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                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 31, 2004
      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 33-73340

                          JOHN Q. HAMMONS HOTELS, L.P.
                 JOHN Q. HAMMONS HOTELS FINANCE CORPORATION III
             (Exact name of registrant as specified in its charter)

           Delaware                                   43-1523951
           Missouri                                   33-1006528
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
  incorporation or organization)

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

Registrants' 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 registrants (1) have 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) have 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 registrants' knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

      Indicate by check mark whether the registrants are accelerated filers (as
defined in Rule 12b-2 of the Act). Yes [ ]  No [X]

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                                     PART I

ITEM 1. BUSINESS.

      We use the terms we, us, our and other similar references to mean 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.

OVERVIEW

      Our general partner has announced over the past several months that it and
its principal stockholder have been engaged in discussions with parties
regarding a possible merger transaction. The board of directors appointed a
Special Committee composed solely of outside independent directors to conduct
all negotiations on our behalf. On March 9, 2005, our general partner announced
that it and John Q. Hammons had agreed to continue to negotiate exclusively with
an investor group led by JQH Acquisition, LLC through April 30, 2005 regarding a
possible transaction. Although terms of the investor group's proposal remain
subject to further discussion and negotiation, the proposal contemplates a
merger transaction in which our general partner's Class A shares would be
purchased for $24.00 cash per share. Although the parties continue to work
through a number of items that remain to be negotiated, particularly with
respect to the documentation of the various arrangements that have been agreed
to in principle between the investor group and Mr. Hammons, there can be no
assurance that a transaction will be consummated.

      We are a leading independent owner and manager of upscale, full service
hotels located primarily in secondary markets. We own and manage 44 hotels
located in 20 states, containing 10,853 guest rooms or suites. We also manage 15
additional hotels located in nine states, containing 3,278 guest rooms or
suites. The majority of these existing 59 hotels operate under the Embassy
Suites Hotels, Holiday Inn and Marriott trade names. Most of our hotels are
located near a state capital, university, convention center, corporate
headquarters, office park or other stable demand generator.

      We own and operate upscale hotels designed to appeal to a broad range of
hotel customers, including frequent business travelers, groups, conventions and
leisure travelers. Our in-house design staff individually designed each of our
hotels and most hotels contain an impressive multi-storied atrium, large indoor
water fountains, lush plantings and comfortable lounge areas. In addition, our
hotels typically include expansive exterior meeting facilities that can be
readily adapted to accommodate both large and small meetings, conventions or
trade shows. Our 19 Embassy Suites Hotels are all-suite hotels which appeal to
the traveler needing or desiring greater space and specialized services. Our 14
Holiday Inn hotels are affordably priced and designed to attract value-conscious
leisure travelers desiring quality accommodations. In addition, we own or manage
22 hotels operating under leading brands including Marriott, Radisson and
Sheraton, as well as four independent hotels.

      We coordinate management of our hotels from our headquarters in
Springfield, Missouri, by our senior executive team. Five regional vice
presidents supervise a group of general managers in day-to-day operations.
Centralized management services and functions include sales and marketing,
purchasing, financial controls, architecture and design, human resources, legal
and hotel operations. Through these centralized services, we realize significant
cost savings due to economies of scale.

      We currently have no hotels under construction and no plans to develop new
hotels for the foreseeable future. During 2000, we entered into a five-year
management contract with John Q. Hammons, or Mr. Hammons, whereby we will
provide internal administrative, architectural design, purchasing and legal
services to Mr. Hammons in conjunction with the development of hotels in an
amount not to exceed 1.5% of the total development costs of any single hotel. In
exchange, we have the opportunity to manage the hotel upon opening and a right
of first refusal to purchase the hotel in the event it is offered for sale.
These costs are amortized over a five-year contract period, beginning upon the
opening of the hotels.

      Although we are not developing new hotels, Mr. Hammons has personally
completed several projects, including new hotels in Tulsa and Oklahoma City,
Oklahoma; Rogers and Hot Springs, Arkansas; Junction City, Kansas; Springfield,
Missouri and North Charleston, South Carolina, all of which we currently manage
under the

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management agreement described above. Mr. Hammons also has numerous other
projects in various stages of development, which we intend to manage upon
completion, including properties in St. Charles, Missouri; Frisco, Texas;
Albuquerque, New Mexico and Hampton, Virginia.

      In general, we have financed our operations through internal cash flow,
loans from financial institutions, the issuance of public and private debt and
equity and the issuance of industrial revenue bonds. Our principal uses of cash
are to pay operating expenses, to service debt and to fund capital expenditures.

FORWARD-LOOKING STATEMENTS

      This Form 10-K contains "forward looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, regarding, among other
things, our operations outlook, business strategy, prospects and financial
position. These statements contain the words "believe," "anticipate,"
"estimate," "expect," "forecast," "project," "intend," "may," and similar words.
These forward looking statements are not guarantees of future performance, and
involve known and unknown risks, uncertainties and other factors that may cause
our actual results to be materially different from any future results expressed
or implied by such forward looking statements. Such factors include, among
others:

      -     general economic conditions, including the speed and strength of the
            economic recovery;

      -     the impact of any serious communicable diseases on travel;

      -     competition;

      -     changes in operating costs, particularly energy and labor costs;

      -     unexpected events, such as the September 11, 2001 terrorist attacks
            or outbreaks of war;

      -     risks of hotel operations, such as hotel room supply exceeding
            demand, increased energy and other travel costs and general industry
            downturns;

      -     seasonality of the hotel business;

      -     cyclical over-building in the hotel and leisure industry;

      -     requirements of franchise agreements, including the right of some
            franchisors to immediately terminate their respective agreements if
            we breach certain provisions; and

      -     costs of complying with applicable state and federal regulations.

      These risks are uncertainties and, along with the risk factors discussed
below, should be considered in evaluating any forward looking statements
contained in this Form 10-K. We undertake no obligation to update or revise
publicly any forward-looking statement, whether as a result of new information,
future events or otherwise, other than as required by law.

RISKS RELATING TO OUR BUSINESS

      WE MAY BE ADVERSELY AFFECTED BY THE LIMITATIONS IN OUR FRANCHISE
AGREEMENTS.

      Approximately 90% of our hotels operate pursuant to franchise agreements
with nationally recognized hotel brands. The franchise agreements generally
contain specific standards for, and restrictions and limitations on, the
operation and maintenance of a hotel in order to maintain uniformity within the
franchisor system. Standards are often subject to change over time. Compliance
with any such new standards could cause us to incur significant expenses or
capital expenditures.

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      If we do not comply with standards or terms of the franchise agreements,
our franchise licenses could be cancelled after the applicable cure period.
While none of our franchisors has ever terminated or failed to renew one of our
agreements, terminating or changing the franchise affiliation of a hotel could
require us to incur significant expenses or capital expenditures. Moreover, the
loss of a franchise license could have a material adverse effect upon the
operations or the underlying value of the hotel covered by the franchise because
of the loss of associated name recognition, marketing support and centralized
reservation systems provided by the franchisor.

      Our current franchise agreements terminate at various times and have
differing remaining terms. Although some are subject to renewal, many of our
franchise agreements are set to expire before the notes mature. As a condition
to renewal, the franchise agreements frequently contemplate a renewal
application process, which may require substantial capital improvements to be
made to the hotel. Significant unexpected capital expenditures could adversely
affect our cash flow and our ability to make payments on our indebtedness,
including our notes.

      MR. HAMMONS' CONTROL OF US CREATES POTENTIAL FOR SIGNIFICANT CONFLICTS OF
INTEREST.

      Through his ownership of all of our general partner's Class B common
stock, and 269,100 shares of our general partner's Class A common stock, Mr.
Hammons controls our activities. In addition, since Mr. Hammons beneficially
owns all of our LP Units, representing 74.88% of our total Partnership units, he
will decide any matters submitted to a vote of our partners. Certain decisions
concerning our operations or financial structure may present conflicts of
interest between Mr. Hammons and the other shareholders of our general partner
or holders of our notes. In addition, Mr. Hammons, as the holder of all of our
LP Units, may suffer different and/or more adverse tax consequences than we do
upon the sale or refinancing of some of the owned hotels as a result of
unrealized gains attributable to certain owned hotels. Therefore, it is unlikely
that an owned hotel will be sold or refinanced if such a transaction would
result in an adverse tax consequence to Mr. Hammons if we are unable to make
sufficient distributions to Mr. Hammons to pay those taxes, regardless of
whether such a sale or refinancing might otherwise be in our best interest.

      Mr. Hammons also (1) owns hotels that we manage; (2) owns an interest in a
hotel management company that provides accounting and other administrative
services for all of our hotels; (3) owns a 50% interest in the entity from which
we lease our corporate headquarters; (4) has an agreement whereby we pay up to
1.5% of his internal development costs for new hotels in exchange for the
opportunity to manage the hotels and the right of first refusal to purchase the
hotels in the event they are offered for sale; (5) leases space to us in two
trade centers owned by him that connect with two of our hotels; (6) has the
right to require the redemption of his LP Units; (7) utilizes our administration
and other services for his outside business interests, for which he reimburses
us; (8) utilizes the services of certain of our general partner's employees in
his personal enterprises and personally subsidizes those employees'
compensation; and (9) owns the real estate underlying one of our hotels, which
we lease from him. We describe these arrangements in further detail under
"Certain Relationships and Related Transactions." In the event that Mr. Hammons
experienced material adverse changes in his outside business interests, we could
receive negative publicity as the result of his close ties to us, and it is
possible the market price of our general partner's stock and the rating of our
debt could be affected.

      WE DEPEND ON CERTAIN KEY MEMBERS OF OUR GENERAL PARTNER'S EXECUTIVE
MANAGEMENT.

      We are dependent on certain key members of our general partner's executive
management, a loss of whose services could have a material effect on our
business and future operations. Some of our general partner's executive
officers, including our general partner's president, Lou Weckstein, spend a
portion of their time performing services for Mr. Hammons unrelated to our
business, which he personally subsidizes.

      COMPLIANCE WITH ENVIRONMENTAL LAWS MAY ADVERSELY AFFECT OUR FINANCIAL
CONDITION.

      Our hotel properties are subject to various federal, state and local
environmental laws. Under these laws, courts and governmental agencies have the
authority to require an owner of a contaminated property to clean up the
property, even if the owner did not know of and was not responsible for the
contamination. In addition to the costs of cleanup, contamination can affect the
value of a property and, therefore, an owner's ability to borrow funds using the
property as collateral. Under environmental laws, courts and government agencies
also have the authority to require a person who sent waste to a waste disposal
facility, like a landfill or an incinerator, to pay for the cleanup of

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that facility if it becomes contaminated and threatens human health or the
environment. Court decisions have established that third parties may recover
damages for injury caused by contamination. For instance, a person exposed to
asbestos while staying in a hotel may seek to recover damages if he suffers
injury from the asbestos.

      We could be responsible for the costs discussed above if one or more of
our properties are found to be contaminated or to have caused contamination. The
costs to clean up contaminated property, to defend against a claim or to comply
with environmental laws, could be material and could affect our financial
performance. In addition, under the laws of many states, contamination on a
property may give rise to a lien on the property for cleanup costs. In several
states, this lien has priority over all existing liens including those of
existing mortgages.

      Real property pledged as security to a lender may be subject to unforeseen
environmental liabilities. Historic uses of some of our properties have involved
industries or businesses which could have used or produced hazardous materials
or generated hazardous waste. In the regular course of business, our hotels
might use and store small quantities of paints, paint thinners, lubricants, pool
supplies, and commercial cleaning compounds which, in some instances, may be
subject to federal and state regulations. Small quantities of waste oil, medical
waste, and other waste materials may also be generated at some of our
properties. Additionally, some of our properties contain or may have contained
underground or above ground storage tanks which are regulated by federal, state
and local environmental laws.

      All of our properties have been subject to environmental site assessments,
or ESAs, prepared by independent third-party professionals. These ESAs were
intended to evaluate the environmental conditions of these properties and
included a site visit, a review of certain records and public information
concerning the properties, the preparation of a written report and, in some
cases, invasive sampling. We obtained the ESAs before we acquired or built most
of our hotels to help us identify whether we might be responsible for clean-up
costs or other environmental liabilities. The ESAs on our properties did not
reveal any environmental conditions that are likely to have a material adverse
effect on our business, assets, results of operations or liquidity. However,
ESAs do not always identify all potential problems or environmental liabilities.
Consequently, we may have material environmental liabilities of which we are
unaware. Moreover, it is possible that future laws, ordinances or regulations
could impose material environmental liabilities, or that the current
environmental condition of our properties could be adversely affected by third
parties or by the condition of land or operations in the vicinity of the
properties.

      ASPECTS OF OUR OPERATIONS ARE SUBJECT TO GOVERNMENT REGULATION, AND
CHANGES IN GOVERNMENT REGULATIONS MAY HAVE SIGNIFICANT EFFECTS ON OUR BUSINESS.

      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. We believe that
our hotels are substantially in compliance with these requirements or, in the
case of liquor licenses, that they have or will promptly obtain the appropriate
licenses. Compliance with, or changes in, these laws could reduce the revenue
and profitability of our hotels and could otherwise adversely affect our
revenues, results of operations and financial condition.

      Under the Americans with Disabilities Act, or ADA, all public
accommodations are required to meet federal requirements related to access and
use by disabled persons. These requirements became effective in 1992. Although
significant amounts have been and continue to be invested in ADA-required
upgrades to our hotels, a determination that our hotels are not in compliance
with the ADA could result in a judicial order requiring compliance, imposition
of fines or an award of damages to private litigants.

      MOISTURE RELATED ISSUES RELATED TO DEFECTIVE WINDOWS AT SOME OF OUR
PROPERTIES HAVE AFFECTED OUR OPERATING RESULTS, AND, IF THE PROBLEMS ARE MORE
WIDESPREAD THAN CURRENTLY APPARENT, COULD ADVERSELY AFFECT OUR FUTURE RESULTS OF
OPERATIONS.

      We discovered water intrusion through defective windows at some of our
hotels. The sealant at the base of the windows provided by several manufacturers
had shrunk. This shrinkage allowed moisture into the space between the exterior
and interior walls. Because of the Exterior Finish Insulation Systems, or EFIS,
used in the construction of our hotels, there is no escape path for any moisture
that does leak in. The EFIS construction

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provides a "stucco" finish and is commonly used throughout the lodging industry.
We conducted an inspection of all of our properties, and found shrinkage at 16
hotels, of which 14 had sustained water intrusion damage related to the
moisture, including six hotels with severe damage.

      During fiscal 2000, we initiated claims against certain of our
construction service providers, as well as with our insurance carrier. These
claims resulted from costs we incurred and expected to incur to address moisture
related problems caused by water intrusion through defective windows. In
December 2001, we initiated legal actions in an effort to collect claims
previously submitted. Subsequent to the filing of the legal action, the
insurance carrier notified us that a portion of our claims had been denied. As
of December 31, 2004, we had incurred approximately $12.6 million to correct the
underlying moisture problem and no further costs are anticipated. During the
third quarter of 2003, summary judgment was granted to our insurance carrier in
one action and later affirmed on appeal, and summary judgment was granted to one
of our window manufacturers. On another action, we received a settlement of $0.2
million during the third quarter of 2004. We plan to continue to vigorously
pursue collection of these costs, although there can be no assurance that we
will be successful.

      We have paid all costs incurred and expected to be incurred in connection
with the 16 hotels at which we discovered problems. Virtually all of our
properties include the same type of windows. While we have found no evidence of
any water damage in any other locations, problems could develop with the windows
in other hotels in the future. If such problems were to become widespread, and
we were unable to collect from the manufacturers or our insurance carrier, the
cost would be significant and could adversely impact our cash flow and results
of operations.

      COMPLIANCE WITH CHANGING REGULATION OF CORPORATE GOVERNANCE AND PUBLIC
DISCLOSURE MAY RESULT IN ADDITIONAL EXPENSES.

      Changing laws, regulations and standards relating to corporate governance
and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC
regulations and AMEX rules, are creating uncertainty for companies such as ours.
These new or changed laws, regulations and standards are subject to varying
interpretations in many cases due to their lack of specificity, and as a result,
their application in practice may evolve over time as new guidance is provided
by regulatory and governing bodies, which could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by ongoing revisions
to disclosure and governance practices. We are committed to maintaining high
standards of corporate governance and public disclosure. As a result, our
efforts to comply with evolving laws, regulations and standards have resulted
in, and are likely to continue to result in, increased general and
administrative expenses and management time related to compliance activities. In
particular, our efforts to comply with Section 404 of the Sarbanes-Oxley Act of
2002 and the related regulations regarding our required assessment of our
internal controls over financial reporting and our external auditors' audit of
that assessment requires the commitment of significant financial and managerial
resources. If our efforts to comply with new or changed laws, regulations and
standards differ from the activities intended by regulatory or governing bodies
due to ambiguities related to practice, our reputation may be harmed and we
might be subject to sanctions or investigation by regulatory authorities, such
as the Securities and Exchange Commission. Any such action could adversely
affect our financial results.

RISKS RELATED TO OUR DEBT

      OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH.

      We have a substantial amount of indebtedness. As of December 31, 2004, we
had total indebtedness of $765.2 million. Our substantial indebtedness could,
among other things:

   -  make it more difficult for us to satisfy our obligations under our notes;

   -  increase our vulnerability to general adverse economic and industry
      conditions;

   -  limit our ability to obtain other financing to fund future working
      capital, capital expenditures and other general corporate requirements;

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   -  require us to dedicate a substantial portion of our cash flow from
      operations to payments on our indebtedness, reducing the availability of
      our cash flow to fund working capital and other expenditures;

   -  limit our flexibility in planning for, or reacting to, changes in our
      business and industry;

   -  place us at a competitive disadvantage compared to our competitors that
      have less debt; and

   -  along with the financial and other restrictive covenants in our
      indebtedness, limit, among other things, our ability to borrow additional
      funds.

      THE TERMS OF OUR DEBT PLACE RESTRICTIONS ON US, WHICH REDUCE OPERATIONAL
FLEXIBILITY AND CREATE DEFAULT RISKS.

      The documents governing the terms of our notes and some of the mortgage
debt on our properties that are not part of the collateral hotels contain
covenants that place restrictions on us and certain of our activities,
including:

   -  acquisitions, mergers and consolidations;

   -  the incurrence of additional indebtedness;

   -  the incurrence of liens;

   -  capital expenditures;

   -  the payment of dividends; and

   -  transactions with affiliates.

      The restrictive covenants in the indenture and the documents governing our
mortgage debt reduce our flexibility in conducting our operations and will limit
our ability to engage in activities that may be in our long-term best interest.
In addition, certain covenants in the mortgage debt documents for some of the
non-collateral hotel properties require us to meet financial performance tests.
Our failure to comply with these restrictive covenants constitutes an event of
default that, if not cured or waived, could result in the acceleration of the
debt which we may be unable to repay.

