressive multi-storied atrium, with water
features and lush plantings, expansive meeting space, large guest rooms or
suites and comfortable lounge areas.  The Company believes that these design
features enhance guest comfort and safety and increase the value perceived by
the guest.  The JQH Hotels' meeting facilities can be readily adapted to
accommodate both larger and smaller meetings, conventions and trade shows.  The
17 Holiday Inn JQH Hotels are affordably priced hotels designed to attract the
business and leisure traveler desiring quality accommodations, including meeting
facilities, in-house restaurants, cocktail lounges and room service.  The  16
Embassy Suites JQH Hotels are all-suite hotels which appeal to the traveler
needing or desiring

                                       2
<PAGE>

greater space and specialized services. The JQH Hotels also include five non-
franchise hotels, three Radissons, two Hampton Inn & Suites, two Marriotts, two
Homewood Suites, one Crowne Plaza, one Sheraton, three Renaissance Hotels and
one Marriott Courtyard. Four of the non-franchise hotels have the word "Plaza"
in their names and the other non-franchise hotel is a resort hotel. The Company
determines which brand of hotel to develop depending upon the demographics of
the market to be served.

     Management of the JQH Hotels is coordinated from the Company's headquarters
in Springfield, Missouri by its senior management team.  Six regional vice
presidents and one district director are responsible for supervising a group of
general managers of JQH Hotels in day-to-day operations.  Centralized management
services and functions include development, design, sales and marketing,
purchasing and financial controls.  Through these centralized services,
significant cost savings are realized due to economies of scale.

     The Company conducts all of its business operation directly and through its
subsidiaries.  Mr. Hammons beneficially owns all 294,100 shares of Class B
Common Stock of the General Partner, representing 73.5% of the combined voting
power of both classes of the General Partner Common Stock.  The General Partner
is the sole general partner of the Company through its ownership of all
6,336,100 general partner units (the "GP Units"), representing 28.31% of the
total equity in the Partnership.  Mr. Hammons beneficially owns all 16,043,900
limited partnership units of the Partnership (the "LP Units"), representing
71.69% of the total equity in the Company.  The Class A Common Stock of the
Company represents approximately 27% of the total equity of the Partnership, and
the Class B Common Stock and LP Units beneficially owned by Mr. Hammons
represent approximately 73% of the total equity in the Partnership.  Mr. Hammons
is also the beneficial owner of 244,300 shares of Class A Common Stock. After
December 29, 2000, the General Partner has agreed to exchange approximately 1.3
million general partner units for funds advanced by the Company to the General
Partner to repurchase its common stock.  The number of general partner units to
be exchanged is equivalent to the number of shares repurchased, in accordance
with the partnership agreement.

     The Company's executive offices are located at 300 John Q. Hammons Parkway,
Suite 900, Springfield, Missouri 65806 and its telephone number is (417) 864-
4300.  The Company is a Delaware corporation that was formed on September 29,
1994.

Development

     The Company's past development activity restricts its ability to grow net
income in the short term.  Fixed charges for new hotels (such as depreciation
and amortization expense and interest expense) exceed new hotel operating cash
flow in the first one to three years of operations.  As new hotels mature, the
Company expects, based on past experience, that the operating expenses for these
hotels will decrease as a percentage of revenues, although there can be no
assurance that this will continue to occur.

     The Company announced on September 11, 1998, that it was ceasing new
development activity, except for the hotels then under construction.  The
Company currently has no hotels under construction, as the last hotels under
construction in 1998 opened in early 2000.

                                       3
<PAGE>

     Although the Company has in the past chosen to develop rather than acquire
existing hotels, the Company may in the future acquire hotels if suitable
opportunities arise.  The Company continues to be approached from time to time
by third-party hotel owners seeking to sell or buy hotels.  The Company will
continue to evaluate each offer and base its decision on the market location,
capital required, and return on investment alternatives.

     During 2000, the Company entered into a five-year management contract with
Mr. Hammons whereby the General Partner would pay a maximum of 1 1/2% of the
total development costs of Mr. Hammons' personally developed hotels for the
opportunity to manage the hotels upon opening and the right of first refusal to
purchase the hotels in the event they are offered for sale.  As part of the
management contract, the Company paid approximately $1,089,000 to Mr. Hammons in
fiscal 2000.  These costs will be amortized over the five-year contract period.
As of December 29, 2000, the Company also paid and capitalized $366,000 of
additional costs in accordance with the management contract.  Amortization of
these costs will commence upon the opening of the hotel.

Operations

     Management of the JQH Hotels network is coordinated by the Company's senior
management team at the Company's headquarters in Springfield, Missouri.  The
management team is responsible for managing the day-to-day financial needs of
the Company, including the Company's internal accounting audits.  The Company's
management team administers insurance plans and business contract review,
oversees the financial budgeting and forecasting for the JQH Hotels, analyzes
the financial feasibility of new hotel developments, and identifies new systems
and procedures to employ within the JQH Hotels to improve efficiency and
profitability.  The management team also coordinates each JQH Hotel's sales
force, designing sales training programs, tracking future business under
contract, and identifying, employing and monitoring marketing programs aimed at
specific target markets.  The management team is indirectly responsible for
interior design of all hotels and each hotel's product quality, and directly
oversees the detailed refurbishment of existing operations.

     Central management utilizes information systems that track each JQH Hotel's
daily occupancy, average room rate, and rooms and food and beverage revenues.
Contracted business is tracked for each hotel individually five years into the
future using the Company's sales projection and usage reporting system.  By
having the latest information available at all times, management is better able
to respond to changes in each market by focusing sales and yield management
efforts on periods of demand extremes (low periods and high periods of demand)
and controlling variable expenses to maximize the profitability of each JQH
Hotel.

     Creating operating, cost and guest service efficiencies in each hotel is a
top priority to the Company.  With a total of 53 hotels under management, the
Company is able to realize significant cost savings due to economies of scale.
By leveraging the total hotels/rooms under its management, the Company is able
to secure volume pricing from its vendors that is not available to smaller hotel
companies.  The Company employs a systems trainer who is responsible for

                                       4
<PAGE>

installing new computer systems and providing training to hotel employees to
maximize the effectiveness of these systems and to ensure that guest service is
enhanced.

     Regional management constantly monitors each JQH Hotel to verify that the
Company's high level of operating standards are being met.  The Company's
franchisors maintain rigorous inspection programs in which chain representatives
visit their respective JQH Hotels (typically 2 or 3 times per year) to evaluate
product and service quality.  Each chain also provides feedback to each hotel
through their guest satisfaction rating systems in which guests who visited the
hotel are asked to rate a variety of product and service issues.

Sales and Marketing

     The Company's marketing strategy is to market the JQH Hotels both through
national marketing programs and local sales managers and a director of sales at
each of the JQH Hotels. While the Company makes periodic modifications to the
concept in order to address differences and maintain a sales organization
structure based on market needs and local preferences, it generally utilizes the
same major campaign concept throughout the country. The concepts are developed
at its management headquarters while the modifications are implemented by the
JQH Hotels' regional vice presidents, district director and local sales force,
all of whom are experienced in hotel marketing. The sales force reacts promptly
to local changes and market trends in order to customize marketing programs to
meet each hotel's competitive needs. In addition, the local sales force is
responsible for developing and implementing marketing programs targeted at
specific customer segments within each market. The Company requires that each of
its sales managers complete an extensive sales training program. Before
finishing the program, the sales manager must successfully complete
certifications in three development phases.

     The Company's core market consists of business travelers who visit a given
area several times per year, including salespersons covering a regional
territory, government and military personnel and technicians. The profile of the
primary target customer is a college educated business traveler, age 25 to 54,
from a two-income household with a middle management white collar occupation or
upper level blue collar occupation. The Company believes that business travelers
are attracted to the JQH Hotels because of their convenient locations in state
capitals, their proximity to airports or corporate headquarters, plants,
convention centers or other major facilities, the availability of ample meeting
space and the high level of service relative to other hotel operators serving
the same markets. The Company's sales force markets to organizations which
consistently produce a high volume of room nights and which have a significant
number of individuals traveling in the Company's operating regions. The Company
also targets groups and conventions attracted by a JQH Hotel's proximity to
convention or trade centers (often adjacent). JQH Hotels' group meetings
logistics include flexible space readily adaptable to groups of varying size,
high-tech audio-visual equipment and on-site catering facilities. The Company
believes that suburban convention centers attract more convention sponsors due
to lower prices than larger, more cosmopolitan cities. In addition to the
business market, the Company's targeted customers also include leisure travelers
looking for secure, comfortable lodging at an affordable price as well as women
travelers who find the security benefits of the Company's atrium hotels
appealing.

                                       5
<PAGE>

     The Company advertises primarily through direct mail, magazine
publications, directories, and newspaper advertisements, all of which focus on
value delivered to and perceived by the guest.  The Company has developed in-
house marketing materials including professional photographs and written
materials that can be mixed and matched to appeal to a specific target group
(business traveler, vacationer, religious group, reunions, etc.).  The Company's
marketing efforts focus primarily on business travelers who account for
approximately 50% of the rooms rented in the JQH Hotels.

     The Company's franchise hotels utilize the centralized reservation systems
of its franchisors, which the Company believes are among the more advanced
reservation systems in the hotel industry.  The franchisors' reservation systems
receive reservation requests entered (i) on terminals located at all of their
respective franchises, (ii) at reservation centers utilizing 1-800 phone access
and (iii) through several major domestic airlines.  Such reservation systems
immediately confirm reservations or indicate accommodations available at
alternate system hotels.  Confirmations are transmitted automatically to the
hotel for which the reservations are made.  The Company believes that these
systems are effective in directing customers to the Company's franchise hotels.

Franchise Agreements

     The Company enters into non-exclusive franchise licensing agreements (the
"Franchise Agreements") with franchisors which it believes are the most
successful brands in the hotel industry.  The term of the individual Franchise
Agreement for a hotel typically is 20 years.  The Franchise Agreements allow the
Company to start with and then build upon the reputation of the brand names by
setting higher standards of excellence than the brands themselves require.  The
non-exclusive nature of the Franchise Agreements allows the Company the
flexibility to continue to develop properties with the brands that have shown
success in the past or to operate hotels in conjunction with other brand names.
While the Company currently has a good relationship with its franchisors, there
can be no assurance that a desirable replacement would be available if any of
the Franchise Agreements were to be terminated.

     Holiday Inn.  The Franchise Agreement grants to the Company a
nonassignable, non-exclusive license to use the Holiday Inns service mark and
computerized reservation network.  The franchisor maintains the right to improve
and change the reservation system to make it more efficient, economical and
competitive.  Monthly fees paid by the Company are based on a percentage of
gross revenues attributable to room rentals, plus marketing and reservation
contributions which are also a percentage of gross revenues.  The term of the
Franchise Agreement is 20 years with a renewal option in the 15th year.

     Embassy Suites.  The Franchise Agreement grants to the Company a
nonassignable, non-exclusive license to use the Embassy Suites service mark and
computerized reservation network.  The franchisor maintains the exclusive right
to improve and change the reservation system for the purpose of making it more
efficient, economical and competitive.  Monthly fees paid by the Company are
based on a percentage of gross revenues attributable to suite rentals, plus

                                       6
<PAGE>

marketing and reservation contributions which are also a percentage of gross
revenues. The term of the Franchise Agreement is 20 years with a renewal option
in the 18th year.

     Other Franchisors.  The franchise agreements with other franchisors not
listed above are similar in that they are nonassignable, non-exclusive licenses
to use the franchisor's service mark and computerized reservation network.
Payments and terms of agreement vary based on specific negotiations with the
franchisor.

Competition

     Each of the JQH Hotels competes in its market area with numerous full
service lodging brands, especially in the upscale market, and with numerous
other hotels, motels and other lodging establishments.  Chains such as Sheraton
Inns, Marriott Hotels, Ramada Inns, Radisson Inns, Comfort Inns, Hilton hotels
and Doubletree/Red Lion Inns are direct competitors of JQH Hotels in their
respective markets.  There is, however, no single competitor or group of
competitors of the JQH Hotels that is consistently located nearby and competing
with most of the JQH Hotels.  Competitive factors in the lodging industry
include reasonableness of room rates, quality of accommodations, level of
service and convenience of locations.

Regulations and Insurance

     General.  A number of states regulate the licensing of hotels and
restaurants including liquor license grants by requiring registration,
disclosure statements and compliance with specific standards of conduct.  In
addition, various federal and state regulations mandate certain disclosures and
practices with respect to the sales of license agreements and the
licensor/licensee relationship.  The Company believes that each of the JQH
Hotels has the necessary permits and approvals to operate its respective
businesses. To supplement the Company's self insurance programs, umbrella,
property, auto, commercial liability and worker's compensation insurance is
provided to the JQH Hotels under a blanket policy.  Insurance expenses for the
JQH Hotels were approximately $3.6 million, $1.1 million, and $2.2 million in
2000, 1999 and 1998, respectively.  During those three years the Company
realized continued favorable trends in insurance expense as a result of claim
experience and rate improvements and a favorable buyout of several prior self-
insured years.  After the end of 2000, the Company expects the insurance expense
to increase due to the now fully-insured nature of most of the Company's
insurance programs, other than medical, and the minimal number of policy years
remaining which could be bought out.  The Company believes that the JQH Hotels
are adequately covered by insurance.

     Americans with Disabilities Act.  The JQH Hotels and any newly developed or
acquired hotels must comply with Title III of the Americans with Disabilities
Act ("ADA") to the extent that such properties are "public accommodations" and
/or "commercial facilities" as defined by the ADA.  Compliance with the ADA
requirements could require removal of structural barriers to handicapped areas
in certain public areas of the JQH Hotels where such removal is readily
achievable.  Noncompliance could result in a judicial order requiring
compliance, an imposition of fines or an award of damages to private litigants.
The Company has taken into account an estimate of the expense required to make
any changes required by the ADA and believes that such expenses will not have a
material adverse effect on the Company's financial condition or

                                       7
<PAGE>

results of operations. If required changes involve a greater expenditure than
the Company currently anticipates, or if the changes must be made on a more
accelerated basis than the Company anticipates, the Company could be adversely
affected. The Company believes that its competitors face similar costs to comply
with the requirements of the ADA.

     Asbestos Containing Materials.  Certain, federal, state and local laws,
regulations and ordinances govern the removal, encapsulation or disturbance of
Asbestos Containing Materials ("ACMs") when ACMs are in poor condition or in the
event of building, remodeling, renovation or demolition.  These laws may impose
liability for the release of ACMs and may permit third parties to seek recovery
from owners or operators of real estate for personal injury associated with
ACMs.  Based on prior environmental assessments, seven of the Owned Hotels
contain ACMs and four of the Owned Hotels may contain ACMs, generally in
sprayed-on ceiling treatments or in roofing materials.  However, no removal of
asbestos from the Owned Hotels has been recommended, and the Company has no
plans to undertake any such removal, beyond the removal that has already
occurred.  The Company believes that the presence of ACMs in the Owned Hotels
will not have a material adverse effect on the Company, but there can be no
assurance that this will be the case.

     Environmental Regulations.  The JQH Hotels are subject to environmental
regulations under federal, state and local laws.  Certain of these laws may
require a current or previous owner or operator of real estate to clean up
designated hazardous or toxic substances or petroleum product releases affecting
the property.  In addition, the owner or operator may be held liable to a
governmental entity or to third parties for damages or costs incurred by such
parties in connection with the contamination.  The Company does not believe that
it is subject to any material environmental liability.

     Pending Insurance Claims.  During fiscal 2000, the General Partner
initiated the filing of claims with certain of its construction service
providers as well as with its insurance carrier.  These requests for recoveries
result from various moisture related problems at certain of the General
Partner's hotel properties.  To date, the various contractors have attempted to
correct these problems at essentially no direct cost to the General Partner.
With respect to the residual moisture related problems, the General Partner has
claims pending with its insurance carrier seeking reimbursement for repair costs
incurred through December 29, 2000, of approximately $1.7 million.  The General
Partner has also incurred an additional approximate $2.6 million through
December 29, 2000, of repair costs which it intends to file for reimbursement
from its insurance carrier during 2001.  Finally, the General Partner
anticipates an additional approximate $5.0 million of claims will be incurred in
the future and submitted to the insurance carrier in 2001 or 2002 as the
applicable repair costs have been incurred and quantified.  Management and its
legal counsel are of the opinion it is remote that the General Partner would be
unsuccessful realizing the claims pending or to be filed for costs incurred
through or as of December 29, 2000.  Accordingly, pending cost reimbursements as
of December 29, 2000, are included as a component of current assets in the
accompanying 2000 balance sheet, while the costs anticipated to be recovered
through insurance have been deferred and are included as a component of deferred
financing costs, franchise fees and other.  Adjustments to these pending
receivables or deferred costs, as applicable, will be recorded in the period in
which the facts and circumstances which give rise to the adjustment become
known.

                                       8
<PAGE>

Employees

     The Company employs approximately 7,000 full time employees, approximately
300 of whom are members of labor unions.  The Company believes that labor
relations with employees are good.

Management

     The following is a biographical summary of the experience of the executive
officers and other key officers of the General Partner.

     John Q. Hammons is the Chairman, Chief Executive Officer, a director and
founder of the General Partner, and a founder of the Company.  Mr. Hammons has
been actively engaged in the development, management and acquisition of hotel
properties since 1959.  From 1959 through 1969, Mr. Hammons and a business
partner developed 34 Holiday Inn franchises, 23 of which were sold in 1969 to
Holiday Inns, Inc.  Since 1969, Mr. Hammons has developed 87 hotels on a
nationwide basis, primarily under the Holiday Inn and Embassy Suites trade
names.

     Paul E. Muellner is Acting Chief Financial Officer of the General Partner.
Prior to joining the General Partner in June of 1998, Mr. Muellner was Vice
President of Finance for Carnival Hotels.  He also served as Operations
Controller at Omni Hotels as well as positions with Red Lion Inns and Marriott
Corporation.

     Lonnie A. Funk is Executive Vice President of Operations of the General
Partner. He began with the General Partner in 1975 as the General Manager at the
Holiday Inn in Billings, Montana.  In 1981, he was promoted to Regional Vice
President of the Midwest Region.  In November of 1998, he became Senior Vice
President of Operations, and in May 2000, he was promoted to his current
position.

     Debra M. Shantz is General Counsel of the General Partner.  She joined the
General Partner in May 1995.  Prior thereto, Ms. Shantz was a partner of
Farrington & Curtis, P.C. (now Husch & Eppenberger, LLC), a law firm which
serves as Mr. Hammons' primary outside counsel, where she practiced primarily in
the area of real estate law.  Ms. Shantz had been with that firm since 1988.

     Pat A. Shivers is Senior Vice President and Corporate Controller of the
General Partner.  He has been active in Mr. Hammons' hotel operations since
1985.  Prior thereto, he had served as Vice President of Product Management in
Winegardner & Hammons, Inc., a hotel management company.

     Steven E. Minton is Senior Vice President, Architecture, of the General
Partner.  He has been active in Mr. Hammons' hotel operations since 1985. Prior
to that time, Mr. Minton was a project manager with the firm of Pellham and
Phillips working on various John Q. Hammons projects.

                                       9
<PAGE>

     Jacqueline A. Dowdy has been the Secretary and a director of the General
Partner since 1989.  She has been active in Mr. Hammons' hotel operations since
1981.  She is an officer of several affiliates of the General Partner.

     L. Scott Tarwater is Vice President, Sales and Marketing, of the General
Partner.  He joined the General Partner in September 2000 from Windsor
Hospitality Group, Inc. in Los Angeles, California where he served as Senior
Vice President, Sales and Marketing, for ten years.  Prior to that time, Mr.
Tarwater served as Senior Director, Sales and Marketing, for Embassy Suites,
Inc., Irving, Texas.

     John D. Fulton is Vice President, Interior Design, of the General Partner.
He joined the General Partner in 1989 from Integra/Brock Hotel Corporation,
Dallas, Texas where he had been Director of Design and Purchasing for ten years.

     Kent S. Foster is Vice President, Human Resources, of the General Partner.
He joined the General Partner in August of 1999.  Prior to that time, he served
as Director and Manager, Human Resources of Dayco Products, Inc. in Michigan.
Prior thereto, Mr. Foster served as Assistant Vice President and Director, Human
Resources, for Great Southern Savings & Loan Association, Springfield, Missouri.

     William T. George, Jr., is Vice President, Capital Planning and Asset
Management, of the Company.  He joined the Company in 1994 from Promus Hotel
Corporation, where he had been director of capital refurbishment.

Forward-Looking Statements

     In addition to historical information, this document contains certain
forward-looking statements within the meaning of the Private Securities
Litigation Act of 1995.  These statements typically, but not exclusively, are
identified by the inclusion of phrases such as "the Company believes," "the
Company plans," "the Company intends," and other phrases of similar meaning.
These forward-looking statements involve risks and uncertainties and are based
on current expectations.  Consequently, actual results could differ materially
from the expectations expressed in the forward-looking statements.  Among the
various factors that could cause actual results to differ include a downturn in
the economy (either regionally or nationwide) affecting overall hotel occupancy
rates, revenues at New Hotels not reaching expected levels as quickly as planned
as the result of competitive factors or the Company's inability to obtain
permanent financing for New Hotels on terms similar to those available in the
past.

Item 2.  Properties.

     The Company leases its headquarters in Springfield, Missouri from a
Missouri general partnership of which Mr. Hammons is a 50% partner.  In 2000,
the Company made aggregate annual lease payments of approximately $234,000 to
such Missouri general partnership.  The Company leases from John Q. Hammons the
real estate on which three of the Company's hotels are located.  These leases
are more fully described in Item 13 "Certain Relationships and Related

                                       10
<PAGE>

Transactions." The Company owns the land on which 34 of the Owned Hotels are
located, while ten of the Owned Hotels are subject to long-term ground leases.

Description of Hotels - General

     The JQH Hotels are located in 21 states and contain a total of 12,989
rooms.  The JQH Hotels operate primarily under the Holiday Inn and Embassy
Suites trade names.  Most of the JQH Hotels have assumed a leadership position
in their local market by providing a high quality product in a market unable to
economically support a second competitor of similar quality.

     Each of the JQH Hotels is individually designed by the Company.  Many of
the JQH Hotels contain an impressive multi-storied atrium, large indoor water
features, lush plantings, expansive meeting space, large guest rooms or suites
and comfortable lounge areas.  In addition to the visual appeal, the Company
believes that an atrium design in which each of the hotel's room doors face into
the atrium, combined with glass elevators, achieves a greater level of security
for all guests.  The Company believes this safety factor is particularly
relevant to women, who represent a growing portion of its business clientele.
The JQH Hotels also appeal to fitness conscious guests as all of the JQH Hotels
have at least one swimming pool and most have exercise facilities.

     The Company believes that the presence of adjacent convention centers
provides incremental revenues for its hotel rooms, meeting facilities, and
catering services, and that hotels which are adjacent to convention centers
occupy a particularly successful niche within the hotel industry.  These
convention or trade centers are available for rent by hotel guests.  Each of the
JQH Hotels has a restaurant/catering service on its premises which provides an
essential amenity to the convention trade.  The Company chooses not to lease out
the restaurant business to third-party caterers or vendors since it considers
the restaurant business an important component of securing convention business.
All of the restaurants in the JQH Hotels are owned and managed by the Company
specifically to maintain direct quality control over a vital aspect of the
convention and hotel business.  The Company also derives significant revenue and
operating profit from food and beverage sales due to its ownership and
management of all of the restaurants in the JQH Hotels.  The Company believes
that its food and beverage sales are more profitable than its competitors due to
the amount of catering business provided to convention and other meetings at the
Owned Hotels.

     The Company retains responsibility for all aspects of the day-to-day
management of each of the JQH Hotels, including establishing and implementing
standards of operation at all levels; hiring, training and supervising staff;
creating and maintaining financial controls; regulating compliance with laws and
regulations relating to the hotel operations; and providing for the safekeeping,
repair and maintenance of the hotels owned by the Company.  The Company
typically refurbishes individual hotels every four to six years, and has spent
an average per year of approximately $20 million in the last four years on the
Owned Hotels.  During 2001, the Company expects to spend approximately $22.3
million on refurbishment of the Owned Hotels.

Owned Hotels

                                       11
<PAGE>

     The Owned Hotels consist of 47 hotels, which are located in 20 states and
contain a total of 11,633 guest rooms or suites.  The following table sets forth
certain information concerning location, franchise/name, number of rooms/suites,
description and opening date for each Owned Hotel:

<TABLE>
<CAPTION>
                                                            Number of
                                                           ------------
Location                    Franchise/Name                 Rooms/Suites  Description                              Opening Date
--------                    --------------                 ------------  -----------                              ------------
<S>                         <C>                            <C>           <C>                 <C>                  <C>
Montgomery, AL              Embassy Suites                 237           Atrium;                                   8/95
                                                                         Meeting Space:      15,000 sq. ft.  (c)
Tucson, AZ                  Holiday Inn                    299           Atrium;                                  11/81
                                                                         Meeting Space:      14,000 sq. ft.
Tucson, AZ                  Marriott                       250           Atrium;                                  12/96
                                                                         Meeting Space:      11,500 sq. ft.
Little Rock, AR             Embassy Suites                 251           Atrium;                                   8/97
                                                                         Meeting  Space      14,000 sq. ft.
Springdale, AR              Holiday Inn                    206           Atrium;                                   7/89
                                                                         Meeting Space:      18,000 sq. ft.
                                                                         Convention Center:  29,280 sq. ft.
Springdale, AR              Hampton Inn & Suites           102           Meeting Space:         400 sq. ft.       10/95
Bakersfield, CA             Holiday Inn Select             259           Meeting Space:       9,735 sq. ft.  (c)   6/95
Monterey, CA                Embassy Suites                 225           Meeting Space:      13,700 sq. ft.       11/95
Sacramento, CA              Holiday Inn                    364           Meeting Space:       9,000 sq. ft.        8/79
San Francisco, CA           Holiday Inn                    279           Meeting Space:       9,000 sq. ft.        6/72
Denver, CO(a)               Holiday Inn (International     256           Atrium;                                  10/82
                            Airport)                                     Trade Center:       66,000 sq. ft.  (b)
Denver, CO                  Holiday Inn (Northglenn)       236           Meeting Space:      20,000 sq. ft.       12/80
Fort Collins, CO            Holiday Inn                    259           Atrium;                                   8/85
                                                                         Meeting Space:      12,000 sq. ft.
Coral Springs, FL           Radisson Plaza                 224           Atrium               5,326 sq. ft.        5/99
                                                                         Convention Center:  12,800 sq. ft.
St. Augustine, FL           World Golf Village Resort      300           Atrium;                                   5/98
                                                                         Convention Center:  40,000 sq. ft.
Tampa, FL                   Embassy Suites                 247           Atrium;                                   1/98
                                                                         Meeting Space:      18,000 sq. ft.
Cedar Rapids, IA            Collins Plaza                  221           Atrium;                                   9/88
                                                                         Meeting Space:      11,250 sq. ft.
Davenport, IA               Radisson                       221           Meeting Space:       7,800 sq. ft.  (c)  10/95
Des Moines, IA              Embassy Suites                 234           Atrium;                                   9/90
                                                                         Meeting Space:      13,000 sq. ft.
Des Moines, IA              Holiday Inn                    288           Atrium;                                   1/87
                                                                         Meeting Space:      15,000 sq. ft.
</TABLE>

                                       12
<PAGE>

<TABLE>
<S>                         <C>                            <C>           <C>                 <C>                   <C>
Topeka, KS                  Capitol Plaza                  224           Atrium;                                   8/98
                                                                         Convention Center;  26,000 sq. ft.
Bowling Green, KY           University Plaza               218           Meeting Space:       4,000 sq. ft.  (c)   8/95
Branson, MO                 Chateau on the Lake            301           Atrium; Meeting                           5/97
                                                                         Space:              40,000 sq. ft.
Jefferson City, MO          Capitol Plaza                  255           Atrium;                                   9/87
                                                                         Meeting Space:      14,600 sq. ft.
Joplin, MO                  Holiday Inn                    262           Atrium;                                   6/79
                                                                         Meeting Space:       8,000 sq. ft.
                                                                         Trade Center:       32,000 sq. ft.  (b)
Kansas City, MO(a)          Embassy Suites                 236           Atrium;                                   4/89
                                                                         Meeting Space:      12,000 sq. ft.
Kansas City, MO             Homewood Suites                117           Extended Stay                             5/97
Springfield, MO             Holiday Inn                    188           Atrium;                                   9/87
                                                                         Meeting Space:       3,020 sq. ft.
Omaha, NE                   Embassy Suites                 249           Atrium;                                   1/97
                                                                         Meeting Space:      13,000 sq. ft.
Reno, NV                    Holiday Inn                    283           Meeting Space:       8,700 sq. ft.        2/74
Albuquerque, NM             Holiday Inn                    311           Atrium;                                  12/86
                                                                         Meeting Space:      12,300 sq. ft.
Charlotte, NC               Renaissance Suites             275           Atrium;                                  12/99
                                                                         Meeting Space:      17,400 sq. ft.
Greensboro, NC(a)           Embassy Suites                 219           Atrium;                                   1/89
                                                                         Meeting Space:      10,250 sq. ft.
Greensboro, NC(a)           Homewood Suites                104           Extended Stay                             8/96
Raleigh-Durham, NC          Embassy Suites                 273           Atrium;                                   9/97
                                                                         Meeting Space:      20,000 sq. ft.
Oklahoma City, OK           Renaissance                    311           Atrium;                                   1/00
                                                                         Meeting Space:      10,150 sq. ft.  (c)
Portland, OR(a)             Holiday Inn                    286           Atrium;                                   4/79
                                                                         Trade Center:       37,000 sq. ft.  (b)
Portland, OR(a)             Embassy Suites                 251           Atrium;                                   9/98
                                                                         Meeting Space:      11,000 sq. ft.
Columbia, SC                Embassy Suites                 214           Atrium;                                   3/88
                                                                         Meeting Space:      13,000 sq. ft.
Greenville, SC              Embassy Suites                 268           Atrium;                                   4/93
                                                                         Meeting Space:      20,000 sq. ft.
North Charleston, SC        Embassy Suites                 255           Atrium;                                   2/00
                                                                         Meeting Space:       3,000 sq. ft.  (c)
Beaumont, TX                Holiday Inn                    253           Atrium;                                   3/84
                                                                         Meeting Space:      12,000 sq. ft.
Dallas/Ft. Worth Airport,   Embassy Suites                 329           Atrium;                                   8/99
</TABLE>

                                       13
<PAGE>

<TABLE>
<S>                         <C>                            <C>           <C>                 <C>                   <C>
TX (a)                                                                   Meeting Space:       18,900 sq. ft.

Houston, TX(a)              Radisson                       288           Atrium;                                   12/85
                                                                          Meeting Space:      14,300 sq. ft.
Mesquite, TX                Hampton Inn Suites             160           Meeting Space:       21,200 sq. ft.        4/99
                                                                          Convention Center:  35,100 sq. ft.

Charleston, WV              Embassy Suites                 253           Atrium;                                   12/97
                                                                         Meeting Space:       14,600 sq. ft.
Madison, WI                 Marriott                       292           Atrium;                                   10/85
                                                                          Meeting Space:      15,000 sq. ft. (b)
                                                                          Convention Center:
                                                                                              50,000 sq. ft.
 </TABLE>
________________________

(a)  Airport location
(b)  The trade or convention center is located adjacent to hotel and is owned by
     Mr. Hammons, except the convention centers in Madison, Wisconsin and
     Denver, Colorado, which are owned by the Company.
(c)  Large civic center is located adjacent to hotel.

Managed Hotels

     The Managed Hotels consist of six hotels (three Holiday Inns, one Sheraton,
one Embassy Suites and one Marriott Courtyard), located in three states
(Missouri, Nebraska and South Dakota), and contain a total of 1,356 guest rooms.
Mr. Hammons directly owns five of these six hotels. The remaining hotel is owned
by an entity controlled by Mr. Hammons in which he has a 50% interest.
Jacqueline Dowdy, a director and officer of the General Partner, and Lonnie A.
Funk, an officer of the General Partner, each own a 25% interest in this entity.
There is a convention and trade center adjacent to three of the Managed Hotels.

     The Company provides management services to the Managed Hotels within the
guidelines contained in annual operating and capital plans submitted to the
hotel owner for review and approval during the final 30 days of the preceding
year. The Company is responsible for the day-to-day operations of the Managed
Hotels. While the Company is responsible for the implementation of major
refurbishment and repairs, the actual cost of such refurbishments and repairs is
borne by the hotel owner. The Company earns a fee based on the size of the
project. The Company earns annual management fees of 3% to 5% of the hotel's
gross revenues. Each of the Managed Hotels' management contracts is for an
initial term of 20 years, which automatically extends for four periods of five
years, unless otherwise canceled. The Company has received an option from Mr.
Hammons or entities controlled by him to purchase each of the Managed Hotels.

Item 3.  Legal Proceedings.

     The Company is not presently involved in any litigation which if decided
adversely to the Company would have a material effect on the Company's financial
condition. To the Company's knowledge, there is no litigation threatened other
than routine litigation arising in the ordinary course of business which would
be covered by liability insurance.


                                       14
<PAGE>

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

     None.

                                    PART II


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

     Not Applicable


Item 6.  Selected Financial Data.

     The selected consolidated financial information of the Company for the
2000, 1999, 1998, 1997, and 1996 Fiscal Years has been derived from and should
be read in conjunction with the audited consolidated financial statements of the
Company, which statements have been audited by Arthur Andersen LLP, independent
public accountants. The information presented below also should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included under Item 7. The Company's fiscal year ends
on the Friday nearest December 31. Consequently, the Company's 1996 Fiscal Year
included 53 weeks of operations while the 1997, 1998, 1999 and 2000 Fiscal Years
included 52 weeks of operations.