      TO SERVICE OUR INDEBTEDNESS, WE REQUIRE A SIGNIFICANT AMOUNT OF CASH. OUR
ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.

      Our ability to make payments on and to refinance our indebtedness and to
fund planned capital expenditures will depend on our ability to generate cash in
the future. This, to a certain extent, is subject to general economic,
financial, competitive and other factors that are beyond our control.

      THE COLLATERAL FOR OUR NOTES MAY NOT BE ADEQUATE.

      We do not have recent appraisals of our hotels. There can be no assurance
that the proceeds from any sale of collateral would be sufficient to satisfy the
amounts due on our notes. To the extent that proceeds from any sale of
collateral would be insufficient to satisfy the amounts due on our notes,
holders of the notes would become our general unsecured creditors with respect
to our other assets. Two of the collateral hotels are subject to ground leases,
and in the event of foreclosure, the trustee under the indenture governing our
notes would be required to comply with the terms of such ground leases,
including payment of rent and terms that may restrict the trustee's ability to
dispose of a hotel following foreclosure. In addition, we may enter into hedging
arrangements relating to interest rates and currency exchange rates which may be
secured by the collateral that secures our notes.

      Mr. Hammons has agreed to contribute a total of up to $195.0 million to us
in the event that the proceeds from the sale of the collateral are insufficient
to satisfy the amounts due under the notes. No assurances can be given

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that we or the trustee for our notes will be able to collect all or any portion
of such amounts. In addition, this obligation will terminate upon Mr. Hammons'
death.

      WE CANNOT ASSURE YOU THAT WE WILL CONTINUE TO RECEIVE REVENUES FROM HOTELS
WE MANAGE.

      We receive a portion of our revenues from managing hotels Mr. Hammons
owns. We have management agreements with respect to the hotels owned by Mr.
Hammons. Each of the management agreements with the 15 hotels owned by Mr.
Hammons or entities controlled by Mr. Hammons are terminable within either 30 or
60 days. We cannot assure you that we will continue to receive revenues with
respect to any of these hotels.

      UNDER CERTAIN CIRCUMSTANCES, BANKRUPTCY RULES MAY IMPAIR RIGHTS OF HOLDERS
OF OUR NOTES IN THE COLLATERAL.

      The right of the trustee under the indenture and related documents to
foreclose upon and sell the collateral after an event of default is likely to be
significantly impaired if a bankruptcy case were to be commenced by or against
us. Under applicable federal bankruptcy law, secured creditors cannot repossess
their security from a debtor in a bankruptcy case, or dispose of security
repossessed from the debtor, without bankruptcy court approval. The debtor also
is generally permitted to use collateral, including, with bankruptcy court
approval, cash collateral, provided, generally, that the secured creditor is
given "adequate protection."

      The meaning of the term "adequate protection" may vary according to the
circumstances. It is intended in general to protect the value of the secured
creditor's interest in the collateral. If the bankruptcy court determines that
the value of the collateral decreased as a result of the stay or the debtor's
use of the collateral during the bankruptcy case, the court could order cash
payments or additional security.

      In view of the lack of a precise definition of the term "adequate
protection" and the broad discretionary powers of a bankruptcy court, it is
impossible to predict if payments under our notes would be made during a
bankruptcy case, whether or when the trustee could foreclose upon or sell the
collateral or whether or to what extent you would be compensated for any delay
in payment or loss of value of the collateral through the requirement of
"adequate protection." Furthermore, in the event the bankruptcy court determines
the value of the collateral is not sufficient to repay all amounts due on our
notes, the note holders would hold "undersecured claims." Federal bankruptcy law
does not permit the payment and/or accrual of interest, costs and attorneys'
fees for "undersecured claims" during a bankruptcy case.

      WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE
CHANGE OF CONTROL OFFER REQUIRED BY THE INDENTURE.

      Upon the occurrence of certain change of control events, we will be
required to offer to repurchase all of our notes. It is possible, however, that
we will not have sufficient funds at the time of the change of control to make
the required repurchase of the notes. Our failure to repurchase any of the notes
would be a default under the indenture and under the mortgages on certain of the
non-collateral hotels.

RISKS RELATED TO THE LODGING INDUSTRY

      THE LODGING INDUSTRY IS HIGHLY COMPETITIVE.

      Competitive factors in the lodging industry include, among others,
reasonableness of room rates, quality of accommodations, service levels and
convenience of locations. We generally operate in areas that contain numerous
other competitors. There can be no assurance that demographic, geographic or
other changes in markets will not adversely affect the convenience or
desirability of the locales in which our hotels operate, competing hotels will
not pose greater competition for guests than presently exists, or that new
hotels will not enter such locales. New or existing competitors could offer
significantly lower rates or greater conveniences, services or amenities or
significantly expand, improve or introduce new facilities in markets in which we
compete, adversely affecting our operations.

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      INTERNATIONAL EVENTS, INCLUDING THE CONTINUED THREAT OF TERRORISM AND THE
ONGOING WAR AGAINST TERRORISM, HAVE AFFECTED AND WILL CONTINUE TO AFFECT OUR
INDUSTRY AND OUR RESULTS OF OPERATIONS.

      The terrorist attacks of September 11, 2001, caused a significant decrease
in our hotels' occupancy and average daily rate due to disruptions in business
and leisure travel patterns, and concerns about travel safety. Our occupancy and
revenue per available room (RevPAR) were below historical levels by as much as
26 percentage points and 35%, respectively, in the week immediately after the
terrorist attacks and have rebounded to prior years' levels since. Additional
similar events could have further material adverse effects on the hotel industry
and our operations.

      WE ARE SUBJECT TO THE RISKS OF HOTEL OPERATIONS.

      Our hotels are subject to all of the risks common to the hotel industry.
These risks could adversely affect hotel occupancy and the rates that can be
charged for hotel rooms as well as hotel operating expenses, and generally
include, among others:

      -     competition from other hotels;

      -     increases in supply of hotel rooms that exceed increases in demand;

      -     increases in energy costs and other travel expenses that reduce
            business and leisure travel;

      -     adverse effects of declines in general and local economic activity;

      -     adverse effects of a downturn in the hotel industry; and

      -     risks associated with the ownership of hotels and real estate, as
            discussed below.

      WE WILL ALSO ENCOUNTER RISKS THAT MAY ADVERSELY AFFECT REAL ESTATE
OWNERSHIP IN GENERAL.

      Our investments in hotels are subject to the numerous risks generally
associated with owning real estate, including among others:

      -     adverse changes in general or local economic or real estate market
            conditions;

      -     changes in zoning laws;

      -     changes in traffic patterns and neighborhood characteristics;

      -     increases in assessed valuation and tax rates;

      -     increases in the cost of property insurance;

      -     governmental regulations and fiscal policies;

      -     the potential for uninsured or underinsured property losses;

      -     the impact of environmental laws and regulations; and

      -     other circumstances beyond our control.

      Moreover, real estate investments are relatively illiquid, and generally
cannot be sold quickly. We may not be able to vary our portfolio promptly in
response to economic or other conditions. The inability to respond promptly to
changes in the performance of our investments could adversely affect our
financial condition.

OPERATIONS

      Our general partner's management team at our headquarters in Springfield,
Missouri, coordinates management of our hotel network. This management team is
responsible for managing our day-to-day financial needs, including internal
accounting audits, insurance plans and business contract review, and oversees
the financial budgeting and forecasting for our hotels, as well as analyzing the
financial feasibility of new hotel developments and identifying new systems and
procedures to employ within our hotels to improve efficiency and profitability.
The management team also coordinates the sales force for each of our hotels,
designing sales training programs, tracking future business under contract, and
identifying, employing and monitoring marketing programs aimed at specific
target markets, and is 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 of our
hotel's daily occupancy, average room rate, rooms revenues and food and beverage
revenues. By having the latest information available at all times,

                                       9
<PAGE>

we are 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 hotel.

      Creating operating, cost and guest service efficiencies in each hotel is a
top priority. With a total of 59 hotels under management, we believe we are able
to realize significant cost savings due to economies of scale. By leveraging the
total hotels/rooms under management, we are able to secure volume pricing from
vendors not available to smaller hotel companies. We employ a systems trainer
responsible for 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 of our hotels to verify that
our high level of operating standards are being met. Our franchisors maintain
rigorous inspection programs in which chain representatives visit their
respective 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.

      Mr. Hammons beneficially owns all 294,100 shares of our general partner's
Class B common stock, and 269,100 shares of our general partner's Class A common
stock, representing 75.7% of the combined voting power of both classes of our
common stock. John Q. Hammons Hotels, Inc. is our sole general partner through
its ownership of all 5,381,075 General Partner units, representing 25.12% of our
total equity. Mr. Hammons beneficially owns all 16,043,900 of our limited
partnership units, or the LP Units, representing 74.88% of our total equity. Our
general partner's Class A common stock represents approximately 22.5% of our
total equity, and the Class A common stock, Class B common stock and LP Units
beneficially owned by Mr. Hammons represent approximately 77.5% of our total
equity.

      Our executive offices are located at 300 John Q. Hammons Parkway, Suite
900, Springfield, Missouri 65806 and our telephone number is (417) 864-4300. We
are a Delaware limited partnership formed on September 8, 1989, our general
partner is a Delaware corporation formed on September 29, 1994, and John Q.
Hammons Hotel Finance Corporation III is a Missouri corporation formed on April
29, 2002. Our website address is www.jqh.com. We post all of our Form 10-K, Form
                                 -----------
10-Q and Form 8-K filings on our website as promptly as practicable after filing
with the SEC.

SALES AND MARKETING

      We market our hotels through national marketing programs and local sales
managers and a director of sales at each of our hotels. While we make periodic
modifications to our marketing concept in order to address regional differences
and maintain a sales organization structure based on market needs and local
preferences, we generally utilize the same major campaign concept throughout the
country. We develop the concepts at our management headquarters, while
modifications are implemented by our hotels' regional vice presidents 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. We require
that each of our sales managers complete an extensive sales training program.

      Our 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. We believe that business travelers are attracted
to our hotels because of their convenient locations in state capitals, their
proximity to corporate headquarters, plants, convention centers or other major
facilities, the availability of ample meeting space and our high level of
service. Our sales force markets to organizations which consistently produce a
high volume of room nights and which have a significant number of individuals
traveling in our operating regions. We also target groups and conventions
attracted by our hotels' proximity to convention or trade centers which are
often adjacent to our hotels. Our hotels' group meetings logistics include
flexible space readily adaptable to groups of varying size, high-tech
audio-visual equipment and on-site catering facilities. We believe that suburban
convention centers attract

                                       10
<PAGE>

more convention sponsors due to lower prices than larger, more cosmopolitan
cities. In addition to the business market, our 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 our atrium hotels
appealing.

      We advertise primarily through direct mail, magazine publications,
directories and newspaper advertisements, all of which focus on value delivered
to and perceived by the guest. We have 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.). Our marketing efforts focus primarily on
business travelers who we estimate account for approximately 50% of the rooms
rented in our hotels.

      Our franchise hotels utilize the centralized reservation systems of our
franchisors, which we believe are among the more advanced reservation systems in
the hotel industry. The franchisors' reservation systems receive reservation
requests entered (1) on terminals located at all of their respective franchises,
(2) at reservation centers utilizing 1-800 phone access and (3) 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. We believe that these systems are effective in directing
customers to our franchise hotels.

FRANCHISE AGREEMENTS

      We enter into non-exclusive franchise licensing agreements with
franchisors we believe are the most successful brands in the hotel industry. The
term of an individual franchise agreement for a hotel typically is 20 years. Our
franchise agreements allow us 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 our franchise agreements allows
us 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.

      Holiday Inn. Our franchise agreements grant us a nonassignable,
non-exclusive license to use Holiday Inn's 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. We
pay monthly fees based on a percentage of gross revenues. The initial terms of
each of our Holiday Inn franchise agreements is 20 years with varying renewal
options and extension terms.

      Embassy Suites Hotels. Our franchise agreements grant us a nonassignable,
non-exclusive license to use the Embassy Suites Hotels service mark and
computerized reservation network. The franchisor maintains the right to improve
and change the reservation system for the purpose of making it more efficient,
economical and competitive. We pay monthly fees based on a percentage of gross
revenues attributable to suite rentals, plus marketing and reservation
contributions which are also a percentage of gross revenues. The initial term of
each of our Embassy Suites Hotels franchise agreements is 20 years with varying
renewal options and extension terms.

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

COMPETITION

      Each of our hotels competes in its market area with numerous other full
service hotels operating under various lodging brands 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 our hotels in their respective markets. There is, however,
no single competitor or group of competitors of our hotels that is consistently
located nearby and competing with most of our 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

                                       11
<PAGE>

      Insurance. To supplement our self insurance programs, we provide property,
auto, commercial liability, workers' compensation and medical insurance to the
hotel properties under blanket commercial policies we purchase. Insurance
expenses for our owned hotels were approximately $13.0 million, $13.3 MILLION,
and $13.3 million in 2004, 2003 and 2002, respectively.

      Regulations. 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. We
believe that each of our hotels has the necessary permits and approvals to
operate their respective businesses.

      Our hotels and any newly developed or acquired hotels must comply with
Title III of the Americans with Disabilities Act, or the ADA, to the extent that
such properties are "public accommodations" and/or "commercial facilities" as
defined by the ADA. Noncompliance could result in a judicial order requiring
compliance, an imposition of fines or an award of damages to private litigants.

      Certain federal, state and local laws, regulations and ordinances govern
the removal, encapsulation or disturbance of Asbestos Containing Materials, or
ACMs, when ACMs are in poor condition or when property with ACMs is undergoing
building, repair, 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 or other damage
associated with ACMs. Several of the owned hotels contain or may contain ACMs,
generally in sprayed-on ceiling treatments, floor tiles or in roofing materials.
Several of our hotels have implemented asbestos management plans. Moreover, in
each hotel with confirmed or potential ACMs, no removal of asbestos from the
owned hotels has been recommended and we have no plans to undertake any
additional removal, beyond the removal that has already occurred.

      Our 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.
See "Risk Factors - Risks Relating to Our Business - Compliance with
environmental laws may adversely affect our financial condition" for a more
detailed description of environmental regulations affecting our business.

EMPLOYEES

      We employ over 5,800 full time employees, approximately 150 of whom are
members of labor unions. We believe that labor relations with employees are
good.

SEASONALITY

      Our hotels have traditionally experienced slight seasonality.
Additionally, hotels for the fourth quarter of 2002 reflect 14 weeks of results
compared to 13 weeks for the first three quarters of the 2002 fiscal year and
all of the quarters in the 2004, 2003 and 2001 fiscal years.

MANAGEMENT

      The following is a biographical summary of the experience of our general
partner's executive officers and other key officers. John Q. Hammons Finance
Corporation III has the same executive officers as our general partner.

      John Q. Hammons, age 86, is the Chairman, Chief Executive Officer, a
director and founder of our general partner. 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 over 110 hotels on a nationwide basis,
primarily under the Holiday Inn and Embassy Suites Hotels trade names.

                                       12
<PAGE>

      Lou Weckstein, age 68, is President of our general partner. Prior to
joining our general partner in September 2001, Mr. Weckstein served for ten
years as Senior Vice President, Hotel Operations, for Windsor Capital Group, a
Los Angeles-based hotel management and development company. Prior to Windsor
Capital Group, Mr. Weckstein served eight years as Vice President of Operations
for Embassy Suites, Inc. Over his career, Mr. Weckstein spent numerous years as
Vice President-Operations for Ramada Inns, Inc. and Vice President-Operations
for Sheraton Inns, Inc. He began his career in the hospitality industry as a
hotel manager in Cleveland, Ohio.

      Paul E. Muellner, age 48, is Executive Vice President and Chief Financial
Officer of our general partner. He has been the Chief Financial Officer of our
general partner since 2000 and an Executive Vice President since 2003. From 1998
through 2000, Mr. Muellner served as our general partner's Vice President and
Corporate Controller. Prior to joining our 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.

      Debra M. Shantz, age 41, is Senior Vice President and General Counsel of
our general partner. She joined our general partner in May 1995 as general
counsel. Prior thereto, Ms. Shantz was a partner of Farrington & Curtis, P.C.
(now Husch & Eppenberger, LLC), a law firm which serves as primary outside
counsel for us, our general partner and Mr. Hammons, where she practiced
primarily in the area of real estate law. Ms. Shantz had been with that firm
since 1988.

      William A. Mead, age 51, is the Regional Vice President, Eastern Region of
our general partner. He joined our general partner in that capacity in 1994 from
Davidson Hotels, where he had been a general manager.

      Pat A. Shivers, age 53, has served as Senior Vice President and Corporate
Controller of our general partner since 2001. Prior to that, he served as Senior
Vice President of Administration and Control of our 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, age 53, has served as Senior Vice President,
Architecture, of our general partner since 1993. He joined our general partner
as a corporate architect in 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.

      Jacqueline A. Dowdy, age 61, has been the Secretary since 1982 and a
director of our general partner since 1994. She has been active in Mr. Hammons'
hotel operations since 1981. She is an officer of several of our affiliates. We
describe these affiliations under "Certain Relationships and Related
Transactions."

      L. Scott Tarwater, age 56, has been Senior Vice President of Sales and
Marketing of our general partner since March of 2004. He joined our general
partner as Vice President of Sales and Marketing in September 2000 from Windsor
Capital Group, 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, age 54, is Vice President, Interior Design, of our general
partner. He joined our 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, age 45, is Vice President, Human Resources, of our general
partner. He joined our general partner in 1999 from Dayco Products, Inc. in
Michigan where he served as Director and Manager, Human Resources. 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., age 53, is Vice President, Capital Planning and
Asset Management, of our general partner. He joined our general partner in 1994
from Promus Hotel Corporation, where he had been Director of Capital
Refurbishment.

                                       13
<PAGE>

ITEM 2. PROPERTIES.

      We lease our headquarters in Springfield, Missouri, from a Missouri
company of which Mr. Hammons is a 50% owner. In 2004, we made aggregate annual
lease payments of approximately $269,000 to that company. We lease various
parcels of land on which we have either constructed a hotel property or certain
auxiliary facilities for the hotel to facilitate the property's operations. Our
owned hotels are pledged as collateral for our long-term debt. We lease from
Mr. Hammons the real estate on which one of these hotels is located. We describe
these leases under "Certain Relationships and Related Transactions -
Mr. Hammons."

DESCRIPTION OF HOTELS - GENERAL

      Our hotels are located in 20 states and contain a total of 10,853 rooms
and suites. A majority of our hotels operate under the Holiday Inn, Embassy
Suites Hotels and Marriott trade names. Most of our 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.