Selected Consolidated Financial Information
-------------------------------------------
(in thousands, except per share amounts, ratios and hotel data)

<TABLE>
<CAPTION>
                                                                               FISCAL YEAR ENDED
                                                      2000            1999            1998             1997            1996
<S>                                                 <C>             <C>        <C>                   <C>             <C>
REVENUES:
  Rooms (a)                                         $267,596        $229,807        $211,989         $195,296        $171,206
  Food and beverage                                  119,865         101,231          91,982           86,183          79,580
  Meeting room rental and other (b)                   49,113          40,646          35,003           31,795          27,488
                                                    --------        --------        --------         --------        --------
    Total revenues                                   436,574         371,684         338,974          313,274         278,274
                                                    --------        --------        --------         --------        --------

OPERATING EXPENSES:
  Direct operating costs and expenses (c)
    Rooms                                             68,224          59,507          54,600           50,265          43,610
    Food and beverage                                 98,398          84,035          77,018           73,383          67,383
    Other                                              3,716           3,667           3,389            3,385           2,929
  General, administrative, sales and management
    service expenses (d,e)                           124,393         104,876          95,500           85,766          74,646
  Repairs and maintenance                             17,065          15,059          13,438           12,578          11,528
  Depreciation and amortization                       53,367          45,669          45,580           34,781          24,034
                                                    --------        --------        --------         --------        --------
    Total operating expenses                         365,163         312,813         289,525          260,158         224,130
                                                    --------        --------        --------         --------        --------
</TABLE>

                                       15
<PAGE>

<TABLE>
<S>                                                 <C>             <C>             <C>              <C>             <C>
INCOME FROM OPERATIONS                                71,411          58,871          49,449           53,116          54,144
OTHER (INCOME) EXPENSE:
Interest expense and amortization of deferred
  financing fees, net                                 73,833          62,209          57,286           44,325          35,620
Gain property disposition (f)                             --          (2,365)         (8,175)              --              --
                                                    --------        --------        --------         --------        --------

INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF CHANGE IN             $ (2,422)       $   (973)       $    338         $  8,791        $ 18,524
 ACCOUNTING PRINCIPLE (g)(h)                        ========        ========        ========         ========        ========

BALANCE SHEET DATA
Total Assets                                        $920,884        $934,312        $876,486         $816,733        $658,072
Total Debt, including current portion                836,707         828,843         759,716          695,791         531,143
</TABLE>

(a)  Includes revenues derived from rooms.
(b)  Includes meeting room rental, management fees for providing management
     services to the Managed Hotels and other.
(c)  Includes expenses incurred in connection with rooms, food and beverage and
     telephones.
(d)  Includes expenses incurred in connection with franchise fees,
     administrative, marketing and advertising, utilities, insurance, property
     taxes, rent and other.
(e)  Includes expenses incurred providing management services to the Managed
     Hotels.
(f)  Gain on sales includes six hotels sold February 6, 1998 and one hotel sold
     December 31, 1998 and one hotel sold June 16, 1999.
(g)  The 1998 and 1999 Fiscal Years do not include a $2.2 million and a $0.2
     million, respectively, extraordinary charge related to early extinguishment
     of debt.
(h)  The Company adopted a new accounting pronouncement in 1999 which requires
     cost of start up activities, including pre-opening expenses, to be expensed
     as incurred. The 1999 Fiscal Year does not include a $1.8 million charge
     related to the change in accounting.


Supplemental Financial Information Relating to the 1994 and 1995 Collateral
Hotels

     The following tables set forth, as of December 29, 2000, unaudited selected
financial information with respect to the 17 hotels collateralizing the 1994
Notes (the "1994 Collateral Hotels") and the eight hotels collateralizing the
1995 notes (the "1995 Collateral Hotels") of the Company, excluding Unrestricted
Subsidiaries (as defined in the indentures relating to the 1994 Notes and the
1995 Indentures) (the "Restricted Group").  Under the heading "Management
Operations," information with respect to revenues and expenses generated by the
Company as manager of the 1994 Collateral Hotels, the 1995 Collateral Hotels,
the other Owned Hotels owned by John Q. Hammons Hotels Two, L.P. ("L.P. Two"),
and the Managed Hotels is provided.

                                       16
<PAGE>

<TABLE>
<CAPTION>
                                                       12 Months Ended December 29, 2000
                                                       ---------------------------------
                                       ---------------------------------------------------------------
                                             1994            1995         Management        Total
                                          Collateral      Collateral      Operations      Restricted
                                            Hotels          Hotels          Groups          Group
                                       ---------------------------------------------------------------
                                                (Dollars in Thousands, except operating data)
<S>                                    <C>              <C>           <C>              <C>
STATEMENT OF OPERATIONS DATA:
Operating Revenues                         $155,959         $55,375       $10,912  (a)     $222,246

OPERATING EXPENSES:
     Direct Operating Costs and
     Expenses                                59,454          21,585             -            81,039
     General, Administrative, Sales
      and Management Expenses (b)            43,364          17,322            65  (c)       60,751

     Repairs and Maintenance                  6,144           2,525             -             8,669
     Depreciation and Amortization           13,637           5,295           399            19,331
                                       -------------    ------------  ------------     -------------
TOTAL OPERATING EXPENSES                    122,599          46,727           464           169,790
                                       -------------    ------------  ------------     -------------

INCOME FROM OPERATIONS                     $ 33,360         $ 8,648       $10,448          $ 52,456
                                       =============    ============  ============     =============

Operating Data:
Occupancy                                      67.6%           63.8%
Average Daily Room Rate                    $  93.01         $ 79.83
RevPar                                     $  62.87         $ 50.93
</TABLE>

                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                       12 Months Ended December 31, 1999
                                                       ---------------------------------
                                       ---------------------------------------------------------------
                                             1994            1995         Management        Total
                                          Collateral      Collateral      Operations      Restricted
                                            Hotels          Hotels          Groups          Group
                                       ---------------------------------------------------------------
                                                (Dollars in Thousands, except operating data)
<S>                                    <C>              <C>           <C>              <C>
STATEMENT OF OPERATIONS DATA:
Operating Revenues                         $152,205         $52,207       $ 8,208  (a)     $212,620

OPERATING EXPENSES:
     Direct Operating Costs and
     Expenses                                58,497          20,685             -            79,182
     General, Administrative, Sales
      and Management Expenses (b)            39,570          16,286          (473) (c)       55,383

     Repairs and Maintenance                  5,779           2,382             -             8,161
     Depreciation and Amortization           12,902           5,173           395            18,470
                                       -------------    ------------  ------------     -------------
TOTAL OPERATING EXPENSES                    116,748          44,526           (78)          161,196
                                       -------------    ------------  ------------     -------------

INCOME FROM OPERATIONS                     $ 35,457         $ 7,681       $ 8,286          $ 51,424
                                       =============    ============  ============     =============

Operating Data:
Occupancy                                      68.0%           60.9%
Average Daily Room Rate                    $  90.79         $ 80.51
RevPar                                     $  61.74         $ 49.03
</TABLE>

(a)  Represents management revenues derived from the Owned Hotels owned by Two
     L.P. and the Managed Hotels.
(b)  General, administrative, sales and management expenses for the 1994 and
     1995 Collateral Hotels includes management expenses allocated to the
     respective hotels.
(c)  General, administrative, sales and management expenses for the 1994 and
     1995 Collateral Hotels includes management revenues allocated to the 1994
     and 1995 Collateral Hotels.

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

     General

          The following discussion and analysis primarily addresses results of
     operations of the Company for the fiscal years ended December 29, 2000
     ("2000"), December 31, 1999 ("1999") and January 1, 1999 ("1998"). The
     following discussion should be read in conjunction with the selected
     consolidated financial information of the Company and the consolidated
     financial statements of the Company included elsewhere herein.

          The Company's consolidated financial statements include revenues from
     the Owned Hotels and management fee revenues for providing management
     services to the Managed Hotels. References to the JQH Hotels include both
     the Owned Hotels and the Managed Hotels. Revenues from the Owned Hotels are
     derived from rooms, food and beverage, meeting rooms and other revenues.
     The Company's beverage revenues include only revenues from the sale of
     alcoholic beverages, while revenues from the sale of non-alcoholic
     beverages are shown as part of food revenues. Direct operating costs and
     expenses include expenses incurred in connection with the direct operation
     of rooms, food and beverage and telephones. General, administrative, sales
     and management services expenses include expenses incurred from franchise
     fees, administrative,

                                       18
<PAGE>

     sales and marketing, utilities, insurance, property taxes, rent, management
     services and other expenses.

          From 1996 through 2000, the Company's total revenues grew at an annual
     compounded growth rate of 11.9%, from $278.3 million to $436.6 million.
     Occupancy for the Owned Hotels during that period decreased 0.3 percentage
     points from 64.7% to 64.4%. However, the Owned Hotels' average daily room
     rate (ADR) increased by 29.4% from $76.16 to $98.56 during that period.
     Room revenue per available room (RevPAR) increased by 28.9% from $49.25 to
     $63.50.

          In general, hotels opened during the period from 1996 to 2000
     decreased overall occupancy but increased the overall average room rate.
     The Company tracks the performance of the Owned Hotels in two groups. One
     group of hotels are those opened by the Company during the current and
     prior fiscal years (New Hotels). During 2000, the New Hotels included two
     hotels opened in 2000 and four hotels opened in 1999. The remainder of the
     Owned Hotels, excluding the New Hotels, are defined as Mature Hotels. In
     2000, the Mature Hotels included 41 hotels opened prior to 1999. New hotels
     typically generate positive cash flow from operations before debt service
     in the first year, generate cash sufficient to service mortgage debt in the
     second year and create positive cash flow after debt service in the third
     year.

<TABLE>
<CAPTION>
                                                                        FISCAL YEAR ENDED
                                                  2000           1999            1998            1997          1996
<S>                                         <C>            <C>             <C>             <C>           <C>
OWNED HOTELS
  Average Occupancy                               64.4%          62.9%           62.1%           62.9%         64.7%
  Average Daily Room Rate (ADR)             $    98.56     $    94.87      $    91.38      $    82.38    $    76.16
  Room Revenue per Available Room
    (RevPAR)                                $    63.50     $    59.64      $    56.79      $    51.84    $    49.25
  Available Rooms (a)                        4,213,947      3,853,403       3,733,166       3,767,387     3,476,279
  Number of Hotels                                  47             45              42              45            39

MATURE HOTELS
  Average Occupancy                               65.1%          64.7%           64.1%           63.8%         64.8%
  Average Daily Room Rate (ADR)             $    96.90     $    93.60      $    86.50      $    79.80    $    76.06
  Room Revenue per Available Room
    (RevPAR)                                $    63.09     $    60.57      $    55.41      $    50.90    $    49.29
  Available Rooms (a)                        3,669,239      3,332,718       3,012,845       3,388,896     3,454,899
  Number of Hotels                                  41             37              32              37            37

NEW HOTELS
  Average Occupancy                               59.9%          51.0%           54.1%           55.3%         42.2%
  Average Daily Room Rate (ADR)             $   110.68     $   105.25      $   115.55      $   108.97    $   100.49
  Room Revenue per Available Room (RevPAR)  $    66.29     $    53.70      $    62.54      $    60.21    $    42.42
  Available Rooms (a)                          544,708        520,685         720,321         378,491        21,380
  Number of Hotels                                   6              8              10               8             2
</TABLE>

                                       19
<PAGE>

<TABLE>
<S>                                              <C>            <C>             <C>             <C>           <C>
PERCENTAGES OF TOTAL REVENUES
REVENUES
  Rooms                                           61.3%          61.8%           62.6%           62.3%         61.8%
  Food and beverage                               27.5%          27.3%           27.1%           27.5%         28.3%
  Meeting room rental and other                   11.2%          10.9%           10.3%           10.2%          9.9%
                                                 -----          -----           -----           -----         -----
   Total revenues                                100.0%         100.0%          100.0%          100.0%        100.0%
                                                 -----          -----           -----           -----         -----

OPERATING EXPENSES
 Direct operating costs and expenses
   Rooms                                          15.6%          16.0%           16.1%           16.0%         15.7%
   Food and beverage                              22.5%          22.6%           22.7%           23.4%         24.3%
   Other                                           0.9%           1.0%            1.0%            1.1%          1.1%
 General, administrative, sales and
   Management service expenses                    28.5%          28.2%           28.2%           27.4%         26.9%
 Repairs and maintenance                           3.9%           4.1%            4.0%            4.0%          4.2%
 Depreciation and amortization                    12.2%          12.3%           13.4%           11.1%          8.7%
                                                 -----          -----           -----           -----         -----
   Total operating expenses                       83.6%          84.2%           85.4%           83.0%         80.9%
                                                 -----          -----           -----           -----         -----
 Income from Operations                           16.4%          15.8%           14.6%           17.0%         19.1%
                                                 =====          =====           =====           =====         =====
</TABLE>

(a)  Available rooms represent the number of rooms available for rent multiplied
by the number of days in the period reported or, in the case of New Hotels, the
number of days the hotel was opened during the period reported.  The Company's
1996 Fiscal Year contained 53 weeks or 371 days, while its 1997, 1998, 1999 and
2000 Fiscal Years each contained 52 weeks, or 364 days.

2000 FISCAL YEAR COMPARED TO 1999 FISCAL YEAR

Total revenues increased to $436.6 million in 2000 from $371.7 million in 1999,
an increase of $64.9 million, or 17.5%. Of total revenues recognized in 2000,
61.3% were revenues from rooms, compared to 61.8% in 1999. Revenues from food
and beverage represented 27.5% of total revenues recognized in 2000, compared to
27.3% in 1999, and revenues from meeting room rental and other represented 11.2%
of total revenues in 2000, and 10.9% in 1999.

Rooms revenues increased to $267.6 million in 2000 from $229.8 million in 1999,
an increase of $37.8 million, or 16.4% as a result of a full year of operation
for the four hotels opened in 1999, and an increase in both the average daily
room rate and occupancy of the Mature Hotels. Average daily room rates (ADR) of
Mature Hotels increased to $96.90 in 2000 from $93.60 in 1999. The occupancy in
the Mature Hotels increased 0.4 percentage points to 65.1% in 2000, compared to
64.7% in 1999. The Mature Hotels' room revenue per available room (RevPAR)
improved to $63.09 in 2000 from $60.57 in 1999, an increase of $2.52 or 4.2%. In
2000, the New Hotels included six hotels, which generated a revenue per
available room (RevPAR) of $66.29, up 23.4% from the 1999 revenue per available
room (RevPAR) of $53.70, when eight New Hotels were open. In general, management
believes the New Hotels are more insulated from the effects of new hotel supply
than are the Mature Hotels, since the New Hotels utilize

                                       20
<PAGE>

franchise brands that are considered to be more upscale in nature, and the New
Hotels have higher-quality guest rooms and public spaces.

Food and beverage revenues increased to $119.9 million in 2000 from $101.2
million in 1999, an increase of $18.7 million, or 18.5%. This increase was
primarily due to revenues associated with the New Hotels.

Meeting room rental and other revenues increased to $49.1 million in 2000 from
$40.6 million in 1999, an increase of $8.5 million, or 20.9%. This increase was
primarily due to the additional meeting space in the New Hotels.

Direct operating costs and expenses for rooms increased to $68.2 million in 2000
from $59.5 million in 1999, an increase of $8.7 million, or 14.6%. As a
percentage of rooms revenue, these expenses decreased slightly to 25.5% in 2000
from 25.9% in 1999. The increased expense was associated with the New Hotels.
These costs generally represent a higher percentage of rooms revenue in newer
hotels until these hotels reach stabilized occupancy levels.

Direct operating costs and expenses for food and beverage increased to $98.4
million in 2000 from $84.0 million in 1999, an increase of $14.4 million, or
17.1%, but decreased as a percentage of food and beverage revenues to 82.1% from
83.0% in 1999. The dollar increase was due to costs associated with the higher
volume of sales associated with the New Hotels.

Direct operating costs and expenses for other were $3.7 million in both 2000 and
1999. As a percentage of meeting room rental and other revenues, these expenses
decreased to 7.5% in 2000 from 9.1% in 1999.

General, administrative, sales and management service expenses increased to
$124.4 million in 2000 from $104.9 million in 1999, an increase of $19.5
million, or 18.6%. Increases in these expenses were primarily attributable to
expenses associated with the opening of new hotels in 1999. A large portion of
expenses associated with new hotel openings are fixed costs in nature. As a
result, these expenses rise faster than revenues in the first one to two years
of operation. As a percentage of total revenues, these expenses increased
slightly to 28.5% in 2000 from 28.2% in 1999.

Repairs and maintenance expenses increased to $17.1 million in 2000 from $15.1
million in 1999, an increase of $2.0 million, or 13.2%, but decreased as a
percentage of total revenues to 3.9% compared to 4.1% in 1999.

Depreciation and amortization increased by $7.7 million, or 16.8% to $53.4
million in 2000 from $45.7 million in 1999. As a percentage of total revenues,
these expenses decreased slightly to 12.2% in 2000, compared to 12.3% in 1999.
The dollar increase was a direct result of the increased level of capital
expenditures for the New Hotels.

Income from operations increased to $71.4 million in 2000 from $58.9 million in
1999, an increase of $12.5 million, or 21.2%. As a percentage of total revenues,
income from operations was 16.4% in 2000, compared to 15.8% in 1999, due to
improved profit margins.

                                       21
<PAGE>

Interest expense and amortization of deferred financing fees net increased to
$73.8 million in 2000 from $62.2 million in 1999, an increase of $11.6 million,
or 18.6%.  The increase was attributable to debt associated with the financing
of the New Hotels.

Loss before extraordinary item and cumulative effect of change in accounting
principle was $2.4 million in 2000 compared to $1.0 million in 1999, an
increased loss of $1.4 million.  The 1999 results include a $2.4 million gain on
the sale of one Holiday Inn in June 1999.


1999 FISCAL YEAR COMPARED TO 1998 FISCAL YEAR

Total revenues increased to $371.7 million in 1999 from $339.0 million in 1998,
an increase of $32.7 million, or 9.6%. Of total revenues recognized in 1999,
61.8% were revenues from rooms, compared to 62.5% in 1998. Revenues from food
and beverage represented 27.2% of total revenues recognized in 1999, compared to
27.1% in 1998, and revenues from meeting room rental and other represented 10.9%
of total revenues compared to 10.3% in 1998.

Rooms revenues increased to $229.8 million in 1999 from $212.0 million in 1998,
an increase of $17.8 million, or 8.4%, as a result of the addition of four
hotels opened in 1999, a full year of operation for the four hotels opened in
1998, and an increase in the average daily room rate (ADR) of the Mature Hotels.
Average daily room rates (ADR) of Mature Hotels increased to $93.60 in 1999 from
$86.50 in 1998. The occupancy in the Mature Hotels was a 0.6 percentage point
increase to 64.7% in 1999, compared to 64.1% in 1998. The Mature Hotels' room
revenue per available room (RevPAR) improved to $60.57 in 1999 from $55.41 in
1998, an increase of $5.16 or 9.3%. In 1999, the New Hotels included eight
hotels, which generated a revenue per available room (RevPAR) of $53.70, down
14.1% from the 1998 revenue per available room (RevPAR) of $62.54, when ten New
Hotels were open. In general, management believes the New Hotels are more
insulated from the effects of new hotel supply than are the Mature Hotels, since
the New Hotels utilize franchise brands that are considered to be more upscale
in nature, and the New Hotels have higher-quality guest rooms and public spaces.

Food and beverage revenues increased to $101.2 million in 1999 from $92.0
million in 1998, an increase of $9.2 million, or 10.0%. This increase was
primarily due to revenues associated with the New Hotels.

Meeting room rental and other revenues increased to $40.6 million in 1999 from
$35.0 million in 1998, an increase of $5.6 million, or 16.0%. This increase was
primarily due to the additional meeting space in the New Hotels.

Direct operating costs and expenses for rooms increased to $59.5 million in 1999
from $54.6 million in 1998, an increase of $4.9 million, or 9.0%. As a
percentage of rooms revenue, these expenses increased slightly to 25.9% in 1999
from 25.8% in 1998. The increased expense was associated with the New Hotels.
These costs generally represent a higher percentage of rooms revenue in newer
hotels until these hotels reach stabilized occupancy levels.

                                       22
<PAGE>

Direct operating costs and expenses for food and beverage increased to $84.0
million in 1999 from $77.0 million in 1998, an increase of $7.0 million, or
9.1%, but decreased slightly as a percentage of food and beverage revenues to
83.0%, from 83.7% in 1998. The dollar increase was due to costs associated with
the higher volume of sales associated with the New Hotels.

Direct operating costs and expenses for other were $3.7 million in 1999 and $3.4
million in 1998, an 8.8% increase. As a percentage of meeting room rental and
other revenues, these expenses were  9.1% in 1999 and 9.7% in 1998.

General, administrative, sales and management service expenses increased to
$104.9 million in 1999 from $95.5 million in 1998, an increase of $9.4 million,
or 9.8%. Increases in these expenses were primarily attributable to expenses
associated with the opening of new hotels in 1998 and 1999.  A large portion of
expenses associated with new hotel openings are fixed costs in nature. As a
result, these expenses rise faster than revenues in the first one to two years
of operation.  As a percentage of total revenues, these expenses remained stable
at 28.2% in both years.

Repairs and maintenance expenses increased to $15.1 million in 1999 from $13.4
million in 1998, an increase of $1.7 million, or 12.7%, and increased slightly
as a percentage of revenues to 4.1% from 4.0% in 1998.

Depreciation and amortization increased slightly by $0.1 million, or 0.2%, to
$45.7 million in 1999 from $45.6 million in 1998. As a percentage of total
revenues, these expenses decreased to 12.3% in 1999 from 13.4% in 1998. The
dollar increase was a direct result of the increased level of capital
expenditures for the newer hotels.

Income from operations increased to $58.9 million in 1999 from $49.4 million in
1998, an increase of $9.5 million, or 19.2%. As a percentage of total revenues,
income from operations was 15.8% in 1999 compared to 14.6% in 1998, due
primarily to the higher proportion of the non-cash expense of depreciation and
amortization in 1998.

Interest expense and amortization of deferred financing fees, net increased to
$62.2 million in 1999 from $57.3 million in 1998, an increase of $4.9 million,
or 8.6%. The increase was attributable to debt associated with the financing of
the New Hotels.

Income (loss) before extraordinary item and cumulative effect of change in
accounting principle was a $1.0 million loss in 1999 compared to $0.3 million of
income in 1998, a decrease of $1.3 million.  The 1999 results include a $2.4
million gain on the sale of one Holiday Inn in June of 1999.  The 1998 results
include an $8.2 million gain on the sales of property and equipment in
connection with the sale of six Holiday Inns in February of 1998 and one Holiday
Inn in December of 1998.

LIQUIDITY AND CAPITAL RESOURCES

     In general, the Company has financed its operations through internal cash
flow, loans from financial institutions, the issuance of public debt and equity
and the issuance of industrial

                                       23
<PAGE>

revenue bonds. The Company's principal uses of cash are to pay operating
expenses, to service debt and to fund capital expenditures.

     At December 29, 2000, the Company had $45.6 million of cash and equivalents
and also had $3.6 million of marketable securities, compared to $49.7 million in
cash and cash equivalents and $5.0 million of marketable securities at the end
of 1999. Such amounts are available for working capital requirements of the
Company.

     Net cash provided by operating activities decreased to $36.4 million at the
end of 2000 from $41.3 million at the end of 1999, a decrease of $4.9 million,
or 11.9%, primarily as the result of reductions of accounts payable, accrued
expenses and other obligations.

     The Company incurred capital expenditures of $43.5 million and $123.6
million, respectively, for 2000 and 1999.  Capital expenditures typically
include capital improvements on existing hotel properties and expenditures for
development of new hotels. Capital expenditures in 2000 included $21.5 million
for new hotel development and $22.0 million for existing hotels. During 1999,
capital expenditures for existing hotels and new hotel development were $16.1
million and $107.5 million, respectively. During 2001, the Company expects
capital expenditures to approximate $22.3 million.

     At the end of 2000, total debt was $836.7 million compared with $828.8
million in 1999. The increase is attributable to the hotels opened during 2000.
The current portion of long-term debt was $56.3 million at the end of 2000,
compared with $16.6 million at the end of 1999.  The current portion of debt at
the end of 2000 reflects the maturity of construction loans for two hotel
properties.  Both loans have extension provisions; however the Company plans to
secure permanent long-term financing.

     The Company expects 2001 capital requirements to be funded by existing
cash, cash flow from operations and refinancing of certain existing hotels.
Based upon current plans, the Company anticipates that its capital resources
will be adequate to satisfy its 2001 normal recurring capital improvement
projects.

     Consistent with the authorization by the General Partner's Board of
Directors, the Company advanced $2.8 million to the General Partner to purchase
547,956 shares of the General Partner's outstanding Class A Common Stock during
2000, at an approximate average price of $5.10 per share, net of commissions.

     The Company did not distribute or accrue any amounts in 2000 or 1999 to its
partners for income taxes. Distributions by the Company  must be made in
accordance with the provisions of the Indentures.

Seasonality

     Demand is affected by normally recurring seasonal patterns.  For most of
the JQH Hotels, demand is higher in the spring and summer months (March through
October) than during the remainder of the year.  Accordingly, the Company's
operations are seasonal in nature, with

                                       24
<PAGE>

lower revenue, operating profit and cash flow in the first and fourth quarters
due to decreased travel during the winter months.

Inflation

     The rate of inflation as measured by changes in the average consumer price
index has not had a material effect on the revenues or operating results of the
Company during the three most recent fiscal years.

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

The Company is exposed to changes in interest rates primarily as a result of its
investing and financing activities.  Investing activity includes operating cash
accounts and investments, with an original maturity of three months or less, and
certain balances of various money market and common bank accounts.  The
financing activities of the Company are comprised of long-term fixed and
variable rate debt obligations utilized to fund business operations and maintain
liquidity.   The following table presents the principal cash repayments and
related weighted average interest rates by maturity date for the Company's long-
term fixed and variable rate debt obligations as of December 29, 2000:

<TABLE>
<CAPTION>
                                                                   Expected Maturity Date
                                                                       (in millions)
                                             2001     2002    2003     2004    2005    Thereafter   Total   Fair Value (d)
<S>                                          <C>      <C>     <C>      <C>     <C>     <C>          <C>     <C>
Long-Term Debt(a)

   $300 Million 1/st/ Mortgage Notes         $  --    $  --   $  --    $ 300   $  --   $  --        $ 300   $ 272

   Average interest rate (b)                   8.9%     8.9%    8.9%     8.9%     --      --          8.9%

   $90 Million 1/st/ Mortgage Notes          $  --    $  --   $  --    $  --   $  90   $  --        $  90   $  81

   Average interest rate(b)                    9.8%     9.8%    9.8%     9.8%    9.8%     --          9.8%

   Other fixed-rate debt obligations         $   8    $  31   $  39    $   7   $   8   $ 219        $ 312   $ 312

   Average interest rate(b)                    8.3%     8.6%    8.1%     8.4%    8.4%    8.6%         8.5%

   Other variable-rate debt obligations      $  48    $   1   $  17    $  30   $   2   $  37        $ 135   $ 135

   Average interest rate(c)                    9.3%     9.3%    9.3%     9.3%    9.3%    9.3%         9.3%
</TABLE>

(a)   Includes amounts reflected as long-term debt due within one year.

(b)   For the long-term fixed rate debt obligations, the weighted average
interest rate is based on the stated rate of the debt that is maturing in the
year reported. The weighted average interest rate excludes the effect of the
amortization of deferred financing costs.

(c)   For the long-term variable rate debt obligations, the weighted average
interest rate assumes no changes in interest rates and  is based on the variable
rate of the debt, as of  December 29, 2000,  that is maturing in the year
reported.  The weighted average interest rate excludes the effect of the
amortization of deferred financing costs.

                                       25
<PAGE>

(d)   The fair values of long-term debt obligations approximate their respective
historical carrying amounts except with respect to the $300 million 1/st/
Mortgage Notes and the $90 million 1/st/ Mortgage Notes.  The fair value of the
first mortgage note issues is estimated by obtaining quotes from brokers.

     Item 8.  Financial Statements and Supplementary Data.

          Reference is made to the Index to Consolidated Financial Statements
     and the Financial Statements following such index in Item 14.


     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 Company does not have any directors or officers.  The General Partner
in its capacity as general partner, manages and controls the activities of the
Company.  The following sets forth certain information concerning the directors
and director nominees of the General Partner who are also not officers of the
General Partner.  Information required by this item with respect to officers of
the General Partner is provided in Item 1 of this report.  See "Management."
Finance Corp. and Finance Corp. II each have the same directors and officers as
the General Partner, except that Messrs. Dempsey, Earley, Hart, Lopez-Ona, Moore
and Sullivan are not directors of Finance Corp. or Finance Corp. II.

     Donald H. Dempsey, age 56 became a director of the General Partner in
August 1999. Mr. Dempsey currently serves as Executive Vice President and Chief
Financial Officer of Equity Inns, Inc., where he also serves on its board of
directors.  Equity Inns, Inc. is a large lodging real estate investment trust
headquartered in Germantown, Tennessee, which owns 100 hotels in 36 states.  Mr.
Dempsey has more than 30 years' experience in corporate and financial management
within the hotel industry.  Prior to joining Equity Inns in July 1998, Mr.
Dempsey served as Executive Vice President and Chief Financial Officer of Choice
Hotel Corporation, a publicly traded hotel franchiser, manager and owner of
hotels whose brands include Hampton Inn, Homewood Suites and Embassy Suites.
Mr. Dempsey was named Senior Vice President and Chief Financial Officer in 1995
of The Promus Companies Incorporated ("PCI"); from 1993 to 1995, he served as
Senior Vice President of Finance and Administration of the Hotel Division.  From
1983 to 1993, he was Vice President of Franchising and Development for the
Hampton Inn Division of PCI.  Mr. Dempsey also held various corporate and
financial management and administrative positions with Holiday Inns from 1969 to
1983.

     Daniel L. Earley, age 58, has been a director of the General Partner since
February 1994.  Since 1985, Mr. Earley has been President, Chief Executive
Officer and a director of Clermont Savings Bank, FSB, a community bank located
Milford, Ohio, which is owned by Mr. Hammons.

     William J. Hart, age 60, has been a director of the General Partner since
December 1993.  He is a member of the law firm of Husch & Eppenberger, LLC,
formerly Farrington & Curtis, P.C., a position he has held since 1970.  Mr.
Hart's firm performs legal services on a regular basis for the Company and
personally for Mr. Hammons.  Mr. Hart has also been a director since 1981

                                       26
<PAGE>

of Johnson Industries, Inc., a commercial textiles company listed on the New
York Stock Exchange.

     John E. Lopez-Ona, age 43, became a director of the General Partner in May
1996.  Mr. Lopez-Ona was a Managing director of Kidder Peabody & Company, Inc.
an investment banking firm, from March 1990 through March 1995.  Since June
1995, Mr. Lopez-Ona has been the President of Anvil Capital, Inc., a firm owned
by him, which specializes in principal investments.

     James F. Moore, age 58, became a director of the General Partner in May
1995.  Since 1987, Mr. Moore has been Chairman, Chief Executive Officer and a
Director of Champion Products, Incorporated, a privately owned manufacturing
company serving the telecommunications industry located in Strafford, Missouri.
Prior to 1987, Mr. Moore served as President of the Manufacturing Division of
Service Corporation International, a company listed on the New York Stock
Exchange.

     David C. Sullivan, age 61, became a director of the General Partner in May,
1999. Mr. Sullivan has been Chairman, Chief Executive Officer and a Director of
Resort Quest International, a company listed on the New York Stock Exchange that
provides vacation rental and property management services, since May 1998. From
April 1995 to December 1997, Mr. Sullivan was Executive Vice President and Chief
Operating Officer of Promus Hotel Corporation, a publicly traded hotel
franchiser, manager and owner of hotels whose brands include Hampton Inn,
Homewood Suites and Embassy Suites. From 1993 to 1995, Mr. Sullivan was the
Executive Vice President and Chief Officer of the Hotel Division of The Promus
Companies Incorporated ("PCI"). He was the Senior Vice President of Development
and Operations of the Hampton Inn/Homewood Suites Division of PCI from 1991 to
1993. From 1990 to 1991, Mr. Sullivan was the Vice President of Development of
the Hampton Inn Hotel Division of PCI.

     Compensation of Directors. Each non-employee director received the
following payments for service on the General Partner's Board during the fiscal
year ended December 29, 2000: (1) $1,000 for each regular Board meeting attended
and (2) $500 for each regular committee meeting attended ($750 per meeting for
the committee chair). In addition, each non-employee director received on the
day following the 2000 annual shareholder meeting: (1) a cash payment of
$10,000, (2) 2,105 shares of the General Partner's Class A Common Stock with a
fair market value equal to $10,000 on the date of payment (other than Mr.
Earley, who declined the share grant) and (3) an option to purchase 10,000
shares of the General Partner's Class A Common Stock at a per share exercise
price of $4.75. The stock and options were issued pursuant to the General
Partner's 1999 Non-Employee Director Stock and Stock Option Plan. Employee
directors are not compensated for their services as directors or committee
members.

Item 11.  Executive Compensation.

Cash Compensation

     The following table sets forth the salary, cash bonus and certain other
forms of compensation paid by the General Partner and its subsidiaries for
services rendered in all capacities during the 2000, 1999 and 1998 fiscal years
to the Chief Executive Officer of the

                                       27
<PAGE>

General Partner and the four most highly compensated executive officers of the
General Partner other than the Chief Executive Officer serving at the end of the
2000 fiscal year (the "Named Executive Officers").