      We believe that the presence of adjacent convention centers provides
incremental revenues for our 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 our hotels has a
restaurant/catering service on its premises which provides an essential amenity
to the convention trade. We choose not to lease out the restaurant business to
third-party caterers or vendors since we consider the restaurant business an
important component of securing convention business. We own and manage all of
the restaurants in our hotels specifically to maintain direct quality control
over a vital aspect of the convention and hotel business. We also derive
significant revenue and operating profit from food and beverage sales due to our
ownership and management of all of the restaurants in our hotels. We believe
that our food and beverage sales are more profitable than those of our
competitors due to the amount of catering business provided to conventions at
our hotels.

      We retain responsibility for all aspects of the day-to-day management of
each of our 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 we own. We typically refurbish individual hotels every
four to six years. We have spent an average per year of approximately $30.6
million in the last five years on the owned hotels and expect to spend
approximately $43.5 million in 2005 on refurbishment of the owned hotels
(including approximately $12.6 million related to planned hotel franchise
conversions of some of our properties).

OWNED HOTELS

      The following table sets forth certain information concerning location,
franchise/name, number of rooms/suites, description and opening date for each of
our hotels:

<TABLE>
<CAPTION>
                                                          NUMBER OF                                                    OPENING
        LOCATION                   FRANCHISE/NAME       ROOMS/SUITES                   DESCRIPTION                      DATE
----------------------------    --------------------    ------------    ------------------------------------------     -------
<S>                             <C>                     <C>             <C>                                            <C>
Montgomery, AL..............    Embassy Suites              237         Atrium; Meeting Space:    15,000 sq. ft.(c)       8/95
Tucson, AZ..................    Holiday Inn                 301         Atrium; Meeting Space:    14,000 sq. ft.         11/81
Tucson, AZ..................    Marriott                    250         Atrium; Meeting Space:    11,500 sq. ft.         12/96
Little Rock, AR.............    Embassy Suites              251         Atrium; Meeting Space:    14,000 sq. ft.          8/97
Springdale, AR..............    Holiday Inn                 206         Atrium; Meeting Space:    18,000 sq. ft.          7/89
                                                                        Convention Center:        29,280 sq. ft.
Springdale, AR..............    Hampton Inn & Suites        102         Meeting Space:            400 sq. ft.            10/95
Monterey, CA................    Embassy Suites              225         Atrium; Meeting Space:    13,700 sq. ft.         11/95
Sacramento, CA..............    Holiday Inn                 362         Meeting Space:            9,000 sq. ft.           8/79
Denver, CO (a)..............    Holiday Inn                 256         Atrium; Trade Center:     66,000 sq. ft.(b)      10/82
                                (International
                                Airport)
Fort Collins, CO............    Holiday Inn                 258         Atrium; Meeting Space:    12,000 sq. ft.          8/85
</TABLE>

                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                          NUMBER OF                                                    OPENING
        LOCATION                   FRANCHISE/NAME       ROOMS/SUITES                   DESCRIPTION                      DATE
----------------------------    --------------------    ------------    -----------------------------------------      -------
<S>                             <C>                     <C>             <C>                                            <C>
Coral Springs, FL...........    Marriott                    224         Atrium; Meeting Space:    5,326 sq. ft.           5/99
                                                                        Convention Center:        12,800 sq. ft.
St. Augustine, FL...........    Renaissance                 301         Atrium; Meeting Space:    9,000 sq. ft (c)        5/98
Tampa, FL...................    Embassy Suites              247         Atrium; Meeting Space:    18,000 sq. ft.          1/98
Cedar Rapids, IA............    Marriott                    219         Atrium; Meeting Space:    11,250 sq. ft.          9/88
Davenport, IA...............    Radisson                    221         Atrium; Meeting Space:    7,800 sq. ft.(c)       10/95
Des Moines, IA..............    Embassy Suites              234         Atrium; Meeting Space:    13,000 sq. ft.          9/90
Des Moines, IA..............    Sheraton                    285         Atrium; Meeting Space:    15,000 sq. ft.          1/87
Topeka, KS..................    Capitol Plaza               224         Atrium; Meeting Space:    7,000 sq. ft.(c)        8/98
Bowling Green, KY...........    Holiday Inn                 218         Atrium: Meeting Space:    4,000 sq. ft.(c)        8/95
Branson, MO.................    Chateau on the Lake         301         Atrium; Meeting Space:    40,000 sq. ft.          5/97
Jefferson City, MO..........    Capitol Plaza               255         Atrium; Meeting Space:    14,600 sq. ft.          9/87
Joplin, MO..................    Holiday Inn                 262         Atrium; Meeting Space:    8,000 sq. ft.           6/79
                                                                        Trade Center:             32,000 sq. ft.(b)
Kansas City, MO (a).........    Embassy Suites              236         Atrium; Meeting Space:    12,000 sq. ft.          4/89
Kansas City, MO (a).........    Homewood Suites             117         Extended Stay                                     5/97
Springfield, MO.............    Holiday Inn                 188         Atrium; Meeting Space:    3,020 sq. ft.           9/87
Omaha, NE...................    Embassy Suites              249         Atrium; Meeting Space:    13,000 sq. ft.          1/97
Reno, NV....................    Holiday Inn                 284         Meeting Space:            8,700 sq. ft.           2/74
Albuquerque, NM.............    Marriott                    310         Atrium; Meeting Space:    12,300 sq. ft.         12/86
Charlotte, NC...............    Renaissance Suites          275         Atrium; Meeting Space:    17,400 sq. ft.         12/99
Greensboro, NC (a)..........    Embassy Suites              219         Atrium; Meeting Space:    10,250 sq. ft.          1/89
Greensboro, NC (a)..........    Homewood Suites             104         Extended Stay                                     8/96
Raleigh-Durham, NC..........    Embassy Suites              273         Atrium; Meeting Space:    20,000 sq. ft.          9/97
Oklahoma City, OK...........    Renaissance                 311         Atrium; Meeting Space:    10,150 sq. ft.(c)       1/00
Portland, OR (a)............    Holiday Inn                 286         Atrium; Trade Center:     37,000 sq. ft.(b)       4/79
Portland, OR (a)............    Embassy Suites              251         Atrium; Meeting Space:    11,000 sq. ft.          9/98
Columbia, SC ...............    Embassy Suites              214         Atrium; Meeting Space:    13,000 sq. ft.          3/88
Greenville, SC..............    Embassy Suites              268         Atrium; Meeting Space:    20,000 sq. ft.          4/93
North Charleston, SC (a)....    Embassy Suites              255         Atrium; Meeting Space:    3,000 sq. ft. (c)       2/00
Beaumont, TX................    Holiday Inn                 253         Atrium; Meeting Space:    12,000 sq. ft.          3/84
Dallas, Ft. Worth
   Airport, TX (a)..........    Embassy Suites              329         Atrium; Meeting Space:    18,900 sq. ft.          8/99
Houston, TX (a).............    Marriott                    287         Atrium; Meeting Space:    14,300 sq. ft.         12/85
Mesquite, TX................    Hampton Inn & Suites        160         Meeting Space:            21,200 sq. ft.          4/99
                                                                        Convention Center:        35,100 sq. ft.(c)
Charleston, WV..............    Embassy Suites              253         Atrium; Meeting Space:    14,600 sq. ft.         12/97
Madison, WI.................    Marriott                    292         Atrium; Meeting Space:    15,000 sq. ft.(b).     10/85
                                                                        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 we own.

(c)   Large civic center is located adjacent to hotel.

MANAGED HOTELS

      The managed hotels consist of 15 hotels, including one Holiday Inn and one
Holiday Inn Express, one Sheraton, four Embassy Suites, three Marriott
Courtyards, two Marriott Residence Inns, two Renaissance properties, and one
non-franchised hotel, located in nine states (Arkansas, Kansas, Missouri,
Nebraska, Oklahoma, South Carolina, South Dakota, Tennessee and Texas), and
contain a total of 3,278 guest rooms. There is a convention and trade center
adjacent to six of our managed hotels.

                                       15
<PAGE>

      We provide management services to the managed hotels within the guidelines
contained in the annual operating and capital plans submitted to the hotel owner
for review and approval during the final 30 days of the preceding year. We are
responsible for the day-to-day operations of the managed hotels. While we are
responsible for the implementation of major refurbishment and repairs, the
actual cost of such refurbishments and repairs is borne by the hotel owner. We
earn annual management fees of 3% to 4% of the hotel's revenues. Each of the
management contracts with the 15 hotels owned by Mr. Hammons or entities
controlled by Mr. Hammons are terminable within either 30 or 60 days.

ITEM 3. LEGAL PROCEEDINGS.

      Two lawsuits have been filed against our general partner (in the Court of
Chancery of the State of Delaware in and for New Castle County), Jolly Roger
Fund L.P. and Jolly Roger Offshore Fund, Ltd. vs. John Q. Hammons Hotels Inc.,
et al, filed October 19, 2004 and Garco Investments LLP v. John Q. Hammons
Hotels, Inc., et al., filed October 20, 2004. Both of these class action
lawsuits originally sought injunctive relief to prevent any merger transaction
and asserted that the original price offered to the public shareholders of our
general partner was not equivalent to the "sweetheart deal" offered to John Q.
Hammons. These lawsuits have been consolidated into one action and the complaint
has been amended to seek compensation, attorney fees and costs of the action for
plaintiffs' efforts because they allegedly added value for the minority public
shareholders as evidenced by the fact the proposed stock acquisition price has
risen from the initial $13.00 a share to the current proposal of $24.00 per
share. The parties have agreed that no responsive pleadings are required to be
filed until March 31, 2005. We have not recorded an obligation with regard to
this matter, as a loss is not yet probable nor can an amount of loss be
reasonably estimated. Management will continue to assess the situation and
adjustments will be recorded, if necessary, in the period in which new facts and
circumstances arise.

      We are party to various other legal proceedings arising from its
consolidated operations. Management believes that the outcome of these
proceedings, individually and in the aggregate, will have no material adverse
effect on our consolidated financial position, results of operations or cash
flows.

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 for the 2004, 2003, 2002,
2001 and 2000 fiscal years has been derived from, and should be read in
conjunction with, our consolidated financial statements. 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. Our fiscal year ends on the Friday nearest December 31.

                                       16

<PAGE>

                   SELECTED CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                            (in thousands, except per share amounts, ratios and hotel data)
                                                        ------------------------------------------------------------------------
FISCAL YEAR END                                            2004          2003              2002             2001         2000
                                                        ---------      ---------        ---------        ---------     ---------
<S>                                                     <C>            <C>              <C>              <C>           <C>
REVENUES:
Rooms (a)                                               $ 266,800      $ 256,564        $ 258,068        $ 251,729     $ 250,847
Food and beverage                                         112,389        108,315          112,072          111,585       113,464
Meeting room rental, related party management
  fee and other (b)                                        51,591         48,596           50,181           50,100        47,048
                                                        ---------      ---------        ---------        ---------     ---------
  Total revenues                                          430,780        413,475          420,321          413,414       411,359
                                                        ---------      ---------        ---------        ---------     ---------
OPERATING EXPENSES:
Direct operating costs and expenses: (c)
  Rooms                                                    66,712         64,096           65,321           64,123        64,066
  Food and beverage                                        84,178         82,524           86,329           88,933        92,728
  Other                                                     2,145          2,584            3,037            3,137         3,516
General, administrative, sales, and
  management service expenses (d,e)                       139,902        130,980          130,571          124,872       117,510
Repairs and maintenance                                    18,193         17,430           17,478           16,920        16,111
Asset impairment (f)                                            -          9,700                -                -             -
Depreciation and amortization                              49,519         49,783           52,106           60,074        51,496
                                                        ---------      ---------        ---------        ---------     ---------
  Total operating expenses                                360,649        357,097          354,842          358,059       345,427
                                                        ---------      ---------        ---------        ---------     ---------
INCOME FROM OPERATIONS                                     70,131         56,378           65,479           55,355        65,932

OTHER (INCOME) EXPENSE:
Other income                                                 (193)          (175)               -                -             -
Interest expense and amortization of deferred
  financing fees, net of interest income                   65,498         67,522           69,323           69,374        71,780
Extinguishment of debt costs (l)                              144            774            7,411              474             -
                                                        ---------      ---------        ---------        ---------     ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS                    4,682        (11,743)         (11,255)         (14,493)       (5,848)
Income (loss) from discontinued operations (m)          $  (5,150)        (1,027)             392            2,120         3,426
                                                        ---------      ---------        ---------        ---------     ---------
NET LOSS                                                $    (468)     $ (12,770)       $ (10,863)       $ (12,373)     $ (2,422)
                                                        =========      =========        =========        =========     =========
</TABLE>

                                       17

<PAGE>

CONTINUED

<TABLE>
<CAPTION>
FISCAL YEAR END                                            2004          2003         2002           2001         2000
                                                        ---------     ---------     ---------      ---------    ---------
<S>                                                     <C>           <C>           <C>            <C>          <C>
OTHER DATA
  EBITDA from continuing operations (g)                 $ 119,650     $ 106,161     $ 117,585      $ 115,429    $ 117,428
  Net cash provided by operating activities                66,283        54,747        48,077         50,903       36,982
  Net cash used in investing activities                   (34,757)      (27,346)      (34,363)       (39,658)     (45,584)
  Net cash (used in) provided by financing activities     (14,272)      (25,385)      (24,238)       (23,786)       5,037

MARGIN AND RATIO DATA FROM CONTINUING OPERATIONS
  EBITDA margin from continuing operations (% of total
     revenue from continuing operations) (g)                 27.8%         25.7%         28.0%          27.9%        28.5%

  Earnings to fixed charges ratio (h)                        1.07x        N/A           N/A            N/A           N/A

OPERATING DATA FROM CONTINUING OPERATIONS
    Owned hotels:
    Number of hotels                                           44            44            44             44           44
    Number of rooms                                        10,853        10,858        10,857         10,861       10,861
    Average occupancy                                        65.7%         64.6%         64.6%          63.3%        64.5%
    Average daily room rate (ADR)  (i)                  $  102.77     $  100.55     $   99.13      $  100.55    $   98.89
    Room revenue per available room (RevPAR) (j)        $   67.51     $   64.92     $   64.05      $   63.68    $   63.79
    Increase in yield (k)                                     4.0%          1.4%          0.6%          (0.2%)        6.4%

BALANCE SHEET DATA
  Total assets                                          $ 816,499     $ 822,183     $ 859,972      $ 881,724    $ 920,884
  Total debt, including current portion                   765,204       781,072       806,342        813,007      836,707
  Refundable equity                                           655             -             -              -            -
  Equity (deficit)                                         (1,524)       (2,461)       10,398         21,306       33,758
</TABLE>

(a)   Includes revenues derived from rooms from continuing operations.

(b)   Includes meeting room rental, related party management fees for providing
      management services to the Managed Hotels and other from continuing
      operations.

(c)   Includes expenses incurred in connection with rooms, food and beverage and
      telephones from continuing operations.

(d)   Includes expenses incurred in connection with franchise fees,
      administrative, marketing and advertising, utilities, insurance, property
      taxes, rent and other from continuing operations.

(e)   Includes expenses incurred providing management services to the Managed
      Hotels.

(f)   We recognized impairment charges of $9.7 million related to our World Golf
      Village Hotel during 2003. The resulting impairment reserve was based on
      fair market values derived from independent third party valuations.

(g)   EBITDA from continuing operations is defined as income from continuing
      operations before income (loss) from discontinued operations, interest
      expense, net, depreciation and amortization, extinguishment of debt costs
      and other income. Management considers EBITDA to be one measure of
      operating performance for us before debt service that provides a relevant
      basis for comparison, and EBITDA is presented to assist investors in
      analyzing our performance. This information should not be considered as an
      alternative to any measure of performance as promulgated under accounting
      principles generally accepted in the United States, nor should it be
      considered as an indicator of our overall financial performance. Our
      calculation of EBITDA may be different from the calculation used by other
      companies and, therefore, comparability may be limited. EBITDA from
      continuing operations for 2003 includes an asset impairment charge of $9.7
      million.

                                       18

<PAGE>

<TABLE>
<CAPTION>
                                                     2004         2003         2002         2001       2000
                                                 -----------   ----------   ---------    ---------  ----------
<S>                                              <C>           <C>          <C>          <C>        <C>
RECONCILIATION OF NET LOSS TO EBITDA FROM
CONTINUING OPERATIONS:

Net loss                                         ($      468)  ($  12,770)  ($ 10,863)   ($ 12,373) ($   2,422)

Income (loss) from discontinued operations             5,150        1,027        (392)      (2,120)     (3,426)

Interest expense and amortization of deferred
financing fees                                        65,498       67,522      69,323       69,374      71,780

Other income                                            (193)        (175)          -            -           -

Depreciation and amortization                         49,519       49,783      52,106       60,074      51,496

Extinguishment of debt costs                             144          774       7,411          474           -
                                                  ----------    ---------    --------     --------   ---------
EBITDA from continuing operations                 $  119,650    $ 106,161    $117,585     $115,429   $ 117,428
                                                  ----------    ---------    --------     --------   ---------
</TABLE>

(h)   Earnings used in computing the earnings to fixed charges ratios consist of
      income (loss) from continuing operations before minority interest and
      provision for income taxes, plus fixed charges. Fixed charges consist of
      interest expense and that portion of rental expense representative of
      interest (deemed to be one-third of rental expense). Fixed charges in
      excess of earnings for the 2003, 2002, 2001 and 2000 fiscal years were
      $11.7 million, $11.3 million, $14.5 million and $6.4 million,
      respectively.

(i)   Total room revenue from continuing operations divided by the number of
      occupied rooms from continuing operations (ADR). Occupied rooms from
      continuing operations represent the number of rooms sold during period
      presented.

(j)   Total room revenue from continuing operations divided by number of
      available rooms from continuing operations. Available rooms from
      continuing operations represent the number of rooms available for rent
      from continuing operations multiplied by the number of days in the period
      presented.

(k)   Increase in yield represents the period-over-period increases in yield.
      Yield is defined as the room revenue per available room (RevPAR).

(l)   We adopted a new accounting pronouncement in 2003 which requires the loss
      on extinguishment of debt that was classified as an extraordinary item in
      prior periods to be reclassified to other expenses.

(m)   We sold two properties during 2004 and one during January 2005. The
      operating results of the three sold properties have been reclassified to
      discontinued operations.

SUPPLEMENTAL FINANCIAL INFORMATION RELATING TO THE COLLATERAL HOTELS

      The following tables set forth, as of December 31, 2004, unaudited
selected financial information with respect to the hotels collateralizing our
$510 million of 8-7/8% First Mortgage Notes due 2012, and about us, excluding
our unrestricted subsidiaries (as defined in the indenture relating to our
notes), or the "Restricted Group." Under the heading "Management Operations
Group," we include information with respect to revenues and expenses we generate
as manager of the collateral hotels and the other hotels we own or manage.