                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                            Long Term Compensation
                                                                                            ----------------------
                                    Fiscal   Annual Compensation       All Other                    Awards
                                             -------------------       ---------                    ------
Name and Principal Positions         Year   Salary ($)  Bonus ($)  Compensation($)(a)  Securities Underlying Options (#)
----------------------------         ----   ----------  ---------  ------------------  ---------------------------------
<S>                                 <C>     <C>         <C>        <C>                 <C>
John Q. Hammons                       2000    287,500    125,000               --                 100,000 (b)
Chairman of the Board and             1999    250,000     90,000               --                      --
Chief Executive Officer               1998    200,000     50,000               --                 200,000 (c)

Lonnie A. Funk                        2000    172,500     70,000            2,604                 40,000 (b)
Executive Vice President,             1999    145,000     50,000            1,675                     --
Operations                            1998    125,000     22,500            1,449                 40,000 (c)

Paul E. Muellner                      2000    137,100     50,000            2,057                 30,000 (b)
Acting Chief Financial Officer        1999    130,000     40,000              650                     --
                                      1998    125,000     22,000               --                 10,000 (c)

Debra M. Shantz                       2000    145,600     50,000            2,934                 30,000 (b)
General Counsel                       1999    140,000     50,000            2,709                     --
                                      1998    135,000     47,500            1,544                 70,000 (c)

Steven E. Minton                      2000    140,300     55,000            1,903                 20,000 (b)
Senior Vice President,                1999    135,000     50,000            1,787                     --
Architecture                          1998    130,000     45,000            1,563                 40,000 (c)
</TABLE>

_________________
(a)  Matching contributions to General Partner's 401(k) Plan.
(b)  Comprised of options with an exercise price of $5.00 per share.
(c)  Comprised of options with an exercise price of $7.375 per share.

                                       28
<PAGE>

                     Option/SAR Grants in Last Fiscal Year

<TABLE>
<CAPTION>
                                                                                                        Potential Realizable
                                                                                                          Value at Assumed
                                                                                                        Rates of Stock rice
                                                                                                          Appreciation for
                                                  Individual Grants                                      Option Term (b)(c)
                     ----------------------------------------------------------------------------------------------------
                                               % of Total
                     Number of Securities    Options Granted
                     Underlying Options      to Employees in   Exercise Price    Expiration
Name                    Granted (#)(a)         Fiscal Year       ($/Share)          Date         5%($)        10%($)
----                    --------------         -----------       ---------          ----         -----        ------
<S>                  <C>                     <C>               <C>               <C>            <C>           <C>
John Q. Hammons            100,000                 11.8            $5.00          6/25/10       314,000       797,000
Lonnie A. Funk              40,000                  4.7            $5.00          6/25/10       125,600       318,800
Paul E. Muellner            30,000                  3.5            $5.00          6/25/10        94,200       239,100
Debra M. Shantz             30,000                  3.5            $5.00          6/25/10        94,200       239,100
Steven A. Minton            20,000                  2.4            $5.00          6/25/10        62,800       159,400
All Employees              846,500                100.0            $5.00          6/25/10     2,658,010     6,746,605
</TABLE>

(a)  Awarded on June 26, 2000.  Exercisable in four equal annual installments,
     beginning on June 25, 2001.
(b)  No gain to the optionees is possible without appreciation in the stock
     price which will benefit all shareholders commensurately.  The dollar
     amounts under these columns are in result of calculations at the 5% and 10%
     assumption rates set by the SEC and therefore are not intended to forecast
     possible future appreciation of the General Partner's stock price or to
     establish any present value of the options.
(c)  Realizable values are computed based on the number of options granted in
     2000 and still outstanding at year-end.

                         Fiscal Year End Option Values

<TABLE>
<CAPTION>
                                    Number of Securities Underlying                              Value of Unexercised
                                          Unexercised Options                                 In-the-Money Options(1)(2)
                                          -------------------                                 ---------------------------
Name                           Exercisable (#)        Unexercisable (#)                  Exercisable         Unexercisable ($)
----                           ---------------        -----------------                  -----------         -----------------
<S>                            <C>                    <C>                                <C>                 <C>
John Q. Hammons                        100,000                  200,000                       --                  106,300
Lonnie A. Funk                          20,000                   60,000                       --                   42,520
Paul E. Muellner                         5,000                   35,000                       --                   31,890
Debra M. Shantz                         35,000                   65,000                       --                   31,890
Steven A. Minton                        20,000                   40,000                       --                   21,260
</TABLE>



(1)  The $7.375 exercise price per share of the stock options granted on June 5,
     1998, is greater than the $6.063 closing price of the General Partner's
     Class A Common Stock as reported on the American Stock Exchange on December
     29, 2000, and so none of these options are "In the Money."  Fifty percent
     of these options are currently exercisable.

(2)  The $5.00 exercise price per share of the stock options granted on June 26,
     2000, is less than the $6.063 closing price of the General Partner's Class
     A Common Stock as reported on the American Stock Exchange on December 29,
     2000, and so these options are "In the Money."  None of these options are
     currently exercisable.

                                       29
<PAGE>

401(k) Plan

     Effective January 1, 1996, the General Partner adopted a contributory
retirement plan (the "401(k) Plan") for its employees age 21 and over with at
least one year of service to the General Partner.  The 401(k) Plan is designed
to provide tax-deferred income to the General Partner's employees in accordance
with the provisions of Section 401(k) of the Internal Revenue Code of 1986.  The
401(k) Plan provides that the General Partner will make a matching contribution
to each participant's account equal to 50% of such participant's eligible
contributions up to a maximum of 3% of such participant's annual compensation.

Employment Agreements

     The General Partner entered into an employment agreement with Debra M.
Shantz, dated as of May 1, 1995, as amended on October 31, 1997, and October 31,
2000. Under the agreement, Ms. Shantz's annual base salary is $155,000, plus a
discretionary bonus, with such annual increases in compensation as may be
determined by the Compensation Committee of the General Partner.  The agreement
currently is scheduled to terminate on May 9, 2004.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

     Mr. Hammons is the beneficial owner of all 16,043,900 limited partnership
units of the Company, representing 71.69% of the total equity in the Company.
The General Partner owns all 6,336,100 general partner units of the Company,
representing 28.31% of the total equity of the Company.  After December 29,
2000, the General Partner has agreed to exchange approximately 1.3  million
general partner units for funds advanced by the Company to the General Partner
to repurchase its common stock.  The number of general partner units to be
exchanged is equivalent to the number of shares repurchased, in accordance with
the partnership agreement.

Item 13. Certain Relationships and Related Transactions.

     Mr. Hammons and Anvil Capital, an investment and consulting firm owned by
Mr. Lopez-Ona, a  director of the General Partner, formed a limited liability
company to provide personal financial advisory services, through which they have
invested in securities of one or more companies in industries unrelated to the
Company's business.

     Mr. Hart is a non-employee director of the General Partner, and is a member
of the law firm of Husch & Eppenberger, LLC, which performs legal services on a
regular basis for the Company and personally for Mr. Hammons.  The Company paid
such firm approximately $458,000 in legal fees during the fiscal year ended
December 29, 2000.

     The Company is controlled by Mr. Hammons through his control of the General
Partner, the sole general partner of the Company.  His equity interest in the
Company (based on his beneficial ownership of 244,300 shares of Class A Common
Stock of the General Partner, all 294,100 shares of Class B Common Stock of the
General Partner and all 16,043,900 limited partnership units of the Company (the
"LP Units") is 74.1%.  There are significant potential conflicts of interests
between Mr. Hammons as a limited partner of the Company, and the holders of
Class A Common Stock of the General Partner, which conflicts may be resolved in
favor of Mr. Hammons.

     Holders of LP Units have the right to require the redemption of their LP
Units.  This redemption right will be satisfied, at the sole option of the
General Partner, by the payment of the then cash equivalent thereof or by the
issuance of shares of Class A Common Stock on a one-for-one basis.  Mr. Hammons
beneficially owns

                                       30
<PAGE>

all 16,043,900 LP Units. If Mr. Hammons, as a holder of LP Units, requires the
Company to redeem LP Units, the non-employee directors of the General Partner
would decide, consistent with their fiduciary duties as to the best interests of
the Company, whether to redeem the LP Units for cash or for shares of Class A
Common Stock. Mr. Hammons would not vote or otherwise participate in the
decision of the non-employee directors. Mr. Hammons has informed the Company
that he has no current plan to require the Company to redeem his LP Units.

     During 2000, the Company provided management services to six hotels not
owned by the Company (the "Managed Hotels") pursuant to management contracts
(the "Management Contracts").  Five of the Managed Hotels are owned by Mr.
Hammons and one is owned 50% by Mr. Hammons; 25% by Jacqueline A. Dowdy, the
Secretary and a director of the General Partner; and 25% by Lonnie A. Funk, an
officer of the General Partner.  Management fees of 3% to 5% of gross revenues
were paid to the Company by the Managed Hotels in the aggregate amount of
$1,245,000 in the fiscal year ended December 29, 2000.  In addition to the
management fees paid by the Managed Hotels to the Company in that year, the
Managed Hotels reimbursed the Company for a portion of the salaries paid by the
Company to its six regional vice presidents and one district director, whose
duties include management services related to the Managed Hotels, and for
certain marketing and other expenses allocated to the Managed Hotels.  Such
reimbursed services and expenses aggregated $184,000 in the fiscal year ended
December 29, 2000.  Each of the Management Contracts is for an initial term of
20 years, which automatically extends for four periods of five years, unless
otherwise canceled.

     The Company has an option granted by Mr. Hammons or persons or entities
controlled by him to purchase the Managed Hotels.  The options are effective
until February 2009.  If an option is exercised, the purchase price is based on
a percentage of the fair market value of the Managed Hotel as determined by an
appraisal firm of national standing.  One hotel owned by the Company and two
Managed Hotels are located in Springfield, Missouri.  These hotels are
potentially competing with one another for customers.  The Company, however,
believes that these hotels do not significantly compete with one another due to
their respective locations and attributes.

     Mr. Hammons has a 45% ownership interest in Winegardner & Hammons, Inc.
("WHI").  All of the hotels owned by the Company (the "Owned Hotels") have
contracted with WHI to provide accounting and other administrative services.
The accounting and administrative charges expensed by the Owned Hotels were
approximately $1,577,000 in the fiscal year ended December 29, 2000.  The fee
may increase if the number of hotels for which accounting and administrative
services are performed drops below 35 hotels.  The accounting services contract
expires in June of 2002.

     The Company leases space in the John Q. Hammons Building for its
headquarters from a Missouri general partnership, of which Mr. Hammons is a 50%
partner and the remaining 50% is collectively held by other employees, including
Jacqueline A. Dowdy, the Secretary and a director of the General Partner, who is
a 9.5% partner.  Pursuant to four lease agreements, expiring December 31, 2001,
the Company paid monthly rental payments of approximately $19,500 in 2000. The
Company made aggregate annual lease payments to the Missouri general partnership
of approximately $234,000 in 2000.

     Mr. Hammons also owns trade centers adjacent to three of the Owned Hotels
(the "JQH Trade Centers").  The Company leases the convention space in the JQH
Trade Center located in Portland, Oregon from Mr. Hammons pursuant to a long-
term lease expiring in 2004, requiring annual payments of approximately
$300,000.  With respect to the other two JQH Trade Centers, the Company makes
nominal annual lease payments to Mr. Hammons.  The Company has assumed
responsibility for all operating expenses of the JQH Trade Centers.

     The Company leases the real estate for the Company's Chateau on the Lake
Resort, opened in mid-1997, in Branson, Missouri, from Mr. Hammons.  Annual rent
is based on adjusted gross revenues from room sales on the property and was
$150,000 in 2000. The lease term is 50 years, with an option to renew for an
additional 10

                                       31
<PAGE>

years. The Company also has an option to purchase the land after March 1, 2118
at a proposed transfer price of the greater of $3,000,000 or the current
appraised value.

     The Company also leases the real estate for the Company's Embassy Suites
hotel in Little Rock, Arkansas which opened in the fall of 1997, from Mr.
Hammons.  Annual rent is $120,000 per year until the end of 2001.  Rent
thereafter is adjusted based on movement in the Consumer Price Index.  The lease
term is 40 years.  The Company has an option to purchase the land at any time
during the first 10 years of the lease term, for the greater of $1,900,000 or
the current appraised value.

     The Company also leases the real estate for the Company's Renaissance
Suites Hotel in Charlotte, NC, which opened in December of 1999 from Tulsa Hills
Investments, Inc., an Ohio corporation, of which Mr. Hammons is a 99% owner and
Jacqueline A. Dowdy is a 1% owner.  The lease term is 99 years.  Aggregate
annual lease payments were $120,000 in 2000, and will be the same in 2001, and
$124,800 per year for years six through ten of the term, and the greater of
$124,800 or 1% of gross rooms revenues plus 0.5% of gross revenues from food and
beverage sales thereafter.

     Mr. Hammons owns parcels of undeveloped land throughout the United States.
Although there are no current plans to do so, the Company may purchase or lease
one or more of these parcels in the future in order to develop hotels.  Since
Mr. Hammons controls the Company, such transactions would not be arms-length
transactions but will be subject to restrictions contained in the  indentures
relating to the Company's outstanding mortgage notes due in 2004 and 2005.

     The General Partner receives no management fee or similar compensation in
connection with its management of the Company.  The General Partner receives the
following remuneration from the Company:  (i) distributions, if any, in respect
of its equity interest in the Company; and (ii) reimbursement for all direct and
indirect costs and expenses incurred by the General Partner for or on behalf of
the Company and all other expenses necessary or appropriate to the conduct of
the business of, and allocable to, the Company.

                                    PART IV

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

14(a)(1)    Financial Statements

  Reference is made to the Index to Consolidated Financial Statements and the
Consolidated Financial Statements following such index.

14(a)(2)    Financial Statement Schedules

     All schedules have been omitted because the required information in such
schedules is not present in amounts sufficient to require submission of the
schedule or because the required information is included in the consolidated
financial statements or is not required.

14(a)(3)    Exhibits

     Exhibits required to be filed by Item 601 of Regulation S-K are listed in
the Exhibit Index attached hereto, which is incorporated by reference. Set forth
below is a list of management contracts and compensatory plans and arrangements
required to be filed as exhibits by Item 14(c).

      10.4    Form of Option Purchase Agreement
      10.8    Employment Agreement between the General Partner and Debra M.
              Shantz dated as of May 1, 1995, as amended on October 31, 1997 and
              October 31, 2000.
      10.18   1994 Stock Option Plan of the General Partner

                                       32
<PAGE>

     10.19  1999 Non-Employer Director Stock and Stock Option Plan of the
            General Partner

14(b)     Reports on Form 8-K

  No reports on Form 8-K were filed during the quarter ended December 29, 2000.

14(c)     Exhibits

  Reference is made to the exhibit index which has been filed with the exhibits.

14(d)   Financial Statements


     Report of Independent Public Accountants

     Consolidated Balance Sheets at Fiscal 2000 and 1999 Year-Ends

     Consolidated Statements of Operations for the 2000, 1999, and 1998 Fiscal
     Years Ended

     Consolidated Statements of Changes In Equity (Deficit) for 2000, 1999, and
     1998 Fiscal Years Ended.

     Consolidated Statements of Cash Flows for 2000, 1999, and 1998 Fiscal Years
     Ended.

     Notes to Consolidated Financial Statements


                                       33
<PAGE>

John Q. Hammons Hotels, L.P.



Consolidated Financial Statements
As of December 29, 2000 and December 31, 1999

Together with Auditors' Report
<PAGE>

Report of Independent Public Accountants
----------------------------------------



To the Partners of
     John Q. Hammons Hotels, L.P.:


We have audited the accompanying consolidated balance sheets of John Q. Hammons
Hotels, L.P. (Note 1) as of December 29, 2000 and December 31, 1999, and the
related consolidated statements of operations, changes in equity and cash flows
for each of the three fiscal years ended December 29, 2000, December 31, 1999
and January 1, 1999.  These financial statements are the responsibility of the
Partnership's management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of John Q.
Hammons Hotels, L.P. (Note 1) as of December 29, 2000 and December 31, 1999, and
the results of their operations and their cash flows for each of the three
fiscal years ended December 29, 2000, December 31, 1999 and January 1, 1999 in
conformity with accounting principles generally accepted in the United States.

As discussed in Note 2 to the consolidated financial statements, effective in
the first quarter of fiscal 1999, the Partnership changed its method of
accounting for costs of start-up activities, including preopening expenses.