                         TRAILING 12 MONTHS ENDED DECEMBER 31, 2004

<TABLE>
<CAPTION>
                                                  2002           Management       Total
                                               Collateral        Operations     Restricted
                                               Hotels (30)         Groups         Group
                                               ----------        ----------     ----------
<S>                                            <C>               <C>             <C>
Statement of operations data
(in thousands):

Operating revenues                             $  271,194        $   11,055(a)  $  282,249
Operating expenses:
  Direct operating costs and
    expenses                                       98,192                 -         98,192
  General, administrative, sales
    and management service expenses (b)            91,471             1,831(c)      93,302
  Repairs and maintenance                          11,671                 -         11,671
  Asset impairment                                  3,197 (d)             -          3,197
  Depreciation and amortization                    30,530               964         31,494
                                               ----------        ----------     ----------
Total operating expenses                       $  235,061        $    2,795     $  237,856
                                               ----------        ----------     ----------
Income from operations                         $   36,133        $    8,260     $   44,393
                                               ==========        ==========     ==========
</TABLE>

                                       19

<PAGE>

<TABLE>
<S>                                            <C>
Operating data:
    Occupancy                                        64.3%
    Average daily room rate (ADR)              $    97.44
    RevPAR                                     $    62.65
</TABLE>

(a)   Represents management revenues derived from the non-collateral hotels and
      the managed hotels.

(b)   General, administrative, sales and management service expenses for the
      collateral hotels include management expenses allocated to the respective
      hotels.

(c)   General, administrative, sales and management service expenses for the
      collateral hotels are presented net of the management revenues associated
      with the management expenses included in general, administrative, sales
      and management service expenses for the collateral hotels.

(d)   Asset impairment charge on Northglenn, Colorado property based on the
      property's carrying value in excess of fair market value, as determined
      through the purchase offers.

                    TRAILING 12 MONTHS ENDED JANUARY 2, 2004

<TABLE>
<CAPTION>
                                             2002           Management       Total
                                          Collateral        Operations     Restricted
                                          Hotels (30)         Groups          Group
                                          -----------       ----------     ----------
<S>                                       <C>               <C>            <C>
Statement of operations data
(in thousands):
Operating revenues                        $  260,678        $  10,048 (a)  $  270,726
Operating expenses:
  Direct operating costs and
    expenses                                  95,828                -          95,828
  General, administrative, sales
    and management service expenses (b)       85,998             (235)(c)      85,763
  Repairs and maintenance                     11,168                -          11,168
  Depreciation and amortization               29,455              779          30,234
                                          ----------        ---------      ----------
Total operating expenses                  $  222,449        $     544      $  222,993
                                          ----------        ---------      ----------
Income from operations                    $   38,229        $   9,504      $   47,733
                                          ==========        =========      ==========

Operating data:
    Occupancy                                   63.1%
    Average daily room rate (ADR)         $    95.21
    RevPAR                                $    60.08
</TABLE>

(a)   Represents management revenues derived from the non-collateral hotels and
      the managed hotels.

(b)   General, administrative, sales and management service expenses for the
      collateral hotels include management expenses allocated to the respective
      hotels.

(c)   General, administrative, sales and management service expenses for the
      collateral hotels are presented net of the management revenues associated
      with the management expenses included in general, administrative, sales
      and management service expenses for the collateral hotels.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

      You should read the following discussion in conjunction with our selected
financial data and consolidated financial statements included elsewhere in this
Form 10-K.

RECENT EVENTS

      Our general partner has announced over the past several months that it and
its principal stockholder have been engaged in discussions with parties
regarding a possible merger transaction. Our general partner's board of
directors appointed a Special Committee composed solely of outside independent
directors to conduct all

                                       20

<PAGE>

negotiations on its behalf. On March 9, 2005, our general partner announced that
it and John Q. Hammons, had agreed to continue to negotiate exclusively with an
investor group led by JQH Acquisition, LLC through April 30, 2005 regarding a
possible transaction. Although terms of the investor group's proposal remain
subject to further discussion and negotiation, the proposal contemplates a
merger transaction in which our general partner's Class A shares would be
purchased for $24.00 cash per share. Although the parties continue to work
through a number of items that remain to be negotiated, particularly with
respect to the documentation of the various arrangements that have been agreed
to in principle between the investor group and Mr. Hammons, there can be no
assurance that a transaction will be consummated.

GENERAL

      Our consolidated financial statements include revenues from our owned
hotels and management fee revenues for providing management services to the
managed hotels (owned or directly controlled by Mr. Hammons). References to our
hotels include both our owned hotels and our managed hotels. We derive revenues
from the owned hotels from rooms, food and beverage, meeting rooms and other
revenues. Our beverage revenues include only revenues from the sale of alcoholic
beverages, while we show revenues from the sale of non-alcoholic beverages as
part of food revenue. Direct operating costs and expenses include expenses we
incur in connection with the direct operation of rooms, food and beverage and
telephones. Our general, administrative, sales and management services expenses
include expenses incurred for franchise fees, administrative, sales and
marketing, utilities, insurance, property taxes, rent, management services and
other expenses.

      From 2000 through 2004, our total revenues from continuing operations grew
at an annual compounded growth rate of 1.2%, from $411.4 million to $430.8
million. Occupancy during that period increased from 64.5% to 65.7%. At the same
time, our average daily room rate increased by 3.9%, from $98.89 to $102.77, and
room revenue per available room increased by 5.8%, from $63.79 to $67.51.

      The terrorist attacks of September 11, 2001, caused a significant decrease
in our hotels' occupancy and average daily rate due to disruptions in business
and leisure travel patterns, and concern about travel safety. Although we have
rebounded to prior years' levels since, general economic conditions, including
the speed and strength of the economic recovery, could have an impact on our
future operating results.

                                       21

<PAGE>

RESULTS OF CONTINUING OPERATIONS

<TABLE>
<CAPTION>
FISCAL YEAR END                                     2004          2003            2002          2001          2000
---------------                                  -----------   -----------    -----------   -----------    -----------
<S>                                              <C>           <C>            <C>           <C>            <C>
OWNED HOTELS
   Average Occupancy                                    65.7%         64.6%          64.6%         63.3%          64.5%
   Average Daily Room Rate (ADR)                 $    102.77   $    100.55    $     99.13   $    100.55    $     98.89
   Room Revenue per Available Room (RevPAR)      $     67.51   $     64.92    $     64.05   $     63.68    $     63.79
   Available Rooms (a)                             3,951,885     3,952,039      4,029,431     3,953,222      3,932,337
   Number of Hotels                                       44            44             44            44             44

MATURE HOTELS (b)
   Average Occupancy                                    65.7%         64.6%          64.6%         63.2%          65.2%
   Average Daily Room Rate (ADR)                 $    102.77   $    100.55    $     99.13   $     99.97    $     97.15
   Room Revenue per Available Room (RevPAR)      $     67.51   $     64.92    $     64.05   $     63.14    $     63.39
   Available Rooms (a)                             3,951,885     3,952,039      4,029,431     3,747,198      3,387,629
   Number of Hotels                                       44            44             44            42             38

NEW HOTELS (b)
   Average Occupancy                                       -%            -%             -%         66.4%          59.9%
   Average Daily Room Rate (ADR)                 $         -   $         -    $         -   $    110.55    $    110.68
   Room Revenue per Available Room (Rev PAR)     $         -   $         -    $         -   $     73.37    $     66.29
   Available Rooms (a)                                     -             -              -       206,024        544,708
   Number of Hotels                                        -             -              -             2              6

PERCENTAGES OF TOTAL REVENUES
   REVENUES
   Rooms                                                61.9%         62.0%          61.4%         60.9%          61.0%
   Food and beverage                                    26.1%         26.2%          26.7%         27.0%          27.6%
   Meeting room rental and other                        12.0%         11.8%          11.9%         12.1%          11.4%
                                                 -----------   -----------    -----------   -----------    -----------
      Total revenues                                   100.0%        100.0%         100.0%        100.0%         100.0%
                                                 -----------   -----------    -----------   -----------    -----------

OPERATING EXPENSES
   Direct operating costs and expenses
      Rooms                                             15.5%         15.5%          15.5%         15.5%          15.6%
      Food and beverage                                 19.5%         20.0%          20.5%         21.5%          22.5%
      Other                                              0.5%          0.6%           0.7%          0.8%           0.9%
   General, administrative, sales, and
      management service expenses                       32.5%         31.7%          31.1%         30.2%          28.6%
   Repairs and maintenance                               4.2%          4.2%           4.2%          4.1%           3.9%
   Asset impairment                                        -%          2.4%             -%            -%             -%
   Depreciation and amortization                        11.5%         12.0%          12.4%         14.5%          12.5%
                                                 -----------   -----------    -----------   -----------    -----------
      Total operating expenses                          83.7%         86.4%          84.4%         86.6%          84.0%
                                                 -----------   -----------    -----------   -----------    -----------
   Income from Operations                               16.3%         13.6%          15.6%         13.4%          16.0%
                                                 ===========   ===========    ===========   ===========    ===========
</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 open during the period
      reported. Our 2002 Fiscal Year contained 53 weeks, or 371 days, while its
      2004, 2003, 2001 and 2000 Fiscal Years each contained 52 weeks, or 364
      days.

(b)   We track the performance of our Owned Hotels in two groups. One group of
      hotels are those we opened during the current and prior Fiscal Years (New
      Hotels). The remainder, excluding the New Hotels, we refer to as Mature
      Hotels. During 2004, 2003 and 2002 Fiscal Years, there were no New Hotels.
      The distinction between Mature and New Hotels has become less significant
      since cessation of our development.

2004 FISCAL YEAR COMPARED TO 2003 FISCAL YEAR

      Total revenues from continuing operations increased to $430.8 million in
2004 from $413.5 million in 2003, or 4.2%, reflecting a continued improvement in
the general economy. We experienced increases in the corporate transient,
corporate group and government market segments of our business as a result of
the improved economy. Our business reflected a shift from the association market
segment in 2003 to the corporate market segment in 2004.

                                       22

<PAGE>

      Room revenues from continuing operations increased $10.2 million, or 4.0%,
from 2003, primarily in the corporate transient, corporate group and government
market segments of our business. Rooms revenues, as a percentage of total
revenues, decreased slightly to 61.9%, compared to 62.0% in 2003. Our average
room rate increased to $102.77 in 2004 from $100.55 in 2003, an increase of
2.3%. Occupancy increased slightly to 65.7% in 2004 from 64.6% in 2003.
Occupancy for the hotel industry, as reported by Smith Travel Research, was
61.3%, up 3.7% from 2003. Our revenue per available room (RevPAR) was $67.51 in
2004, up $2.59, or 4.0%, from 2003. RevPAR for the hotel industry was $52.93, up
7.8% from 2003.

      Food and beverage revenues from continuing operations increased $4.1
million, or 3.8%, from 2003, but decreased slightly as a percentage of total
revenues to 26.1% from 26.2%. The dollar increase was primarily related to
increased banquet sales during 2004.

      Meeting room rental, related party management fee and other revenues from
continuing operations increased by $3.0 million, or 6.2%, in 2004 from 2003, and
increased as a percentage of total revenues, to 12.0% from 11.8%. The increase
was attributable to increases in related party management fees, meeting room
rental fees and rooms other income, partially offset by a decrease in telephone
revenues.

      Rooms operating expenses from continuing operations increased by $2.6
million, or 4.1%, in 2004. The increase was primarily attributable to increased
labor costs related to the increased occupancy.

      Food and beverage operating expenses from continuing operations increased
by $1.7 million, or 2.1%, from 2003 as the result of increased food and beverage
revenues, but decreased as a percentage of food and beverage revenues to 74.9%
in 2004, from 76.2% in 2003. The dollar increase was primarily attributable to
increased labor costs directly related to higher sales volumes discussed above.

      Other operating expenses from continuing operations decreased by $0.5
million, or 19.2%, from 2003 and decreased as a percentage of meeting room
rental, related party management fee and other income, to 4.1% in 2004, from
5.4% in 2003.

      General, administrative, sales and management service expenses from
continuing operations increased by $8.9 million, or 6.8%, and increased as a
percentage of total revenues to 32.5% from 31.7% in 2003. The increase was
primarily attributable to increases in costs associated with administrative and
sales and marketing compensation, legal and professional fees associated with
our merger proposal, utilities, franchise frequent travel programs and credit
card commissions, partially offset by decreases in property taxes.

      Repairs and maintenance expenses from continuing operations increased
slightly, by $0.8 million compared to 2003, but remained stable as a percentage
of revenues, at 4.2%.

      Depreciation and amortization expenses from continuing operations
decreased by $0.3 million, or 0.6%, in 2004 from 2003, and decreased as a
percentage of total revenues to 11.5% from 12.0% in 2003. The decrease related
to cessation of new hotel development in 1998.

      Income from operations increased by $13.7 million, or 24.3%, from 2003,
largely because of the absence of the 2003 asset impairment charge of $9.7
million described below.

      Income (loss) from continuing operations was $4.7 million of income,
compared to a loss of $11.7 million in 2003, primarily as a result of the asset
impairment charge, greater interest expense and extinguishment of debt costs in
2003.

      Net loss was $0.5 million compared to $12.8 million in 2003, as the result
of the factors discussed above.

                                       23

<PAGE>

2003 FISCAL YEAR COMPARED TO 2002 FISCAL YEAR

      Total revenues from continuing operations decreased by $6.8 million, or
1.6%, in 2003, as fourth quarter 2003 revenues (13 weeks) decreased compared to
the 2002 fourth quarter (14 weeks). The decrease is attributable to decreases in
the corporate, leisure and corporate group market segments of our business.

      Rooms revenues from continuing operations decreased by 0.6% from 2002, as
the result of a decrease in rooms revenues in the fourth quarter of 2003,
related primarily to the decreases in corporate, leisure and corporate group
market segments of our business mentioned above. Rooms revenues, as a percentage
of total revenues, increased to 62.0%, compared to 61.4% in 2002. Our average
room rate increased to $100.55 in 2003 from $99.13 in 2002, an increase of 1.4%.
Occupancy remained stable at 64.6%. Occupancy for the hotel industry, as
reported by Smith Travel Research, was 59.2%, up 0.2% from 2002. Our revenue per
available room (RevPAR) was $64.92 in 2003, up $0.87, or 1.4%, from 2002. RevPAR
for the hotel industry was $49.34, up 0.2% from 2002.

      Food and beverage revenues from continuing operations decreased $3.8
million, or 3.4%, in 2003 from 2002, and decreased as a percentage of total
revenues to 26.2% from 26.7% in 2002. The decrease related primarily to the
decrease in the corporate group market segment of our business discussed above.

      Meeting room rental, related party management fee and other revenues from
continuing operations decreased by $1.6 million, or 3.2%, in 2003 from 2002, and
decreased slightly as a percentage of total revenues, to 11.8% from 11.9%. The
decrease was attributable to declines in telephone department revenues as well
as the decrease from the corporate group market segment of our business.

      Rooms operating expenses from continuing operations decreased by $1.2
million, or 1.8%, in 2003, and decreased as a percentage of rooms revenue, to
25.0% from 25.3% in 2002. The decrease was primarily attributable to reduced
labor costs and favorable workers' compensation loss experience.

      Food and beverage operating expenses from continuing operations decreased
by $3.8 million, or 4.4%, from 2002 as the result of decreased food and beverage
revenues, but also decreased as a percentage of food and beverage revenues to
76.2% in 2003, from 77.0% in 2002. The decrease was primarily attributable to
reduced labor costs directly related to lower sales volumes as discussed above.

      Other operating expenses from continuing operations decreased by $0.4
million, or 13.3%, from 2002 and decreased as a percentage of meeting room
rental, related party management fee and other income, to 5.4% in 2003, from
6.0% in 2002.

      General, administrative, sales and management service expenses from
continuing operations increased by $0.4 million, or 0.3%, and increased as a
percentage of total revenues to 31.7% from 31.1% in 2002. The increase was
primarily attributable to increases in costs associated with sales and marketing
compensation, franchise frequent traveler programs, utilities and credit card
commissions, partially offset by decreases in franchise fees and property taxes.

      Asset impairment from continuing operations of $9.7 million in 2003 was
attributable to the write down of our World Golf Village property to reflect the
difference between the net book value and the current estimated fair value of
this property obtained from independent third party valuations.

      Depreciation and amortization expenses from continuing operations
decreased by $2.3 million, or 4.4%, in 2003 from 2002, and decreased as a
percentage of total revenues to 12.0% from 12.4% in 2002. The decrease related
to cessation of new hotel development in 1998.

      Income from operations decreased by $9.1 million, or 13.9%, from 2002, as
the result of the $9.7 million asset impairment charge described above,
partially offset by reduced depreciation and amortization expenses.

      Loss from continuing operations was $11.7 million, compared to $11.3
million in 2002.

      Net loss was $12.8 million for 2003, compared to $10.9 million in 2002.

                                       24

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

      In general, we have financed our operations through internal cash flow,
loans from financial institutions, the issuance of public and private debt and
equity and the issuance of industrial revenue bonds. Our principal uses of cash
are to pay operating expenses, to service debt and to fund capital expenditures.

      At December 31, 2004, we had $41.0 million of cash and equivalents and
$22.3 million of marketable securities, compared to $23.8 million and $15.7
million, respectively, at the end of 2003. Such amounts are available for our
working capital requirements, capital expenditures and debt service. At December
31, 2004 and January 2, 2004, we had restricted cash reserves of $30.6 million
and $21.7 million, respectively. This restricted cash is escrowed for insurance,
taxes, capital expenditures and certain other obligations, in accordance with
specific loan covenants and franchise agreements.

      Cash from operating activities increased to $66.5 million for 2004, from
$54.9 million for 2003, an increase of $11.6 million, or 21.2%, primarily
attributable to increased sales and operating margins and favorable changes in
certain assets and liabilities.

      We incurred capital expenditures of $30.3 million in 2004, compared to
$18.4 million in 2003. Capital expenditures typically include capital
improvements on existing hotel properties.

      During fiscal 2000, we initiated claims against certain of our
construction service providers, as well as with our insurance carrier. These
claims resulted from costs we incurred and expected to incur to address moisture
related problems caused by water intrusion through defective windows. In
December 2001, we initiated legal actions in an effort to collect claims
previously submitted. Subsequent to the filing of the legal action, the
insurance carrier notified us that a portion of our claims had been denied. As
of December 31, 2004, we had incurred approximately $12.6 million to correct the
underlying moisture problem and no further costs are anticipated. During the
third quarter of 2003, summary judgment was granted to our insurance carrier in
one action and later affirmed on appeal, and summary judgment was granted to one
of our window manufacturers. On another action, we received settlement of $0.2
million during the third quarter of 2004. We plan to continue to vigorously
pursue collection of these costs, although there can be no assurance that we
will be successful. Our total cumulative depreciation charge through December
31, 2004, was $7.6 million, which we recorded in fiscal year 2001 to reserve the
net historical costs of the hotel property assets refurnished absent any
recoveries. To the extent we realize recoveries we will record them as a
component of other income.