Cincinnati, Ohio,
     February 9, 2001
<PAGE>

John Q. Hammons Hotels, L.P. (Note 1)

<TABLE>
<CAPTION>
Consolidated Balance Sheets
(000's omitted)
---------------------------------------------------------------------------------------------------------
                                                                         Fiscal             Fiscal
                                                                          2000               1999
                                                                     -------------      -------------
<S>                                                                  <C>                <C>
ASSETS
------
CASH AND EQUIVALENTS (Restricted cash of $715 and $1,323 in
 2000 and 1999, respectively) (Note 2)                                 $   45,554         $   49,727

MARKETABLE SECURITIES (Note 2)                                              3,617              4,982

RECEIVABLES:
  Trade, less allowance for doubtful accounts of $231 and $226 in
   2000 and 1999, respectively                                             11,606             11,677
  Construction reimbursements, pending insurance claims and other           2,438              2,370
   (Note 2)
  Management fees (Note 3)                                                    101                 63

INVENTORIES                                                                 1,496              1,349

PREPAID EXPENSES AND OTHER                                                  2,396              1,699
                                                                     -------------      -------------
          Total current assets                                             67,208             71,867
                                                                     -------------      -------------
PROPERTY AND EQUIPMENT, at cost (Notes 2, 5 and 6):
  Land and improvements                                                    58,229             55,818
  Buildings and improvements                                              740,618            683,462
  Furniture, fixtures and equipment                                       297,946            270,146
  Construction in progress                                                      -             53,462
                                                                     -------------      -------------
                                                                        1,096,793          1,062,888
  Less- Accumulated depreciation and amortization                        (273,535)          (227,411)
                                                                     -------------      -------------
                                                                          823,258            835,477
                                                                     -------------      -------------
DEFERRED FINANCING COSTS, FRANCHISE FEES
 AND OTHER, net (Notes 2, 4 and 5)                                         30,418             26,968
                                                                     -------------      -------------
                                                                       $  920,884         $  934,312
                                                                     =============      =============
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these consolidated balance sheets.
<PAGE>

John Q. Hammons Hotels, L.P. (Note 1)


Consolidated Balance Sheets
(000's omitted)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Consolidated Balance Sheets
(000's omitted)
--------------------------------------------------------------------------------------------------------
                                                                         Fiscal             Fiscal
                                                                          2000               1999
                                                                     -------------      -------------
<S>                                                                  <C>                <C>
LIABILITIES AND EQUITY
----------------------
LIABILITIES:
  Current portion of long-term debt (Note 5)                           $ 56,258           $ 16,569
  Accounts payable, including construction payables of approximately
   $0 and $4,055, respectively                                            5,990             11,877

  Accrued expenses-
     Payroll and related benefits                                         9,077              7,720
     Sales and property taxes                                            11,642             10,368
     Insurance (Notes 2 and 3)                                            2,292              7,576
     Interest                                                            12,639             12,873
     Utilities, franchise fees and other                                  6,747              6,546
                                                                     -------------      -------------
          Total current liabilities                                     104,645             73,529

  Long-term debt (Note 5)                                               780,449            812,274
  Other obligations and deferred revenue (Note 2)                         2,032              9,402
                                                                     -------------      -------------
          Total liabilities                                             887,126            895,205
                                                                     -------------      -------------

COMMITMENTS AND CONTINGENCIES (Note 6)

EQUITY (Note 1):
  Contributed capital                                                    96,436             96,436
  Partners' and other deficits, net                                     (62,678)           (57,329)
                                                                     -------------      -------------
          Total equity                                                   33,758             39,107
                                                                     -------------      -------------
                                                                       $920,884           $934,312
                                                                     =============      =============
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these consolidated balance sheets.
<PAGE>

John Q. Hammons Hotels, L.P. (Note 1)


Consolidated Statements of Operations
(000's omitted)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                   Fiscal Year Ended
                                                                     -------------------------------------------------
                                                                          2000              1999              1998
                                                                     -------------     -------------     -------------
<S>                                                                  <C>               <C>               <C>
REVENUES (Note 8):
  Rooms                                                                  $267,596          $229,807          $211,989
  Food and beverage                                                       119,865           101,231            91,982
  Meeting room rental and other                                            49,113            40,646            35,003
                                                                     -------------     -------------     -------------
          Total revenues                                                  436,574           371,684           338,974
                                                                     -------------     -------------     -------------

OPERATING EXPENSES (Notes 3, 4 and 6):
  Direct operating costs and expenses-
     Rooms                                                                 68,224            59,507            54,600
     Food and beverage                                                     98,398            84,035            77,018
     Other                                                                  3,716             3,667             3,389
  General, administrative, sales and management service expenses          124,393           104,876            95,500
  Repairs and maintenance                                                  17,065            15,059            13,438
  Depreciation and amortization (Note 8)                                   53,367            45,669            45,580
                                                                     -------------     -------------     -------------
          Total operating expenses                                        365,163           312,813           289,525
                                                                     -------------     -------------     -------------
INCOME FROM OPERATIONS (Note 8)                                            71,411            58,871            49,449

OTHER (INCOME) EXPENSE:
  Interest expense and amortization of deferred financing fees,
   net of $2,798, $3,161, and $3,794 of interest income in
   2000, 1999 and 1998, respectively (Note 2(g))                           73,833            62,209            57,286
  Gain on sales of property and equipment (Note 8)                              -            (2,365)           (8,175)
                                                                     -------------     -------------     -------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT
 OF CHANGE IN ACCOUNTING PRINCIPLE                                         (2,422)             (973)              338

   Extraordinary item; cost of early extinguishment of debt
    (Note 5)                                                                    -              (194)           (2,249)
                                                                     -------------     -------------     -------------

LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE            (2,422)           (1,167)           (1,911)

   Cumulative effect of change in accounting principle
   (Note 2(r))                                                                  -            (1,819)                -
                                                                     -------------     -------------     -------------

NET LOSS (Note 2(l))                                                     $ (2,422)         $ (2,986)         $ (1,911)
                                                                     =============     =============     =============
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
<PAGE>

John Q. Hammons Hotels, L.P. (Note 1)


Consolidated Statements of Changes in Equity (1)
(000's omitted)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                  Partners and
                                            Contributed Capital              Other Equity (Deficit)
                                        --------------------------       ----------------------------
                                         General          Limited          General           Limited
                                         Partner          Partner          Partner           Partner       Total
                                        ---------        ---------      -------------     -----------   ----------
<S>                                     <C>               <C>            <C>               <C>           <C>
BALANCE, Yearend 1997                    $96,436           $    -         $(77,897)        $ 39,399      $ 57,938
 Distributions (Note 1(b))                     -                -             (150)         (10,637)      (10,787)
 Net loss                                      -                -             (541)          (1,370)       (1,911)
                                        ---------        ---------      -------------     -----------   ----------
BALANCE, Yearend 1998                     96,436                -          (78,588)          27,392        45,240
 Distributions (Note 1(b))                     -                -             (150)               -          (150)
 Advances to General Partner
  to purchase treasury stock
  (Note 1(b))                                  -                -           (2,997)               -        (2,997)
 Net loss                                      -                -             (845)          (2,141)       (2,986)
                                        ---------        ---------      -------------     -----------   ----------
BALANCE, Yearend 1999                     96,436                -          (82,580)          25,251        39,107
 Distributions (Note 1(b))                                                    (150)                          (150)
 Advances to General Partner
  to purchase treasury stock
  (Note 1(b))                                  -                -           (2,777)               -        (2,777)


 Net loss                                      -                -             (686)          (1,736)       (2,422)
                                        ---------        ---------      -------------     -----------   ----------
BALANCE, Yearend 2000                    $96,436           $    -         $(86,193)        $ 23,515      $ 33,758
                                        =========        =========      =============     ===========   ==========
</TABLE>

(1)  For periods presented, there are no elements of other comprehensive income
     as defined by the Financial Accounting Standards, No. 130, Reporting
                                                                ---------
     Comprehensive Income.
     --------------------

The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
<PAGE>

John Q. Hammons Hotels, L.P. (Note 1)


Consolidated Statements of Cash Flows
(000's omitted)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                   Fiscal Year Ended
                                                                           ---------------------------------
                                                                             2000        1999        1998
                                                                           --------- ----------- -----------
<S>                                                                        <C>        <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                 $ (2,422)  $  (2,986)  $  (1,911)
  Adjustments to reconcile net loss to cash provided by
  operating activities-
     Depreciation, amortization and loan cost amortization                   55,718      47,655      48,448
     Extraordinary item (Note 5)                                                  -         194       2,249
     Cumulative effect of change in accounting principle
     (Note 2)                                                                     -       1,819           -
     Gain on sales of property and equipment (Note 8)                             -      (2,365)     (8,175)
     Non-cash director compensation                                              50          40           -
                                                                           --------- ----------- -----------
                                                                             53,346      44,357      40,611
  Changes in certain assets and liabilities-
     Receivables                                                                (35)         73      (2,742)
     Inventories                                                               (147)       (144)       (112)
     Prepaid expenses and other                                                (697)       (610)        297
     Accounts payable                                                        (5,887)     (1,264)      1,909
     Accrued expenses                                                        (2,686)        513         698
     Other obligations and deferred revenue                                  (7,370)     (1,481)      2,983
                                                                           --------- ----------- -----------
          Net cash provided by operating activities                          36,524      41,444      43,644
                                                                           --------- ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                                       (43,499)   (123,620)   (131,183)
  Franchise fees and other                                                   (3,450)     15,353     (11,528)
  Sale of marketable securities                                               1,365       1,551       6,209
  Proceeds from sales of property and equipment (Note 8)                          -       6,500      43,577
                                                                           --------- ----------- -----------
          Net cash used in investing activities                             (45,584)   (100,216)    (92,925)
                                                                           --------- ----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from borrowings                                                   24,436     104,477     260,771
  Repayments of debt                                                        (16,572)    (35,350)   (196,846)
      Advances for treasury stock and other                                  (2,827)     (3,037)          -
  Distributions to partners                                                    (150)     (3,086)     (7,851)
  Loan financing fees                                                             -        (738)     (2,521)
                                                                           --------- ----------- -----------
          Net cash provided by financing activities                           4,887      62,266      53,553
                                                                           --------- ----------- -----------
          Increase (decrease) in cash and equivalents                        (4,173)      3,494       4,272

CASH AND EQUIVALENTS, beginning of period                                    49,727      46,233      41,961
                                                                           --------- ----------- -----------

CASH AND EQUIVALENTS, end of period                                        $ 45,554   $  49,727   $  46,233
                                                                           ========= =========== ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID FOR INTEREST, net of amounts capitalized                         $ 74,552   $  63,312   $  58,733
                                                                           ========= =========== ===========

SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
  Note receivable from sale of property and equipment (Note 8)             $      -   $       -   $  11,900
                                                                           ========= =========== ===========
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
<PAGE>

                                                       TENTATIVE AND PRELIMINARY
                                                    FOR DISCUSSION PURPOSES ONLY


John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
(000's omitted)
--------------------------------------------------------------------------------

(1)  Basis of Presentation-
     ---------------------

     (a)  Entity Matters--The accompanying consolidated financial statements
          --------------
          include the accounts of John Q. Hammons Hotels, L.P. and its wholly-
          owned subsidiaries (the Partnership), John Q. Hammons Hotels Finance
          Corporation, a corporation with nominal assets and no operations, the
          catering corporations, which consist of separate corporations for each
          hotel location chartered to own the respective food and liquor
          licenses as well as operate the related food and beverage facilities
          and certain wholly-owned subsidiaries which consist of certain hotel
          operations. As of fiscal yearend 2000, 1999, 1998, the Partnership had
          47, 45, and 42, respectively, hotels in operation of which 30 in 2000,
          29 in 1999 and 28 in 1998 operate under the Holiday Inn and Embassy
          Suites trade names. The Partnership's hotels are located in 20 states
          throughout the United States.

          In conjunction with a public offering of debt securities in February,
          1994 and a public offering of equity securities in November, 1994 by
          John Q. Hammons Hotels, Inc., J.Q.H. Hotels, L.P., which owned and
          operated ten hotel properties, obtained through transfers or
          contributions from Mr. John Q. Hammons (Mr. Hammons) or enterprises
          which he controlled, twenty-one additional operating hotel properties,
          equity interests in two hotels under construction, the stock of the
          catering corporations and management contracts relating to all of Mr.
          Hammons' hotels. Upon consummation of these transactions J.Q.H.
          Hotels, L.P. changed its name to John Q. Hammons Hotels, L.P. and the
          allocation of income or loss was modified from 1% to its general
          partner and 99% to its limited partner to 10% and 90%, respectively,
          upon completion of the public debt offering and to 28.31% to its
          general partner and 71.69% to its limited partner upon completion of
          the public equity offering.

          The Partnership is directly or indirectly owned and controlled by Mr.
          Hammons, as were all enterprises which transferred or contributed net
          assets to the Partnership. Accordingly, the accompanying financial
          statements present, as a combination of entities under common control
          as if using the pooling method of accounting, the financial position
          and related results of operations of all entities on a consolidated
          basis for all periods presented. All significant balances and
          transactions between the entities and properties have been eliminated.

     (b)  Partnership Matters--A summary of selected provisions of the
          -------------------
          Partnership agreement and other matters are as follows:

          General and Limited Partner: John Q. Hammons Hotels, Inc. (the
          ----------------------------
          Company) was formed in September 1994 and had no operations or assets
          prior to its initial public offering of 6,042,000 Class A common
          shares at $16.50 per share on November 23, 1994. Immediately prior to
          the initial public offering, Mr. Hammons contributed approximately $5
          million in cash in exchange for 294,100 shares of Class B common stock
          (which represents approximately 72% of the voting control of the
          Company). John Q. Hammons Hotels, Inc. contributed the approximate $96
          million of the net proceeds from the Class A and Class B common stock
          offerings to the Partnership in exchange for an approximate 28%
          general partnership interest.
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
(000's omitted)                                                                2
--------------------------------------------------------------------------------


       As a result of the public equity offering, John Q. Hammons Hotels, Inc.
       became the sole general partner and John Q. Hammons Revocable Living
       Trust and Hammons, Inc., entities beneficially owned and controlled by
       Mr. Hammons, became its limited partners.

       Allocation of Income, Losses and Distributions: Income, losses and
       -----------------------------------------------
       distributions of the Partnership will generally be allocated between the
       general partner and the limited partners based on their respective
       ownership interests of approximately 28% and 72%.

       In the event the Partnership has taxable income, distributions are to be
       made to the partners in an aggregate amount equal to the amount that the
       Partnership would have paid for income taxes had it been a C corporation
       during the applicable period.  Aggregate tax distributions will first be
       allocated to the general partner, if applicable, with the remainder
       allocated to the limited partners.  There were no distributions to the
       limited partner for taxes for the fiscal year ended 2000 and 1999.
       Distributions to the limited partner for taxes approximated $10,637 for
       the fiscal year ended 1998.

       In 1998 and 1999, the Board of Directors of John Q. Hammons Hotels, Inc.
       authorized the purchase of up to $3.0 million of its stock during each of
       the fiscal years 1999 and 2000.  As of December 29, 2000, $5,864 of stock
       had been purchased.  For financial reporting purposes, the advances by
       the partnership to its general partner to purchase stock have been
       reflected as a reduction of equity in the accompanying consolidated
       balance sheet and statement of changes in equity.

       Additional Capital Contributions: In the event proceeds from the sale of
       ---------------------------------
       the original twenty hotel properties (or applicable replacement
       collateral) which secure the $300 million First Mortgage notes (1994
       notes) (Note 5) are insufficient to satisfy amounts due on the 1994
       notes, Mr. Hammons and Hammons, Inc. (as general partners at the time the
       1994 notes were secured) are severally obligated to contribute up to $135
       million and $15 million, respectively, to satisfy amounts due, if any.
       In the event proceeds from the sale of the original eight hotel
       properties (or applicable replacement collateral) which secure the $90
       million First Mortgage notes (1995 notes) (Note 5) are insufficient to
       satisfy amounts due on the 1995 notes, Mr. Hammons is obligated to
       contribute up to $45 million to satisfy amounts due, if any.  In
       addition, with respect to the original eleven hotel properties
       contributed by Mr. Hammons concurrent with the public equity offering,
       Mr. Hammons is obligated to contribute up to $50 million in the event
       proceeds from the sale of these hotel properties (or applicable
       replacement collateral) are insufficient to satisfy amounts due on the
       then outstanding mortgage indebtedness related to these properties.

       Redemption of Limited Partner Interests: Subject to certain limitations,
       ----------------------------------------
       the limited partners have the right to require redemption of their
       limited partner interests at any time subsequent to November 1995.  Upon
       redemption, the limited partners receive, at the sole discretion of the
       general partner, one share of John Q. Hammons Hotels, Inc.'s Class A
       common stock for each limited partner unit tendered or the then cash
       equivalent thereof.

       Additional General Partner Interests: Upon the issuance by the general
       -------------------------------------
       partner of additional shares of its common stock, including shares issued
       upon the exercise of its stock options, the general partner will be
       required to contribute to the Partnership the net proceeds received and
       the Partnership will be required to issue additional general partner
       units to the general partner in an equivalent number to the additional
       shares of common stock issued.
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
(000's omitted)                                                                3
--------------------------------------------------------------------------------


(2)  Summary of Significant Accounting Policies-
     ------------------------------------------

     (a)  Cash and Equivalents--Cash and equivalents include operating cash
          --------------------
          accounts and investments, with an original maturity of three months or
          less, and certain balances of various money market and common bank
          accounts.