      At December 31, 2004, our total debt was $765.2 million compared with
$781.1 million at the end of 2003. The decrease is primarily attributable to the
reduction of long term debt from scheduled principal payments and from the
proceeds from the sale of certain hotels during 2004. The current portion of
long-term debt was $25.7 million at the end of 2004, compared with $7.4 million
at the end of 2003. The increase is primarily attributable to the total debt on
our World Golf Village Hotel (approximately $18.4 million) which we paid off on
February 23, 2005, as discussed below.

      On January 27, 2005, we completed the sale of a Holiday Inn property
located in Emeryville, California. This hotel property served as collateral
under the 2002 First Mortgage Notes. Under the terms of these indentures, we
provided replacement collateral in accordance with the indenture provisions, as
discussed below.

      On February 23, 2005, we utilized the net cash proceeds from the sale of
the Northglenn, Colorado and the Emeryville, California hotel properties to
pay-off the existing mortgage on our World Golf Village Hotel in St. Augustine,
Florida and substitute it as the replacement collateral for the 2002 First
Mortgage Notes in accordance with the indenture provisions.

      During the second quarter of 2002, we completed the refinancing of our
long-term debt, primarily our $300 million 8-7/8% First Mortgage Notes due
February 2004 and our $90 million 9-3/4% First Mortgage Notes due April 2005, as
well as $30.1 million of short-term debt, with new $510 million 8-7/8% First
Mortgage Notes due May 2012. We expect 2005 capital requirements estimated at
$43.5 million (including approximately $12.6 million related to planned hotel
franchise conversions of some of our properties) to be funded by cash and cash
flow from

                                       25

<PAGE>

operations. Based upon current plans, we anticipate that our capital resources
will be adequate to satisfy our 2005 capital requirements for normal recurring
capital improvement projects.

      We did not distribute or accrue any amounts in 2004 or 2003, except for
$177,000 and $150,000, respectively, in each of those years for our general
partner's state franchise taxes. Our distributions must be in accordance with
the provisions of the indenture.

NEW ACCOUNTING PRONOUNCEMENT

      In January 2003, the FASB issued Interpretation No. 46 (FIN 46)
"Consolidation of Variable Interest Entities." Until this interpretation, a
company generally included another entity in its consolidated financial
statements only if it controlled the entity through voting interests. FIN 46
requires a variable interest entity to be consolidated by a company if that
company is subject to a majority of the risk of loss from the variable interest
entity's activities or entitled to receive a majority of the entity's residual
returns. In December 2003, the FASB issued FIN 46R, "Consolidation of Variable
Interest Entities, an Interpretation of ARB 51 (as revised December 2003)." The
primary objectives of FIN 46R are to provide guidance on the identification of
entities for which control is achieved through means other than through voting
rights (Variable Interest Entities) and how to determine when and which business
enterprise should consolidate the Variable Interest Entity (the Primary
Beneficiary). We do not have any variable interest entities and therefore, FIN
46R did not impact our financial position, results of operation or cash flow.

      In December 2004, the FASB issued SFAS 123R "Share Based Payment" that
will require compensation costs related to share-based payment transactions to
be recognized in the financial statements. With limited exception, the amount of
compensation cost will be measured based on the grant-date fair value of the
equity or liability instruments issued. In addition, liability awards will be
realized each reporting period. Compensation costs will be recognized over the
period that an employee provides service in exchange for the award. This will be
effective for the third quarter of fiscal 2005, and affect the compensation
expense related to our general partner's stock options recorded in the
accompanying consolidated financial statements. As of December 31, 2004, SFAS
123R did not impact the accompanying consolidated financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. On an ongoing basis, we evaluate our estimates and assumptions,
including those related to bad debts, investments, valuation of long-lived
assets, self-insurance reserves, contingencies and litigation. We base our
estimates and judgments on historical experience and various other factors we
believe to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. We believe the following
critical accounting policies, among others, affect our more significant
estimates and assumptions used in preparing our consolidated financial
statements. Actual results could differ from our estimates and assumptions.

      Trade receivables are reflected net of an estimated allowance for doubtful
accounts. This estimate is based primarily on historical experience and
assumptions with respect to future payment trends.

      Property and equipment are stated at cost less accumulated depreciation.
We periodically review the carrying value of property and equipment and other
long-lived assets for indications that the carrying value of such assets may not
be recoverable. This review consists of a comparison of the carrying value of
the assets with the expected future undiscounted cash flows. If the respective
carrying values exceed the expected future undiscounted cash flows, the
impairment is measured using fair value measures to the extent available or
discounted cash flows.

      We consider each individual hotel to be an identifiable component of our
business. In accordance with SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," we do not consider a hotel as "held for sale"
until it is probable that the sale will be completed within one year. Once a
hotel is "held for sale" the operations related to the hotel will be included in
discontinued operations. We consider a hotel as "held for sale"

                                       26
<PAGE>

once the potential transaction has been approved by our board of directors
(i.e., Letter of Intent is approved), a contract for sale has been executed, the
buyer has completed its due diligence review of the asset, and we have received
a deposit. Until a buyer has completed its due diligence review of the asset,
necessary approvals have been received and substitutive conditions to the
buyer's obligation to perform have been satisfied, we do not consider a sale to
be probable.

      We do not depreciate hotel assets while they are classified as "held for
sale." Upon designation of a hotel as being "held for sale," and quarterly
thereafter, we review the carrying value of the hotel and, as appropriate,
adjust its carrying value to the lesser of depreciated cost or fair value less
cost to sell, in accordance with SFAS 144. Any such adjustment in the carrying
value of a hotel classified as "held for sale" will be reflected in discontinued
operations. We will include in discontinued operations the operating results of
hotels classified as "held for sale" or that have been sold.

      Our deferred financing costs, franchise fees and other assets include
management and franchise contracts and leases. The value of our management and
franchise contracts and leases are amortized on a straight-line method over the
life of the respective agreement. The assessment of management and franchise
contracts and leases requires us to make certain judgments, including estimated
future cash flow from the respective properties.

      We are self-insured for various levels of general liability and auto,
workers' compensation and employee medical coverages. 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,
unasserted claims, claim cost, claim frequency, as well as changes in actual
experience, could cause these estimates to change.

      We recognize revenues from our rooms, catering and restaurant facilities
as earned on the close of business each day.

CONTRACTUAL OBLIGATIONS

      The following table summarizes our significant contractual obligations as
of December 31, 2004, including long-term debt and operating lease commitments:

<TABLE>
<CAPTION>
                                                     Payments Due by Period
                                  ------------------------------------------------------------
Contractual obligations                         1 Year        2-3          4-5        After 5
(000s omitted)                      Total      or less       Years        Years        Years
<S>                               <C>          <C>          <C>          <C>          <C>
Long-term debt                    $765,204     $ 25,719     $ 78,976     $ 53,108     $607,401
Related party leases                 7,383        1,208          300          300        5,575
Other leases                        65,283        2,744        5,279        3,845       53,415
                                  --------     --------     --------     --------     --------

Total contractual obligations     $837,870     $ 29,671     $ 84,555     $ 57,253     $666,391
                                  ========     ========     ========     ========     ========
</TABLE>

      For 41 of 44 operating hotel properties, which excludes the Holiday Inn
Emeryville, California property we sold on January 27, 2005 (as discussed
above), we have entered into franchise agreements with national hotel chains
that require each hotel to remit to the franchisor monthly fees equal to
approximately 3.0% to 6.0% of gross room revenues, as defined. Franchise fees
expensed under these contracts were $11.9 million in fiscal 2004, of which $0.5
million is included in discontinued operations. In addition, each hotel under a
franchise agreement pays additional advertising, reservation and maintenance
fees to the franchisor which range from 1.0% to 4.0% of gross revenues as
defined. The amount of expense related to these fees included in the
consolidated statements of operations as a component of general, administrative,
sales and management service expenses was $10.4 million in fiscal 2004, of which
$0.4 million was included in discontinued operations. Since these franchise
obligations are dependent on gross revenues and as such are variable, the
amounts are not included in the above table. Interest expense obligations also
are excluded from the above table.

                                      27
<PAGE>

SEASONALITY

      Our hotels have traditionally experienced slight seasonality.
Additionally, hotels for the fourth quarter of 2002 reflect 14 weeks of results
compared to 13 weeks for the first three quarters of the 2002 fiscal year and
all of the quarters in the 2004, 2003 and 2001 fiscal years.

INFLATION

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

      We are exposed to changes in interest rates primarily as the result of our
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. Our financing
activities 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 our long-term fixed and variable rate debt
obligations as of December 31, 2004.

<TABLE>
<CAPTION>
                                                                                                  THERE-                 FAIR
EXPECTED MATURITY DATE                 2005        2006        2007        2008        2009       AFTER       TOTAL      VALUE(d)

<S>                                   <C>         <C>         <C>         <C>         <C>         <C>         <C>        <C>
Long-Term Debt(a)
(IN MILLIONS)

$510 million First Mortgage Notes     $    -      $    -      $    -      $    -      $    -      $  499      $  499      $  561-
                                                                                                                             569

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

Other fixed-rate debt obligations     $   25      $   27      $   41      $   26      $    4      $  108      $  231      $  231

Average interest rate(b)                 9.8%        7.8%        8.4%        8.1%        8.7%        8.6%        8.5%

Other variable-rate debt obligations  $    1      $   10      $    1      $   23      $    -      $    -      $   35      $   35

Average interest rate(c)                 5.5%        5.5%        5.5%        5.5%        5.5%        5.5%        5.5%
</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 31, 2004, that is maturing in
    the year reported. The weighted average interest rate excludes the effect
    of the amortization of deferred financing costs.

(d) The fair values of long-term debt obligations approximate their respective
    historical carrying amounts, except with respect to the $510 million First
    Mortgage Notes. The fair value of the First Mortgage Notes issued is
    estimated by obtaining quotes from brokers. A one percentage point change
    in the quote received for the $510 million First Mortgage Notes would have
    an effect of approximately $5 million on the fair value, while a one
    percentage point change in the 8-7/8% discount rate used to calculate the
    fair value of our other fixed rate debt would change its fair value by
    approximately $11 million.

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 15.

                                      28
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

        None.

ITEM 9A. CONTROLS AND PROCEDURES.

      We maintain a system of disclosure controls and procedures designed to
provide reasonable assurance that information we are required to disclose in the
reports that we file or submit under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported, within the time
periods specified in Securities and Exchange Commission rules and forms. Our
management, with the participation of the chief executive officer and chief
financial officer of our general partner, evaluated the effectiveness of our
disclosure controls and procedures as of December 31, 2004. Based on that
evaluation, the chief executive officer the chief financial officer have
concluded that, as of such date, our disclosure controls and procedures were
effective at the reasonable assurance level.

      There have been no changes in our internal control over financial
reporting that occurred during the quarter ended December 31, 2004, that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

ITEM 9B. OTHER INFORMATION.

      We have no information required to be disclosed in a report on Form 8-K
during the fourth quarter of the 2004 fiscal year that was not reported on such
Form 8-K.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

      We list below the members of our general partner's board of directors, and
we provide certain other information about each person's age, principal
occupation or employment during the past five years, the periods during which
they have served as directors and positions they currently hold with our general
partner.

<TABLE>
<CAPTION>
                                 Director      Expiration
                        Age        Since         of Term     Position(s) Held with General Partner
                        ---      --------      ----------    --------------------------------------
<S>                     <C>      <C>           <C>           <C>
Donald H. Dempsey        60        1999           2007       Director

Jacqueline A. Dowdy      61        1994           2005       Director and Secretary

Daniel L. Earley         62        1994           2006       Director

John Q. Hammons          86        1994           2006       Director, Chairman and Chief Executive
                                                             Officer
William J. Hart          64        1994           2005       Director

James F. Moore           62        1995           2006       Director

John E. Lopez-Ona        47        1996           2007       Director

David C. Sullivan        65        1999           2005       Director
</TABLE>

      Donald H. Dempsey became a director of our general partner in August 1999.
From July 1998 until January 2004, Mr. Dempsey served as Executive Vice
President, Secretary, Treasurer, Chief Financial Officer and Director of Equity
Inns, Inc. Equity Inns, Inc. is a large lodging real estate investment trust
headquartered in Germantown, Tennessee. Mr. Dempsey has more than 30 years'
experience in corporate and financial management

                                      29
<PAGE>

within the hotel industry. Before he joined Equity Inns in July 1998, Mr.
Dempsey served as Executive Vice President and Chief Financial Officer of Choice
Hotels International, Inc., a publicly traded hotel franchisor. From April 1995
to December 1997, Mr. Dempsey served as Senior Vice President and Chief
Financial Officer of Promus Hotel Corporation. From October 1993 to April 1995,
he served as Senior Vice President of Finance and Administration of the Hotel
Division of The Promus Companies Incorporated, and from December 1991 to October
1993, as Vice President, Finance, of the Hampton Inn/Homewood Suites Hotel
Division of The Promus Companies Incorporated. Mr. Dempsey served in various
other senior financial and development officer positions with the Hotel Division
of The Promus Companies Incorporated and its predecessor companies from 1983 to
1991. From 1969 to 1983, Mr. Dempsey held various corporate and division
financial management and administrative positions with Holiday Inns, Inc.

      Jacqueline A. Dowdy has been the Secretary since 1982 and a director of
our general partner since 1994. She has been active in Mr. Hammons' hotel
operations since 1981. She is an officer and director of several of our
affiliates of the Company.

      Daniel L. Earley has been a director of our general partner since 1994.
From 1985 until January 2005, Mr. Earley served as President, Chief Executive
Officer and a director of First Clermont Bank, a community bank located in
Milford, Ohio, which was owned by Mr. Hammons. In January 2005, that bank was
sold and became a division of The Park National Bank, Milford, Ohio, where Mr.
Earley remains as president.

      John Q. Hammons is Chairman, Chief Executive Officer, a director and
founder of our general partner. Mr. Hammons has been actively engaged in the
acquisition, development and management 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 110 hotels on a nationwide basis, primarily under the
Holiday Inn and Embassy Suites Hotels tradenames. Mr. Hammons is the controlling
shareholder of our general partner.

      William J. Hart has been a director of our general partner since 1994. 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 us and personally for Mr. Hammons.

      John E. Lopez-Ona became a director of our general partner in May 1996. He
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 he owns, which specializes in
principal investment. Since 1998, Mr. Lopez-Ona has been the Chairman and CEO of
Six Sigma Qualtec, a premier training, consulting and technology solutions
company for performance improvement methodologies.

      James F. Moore became a director of our general partner in May 1995. Mr.
Moore is Managing Partner, American Products LLC, a privately owned
manufacturing company serving the telecommunications industry located in
Strafford, Missouri. From 1987 until 2000, he served as Chairman, Chief
Executive Officer and a director of Champion Products, Incorporated, the
predecessor company to American Products LLC. 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 became a director of our general partner in May 1999. He
is the Chairman of Sullivan Investments, LLC, a position he has held since May,
2000. From December 1997 until May 2000, Mr. Sullivan served as Chairman, Chief
Executive Officer and a director of ResortQuest International, a company listed
on the New York Stock Exchange that provides vacation rental and property
management services. From April 1995 to December 1997, Mr. Sullivan was
Executive Vice President and Chief Operating Officer of Promus Hotel
Corporation, a publicly traded hotel franchisor, 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 Operating
Officer of the Hotel Division of The Promus Companies Incorporated or 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. Mr. Sullivan serves on the board of directors of Winston Hotels, Inc.

                                      30
<PAGE>

CORPORATE GOVERNANCE AND OTHER MATTERS

      DIRECTOR INDEPENDENCE. Our general partner's board of directors has
determined that five of its current directors, John E. Lopez-Ona, James F.
Moore, David C. Sullivan, Donald H. Dempsey and William J. Hart, are
"independent" within the meaning of the American Stock Exchange listing
standards. This determination has been made based on written responses provided
by each of the directors in a questionnaire regarding relationships and possible
conflicts of interest. Mr. Hart and his law firm provide services to us, Mr.
Hammons and certain of his affiliates. The board of directors has determined
that this legal representation of Mr. Hammons and us does not impair Mr. Hart's
independence because the duty of Mr. Hart and his firm as counsel to us is to
us, and not to Mr. Hammons. In the event of a conflict between Mr. Hammons and
us, Mr. Hart and his firm could not represent either party. In addition, the
board considered Mr. Hart's fiduciary duties as a director, and his past
performance on the board, and concluded that Mr. Hart had demonstrated an
independence of thought and a commitment to the best interest of all
stakeholders.

      SELECTION OF NOMINEES AND NOMINATIONS BY SHAREHOLDERS. In March of 2004,
our general partner's board of directors established a nominating committee
composed of three independent directors (as defined in the American Stock
Exchange listing standards) to select nominees for election as directors. The
board has adopted a nominating committee charter governing the nomination
process.

      The nominating committee our general partner considers director candidates
recommended by any shareholder in writing. A shareholder's written
recommendation must be received by the committee in a timely manner, but no
later than 90 days before the annual meeting, and contain the name of the
candidate, a detailed description of his or her experience and qualifications
and any other information that may assist the nominating committee in its
evaluation of the candidate. The recommendation should be addressed to the
Nominating Committee of the Board of Directors c/o Chief Financial Officer, John
Q. Hammons Hotels, Inc., 300 John Q. Hammons Parkway, Suite 900, Springfield,
Missouri 65806.

      The nominating committee uses the same process to review and evaluate all
potential director nominees, regardless of who recommends the candidate, and
considers the candidate's qualifications in light of the criteria established
for board members, as well as any special skills the committee believes are
appropriate, in light of the credentials of the other directors. Our general
partner has never used a director search firm to locate potential board nominees
in the past, although the nominating committee is free to do so in the future if
it so chooses.

      Criteria and minimum qualifications for new board members include a high
level of integrity and ability, independence from our general partner and
management under the criteria established by the American Stock Exchange listing
standards and operating company experience as a member of senior management
(operational or financial). The nominating committee also seeks individuals with
the time and commitment necessary to perform the duties of a board member,
hospitality industry experience or knowledge, and other special skills that
complement or supplement the skill sets of current directors.

      In addition to recommending potential nominees to the board of our general
partner, the general partner's Bylaws permit shareholders to nominate persons
directly for directors if the nominations are made in a timely written notice.
We must receive the notice at its principal executive offices not less than 120
days and not more than 180 days before the meeting date (if at least 130 days'
notice or prior public disclosure of the annual meeting date is made). If less
than 130 days' notice or public disclosure of the meeting date is given to
shareholders, our general partner must receive notice not later than the close
of business on the 10th day following the day on which such notice of the annual
meeting date was mailed or such public disclosure was made. A shareholder's
notice of nomination must include certain information (specified in Section 3.5
of our Bylaws) concerning each proposed nominee and the nominating shareholder.

      DIRECT COMMUNICATIONS WITH THE BOARD OF DIRECTORS. Our general partner's
board of directors has established the following methods for shareholders to
communicate directly with the board of directors or any of its members:

                                      31
<PAGE>

      -     By Mail. Letters may be addressed to the board of directors or to an
            -------
            individual board member as follows:

                   The Board of Directors (or name of individual director)
                   c/o Office of the Chief Financial Officer
                   John Q. Hammons Hotels, Inc.
                   300 John Q. Hammons Parkway, Suite 900
                   Springfield, Missouri  65806

            The Chief Financial Officer will forward (unopened) any
            correspondence addressed as set forth directly to the named board
            member, or if addressed to the entire board of directors, to the
            chair of the audit committee.

      -     By Telephone. Our general partner has established a safe and
            ------------
            confidential process for reporting, investigating and resolving
            employee and other third party concerns related to accounting,
            auditing and similar matters under the Sarbanes-Oxley Act of 2002.
            Its shareholders may also use this Report Line to communicate with
            one or more of its directors. The Report Line is operated by an
            independent, third party service. In the United States, the Report
            Line can be reached by dialing toll-free 1-888-337-7507.

      BOARD COMMITTEES. Our general partner's four standing board committees
operate under charters adopted by the board of directors. Those charters are
posted on our website at
HTTP://WWW.JQH.COM/INDEX.CFM/FUSEACTION/CORPORATE.DSPSUBCMS/PGID/618. In
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addition, as noted above, our general partner's board has established a Special
Committee to handle all negotiations with respect to the possible merger of our
general partner with an outside buyer.

      The audit committee is composed of Messrs. Moore, Dempsey and Lopez-Ona.
During the fiscal year ended December 31, 2004, they met four times. The audit
committee reviews the scope and results of the independent annual audit. The
audit committee also reviews the scope and results of audits performed by our
internal auditors. The board of directors has determined that all three members
of the audit committee are "independent," as such term is defined by the
American Stock Exchange listing standards. In addition, Donald H. Dempsey and
John E. Lopez-Ona are both "audit committee financial experts," as defined by
SEC rules. The board determined that Mr. Lopez-Ona qualifies as an audit
committee financial expert on the basis of his relevant experience, and
determined that he has demonstrated the required attributes of an audit
committee financial expert during his five-year tenure on our audit committee.
In addition to his undergraduate degree in accounting and his graduate degree
(MBA), Mr. Lopez-Ona spent five years at a Fortune 100 conglomerate conducting
operation audits and ten years with large New York-based investment banks
managing transactions involving large public and private companies.

      The members of the finance committee are Messrs. Earley, Dempsey, Sullivan
and Mrs. Dowdy. The finance committee oversees our finance, accounting and
development activities, and reviews and makes recommendations to the board
concerning all real property acquisitions of $1,000,000 or more, agreements with
annual obligations of $250,000 or more, financings of $1,000,000 or more, any
agreement or arrangements with insiders, sales or purchases of hotels or
associated properties, our annual budget and the refinancing of our bonds and
bank debt. After finance committee review, board policy provides that all such
corporate commitments must be reviewed and approved by the board. During the
fiscal year ended December 31, 2004, the finance committee held seven meetings.

      The compensation committee establishes the compensation for our general
partner's CEO and our executive officers, and also reviews employee compensation
and makes recommendations to the board regarding changes in compensation. The
committee administers our stock option plan and makes option grants. During the
fiscal year ended December 31, 2004, the compensation committee held three
meetings. The members of the compensation committee are Messrs. Hart, Moore and
Sullivan. The board of directors has determined that all three members of the
compensation committee are "independent," as such term is defined by the
American Stock Exchange listing standards.

                                      32
<PAGE>

      The nominating committee is composed of Messrs. Hart, Moore and Sullivan.
That committee selected the nominees for re-election at the 2005 annual meeting
of shareholders.

      MEETINGS OF THE BOARD OF DIRECTORS AND THE SHAREHOLDERS. As a policy of
our general partner's board of directors, all directors are expected to attend
all board and relevant committee meetings, as well as the annual shareholder
meeting of our general partner, if possible. All directors attended the 2004
annual shareholders meeting.

      During the fiscal year ended December 31, 2004, our general partner's
board of directors held eleven meetings. Each director attended all board
meetings, except for Mr. Lopez-Ona who attended eight of the eleven board
meetings. Each director attended all meetings of each standing committee of
which he or she was a member, except for Mr. Lopez-Ona, who attended three of
the four audit committee meetings. All members of the Special Committee attended
all 19 meetings held in 2004, except for Mr. Moore, who attended 17 of the 19
Special Committee meetings.

      CODE OF ETHICS. Our general partner has adopted a code of ethics that
applies to all of its directors, officers and employees, including our chief
executive officer, principal financial officer and principal accounting officer.
That code of ethics is posted on our Internet website at
HTTP://WWW.JQH.COM/INDEX.CFM/FUSEACTION/CORPORATE.DSPSUBCMS/PGID/618. We intend
--------------------------------------------------------------------
to post any amendments to or waivers from the code of ethics, which must be
approved by our general partner's board of directors, on our Internet website at
HTTP://WWW.JQH.COM/INDEX.CFM/FUSEACTION/CORPORATE.DSPSUBCMS/PGID/618. You also
--------------------------------------------------------------------
may obtain, free of charge, a copy of the code of ethics by writing to Investor
Relations, John Q. Hammons Hotels, Inc., 300 John Q. Hammons Parkway, Suite 900,
Springfield, Missouri 65806.

MANAGEMENT

      The following is a biographical summary of the experience of the executive
officers and other key officers of our general partner.

      John Q. Hammons, age 86, is the Chairman, Chief Executive Officer, a
director and founder of our general partner. 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 over 110 hotels on a nationwide basis,
primarily under the Holiday Inn and Embassy Suites Hotels trade names.

      Lou Weckstein, age 68, is President of our general partner. Prior to
joining our general partner in September 2001, Mr. Weckstein served for ten
years as Senior Vice President, Hotel Operations, for Windsor Capital Group, a
Los Angeles-based hotel management and development company. Prior to Windsor
Capital Group, Mr. Weckstein served eight years as Vice President of Operations
for Embassy Suites, Inc. Over his career, Mr. Weckstein spent numerous years as
Vice President-Operations for Ramada Inns, Inc. and Vice President-Operations
for Sheraton Inns, Inc. He began his career in the hospitality industry as a
hotel manager in Cleveland, Ohio.

      Paul E. Muellner, age 48, is Executive Vice President and Chief Financial
Officer of our general partner. He has been the Chief Financial Officer of our
general partner since 2000 and an Executive Vice President since 2003. From 1998
through 2000, Mr. Muellner served as our general partner's Vice President and
Corporate Controller. Prior to joining our 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.

      Debra M. Shantz, age 41, is Senior Vice President and General Counsel of
our general partner. She joined in May 1995 as general counsel. Prior thereto,
Ms. Shantz was a partner of Farrington & Curtis, P.C. (now Husch & Eppenberger,
LLC), a law firm which serves as primary outside counsel for us and Mr. Hammons,
where she practiced primarily in the area of real estate law. Ms. Shantz had
been with that firm since 1988.

      William A. Mead, age 51, is Regional Vice President, Eastern Region, of
our general partner. He joined in that capacity in 1994 from Davidson Hotels,
where he had been a general manager.

                                      33
<PAGE>

      Pat A. Shivers, age 53, has served as Senior Vice President and Corporate
Controller of our general partner since 2001. Prior to that, he served as Senior
Vice President of Administration and Control. 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, age 53, has served as Senior Vice President,
Architecture, of our general partner since 1993. He joined as a corporate
architect in 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.

      Jacqueline A. Dowdy, age 61, has been the Secretary since 1982 and a
director of our general partner since 1994. She has been active in Mr. Hammons'
hotel operations since 1981. She is an officer of several affiliates of our
general partner. We describe these affiliations under "Certain Relationships and
Related Transactions."

      L. Scott Tarwater, age 56, has been Senior Vice President of Sales and
Marketing of our general partner since March of 2004. He joined as Vice
President of Sales and Marketing in September 2000 from Windsor Capital Group,
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, age 54, is Vice President, Interior Design, of our general
partner. He joined in 1989 from Integra/Brock Hotel Corporation, Dallas, Texas,
where he had been Director of Design and Purchasing for ten years.

      Kent S. Foster, age 45, is Vice President, Human Resources, of our general
partner. He joined in 1999 from Dayco Products, Inc. in Michigan where he served
as Director and Manager, Human Resources. 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., age 53, is Vice President, Capital Planning and
Asset Management, of our general partner. He joined our general partner in 1994
from Promus Hotel Corporation, where he had been Director of Capital
Refurbishment.

ITEM 11. EXECUTIVE COMPENSATION.

CASH COMPENSATION

      The following table sets forth the salary compensation, cash bonus and
certain other forms of compensation paid for services rendered in all capacities
during the 2004, 2003 and 2002 fiscal years to the Chief Executive Officer of
our general partner and the four other most highly compensated executive
officers of our general partner serving at the end of 2004 (the "named executive
officers").

                                       34
<PAGE>

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                              LONG-TERM COMPENSATION
                                                                              ALL OTHER               AWARDS
     NAME AND PRINCIPAL          FISCAL       ANNUAL COMPENSATION           COMPENSATION     SECURITIES UNDERLYING OPTIONS
         POSITIONS                YEAR      SALARY ($)     BONUS ($)          ($) (a)                   (#)
----------------------------     ------     ----------     ---------        ------------     -----------------------------
<S>                              <C>        <C>            <C>              <C>              <C>
John Q. Hammons                   2004        370,750       225,374                -                        -
Chairman of the Board and         2003        359,000       200,130                -                   35,000 (d)
Chief Executive Officer           2002        342,500       120,000                -                        -

Louis Weckstein (b)               2004        330,381       187,625            5,125                        -
President                         2003        330,381       184,972            6,603                   20,000 (d)
                                  2002        309,131       105,600            3,338                        -

Paul E. Muellner                  2004        216,045        97,969            4,100                        -
Executive Vice President and      2003        202,545        99,078            3,088                   25,000 (d)
Chief Financial Officier          2002        177,545        79,000 (e)        3,570                        -

Debra M. Shantz                   2004        172,380        78,147            4,902                        -
Senior Vice President and         2003        166,717        72,757            3,238                   15,000 (d)
General Counsel                   2002        160,839        66,500 (f)        3,668                        -

William A. Mead (c)               2004        176,967        63,990            4,998                        -
Regional Vice President           2003        166,600        40,000            2,469                   15,000 (d)
Eastern Region                    2002        162,891        63,386            3,062                        -
</TABLE>

(a) Matching contributions to 401(k) Plan.

(b) Salary does not include $270,000, $270,000 and $267,083 paid personally by
    Mr. Hammons in 2004, 2003 and 2002, respectively. Bonuses do not include
    $100,000 paid by Mr. Hammons for 2002 in five equal monthly installments
    beginning March 1, 2003. Mr. Hammons personally compensated the employee
    for services related to his personal enterprises.

(c) Salary does not include $65,000, $65,000 and $65,000 paid personally by
    Mr. Hammons, in 2004, 2003 and 2002, respectively. Mr. Hammons personally
    compensated the employee for services related to his personal enterprises.

(d) Comprised of options with an exercise price of $4.75 per share.

(e) Includes a special one-time bonus of $25,000 for work related to
    refinancing our bonds.

(f) Includes a special one-time bonus of $17,500 for work related to
    refinancing our bonds.

OPTION GRANTS IN LAST FISCAL YEAR

      Our general partner did not grant any stock options during 2004 to any of
the named executive officers.

OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

      The following table sets forth information concerning each exercise of
stock options during 2004 by each of the named executive officers and the fiscal
year-end value of unexercised options. The table includes the number of shares
covered by both exercisable and unexercisable stock options as of December 31,
2004 and the values of "in-the-money" options, which represent the positive
spread between the exercise price of any such option and the fiscal year-end
value of the common stock.

                                      35
<PAGE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                      NUMBER OF SECURITIES UNDERLYING   VALUE OF UNEXERCISED IN-THE-MONEY
                                                            UNEXERCISED OPTIONS                    OPTIONS (1)
                                                      -------------------------------   ---------------------------------
                   SHARES ACQUIRED   VALUE REALIZED
      NAME         ON EXERCISE (#)        ($)         EXERCISABLE(2)    UNEXERCISABLE   EXERCISABLE(2)      UNEXERCISABLE
----------------   ---------------   --------------   --------------    -------------   --------------      -------------
<S>                <C>               <C>              <C>               <C>             <C>                 <C>
John Q. Hammons           -                -             308,750            26,250        $4,235,625          $406,875
Louis Weckstein           -                -              80,000            40,000        $1,210,000          $610,000
Paul E. Muellner          -                -              46,250            18,750        $  683,125          $290,625
Debra M. Shantz           -                -             103,750            11,250        $1,416,875          $174,375
William A. Mead           -                -              63,750            11,250        $  878,125          $174,375
</TABLE>

(1)   Calculated based upon the excess of the closing price of our Class A
      common stock as reported on the American Stock Exchange on December 31,
      2004, over the exercise price per share of the stock options ($4.75 for
      the options granted in 2003, $5.15 for the options granted in 2001, $5.00
      for the options granted in 2000 and $7.375 for the options granted in
      1998).

(2)   All of the 1998 and 2000 options are currently exercisable, seventy-five
      percent of the 2001 options are currently exercisable and twenty-five
      percent of the 2003 options are currently exercisable.

401(k) PLAN

      Effective January 1, 1996, we adopted a contributory retirement plan (the
"401(k) Plan") for our employees that currently requires employees to be 21
years of age and have at least 6 months of service to participate. The 401(k)
Plan is designed to provide tax-deferred income to employees in accordance with
the provisions of Section 401(k) of the Internal Revenue Code of 1986. The
401(k) Plan provides that we 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

      Our general partner entered into an employment agreement with Lou
Weckstein, the President, effective September 17, 2001. Mr. Weckstein's base
salary under the agreement is $300,000 per year, with such annual increases in
compensation as may be determined by the compensation committee of our general
partner. He also may participate in incentive or supplemental compensation plans
for which he is eligible. The compensation committee of our general partner may
award him a cash bonus based upon the bonus plan for our other executive
officers. Either party may terminate the agreement at any time. Mr. Hammons and
Mr. Weckstein also have a verbal agreement, under which Mr. Hammons has agreed
to pay to Mr. Weckstein, for services he performs unrelated to our business, the
difference between his annual salary from our general partner and $600,000, up
to a maximum of $270,000 per year.

      Our general partner entered into an employment agreement with Paul
Muellner, the Chief Financial Officer, on December 1, 2003. This agreement
entitles Mr. Muellner to an annual base salary of $210,000 and other benefits
generally available to our general partner's executive officers, including
participation in incentive or supplemental compensation plans for which he is
eligible. The compensation committee of our general partner may award him a cash
bonus based upon the bonus plan for our other executive officers and stock
options pursuant to our general partner's 1994 Stock Option Plan. In the event
Mr. Muellner is terminated without cause or there is a change-in-control of our
general partner, our general partner will continue to pay his base salary and
COBRA payments for a period of one year, in addition to an annual bonus award
pursuant to the executive bonus plan. Either party may terminate the agreement
at any time.

      Our general partner entered into an employment agreement with Debra M.
Shantz, dated as of May 1, 1995, and amended on October 31, 1997 and November 1,
2001. 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 our general partner. The agreement
runs until May 1, 2005, and renews automatically thereafter from year to year,
unless she or our general partner terminates her employment at the end of the
renewal term by giving not less than six months prior written notice. If our
general partner terminates Ms. Shantz's employment without cause, she receives
two years of her base salary and any vested deferred compensation, as well as
six months of benefits under our general partner's benefit plans. In the event
there is a change-in-control of our

                                       36

<PAGE>

general partner, Ms. Shantz may terminate the agreement, and the Company will
pay her 12 times her monthly salary and an amount equal to her bonus for the
prior fiscal year.

      Our general partner entered into an employment agreement with William A.
Mead, one of our general partner regional vice-presidents, as of January 25,
2000, that became effective on April 1, 2000. Mr. Mead's annual base salary
under the agreement is $160,000, plus a guaranteed bonus of at least $40,000
each year. He also may participate in available savings, retirement and other
benefit plans. This agreement expires on March 31, 2005. In addition, as of
January 27, 2000, Mr. Hammons and Mr. Mead entered into an agreement that
provides that in exchange for Mr. Mead's services in selecting markets for
various hotel projects for Mr. Hammons personally, Mr. Hammons will pay Mr. Mead
an additional $65,000 per year, in equal monthly installments, during the term
of his employment agreement with our general partner. That agreement also became
effective on April 1, 2000, and provides that Mr. Mead will have the opportunity
to acquire a 25% interest in up to three Residence Inn hotel projects, with a
substantial portion of Mr. Mead's investment to be financed.

DIRECTOR COMPENSATION

      For 2004, each non-employee director of our general partner received:

      -     $1,000 for each regular board meeting attended and $500 for each
            regular committee meeting of a standing committee attended ($750 per
            meeting for the committee chair),

      -     $1,000 for each meeting of the Special Committee attended,

      -     a cash payment of $10,000 (other than Mr. Earley, who declined the
            cash payment),

      -     1,087 shares of 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

      -     an option to purchase 10,000 shares of our general partner's Class A
            common stock at a per share exercise price of $9.20, exercisable in
            four equal annual installments, beginning May 12, 2005, and expiring
            May 12, 2014.

      The stock and options were issued pursuant to the 1999 Non-Employee
Director Stock and Stock Option Plan. Employee directors are not compensated for
their services as directors or committee members.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      Not Applicable.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      Mr. Hammons and Anvil Capital, an investment and consulting firm owned by
Mr. Lopez-Ona, one of our directors, have formed a limited liability company
through which they have invested in securities of one or more companies in
industries unrelated to our business.

      Mr. Hammons controls us through his control our, the sole general partner.
His equity interest in our general partner and us (based on his beneficial
ownership of 269,100 shares of Class A common stock, all 294,100 shares of Class
B common stock and all 16,043,900 limited partnership units, or the LP Units) is
79%. There are significant potential conflicts of interests between Mr. Hammons
as a limited partner of the Partnership, and our 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 our
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 all 16,043,900 LP Units. If Mr. Hammons, as a holder of LP
Units, requires us to redeem LP Units, our general partner's non-employee
directors would decide, consistent with their fiduciary duties as to the best
interests of our

                                       37

<PAGE>

general partner, 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 us that he has
no current plan to require the Partnership to redeem his LP Units.