          Restricted cash consists of certain funds maintained in escrow for
          property taxes and certain other obligations.

     (b)  Marketable Securities--Marketable securities consist of available-for-
          ---------------------
          sale commercial paper and government agency obligations which mature
          or will be available for use in operations in 2001. These securities
          are valued at current market value, which approximates cost. Realized
          gains and losses in 2000 and 1999, determined using the specific
          identification method, were nominal.

     (c)  Pending Insurance Claims--During fiscal 2000, the Partnership
          ------------------------
          initiated the filing of claims with certain of its construction
          service providers as well as with its insurance carrier. These
          requests for recoveries result from various moisture related problems
          at certain of the Partnership's hotel properties. To date, the various
          contractors have attempted to correct these problems at essentially no
          direct cost to the Partnership. With respect to the residual moisture
          related problems, the Partnership has claims pending with its
          insurance carrier seeking reimbursement for repair costs incurred
          through December 29, 2000 of approximately $1.7 million. The
          Partnership has also incurred an additional approximate $2.6 million
          through December 29, 2000 of repairs cost which it intends to file for
          reimbursement from its insurance carrier during 2001. Finally, the
          Partnership anticipates an additional approximate $5.0 million of
          claims will be incurred in the future and submitted to the insurance
          carrier in 2001 or 2002 as the applicable repair costs have been
          incurred and quantified. Management and its legal counsel are of the
          opinion it is remote that the Partnership would be unsuccessful
          realizing the claims pending or to be filed for costs incurred through
          or as of December 29, 2000. Accordingly, pending cost reimbursements
          as of December 29, 2000 are included as a component of current assets
          in the accompanying 2000 balance sheet, while the costs anticipated to
          be recovered through insurance have been deferred and are included as
          a component of deferred financing costs, franchise fees and other.
          Adjustments to these pending receivables or deferred costs, as
          applicable, will be recorded in the period in which the facts and
          circumstances which give rise to the adjustment become known.
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
(000's omitted)                                                                4
--------------------------------------------------------------------------------

     (d)  Allowance for Doubtful Accounts-
          -------------------------------

          The following summarizes activity in the allowance for doubtful
          accounts on trade accounts receivable:

<TABLE>
<CAPTION>
                                                         Additions
                                           Balance,     Charged to                    Balance,
                                         Beginning of    Costs and                     End of
                                            Period       Expenses     Deductions       Period
                                         -------------  -----------  ------------   ------------
          <S>                            <C>            <C>          <C>            <C>
          Year ended December 29, 2000          $226          $558        $(553)           $231

          Year ended December 31, 1999           206           272         (252)            226

          Year ended January 1, 1999             188           584         (566)            206
</TABLE>

     (e)  Inventories--Inventories consist of food and beverage items.  These
          -----------
          items are stated at the lower of cost, as determined by the first-in,
          first-out valuation method, or market.

     (f)  Deferred Financing Costs, Franchise Fees and Other--Franchise fees
          --------------------------------------------------
          paid to the respective franchisors of the hotel properties are
          amortized on a straight-line basis over 10 to 20 years which
          approximates the terms of the respective agreements. Costs of
          obtaining financing are capitalized and amortized over the respective
          terms of the debt.

          The components of deferred financing costs, franchise fees and other
          are summarized as follows:

<TABLE>
<CAPTION>
                                                                                   Fiscal Yearend
                                                                           -------------------------------
                                                                                2000             1999
                                                                           --------------    -------------
               <S>                                                         <C>               <C>
               Deferred financing costs                                       $ 21,732         $ 22,603
               Franchise fees                                                    5,186            5,142
               Less- Accumulated amortization                                  (13,586)         (11,830)
                                                                           --------------    -------------
                                                                                13,332           15,915
               Deposits                                                         12,543           10,738
               Managed contract costs and other (Note 3(e))                      1,455                -
               Pending insurance claims (Note 2(c))                              2,600                -
               Restricted cash deposits, interest-bearing, related to
                sales of hotels and a component of replacement
                collateral for 1994 and 1995 First Mortgage notes
                 (Note 8)                                                          160              102
               Other, net                                                          328              213
                                                                           --------------    -------------
                                                                              $ 30,418         $ 26,968
                                                                           ==============    =============
</TABLE>

     (g)  Property and Equipment--Property and equipment are stated at cost
          ----------------------
          (including interest, real estate taxes and certain other costs
          incurred during development and construction) less accumulated
          depreciation and amortization. Buildings and improvements are
          depreciated using the straight-line
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
(000's omitted)                                                                5
--------------------------------------------------------------------------------

          method while all other property is depreciated using both straight-
          line and accelerated methods. The estimated useful lives of the assets
          are summarized as follows:

                                                              Lives In Years
                                                             ----------------
               Land improvements                                    5-25
               New buildings and improvements                      10-40
               Purchased buildings                                    25
               Furniture, fixtures and equipment                    3-10

          Construction in progress includes development and construction costs
          of certain hotel developments. Costs associated with hotel development
          construction in progress approximated $53 million in 1999, with the
          remainder representing refurbishments of operating hotels. There was
          no construction in progress at December 29, 2000.

          The Partnership periodically reviews the carrying value of these
          assets and other long-lived assets and impairment losses are
          recognized when the expected undiscounted future cash flows are less
          than the carrying amount of the asset. Based on its most recent
          analysis, the Partnership believes no impairment exists at December
          29, 2000.

          Interest costs, construction overhead and certain other carrying costs
          are capitalized during the period hotel properties are under
          construction. Interest costs capitalized were $504, $6,770 and $6,163
          for the fiscal years ended 2000, 1999 and 1998, respectively. Costs
          incurred for prospective hotel projects ultimately abandoned are
          charged to operations in the period such plans are finalized. Costs of
          significant improvements are capitalized, while costs of normal
          recurring repairs and maintenance are charged to expense as incurred.

          The accompanying 2000 consolidated financial statements include the
          land costs for 34 of the operating hotel properties. Land for 10 of
          the remaining 13 operating hotel properties is leased by the
          Partnership from unrelated parties over long-term leases. Land for the
          remaining three operating hotel properties is leased by the
          Partnership from a related party over long-term leases. Rent expense
          for all land leases was $1,489, $1,109 and $1,008 for the fiscal years
          ended 2000, 1999 and 1998, respectively.

     (h)  Par Operating Equipment--A hotel's initial expenditures for the
          -----------------------
          purchase of china, glassware, silverware, linens and uniforms are
          capitalized into furniture, fixtures and equipment and amortized on a
          straight-line basis over a three to five year life. Costs for
          replacement of these items are charged to operations in the period the
          items are placed in service.

     (i)  Advertising--The Partnership expenses the cost of advertising
          -----------
          associated with operating hotels as incurred. Advertising expense for
          2000, 1999 and 1998 was approximately $31,815, $26,834 and $23,571,
          respectively.
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
000's omitted)                                                                 6
--------------------------------------------------------------------------------

     (j)  Pensions and Other Benefits--The Partnership contractually provides
          ---------------------------
          retirement benefits for certain union employees at two of its hotel
          properties under a union-sponsored defined benefit plan and a defined
          contribution plan. Contributions to these plans, based upon the
          provisions of the respective union contracts, approximated $86, $77
          and $70 for the fiscal years ended 2000, 1999 and 1998, respectively.

          The Partnership maintains an employee savings plan (a 401(k) plan).
          The Partnership matches a percentage of an employee's contribution.
          The Partnership's matching contributions are funded currently. The
          cost of the matching program and administrative costs charged to
          income were approximately $506, $258 and $591 in 2000, 1999 and 1998,
          respectively. The Partnership does not offer any other post-employment
          or post-retirement benefits to its employees.

     (k)  Self-Insurance--The Partnership was self-insured for liability and
          --------------
          workers' compensation claims that occurred prior to November 1999 and
          October 1998, respectively. The Partnership became self-insured for
          medical coverage effective January 1999. Estimated costs related to
          these self-insurance programs are accrued based on known claims and
          projected settlements of unasserted claims. Subsequent changes in,
          among others, assumed claims, claims costs, claim frequency, as well
          as changes in actual experience, could cause these estimates to
          change.

          The Partnership entered into an $800 irrevocable stand-by letter of
          credit agreement with a bank which was required by an insurance
          carrier for the Partnership's self-insurance programs. The letter of
          credit expires in October 2001.

     (l)  Income Taxes--Prior to 1994, the entities and properties included in
          ------------
          the accompanying consolidated financial statements consisted of a
          Partnership, S Corporations and a sole proprietorship. Accordingly,
          the Partnership generally is not responsible for payment of income
          taxes. Rather, the respective partner, stockholder or sole proprietor,
          as applicable, is taxed on the Partnership's taxable income at the
          respective individual federal and state income tax rates. Therefore,
          no income taxes have been provided in the accompanying consolidated
          financial statements.

          As described in Note 1, the Partnership and its general partner, as
          applicable, completed public offerings of first mortgage notes and
          equity securities. Prior to the consummation of these offerings, the S
          Corporation status of the catering companies was terminated, and,
          accordingly, the Partnership is subject to federal and state income
          taxes on taxable income, if any, earned by the catering companies
          after the effective date of the securities registrations. There were
          nominal, if any, earnings attributable to the catering companies after
          the applicable public offerings and there were no undistributed
          earnings of the S Corporations at the time of termination.

     (m)  Revenue Recognition--The Partnership recognizes revenues from its
          -------------------
          rooms, catering and restaurant facilities as earned on the close of
          business each day.

     (n)  Use of Estimates--The preparation of financial statements in
          ----------------
          conformity with accounting principles generally accepted in the United
          States requires management to make estimates and assumptions that
          affect the reported amounts of assets and liabilities at the date of
          the financial statements and the reported amounts of revenues and
          expenses during the reporting period. Actual results could differ from
          those estimates.
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
000's omitted)                                                                 7
--------------------------------------------------------------------------------

     (o)  Fiscal Year--The Partnership's fiscal year ends on the Friday nearest
          -----------
          December 31 which includes 52 weeks in 2000, 1999 and 1998.

          The periods ended in the accompanying consolidated financial
          statements are summarized as follows:

                    Year                        Fiscal Yearend
                ------------              --------------------------

                    2000                       December 29, 2000
                    1999                       December 31, 1999
                    1998                       January 1, 1999

     (p)  Segments--The Partnership operates in one reportable segment,
          --------
          hospitality services.

     (q)  Reclassifications--Certain reclassifications have been reflected in
          -----------------
          1999 and 1998 to conform with the current period presentation.

     (r)  Accounting Pronouncements-- In April 1998, the American Institute of
          -------------------------
          Certified Public Accountants issued Statement of Position 98-5,
          "Reporting on the Costs of Start-Up Activities" (SOP 98-5), which
          requires costs of start-up activities, including preopening expenses,
          to be expensed as incurred. Prior to January 1, 1999, the
          Partnership's practice was to defer these expenses until a hotel had
          commenced operations, at which time the costs, other than advertising
          costs which were expensed upon opening, were amortized over a one-year
          period. The Partnership adopted the provisions of this statement in
          the first quarter of fiscal 1999 and, as a result, cumulative
          unamortized preopening costs of approximately $1.8 million were
          charged to expense. Preopening expenses in 1999 approximated $4,161
          and are included in general, administrative, sales and management
          service expenses in the accompanying consolidated statement of
          operations.

          In June 1998, the Financial Accounting Standards Board (FASB) issued
          Statement of Financial Accounting Standards No. 133, "Accounting for
          Derivative Instruments and Hedging Activities" (SFAS 133). SFAS 133
          establishes accounting and reporting standards requiring that every
          derivative instrument (including certain derivative instruments
          embedded in other contracts) be recorded in the balance sheet as
          either an asset or liability measured at its fair value. This
          statement requires that changes in the derivative's fair value be
          recognized currently in earnings unless specific hedge accounting
          criteria are met. The Partnership adopted this statement in the fourth
          quarter of fiscal 2000 with no impact on its reported consolidated
          financial position, results of operations, cash flows or related
          disclosures.
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
000's omitted)                                                                 8
--------------------------------------------------------------------------------

(3)  Related Party Transactions-
     --------------------------

     (a)  Hotel Management Fees--In addition to managing the hotel properties
          ---------------------
          included in the accompanying consolidated financial statements, the
          Partnership provides similar services for other hotel properties owned
          or controlled by Mr. Hammons which included 6 properties at December
          29, 2000. A management fee of approximately 3% to 5% of gross revenues
          (as defined) is paid to the Partnership by these hotels which
          aggregated approximately $1,245, $844 and $715 for the fiscal years
          ended 2000, 1999 and 1998, respectively.

     (b)  Accounting and Administrative Services--The hotels have contracted for
          --------------------------------------
          accounting and other administrative services with Winegardner &
          Hammons, Inc. (WHI), a company related by common ownership. The
          accounting and administrative charges expensed by the hotel
          properties, included in administrative expenses, were approximately
          $1,577, $1,440 and $1,388 for the fiscal years ended 2000, 1999 and
          1998, respectively.

          In 1999, the Partnership negotiated a new contract with WHI to
          continue to provide accounting and administrative services through
          June 2002. Charges for these services provided by WHI will approximate
          $35 per year for each hotel property for the duration of the
          agreement.

     (c)  In surance Coverage--To supplement the Partnership's self-insurance
          ------------------
          programs, umbrella, property, auto, commercial liability, workers'
          compensation and, commencing in 1999, medical insurance is provided to
          the hotel properties under a blanket commercial policy purchased by
          John Q. Hammons Hotels, Inc. or WHI, covering hotel properties owned
          by the Partnership, Mr. Hammons, or managed by WHI. Generally,
          premiums allocated to each hotel property are based upon factors
          similar to those used by the insurance provider to compute the
          aggregate group policy premium. Insurance expense for the properties
          included in operating expenses was approximately $3,578, $1,088 and
          $2,158 for the fiscal years ended 2000, 1999 and 1998, respectively.
          During fiscal 2000, 1999 and 1998, the Partnership realized continued
          favorable trends in insurance expense as a result of claims experience
          and rate improvements and favorable buyouts of several prior self-
          insured years. Subsequent to fiscal 2000, the Partnership expects the
          insurance expense to significantly increase due to the now fully-
          insured nature of most of the Partnership's insurance programs, other
          than medical, and the minimal number of policy years remaining which
          could be bought out.

     (d)  Allocation of Common Costs--The Partnership incurs certain hotel
          --------------------------
          management expenses incidental to the operations of all hotels
          beneficially owned or controlled by Mr. Hammons. These costs
          principally include the compensation and related benefits of certain
          senior hotel executives. Commencing in May of 1993, these costs were
          allocated by the Partnership to hotels not included in the
          accompanying statements, based on the respective number of rooms of
          all hotels owned or controlled by Mr. Hammons. These costs
          approximated $184, $132 and $145 for the fiscal years ended 2000, 1999
          and 1998, respectively. Management considers these allocations to be
          reasonable.

     (e)  Transactions with Partners and Directors--Advances to Mr. Hammons as
          ----------------------------------------
          of December 31, 1999 approximated $366. There were no advances to Mr.
          Hammons as of December 29, 2000.

          During 2000, the Partnership's Board of Directors authorized the
          Partnership to enter into a five-year management contract with Mr.
          Hammons whereby the Partnership would pay a maximum 1 1/2% of
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
(000's omitted)                                                                9
--------------------------------------------------------------------------------

          the total development cost of Mr. Hammon's personally developed hotels
          for the opportunity to manage the hotels upon opening and the right of
          first refusal to purchase the hotels in the event they are offered for
          sale. As part of the management contract, the Partnership paid
          approximately $1,089 to Mr. Hammons in fiscal 2000. These costs will
          be amortized over the five-year contract period. As of December 29,
          2000, the Partnership also paid and capitalized $366 of additional
          costs in accordance with the management contract. Amortization for
          these costs will commence upon the opening of the hotel.

          During 1998, Mr. Hammons assumed approximately $300 in costs incurred
          associated with new developments. No such costs were assumed by Mr.
          Hammons in fiscal 2000 or 1999.

          During 1996, the Partnership entered into an agreement with a director
          relating to certain financial advisory services. The Partnership
          recognized approximately $17 in expense for the fiscal year ended 1998
          under this agreement. No such services were rendered in fiscal 2000
          and 1999.

     (f)  Summary of Related Party Expenses--The following summarizes expenses
          ---------------------------------
          reported as a result of activities with related parties:

<TABLE>
<CAPTION>
                                                                    2000       1999       1998
                                                                  --------   --------   --------
          <S>                                                     <C>        <C>        <C>
          Expenses included within general,
           administrative, sales and management
           service expenses:

            Accounting and administrative                          $1,577     $1,440     $1,388
            Rental expenses (Note 6)                                  830        787        800
            Financial advisory services from a director                 -          -         17
                                                                  --------   --------   --------
                                                                   $2,407     $2,227     $2,205
                                                                  ========   ========   ========

          Allocated insurance expense from the pooled
           coverage included within various operating
           categories:
            Insurance other than medical                           $3,578     $1,088     $2,158
                                                                  ========   ========   ========
            Medical, self-insured commencing in 1999               $5,198     $5,368     $    -
                                                                  ========   ========   ========
</TABLE>

     (4)  Franchise Agreements-
          --------------------

          As of yearend 2000 and 1999, 42 of the 47 and 40 of the 45,
          respectively, operating hotel properties included in the accompanying
          consolidated balance sheets have franchise agreements with national
          hotel chains which require each hotel to remit to the franchisor
          monthly fees equal to approximately 3% to 5% percent of gross room
          revenues, as defined. Franchise fees expensed under these contracts
          were $10,305, $8,478 and $8,110 for the fiscal years ended 2000, 1999
          and 1998, respectively.

          As part of the franchise agreement, each hotel also pays additional
          advertising, reservation and maintenance fees to the franchisor which
          range from 1% to 3.5% of gross room revenues, as defined. The amount
          of expense related to these fees included in the consolidated
          statements of operations as a component of sales expenses was
          approximately $9,021, $7,720 and $7,083 for the fiscal years ended
          2000, 1999 and 1998, respectively.
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
000's omitted)                                                                10
--------------------------------------------------------------------------------


(5)  Long-Term Debt-
     ---------------

     The components of long-term debt are summarized as follows:

<TABLE>
<CAPTION>
                                                                                           Fiscal Yearend
                                                                                    ------------      ------------
                                                                                        2000              1999
                                                                                    ------------      ------------
     <S>                                                                            <C>               <C>
     1994 First Mortgage notes, interest at 8.875%, interest only payable
     February 15 and August 15, principal due February 15, 2004, secured by
     a first mortgage lien on the original 20 hotel properties (or
     applicable replacement collateral) and additional capital
     contributions of up to $150 million by Mr. Hammons and an entity under
     his control.  (Note 1(b))                                                        $300,000          $300,000

     1995 First Mortgage notes, interest at 9.75%, interest only payable
     April 1 and October 1, principal due October 1, 2005, secured by a
     first mortgage lien on the original six hotel properties (or
     applicable replacement collateral), a second mortgage lien on the
     original two hotel properties and additional capital contributions of
     up to $45 million by Mr. Hammons.  (Note 1(b))                                     90,000            90,000

     Development bonds, interest rates at 7.125%, payable in scheduled
     installments through August 2015, certain of the obligations subject
     to optional prepayments by the bondholders, secured by certain hotel
     facilities, fixtures and an assignment of rents.                                   13,439            13,959

     Mortgage notes payable to banks, insurance companies and a state
     retirement plan, variable interest rates at prime to prime plus .75%
     with a certain instrument subject to a ceiling rate and a floor rate,
     fixed rates ranging from 7.57% to 9.5%, payable in scheduled
     installments through April 2027, secured by certain hotel facilities,
     fixtures, and an assignment of rents, with certain instruments subject
     to cross-collateralization provisions and, with respect to
     approximately $402,890 of mortgage notes, a personal guarantee of Mr.
     Hammons.                                                                          426,163           416,130

     Other notes payable, interest at 8.125%, payable in scheduled
     installments through March 2003, secured by certain hotel
     improvements, furniture, fixtures and related equipment and, with
     respect to approximately $375 of notes, a personal guarantee of
     Mr. Hammons.                                                                        7,105             8,754
                                                                                    ------------      ------------
     Less- current portion                                                             836,707           828,843
                                                                                       (56,258)          (16,569)
                                                                                    ------------      ------------
                                                                                      $780,449          $812,274
                                                                                    ============      ============
</TABLE>

     The indenture agreements relating to the 1994 and 1995 First Mortgage notes
     include certain covenants which, among others, limit the ability of the
     Partnership and its restricted subsidiaries (as defined) to make
     distributions, incur debt and issue preferred equity interests, engage in
     certain transactions with its partners, stockholders or affiliates, incur
     certain liens, engage in mergers or consolidations and achieve

<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
000's omitted)                                                                11
--------------------------------------------------------------------------------

     certain interest coverage ratios, as defined. In addition, certain of the
     other credit agreements include subjective acceleration clauses and limit,
     among others, the incurrence of certain liens and additional indebtedness
     and achieve or maintain certain financial covenants. The 1994 and 1995
     First Mortgage notes and certain other obligations include scheduled
     prepayment penalties in the event the obligations are paid prior to their
     scheduled maturity.

     The Partnership paid off or refinanced approximately $9,701, $28,000 and
     $133,000 of long-term debt in 2000, 1999 and 1998, respectively. In
     connection with these transactions, the Partnership incurred approximately
     $0, $200 and $2,200, respectively, in charges related to the early
     extingushment of debt. These debt extinguishment charges have been
     reflected in the accompanying 1999 and 1998 consolidated statements of
     operations as an extraordinary item.

     Scheduled maturities of long-term debt are summarized as follows:

                                                         Yearend
                      Year Ending                         2000
          -----------------------------------------  ---------------
            2001                                         $ 56,258
            2002                                           32,621
            2003                                           56,548
            2004                                          336,744
            2005                                           98,360
            Thereafter                                    256,176
                                                     ---------------
                                                         $836,707
                                                     ===============

     The Partnership intends to refinance or enter into extensions for
     approximately $47 million of debt maturing in 2001.

(6)  Commitments and Contingencies-
     -----------------------------

     (a)  Operating Leases--The hotel properties lease certain equipment and
          ----------------
          land from unrelated parties under various lease arrangements. In
          addition, the Partnership leases certain parking spaces at one hotel
          for the use of its patrons and is billed by the lessor based on actual
          usage. Rent expense for these leases was approximately $3,907, $3,508
          and $2,715 for the fiscal years ended 2000, 1999 and 1998,
          respectively, which has been included in general, administrative,
          sales and management service expenses.

          The Partnership operates two trade centers located in Joplin, Missouri
          and Portland, Oregon. Both of the facilities in which these trade
          centers operate are owned by Mr. Hammons. The lease agreement for the
          Joplin trade center stipulates nominal rentals for each of the fiscal
          years ended 2000, 1999 and 1998 and for each ensuing year through
          2014. The lease agreement for the Portland facility extends through
          2004 and requires minimum annual rents of $300 to Mr. Hammons. In
          addition, the Partnership leases office space in Springfield, Missouri
          from a partnership (of which Mr. Hammons is a partner) for annual
          payments of approximately $234 through December 2001. The Partnership
          has also entered into land leases with Mr. Hammons for three operating
          hotel properties. Subject to the Partnership exercising purchase
          options provided under these agreements, these leases extend
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
000's omitted)                                                                12
--------------------------------------------------------------------------------

          through 2008, 2036 and 2045, respectively, and require aggregate
          minimum annual payments of approximately $390. Rent expense for these
          related party leases was approximately $890, $787 and $800 for the
          fiscal years ended 2000, 1999 and 1998, respectively.

          The minimum annual rental commitments for these noncancellable
          operating leases at December 29, 2000 are as follows:

                 Fiscal Year
                   Ending              Mr. Hammons     Other      Total
               --------------         ------------- ----------- ----------
                    2001                 $   690      $ 2,309     $ 2,999
                    2002                     690        1,648       2,338
                    2003                     690          875       1,565
                    2004                     695          649       1,344
                    2005                     395          539         934
                 Thereafter               10,339       37,737      48,076
                                      ------------- ----------- ----------
                                         $13,499      $43,757     $57,256
                                      ============= =========== ==========

     (b)  Hotel Development--Currently, the Partnership does not have any hotels
          -----------------
          under construction nor does it have any plans to start construction.

     (c)  Legal Matters--The Partnership is party to various legal proceedings
          -------------
          arising from its consolidated operations. Management of the
          Partnership believes that the outcome of these proceedings,
          individually and in the aggregate, will have no material adverse
          effect on the Partnership's consolidated financial position, results
          of operations or cash flows.

(7)  Fair Value of Financial Instruments-
     -----------------------------------
     The fair values of marketable securities and long-term debt approximate
     their respective historical carrying amounts except with respect to the
     1994 and 1995 First Mortgage notes for which fair market value was
     approximately $353 million and $408 million at 2000 and 1999, respectively.
     The fair value of the First Mortgage notes issued is estimated by obtaining
     quotes from brokers.
<PAGE>

John Q. Hammons Hotels, L.P.


Notes To Consolidated Financial Statements
000's omitted)                                                                13
--------------------------------------------------------------------------------

(8)  Sales of Property and Equipment-
     -------------------------------

     On February 6, 1998, the Partnership completed the sale of six hotels to an
     unrelated party for $39.4 million, resulting in a gain of approximately
     $0.2 million. The net book value of the hotels' property and equipment at
     the time of the sale was approximately $38.6 million. Certain of these
     hotels served as collateral under the 1994 and 1995 First Mortgage notes
     (Note 5). Under the terms of these indentures, the Partnership provided
     replacement collateral in accordance with the indenture provisions.

     On December 31, 1998, the Partnership completed the sale of a hotel
     property to an unrelated party for $16.1 million, resulting in a gain of
     approximately $8.0 million. The net book value of the hotel's property and
     equipment at the time of the sale was approximately $8.0 million. In
     addition to the cash received upon closing, the sales price included a note
     receivable for $11.9 million. Proceeds for the balance of the note
     receivable were received during fiscal 1999. This hotel served as
     collateral under the 1995 First Mortgage notes (Note 5). Under the terms of
     this indenture, the Partnership provided replacement collateral in
     accordance with the indenture provisions.

     On June 16, 1999, the Partnership completed the sale of a hotel to an
     unrelated party for $6.5 million, resulting in a gain of approximately $2.4
     million. The net book value of the hotel's property and equipment at the
     time of the sale was approximately $3.6 million. The hotel served as
     collateral under the 1994 First Mortgage notes (Note 5). Under the terms of
     this indenture, the Partnership provided replacement collateral in
     accordance with the indenture provisions.

     Summary unaudited operating results for the eight hotels sold for each of
     the three years ended 2000, 1999 and 1998, as applicable, are as follows:

<TABLE>
<CAPTION>
                                                        2000      1999     1998
                                                      --------- -------- ---------
     <S>                                              <C>       <C>      <C>
     Revenues                                          $     -   $1,003   $12,122
                                                      ========= ======== =========
     Income (loss) from operations, including
      depreciation and amortization of $0, $210 and
      $1,315, respectively                             $     -   $  (22)  $   439
                                                      ========= ======== =========
</TABLE>

(9)  Subsequent Event-
     ----------------

     Subsequent to December 29, 2000, John Q. Hammons Hotels, Inc. has agreed to
     exchange approximately 1.3 million general partner units for funds advanced
     by the Partnership to John Q. Hammons Hotels, Inc. to repurchase its common
     stock. The number of general partner units to be exchanged is equivalent to
     the number of shares repurchased as outlined by the partnership agreement.
     Had the units been repurchased in fiscal 2000, the net loss allocable to
     the general partner would have been decreased by approximately $100.
<PAGE>

SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrants have duly caused this report to be signed
on their behalf by the undersigned, thereunto duly authorized, in the City of
Springfield, Missouri, on the 29th day of March, 2001.


                                  JOHN Q. HAMMONS HOTELS, L.P.

                                  By:  John Q. Hammons Hotels, Inc.,
                                     its general partner


                                  By: /s/ John Q. Hammons
                                     ---------------------------
                                     John Q. Hammons
                                     Chairman and Chief Executive Officer


                                  JOHN Q. HAMMONS HOTELS FINANCE
                                  CORPORATION

                                  By: /s/ John Q. Hammons
                                      --------------------------
                                      John Q. Hammons
                                      Chairman and Chief Executive Officer

                                  JOHN Q. HAMMONS HOTELS FINANCE
                                  CORPORATION II


                                  By: /s/ John Q. Hammons
                                      --------------------------
                                      John Q. Hammons
                                      Chairman and Chief Executive Officer

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
in their capacities at John Q. Hammons Hotels, Inc. as general partner of John
Q. Hammons Hotels, L.P., and in the capacities indicated for John Q. Hammons
Hotels Finance Corporation, and John Q Hammons Hotels Finance Corporation II, on
March 29, 2001.

                                       34
<PAGE>

Signatures                    Title
----------                    -----

/s/ John Q. Hammons           Chairman and Chief Executive Officer of John Q.
---------------------------
John Q. Hammons               Hammons Hotels, Inc., John Q. Hammons Hotels
                              Finance Corporation and John Q. Hammons Finance
                              Corporation II (Principal Executive Officer)

/s/ Paul E. Muellner          Acting Chief Financial Officer
---------------------------
Paul E. Muellner              (Principal Financial and Accounting Officer)


/s/ Jacqueline A. Dowdy       Director, Secretary of John Q. Hammons Hotels,
---------------------------
Jacqueline A. Dowdy           Inc., John Q. Hammons Hotels Finance Corporation
                              and John Q. Hammons Finance Corporation II

/s/ William J. Hart           Director of John Q. Hammons Hotels, Inc.
---------------------------
William J. Hart

/s/ Daniel L. Earley          Director of John Q. Hammons Hotels, Inc.
---------------------------
Daniel L. Earley

/s/ James F. Moore            Director of John Q. Hammons Hotels, Inc.
---------------------------
James F. Moore

/s/ John E. Lopez-Ona         Director of John Q. Hammons Hotels, Inc.
---------------------------
John E. Lopez-Ona

/s/ David C. Sullivan         Director of John Q. Hammons Hotels, Inc.
---------------------------
David C. Sullivan

/s/ Donald H. Dempsey         Director of John Q. Hammons Hotels, Inc.
---------------------------
Donald H. Dempsey

                                       35
<PAGE>

EXHIBIT INDEX

No.        Title
---        -----

     *3.1  Second Amended and Restated Agreement of Limited Partnership of the
           Company (the "Partnership Agreement")
      3.2  Amendment No. 1 to Partnership Agreement (incorporated by reference
           to the Company's Annual Report on Form 10-K for the fiscal year ended
           December 30, 1994)
    **3.3  Amendment No. 2 to Partnership Agreement
  ****3.4  Certificate of Limited Partnership of the Company filed with the
           Secretary of State of the State of Delaware
     *3.5  Restated Certificate of Incorporation of the General Partner
   ***3.6  Certificate of Incorporation of John Q. Hammons Hotels Finance
           Corporation II
   **10.1  1994 Note Indenture
   **10.2  1995 Note Indenture
   **10.3  Embassy Suites License Agreement
   **10.4  Form of Option Purchase Agreement
    *10.5  Collective Bargaining Agreement between East Bay Hospitality Industry
           Association, Inc. and
           Service Employee's International Union
    *10.6  Collective Bargaining Agreement between Hotel Employee and Restaurant
           Employee Union Local 49 and Holiday Inn Sacramento--Capitol Plaza,
           for 06/01/98 to 5/31/01
    *10.7  Letter Agreement re: Hotel Financial Services for Certain Hotels
           Owned and Operated by John Q. Hammons or JQH Controlled Companies
     10.8  Employment Agreement between John Q. Hammons Hotels, Inc. and Debra
           M. Shantz dated as of May 1, 1995, as amended on October 31, 1997 and
           October 31, 2000
 ***10.9a  John Q. Hammons Building Lease Agreement - 9th Floor (6000 sq. ft.)
 ***10.9b  John Q. Hammons Building Lease Agreement - 7th Floor (2775 sq. ft.)
 ***10.9c  John Q. Hammons Building Lease Agreement - 7th Floor (2116 sq. ft.)
 ***10.9d  John Q. Hammons Building Lease Agreement - 8th Floor (6000 sq. ft.)
   *10.10  Triple Net Lease
   *10.11  Lease Agreement between John Q. Hammons and John Q. Hammons Hotels,
           L.P.
 ***10.14  Ground lease between John Q. Hammons and John Q. Hammons-Branson,
           L.P. - (Chateau on the Lake, Branson, Missouri)
 ***10.15  Ground lease between John Q. Hammons and John Q. Hammons-Hotels Two,
           L.P. - (Little Rock, Arkansas)
   *10.16  Operating Agreement of Rivercenter Plaza Development Co., L.C., an
           Iowa limited liability company
   *10.17  Agreement of Limited Partnership of John Q. Hammons Hotels, L.P. Two
   *10.18  1994 Stock Option Plan
****10.19  Agreement of Limited Partnership of John Q. Hammons Hotels--
           Montgomery L.P.
    10.20  1999 Non-Employee Director Stock and Stock Option Plan of the General
           Partner (incorporated by reference to the Company's Annual Report on
           Form 10-K for the fiscal year ended January 1, 1999)
     12.1  Computations of Ratio of Earnings to Fixed Charges of the Company

________________________
*    Incorporated by reference to the General Partner's Registration Statement
     on Form S-1, No. 33-84570.
**   Incorporated by reference to the Company's Registration Statement on Form
     S-4, No. 33-73340.
***  Incorporated by reference to the Company's Annual Report on Form 10-K for
     the Fiscal Year Ended January 3, 1997.
**** Incorporated herein by reference to the Company's Registration Statement
     (Registration No. 33-99614) previously filed with the Commission.

                                       36