      During 2004, we provided management services to fifteen hotels we do not
own (the "Managed Hotels") pursuant to management contracts (the "Management
Contracts"). Management fees of 3% to 4% of gross revenues were paid to our
general partner by the Managed Hotels in the aggregate amount of $3,323,505 in
the fiscal year ended December 31, 2004. In addition to the management fees paid
by the Managed Hotels to us in that year, the Managed Hotels reimbursed our
general partner for a portion of the salaries it paid to its regional vice
presidents, 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 $71,452 in the fiscal
year ended December 31, 2004. The Management Contracts have 20-year terms and
automatically extend for four periods of five years, unless otherwise canceled.

      We currently have no hotels under construction and no plans to develop new
hotels for the foreseeable future. During 2000, we entered into a five-year
management contract with John Q. Hammons whereby we will provide internal
administrative, architectural design, purchasing and legal services to Mr.
Hammons in conjunction with the development of hotels in an amount not to exceed
1.5% of the total development costs of any single hotel. In exchange, we have
the opportunity to manage the hotel upon opening and a right of first refusal to
purchase the hotel in the event it is offered for sale. During fiscal year 2004,
2003, 2002 and 2001, we paid approximately $805,300, $327,800, $326,000, and
$487,000, respectively, of additional costs in accordance with the management
contract. These costs will be amortized over a five-year contract period.
Amortization for these costs commence upon the opening of the hotels.

      We hold an option from Mr. Hammons or persons or entities controlled by
him to purchase the Managed Hotels, 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 we own and four Managed Hotels are located in Springfield, Missouri.
These hotels potentially compete with one another for customers. We believe 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.,
or WHI. All of the hotels we own or manage have contracted with WHI to provide
accounting and other administrative services. The accounting and administrative
charges expensed by the hotels we own were approximately $1,651,000, of which
approximately $109,000 is from discontinued operations, in the fiscal year ended
December 31, 2004. The fee may increase if the number of hotels for which WHI
performs accounting and administrative services drops below 55 hotels. The
existing accounting service agreement expires in June 2005.

      We lease space in the John Q. Hammons Building for our headquarters from a
Missouri company, of which Mr. Hammons owns 50% and the remaining 50% is
collectively held by other employees, including Jacqueline A. Dowdy, the
secretary and a director, who is a 9.5% owner. Pursuant to four lease
agreements, expiring December 31, 2004, we paid monthly rental payments of
approximately $22,450 in 2004. We made aggregate annual lease payments to that
Missouri company of approximately $269,400 in 2004. On December 14, 2004, we
extended our lease for a one-year extension, under which we will pay monthly
rental payments of approximately $24,000, aggregating $288,000 in 2005.

      We also lease the real estate for the Chateau on the Lake Resort, opened
in mid-1997, in Branson, Missouri, from Mr. Hammons. Annual rent is based on the
greater of a percentage of adjusted gross revenues from room sales and food and
beverage sales on the property or $150,000. Rent expense was approximately
$233,100 in 2004. The lease term is 50 years, with an option to renew for an
additional 10 years. We also have an option to purchase the land after March 1,
2018, at the greater of $3,000,000 or the current appraised value.

      To supplement our self-insurance programs, we provide property, auto,
commercial liability, workers' compensation and medical insurance to the hotels,
including hotels we own and Mr. Hammons, under blanket commercial policies we
purchase. In addition, we provide umbrella and crime insurance to all such
hotels under blanket commercial policies we purchase. Generally, we allocate
expenses to each hotel (including those owned by

                                       38

<PAGE>

Mr. Hammons) based upon factors similar to those used by the insurance provider
to compute the aggregate group policy expense.

      Certain of our employees provide some administrative and other services
for Mr. Hammons' outside business interests. Management does not believe that,
historically, the amount of such services has been material, but has implemented
a cost-allocation system in 2002. Pursuant to the cost-allocation system, Mr.
Hammons pays us 30% of all costs related to such services as well as the
internal development costs discussed above, and maintains a deposit with us,
which was $54,847 as of December 31, 2004, to cover these expenses.

      Mr. Hammons also owns trade centers adjacent to two of the Owned Hotels
(the "JQH Trade Centers"). We lease the convention space located in Portland,
Oregon, from Mr. Hammons on a month to month basis at a fee of $25,000 per
month. With respect to the other JQH Trade Center, located in Joplin, MO, we
make nominal annual lease payments to Mr. Hammons pursuant to a lease expiring
in 2014. We have assumed responsibility for all operating expenses of the JQH
Trade Centers.

      Mr. Hammons owns parcels of undeveloped land throughout the United States.
Although there are no current plans to do so, we may purchase or lease one or
more of these parcels in the future in order to develop hotels. Since Mr.
Hammons controls our general partner, such transactions would not be arms-length
transactions but will be subject to restrictions contained in the indentures
relating to the Partnership's outstanding mortgage notes due in 2012.

      Our general partner receives no management fee or similar compensation in
connection with its management of us. We pay the following remuneration to our
general partner: (i) distributions, if any, in respect of its equity interest in
us; and (ii) reimbursement for all direct and indirect costs and expenses it
incurs for or on our behalf and all other expenses necessary or appropriate to
the conduct of the business of, and allocable to, us.

      Mr. Hammons has a written agreement with William A. Mead, one of our
regional vice presidents, to pay Mr. Mead $65,000 per year for five years,
ending March 31, 2005, in exchange for services he provides unrelated to our
business, and to allow Mr. Mead to invest in 25% of up to three proposed new
hotels. Mr. Hammons also has a verbal agreement with Lou Weckstein, our
president, to supplement Mr. Weckstein's salary from our general partner by up
to $270,000 per year during his employment for services he provides unrelated to
our business. We describe these arrangements in more detail under the caption
"Employment Agreements" above.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

      Deloitte & Touche LLP was our independent auditor for 2004 and 2003. A
summary of the fees Deloitte & Touche LLP billed us for fiscal 2004 and fiscal
2003 follows:

<TABLE>
<CAPTION>
                         Nature of Service                       2004       2003
                         -----------------                     --------   ---------
<S>                                                            <C>        <C>
Audit Fees (a)..............................................   $ 346,392  $ 290,068
Audit-Related Fees (b)......................................   $  59,522  $  91,910
Tax Fees (c)................................................   $  44,500  $       -
</TABLE>

(a)   The "Audit Fees" represent fees for professional services for the audit of
      our annual financial statements, the review of financial statements
      included in our quarterly financial statements and audit services provided
      in connection with other statutory or regulatory fees. Our general
      partner's audit committee pre-approved 100% of the "Audit Fees" in 2004
      and 2003.

(b)   The "Audit-Related Fees" consist of fees for assurance and related
      services that were reasonably related to the performance of the audit or
      review of our financial statements and are not reported under "Audit
      Fees." These services included Sarbanes-Oxley Act services, audit of our
      401(k) Plan and the audit of other financial elements of individual
      hotels. Our general partner's audit committee pre-approved 100% of the
      "Audit - Related Fees" in 2004 and 2003.

                                       39

<PAGE>

(c)   The "Tax Fees" include fees for professional services for tax advice and
      planning. Our general partner's audit committee pre-approved 100% of the
      "Tax Fees" in 2004.

      Our general partner's audit committee determined that the provision of the
services described above is compatible with maintaining the independence of
Deloitte & Touche LLP.

      The audit committee's policy is to pre-approve all audit and permissible
non-audit services provided by the independent auditors. The audit committee
will generally pre-approve a list of specific services and categories of
services, including audit, audit-related and other services, for the upcoming or
current fiscal year, subject to a specified cost level. Any service that is not
included in the approved list of services must be separately pre-approved by the
audit committee. In addition, all audit and permissible non-audit services in
excess of the pre-approved cost level, whether or not such services are included
on the pre-approved list of services, must be separately pre-approved by the
audit committee chair. Also, all permissible non-audit services must be
separately pre-approved by the audit committee chair if the aggregate fees for
such services exceed 5% of the total fees paid to the independent auditor for
the current fiscal year.

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

      The audit committee of our general partner's board of directors serves as
the representative of the board for general oversight of financial accounting
and reporting process, system of internal control and audit process. The audit
committee operates under a written charter which was adopted by the board of
directors and is available on our website. Our management has primary
responsibility for preparing our financial statements and our financial
reporting process. Our independent accountants, Deloitte & Touche LLP, are
responsible for expressing an opinion on the conformity of our financial
statements to accounting principles generally accepted in the United States.

      In this context, the audit committee reports as follows:

      1. The audit committee has reviewed and discussed the audited financial
statements with Deloitte & Touche LLP and Company management.

      2. The audit committee has discussed with the independent accountants the
matters required to be discussed by SAS 61 (Codification of Statements on
Auditing Standard, AU 380), and SAS 99 (Consideration of Fraud in a Financial
Statement Audit).

      3. The audit committee has received the written disclosures and the letter
from the independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standards No. 1, Independence
Discussions with Audit Committees) and has discussed with the independent
accountants the independent accountants' independence.

      4. Based on the review and discussion referred to in paragraphs (1)
through (3) above, the audit committee recommended to the board of directors,
and the board has approved, that the audited financial statements be included in
our annual report on Form 10-K for the fiscal year ended December 31, 2004, for
filing with the Securities and Exchange Commission.

      Each of the members of the audit committee is independent as defined under
the listing standards of the American Stock Exchange.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL SCHEDULES, AND REPORTS ON FORM 8-K.

15(a) FINANCIAL STATEMENTS (immediately following Item 15)

      Report of Independent Registered Public Accounting Firm

                                       40

<PAGE>

      Consolidated Balance Sheets at Fiscal 2004 and 2003 Year-Ends

      Consolidated Statements of Operations for the 2004, 2003, and 2002 Fiscal
      Years Ended

      Consolidated Statements of Changes In Refundable Equity and Equity
      (Deficit) for the 2004, 2003, and 2002 Fiscal Years Ended

      Consolidated Statements of Cash Flows for the 2004, 2003, and 2002 Fiscal
      Years Ended

      Notes to Consolidated Financial Statements

15(b) 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 15(c).

      10.4  Form of Option Purchase Agreement

      10.7  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 November 1, 2001

      10.7a Employment Agreement between John Q. Hammons Hotels, Inc. and Lou
            Weckstein dated as of September 17, 2001

      10.7b Employment Agreement between John Q. Hammons Hotels, Inc. and
            William A. Mead dated as of January 25, 2000

      10.7c Letter Agreement between John Q. Hammons and William A. Mead dated
            as of January 27, 2000

      10.7d Employment Agreement between John Q. Hammons Hotels, Inc. and Paul
            E. Muellner dated as of December 1, 2003

      10.14 1994 Employee Stock Option Plan

      10.15 1999 Non-Employee Director Stock and Stock Option Plan

15(c) 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.

                                       41

<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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 31, 2004 and January 2, 2004, and the
related consolidated statements of operations, changes in refundable equity and
equity (deficit) and cash flows for the years ended December 31, 2004, January
2, 2004 and January 3, 2003. 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 of the Public
Company Accounting Oversight Board (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. The Partnership is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Partnership's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, 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
the Partnership as of December 31, 2004 and January 2, 2004, and the results of
their operations and their cash flows for the years ended December 31, 2004,
January 2, 2004 and January 3, 2003, in conformity with accounting principles
generally accepted in the United States of America.

March 25, 2005

                                       42

<PAGE>

JOHN Q. HAMMONS HOTELS, L.P.

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND JANUARY 2, 2004
(000's OMITTED)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,   JANUARY 2,
                                                                    2004          2004
<S>                                                              <C>            <C>
ASSETS

CASH AND EQUIVALENTS                                             $    41,044    $   23,790

RESTRICTED CASH                                                       10,206         1,268

MARKETABLE SECURITIES                                                 22,332        15,711

RECEIVABLES:
  Trade, less allowance for doubtful accounts
    of $231 in 2004 and 2003                                           7,250         7,214
  Other                                                                  277           251
  Management fees -- related party                                       265           223

INVENTORIES                                                            1,091         1,067

PREPAID EXPENSES AND OTHER                                             4,343         4,498

ASSETS HELD FOR SALE                                                   4,300             -
                                                                 -----------    ----------
           Total current assets                                       91,108        54,022
                                                                 -----------    ----------

PROPERTY AND EQUIPMENT, at cost:
  Land and improvements                                               60,553        62,779
  Buildings and improvements                                         717,870       742,807
  Furniture, fixtures and equipment                                  342,214       338,833
  Construction in progress                                                 -            75
                                                                 -----------    ----------
                                                                   1,120,637     1,144,494

  Less:  accumulated depreciation and amortization                  (436,196)     (418,509)
                                                                 -----------    ----------
                                                                     684,441       725,985
                                                                 -----------    ----------

DEFERRED FINANCING COSTS, FRANCHISE FEES AND
  OTHER, net, including $20,376 and $20,453 of restricted cash
  in 2004 and 2003, respectively                                      40,950        42,176
                                                                 -----------    ----------
TOTAL ASSETS                                                     $   816,499    $  822,183
                                                                 ===========    ==========
</TABLE>

                                                                     (Continued)

See notes to consolidated financial statements.

                                       43

<PAGE>

JOHN Q. HAMMONS HOTELS, L.P.

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND JANUARY 2, 2004
(000's OMITTED)

<TABLE>
<CAPTION>
                                                  DECEMBER 31,   JANUARY 2,
                                                     2004          2004
<S>                                               <C>            <C>
LIABILITIES AND PARTNERS' DEFICIT

CURRENT LIABILITIES:
  Current portion of long-term debt                 $  25,719    $   7,423
  Accounts payable                                      8,172        5,028
  Accrued expenses:
    Payroll and related benefits                        9,601        7,776
    Sales and property taxes                           12,053       12,077
    Insurance                                           2,789        2,646
    Interest                                            6,106        6,218
    Utilities, franchise fees and other                10,115        7,298
                                                    ---------    ---------
           Total current liabilities                   74,555       48,466

LONG-TERM DEBT                                        739,485      773,649

OTHER OBLIGATIONS                                       3,328        2,529
                                                    ---------    ---------
           Total liabilities                          817,368      824,644
                                                    ---------    ---------

COMMITMENTS AND CONTINGENCIES (Note 6)

REFUNDABLE EQUITY                                         655            -
                                                    ---------    ---------

PARTNERS' DEFICIT:
  Contributed capital                                  96,844       96,458
  Partners' and other deficits, net                   (98,327)     (98,942)
  Accumulated other comprehensive income (loss)           (41)          23
                                                    ---------    ---------
           Total partners' deficit                     (1,524)      (2,461)
                                                    ---------    ---------
TOTAL LIABILITIES AND PARTNERS' DEFICIT             $ 816,499    $ 822,183
                                                    =========    =========
</TABLE>

                                                                     (Concluded)

See notes to consolidated financial statements.

                                       44

<PAGE>

JOHN Q. HAMMONS HOTELS, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2004, JANUARY 2, 2004 AND JANUARY 3, 2003
(000's OMITTED)

<TABLE>
<CAPTION>
                                                                         FISCAL YEAR ENDED
                                                                ------------------------------------
                                                                   2004         2003        2002
<S>                                                             <C>          <C>          <C>
REVENUES:
  Rooms                                                         $ 266,800    $ 256,564    $ 258,068
  Food and beverage                                               112,389      108,315      112,072
  Meeting room rental, related party management fee and other      51,591       48,596       50,181
                                                                ---------    ---------    ---------
           Total revenues                                         430,780      413,475      420,321
                                                                ---------    ---------    ---------
OPERATING EXPENSES:
  Direct operating costs and expenses:
    Rooms                                                          66,712       64,096       65,321
    Food and beverage                                              84,178       82,524       86,329
    Other                                                           2,145        2,584        3,037
  General, administrative, sales and management
    service expenses                                              139,902      130,980      130,571
  Repairs and maintenance                                          18,193       17,430       17,478
  Asset impairment                                                      -        9,700            -
  Depreciation and amortization                                    49,519       49,783       52,106
                                                                ---------    ---------    ---------
           Total operating expenses                               360,649      357,097      354,842
                                                                ---------    ---------    ---------
INCOME FROM OPERATIONS                                             70,131       56,378       65,479
OTHER (INCOME) EXPENSES:
  Other income                                                       (193)        (175)           -
  Interest expense and amortization of deferred financing
    fees, net of $788, $546 and $907 of interest
    income in 2004, 2003 and 2002, respectively                    65,498       67,522       69,323
  Extinguishment of debt costs                                        144          774        7,411
                                                                ---------    ---------    ---------

INCOME (LOSS) FROM CONTINUING OPERATIONS                            4,682      (11,743)     (11,255)
  Income (loss) from discontinued operations                       (5,150)      (1,027)         392
                                                                ---------    ---------    ---------
NET LOSS                                                        $    (468)   $ (12,770)   $ (10,863)
                                                                =========    =========    =========
</TABLE>

See notes to consolidated financial statements.

                                       45
<PAGE>



JOHN Q. HAMMONS HOTELS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN REFUNDABLE EQUITY AND EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 2004, JANUARY 2, 2004, AND JANUARY 3,  2003
(000's omitted)

<TABLE>
<CAPTION>
                                                                                                               PARTNER'S AND
                                                                                     CONTRIBUTED CAPITAL   OTHER EQUITY (DEFICIT)
                                                       COMPREHENSIVE                --------------------   ----------------------
                                                          INCOME       REFUNDABLE    GENERAL    LIMITED     GENERAL      LIMITED
                                                          (LOSS)         EQUITY      PARTNER    PARTNERS    PARTNER     PARTNERS
                                                       -------------   ----------   ---------   --------   ----------   ---------
<S>                                                    <C>             <C>          <C>         <C>        <C>          <C>
BALANCE, at December 28, 2001                                            $   -      $ 96,436       $ -     $ (89,241)   $ 14,111

  Distributions                                                              -             -         -          (150)          -
  Issuance of general partner's treasury
    stock                                                                    -            16         -            34           -
  Net loss                                                $(10,863)          -             -         -        (2,611)     (8,252)
  Unrealizable appreciation on marketable securities            55           -             -         -             -           -
                                                          --------       -----      --------       ---     ---------    --------
  Comprehensive loss                                      $(10,808)
                                                          ========
BALANCE, at January 3, 2003                                                  -        96,452         -       (91,968)      5,859

  Distributions                                                              -             -         -          (150)          -
  Issuance of general partner's treasury
    stock                                                                    -             6         -            87           -
  Net loss                                                $(12,770)          -             -         -        (6,911)     (5,859)
  Unrealized depreciation on marketable securities             (32)          -             -         -             -           -
                                                          --------       -----      --------       ---     ---------    --------
  Comprehensive loss                                      $(12,802)
                                                          ========
BALANCE, at January 2, 2004                                                  -        96,458         -       (98,942)          -

  Distributions                                                              -             -         -          (177)          -
  Issuance of general partner's treasury
    stock                                                                    -           386         -         1,260           -
  Refundable equity contribution                                           655             -         -             -           -
  Net loss                                                $   (468)          -             -         -          (468)          -
  Unrealized depreciation on marketable securities             (64)          -             -         -             -           -
                                                          --------       -----      --------       ---     ---------    --------
  Comprehensive loss                                      $   (532)
                                                          ========
BALANCE, at December 31, 2004                                            $ 655      $ 96,844       $ -     $ (98,327)   $      -
                                                                         =====      ========       ===     =========    ========

<CAPTION>
                                                       ACCUMULATED
                                                          OTHER
                                                       COMPREHENSIVE
                                                       INCOME (LOSS)   TOTAL
                                                       -------------  --------
<S>                                                    <C>            <C>
BALANCE, at December 28, 2001                              $   -      $ 21,306

  Distributions                                                -          (150)
  Issuance of general partner's treasury
    stock                                                      -            50
  Net loss                                                     -       (10,863)
  Unrealizable appreciation on marketable securities          55            55
                                                           -----      --------
  Comprehensive loss

BALANCE, at January 3, 2003                                   55        10,398

  Distributions                                                -          (150)
  Issuance of general partner's treasury
    stock                                                      -            93
  Net loss                                                     -       (12,770)
  Unrealized depreciation on marketable securities           (32)          (32)
                                                           -----      --------
  Comprehensive loss

BALANCE, at January 2, 2004                                   23        (2,461)

  Distributions                                                -          (177)
  Issuance of general partner's treasury
    stock                                                      -         1,646
  Refundable equity contribution                               -             -
  Net loss                                                     -          (468)
  Unrealized depreciation on marketable securities           (64)          (64)
                                                           -----      --------
  Comprehensive loss

BALANCE, at December 31, 2004                              $ (41)     $ (1,524)
                                                           =====      ========
</TABLE>

See notes to consolidated financial statements.

                                       46
<PAGE>

JOHN Q. HAMMONS HOTELS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2004, JANUARY 2, 2004 AND JANUARY 3, 2003
(000's omitted)

<TABLE>
<CAPTION>
                                                                                            FISCAL YEAR
                                                                                -----------------------------------
                                                                                   2004         2003         2002
                                                                                ---------    ---------    ---------
<S>                                                                             <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                      $    (468)   $ (12,770)   $ (10,863)
  Adjustments to reconcile net loss to cash provided by operating activities:
    Depreciation, amortization and loan cost amortization                          52,936       53,559       56,214
    Loss on sale of property and equipment                                            390            -            -
    Asset impairment (included in discontinued operations for 2004)                 4,619        9,700            -
    Extinguishment of debt costs                                                      144          774        7,411
    Non-cash director compensation                                                     50           50           50
  Changes in certain assets and liabilities:
    Restricted cash                                                                   247         (165)        (221)
    Receivables                                                                      (173)       1,939        2,116
    Inventories                                                                       (32)          84          137
    Prepaid expenses and other                                                        155        1,386       (2,438)
    Accounts payable                                                                3,144          (13)        (585)
    Accrued expenses                                                                4,649          267       (3,698)
    Other obligations                                                                 799           86          104
                                                                                ---------    ---------    ---------

           Net cash provided by operating activities                               66,460       54,897       48,227
                                                                                ---------    ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                                             (30,259)     (18,372)     (28,618)
  Proceeds from the sale of property and equipment                                 12,218            -            -
  Franchise fees, restricted cash and other                                       (10,031)      (5,712)      (4,335)
  Purchase of marketable securities                                                (6,685)      (3,262)      (1,410)
                                                                                ---------    ---------    ---------

           Net cash used in investing activities                                  (34,757)     (27,346)     (34,363)
                                                                                ---------    ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from borrowings                                                              -          328      510,000
  Proceeds from issuance of general partner's treasury stock                        1,596           43            -
  Repayments of debt                                                              (15,868)     (25,598)    (516,385)
  Debt offering costs                                                                   -            -      (13,782)
  Debt redemption costs                                                                 -         (158)      (4,071)
  Distributions to partners                                                          (177)        (150)        (150)
                                                                                ---------    ---------    ---------

           Net cash used in financing activities                                  (14,449)     (25,535)     (24,388)
                                                                                ---------    ---------    ---------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS                                    17,254        2,016      (10,524)

CASH AND EQUIVALENTS, Beginning of period                                          23,790       21,774       32,298
                                                                                ---------    ---------    ---------

CASH AND EQUIVALENTS, End of period                                             $  41,044    $  23,790    $  21,774
                                                                                =========    =========    =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest                                                        $  66,380    $  68,254    $  75,696
                                                                                =========    =========    =========

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
  Unrealized (depreciation) appreciation of marketable securities               $     (64)   $     (32)   $      55
                                                                                =========    =========    =========

  Exchange of land parcels                                                      $       -    $   2,586    $       -
                                                                                =========    =========    =========

  Financing costs funded by limited partners                                    $     655    $       -    $       -
                                                                                =========    =========    =========
</TABLE>

See notes to consolidated financial statements.

                                       47
<PAGE>

JOHN Q. HAMMONS HOTELS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004, JANUARY 2, 2004 AND JANUARY 3, 2003
(DOLLARS IN THOUSANDS)

1.    BASIS OF PRESENTATION

      ENTITY MATTERS -- The accompanying consolidated financial statements
      include the accounts of John Q. Hammons Hotels, L.P. (the "Partnership")
      and its wholly owned subsidiaries, John Q. Hammons Hotels Finance
      Corporation III, 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 December 31, 2004 the Partnership owned 45 hotels, and as of January 2,
      2004 and January 3, 2003 the Partnership owned 47 hotels, of which 28 in
      fiscal year 2004 and 30 in fiscal years 2003 and 2002 operated under the
      Holiday Inn and Embassy Suites Hotels trade names. The Partnership's
      hotels are located in 20 states throughout the United States of America.

      The Partnership sold two Holiday Inn hotels located in Bakersfield,
      California and Northglenn, Colorado during fiscal year 2004 (Note 8). In
      addition, the Partnership sold the Holiday Inn located in Emeryville,
      California subsequent to year end (Notes 7 and 10). These three hotels are
      included as discontinued operations in the accompanying consolidated
      financial statements with the Emeryville, California property reported as
      held for sale as of December 31, 2004.

      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 10
      hotel properties, obtained through transfers or contributions from Mr.
      John Q. Hammons ("Mr. Hammons") or enterprises which he controlled, 21
      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 partners 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 partners upon
      completion of the public equity offering. Since that time, the Partnership
      has redeemed approximately 955,000 Partnership units, net of shares
      issued. The number of net partnership units redeemed is equivalent to the
      net number of shares redeemed by John Q. Hammons Hotels, Inc., as required
      by the partnership agreement. Accordingly, the allocation percentages
      changed to approximately 24% in 2004, 2003 and 2002 for the general
      partner and approximately 76% in 2004, 2003 and 2002 for the limited
      partners. During fiscal year 2003, losses otherwise allowable to the
      limited partners of $9,698 were limited to $5,859 as the allocation of
      additional losses would have exceeded our limited partners' cumulative net
      investment in the Partnership. During fiscal year 2004, additional losses
      of $355 otherwise allocable to the limited partners were recognized by the
      general partner, resulting in cumulative losses of $4,194 recognized by
      the general partner otherwise allocable to the limited partners as of
      December 31, 2004. The general partner must recapture the total losses
      from future earnings of the Partnership before any earnings will be
      allocated to the limited partners.

      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, the
      financial position and related results of operations of all entities on a
      consolidated basis for all periods presented.

      During 2004 and subsequent to December 31, 2004, the Partnership has
      received certain merger and sales offers and has negotiated with certain
      parties regarding a potential sale or merger of the Partnership.

      All significant balances and transactions between the entities and
      properties have been eliminated.

                                       48
<PAGE>

      PARTNERSHIP MATTERS -- A summary of selected provisions of the Partnership
      agreement as well as certain other matters are summarized as follows:

            General and Limited Partners -- John Q. Hammons Hotels, Inc. 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.

            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. However, the limited partners'
            allocation of losses is limited to the limited partners' net
            investment in the Partnership.

            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 partners for taxes for
            the fiscal years ended 2004, 2003 and 2002.

            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 2000 and 1999. No stock repurchase
            program was approved since 2002. For financial reporting purposes,
            advances by the partnership to its general partner to purchase stock
            are reflected as a reduction of equity in the consolidated balance
            sheets and statements of changes in refundable equity and equity
            (deficit), in the event applicable for the periods presented.

            Additional Capital Contributions -- In the event proceeds from the
            sale of the 30 hotel properties (or applicable replacement
            collateral) which secure the $510 million First Mortgage Notes
            ("2002 First Mortgage Notes") (Note 5) are insufficient to satisfy
            amounts due on the 2002 First Mortgage Notes, Mr. Hammons and
            Hammons, Inc. are severally obligated to contribute up $195 million
            to satisfy amounts due, if any. In addition, with respect to the
            original 11 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.

                                       49
<PAGE>

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      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 -- Restricted cash consists of certain funds maintained in
      escrow for property taxes and certain other obligations. As of December
      31, 2004, restricted cash also included $4,170 from the sale proceeds from
      Northglenn, Colorado, which was used to provide replacement collateral
      subsequent to year end, and included $5,015 of restricted cash required
      under the St. Augustine, Florida property's debt agreement, which was paid
      in full subsequent to year end (Note 10).

      MARKETABLE SECURITIES -- Marketable securities consist of investments
      which mature or will be available for use in operations in 2005. These
      securities are valued at current market value as determined by published
      market quotes. Realized gains and losses for the fiscal years ended 2004,
      2003 and 2002, determined using the specific identification method, were
      nominal. Unrealized holding losses of $41 as of December 31, 2004, and
      unrealized holding gains of $23 as of January 2, 2004 are included as a
      separate component of partners' equity (deficit) until realized.

      The following summarizes the types of marketable securities owned by the
      Partnership and their respective carrying value, gross unrealized gains
      and losses and fair market value:

<TABLE>
<CAPTION>
                                        DECEMBER 31, 2004
                        CARRYING         GROSS UNREALIZED       FAIR MARKET
                         VALUE        GAINS          LOSSES        VALUE
<S>                     <C>          <C>           <C>          <C>
Commercial paper        $ 14,347     $     13      $      -      $ 14,360
Government agencies        5,977            4           (35)        5,946
Corporate bonds            2,049            -           (23)        2,026
                        --------     --------      --------      --------

                        $ 22,373     $     17      $    (58)     $ 22,332
                        ========     ========      ========      ========
</TABLE>

<TABLE>
<CAPTION>
                                   JANUARY 2, 2004
                     CARRYING      GROSS UNREALIZED     FAIR MARKET
                      VALUE       GAINS        LOSSES     VALUE
<S>                  <C>         <C>           <C>      <C>
Commercial paper     $12,110     $     -         $ -     $12,110
Corporate bonds        3,578          23           -       3,601
                     -------     -------         ---     -------

                     $15,688     $    23         $ -     $15,711
                     =======     =======         ===     =======
</TABLE>

      As of December 31, 2004, the marketable securities are scheduled to mature
      as follows:

<TABLE>
<CAPTION>
                       CARRYING    FAIR MARKET
FISCAL YEAR ENDING       Value        Value
<C>                    <C>         <C>
2005                    $17,336     $17,342
2006                      5,037       4,990
                        -------     -------

                        $22,373     $22,332
                        =======     =======
</TABLE>

      The Partnership expects actual maturities to differ from scheduled
      maturities because borrowers have the right to call or prepay certain
      obligations.

                                       50
<PAGE>

      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 31, 2004       $ 231       $ 311       $(311)       $ 231
Year ended January 2, 2004           231         244        (244)         231
Year ended January 3, 2003           231         575        (575)         231
</TABLE>

      ASSETS HELD FOR SALE -- The Partnership considers each individual hotel to
      be an identifiable component of its business. In accordance with Statement
      of Financial Accounting Standard ("SFAS") 144, "Accounting for the
      Impairment or Disposal of Long-Lived Assets," the Partnership does not
      consider a hotel as "held for sale" until it is probable that the sale
      will be completed within one year. Once a hotel is "held for sale" the
      operations related to the hotel will be included in discontinued
      operations. The Partnership considers a hotel as "held for sale" once the
      potential transaction has been approved by the board of directors (i.e.,
      letter of intent is approved) of its general partner, a contract for sale
      has been executed, the buyer has completed its due diligence review of the
      asset, and the Partnership has received a deposit. Until a buyer has
      completed its due diligence review of the asset, necessary approvals have
      been received and substantive conditions to the buyer's obligation to
      perform have been satisfied, the Partnership does not consider a sale to
      be probable.

      The Partnership does not depreciate hotel assets while classified as "held
      for sale." Upon designation of a hotel as being "held for sale," and
      quarterly thereafter, the Partnership reviews the carrying value of the
      hotel and, as appropriate, adjust its carrying value to the lesser of
      depreciated cost or fair value less cost to sell, in accordance with SFAS
      144. Any such adjustment in the carrying value of a hotel classified as
      "held for sale" will be reflected in discontinued operations. The
      Partnership includes in discontinued operations the operating results of
      hotels classified as "held for sale" or that have been sold.

      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.

      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 deferred and
      amortized over the respective terms of the debt. The restricted cash
      deposits are required by certain mortgages and franchise agreements, which
      require the Partnership to maintain escrow accounts for real estate taxes
      and furniture and fixture replacement reserves, based upon a percentage of
      gross revenue.

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

                                       51
<PAGE>

<TABLE>
<CAPTION>
                                 DECEMBER 31,   JANUARY 2,
                                    2004           2004
<S>                              <C>            <C>
Deferred financing costs           $ 17,386      $ 17,152
Franchise fees                        5,260         5,251
Management contract costs             3,401         2,596
                                   --------      --------

                                     26,047        24,999

Less: Accumulated amortization       (9,164)       (7,044)
                                   --------      --------

                                     16,883        17,955

Deposits                              3,283         3,342
Restricted cash deposits             20,376        20,453
Other, net                              408           426
                                   --------      --------

                                   $ 40,950      $ 42,176
                                   ========      ========
</TABLE>

      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 method, while all other property is depreciated using both
      straight-line and accelerated methods. Depreciation expense was $48,495,
      $50,997 and $53,509 for the fiscal years ended 2004, 2003 and 2002,
      respectively, of which $1,475, $1,908 and $2,068, respectively, is
      included in discontinued operations. The estimated useful lives of the
      assets are summarized as follows:

<TABLE>
<CAPTION>
                                                   LIVES IN YEARS
<S>                                                <C>
Land improvements                                     10 to 25
New buildings and improvements                        10 to 40
Purchased buildings                                         25
Furniture, fixtures and equipment                      3 to 10
</TABLE>

      Construction in progress includes refurbishment costs of certain hotel
      developments at January 2, 2004.

      The Partnership periodically reviews the carrying value of property and
      equipment and other long-lived assets for indications that the carrying
      value of such assets may not be recoverable. This review consists of a
      comparison of the carrying value of the assets with the expected future
      undiscounted cash flows. If the respective carrying values exceed the
      expected future undiscounted cash flows, the impairment is measured using
      fair value measures to the extent available or discounted cash flows.
      During fiscal year 2003, the Partnership recognized impairment charges of
      $9,700 related to its St. Augustine, Florida property. The impairment
      reserves were based on fair market values derived from independent third
      party valuations.

      During fiscal year 2004, the Partnership recorded impairment charges of
      $4,619, which is included in discontinued operations, related to its
      decision to sell the two properties (Note 8). The impairment reserves were
      based on fair market values derived from third party offers to purchase
      the hotels' property and equipment.

      Interest costs, construction overhead and certain other carrying costs are
      capitalized during the period hotel properties are under construction. No
      interest costs were capitalized during the fiscal years ended 2004, 2003
      and 2002. 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.

                                       52
<PAGE>

      The Partnership leases various parcels of land on which the Partnership
      has either constructed a hotel property or constructed certain auxiliary
      facilities for the hotel to facilitate the property's operations. As of
      December 31, 2004 and January 2, 2004, land for one operating hotel
      property was leased by the Partnership from a related party over a
      long-term lease (Note 3). Rent expense for all land leases was $1,809,
      $1,437 and $1,545 for the fiscal years ended 2004, 2003 and 2002,
      respectively.

      PAR OPERATING EQUIPMENT -- The Partnership'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.

      ADVERTISING -- The Partnership expenses the cost of advertising associated
      with operating hotels as incurred. Advertising expense for the fiscal
      years ended 2004, 2003 and 2002 was approximately $38,599, $35,289 and
      $34,179, respectively, of which, $1,616, $1,594 and $1,452, respectively,
      is included in discontinued operations.

      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 $105, $96 and $97 for the
      fiscal years ended 2004, 2003 and 2002, respectively, of which $38, $36
      and $39, respectively, is included in discontinued operations.

      The Partnership maintains an employee savings plan (a 401(k) plan) and
      matches a percentage of an employee's contributions. The Partnership's
      matching contributions are funded currently. The costs of the matching
      program and administrative costs charged to operations were approximately
      $1,116, $812 and $760 for the fiscal years ended 2004, 2003 and 2002,
      respectively, of which, $45, $35 and $24, respectively, is included in
      discontinued operations.

      The Partnership does not offer any other post-employment or
      post-retirement benefits to its employees.

      SELF-INSURANCE -- The Partnership became self-insured for medical coverage
      effective January 1999. Effective October 1, 2002, the Partnership became
      self-insured for workers' compensation, general liability and auto claims.
      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, unasserted claims, claim costs, claim frequency,
      as well as changes in actual experience, could cause these estimates to
      change (see Note 3).

      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.

      REVENUE RECOGNITION -- The Partnership recognizes revenues from its rooms,
      catering and restaurant facilities as earned on the close of business each
      day.

      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

                                       53
<PAGE>

      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.

      FISCAL YEAR -- The Partnership's fiscal year ends on the Friday nearest
      December 31, which includes 52 weeks in 2004 and 2003, and 53 weeks in
      fiscal year 2002.

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

<TABLE>
<CAPTION>
FISCAL YEAR ENDED        FISCAL YEAR END
<S>                     <C>
      2004              December 31, 2004
      2003                January 2, 2004
      2002                January 3, 2003
</TABLE>

      SEGMENTS -- The Partnership operates in one reportable segment,
      hospitality services.

      RECLASSIFICATIONS -- Certain prior years' amounts have been reclassified
      to conform to the current year presentation.

      ACCOUNTING PRONOUNCEMENTS -- In January 2003, the Financial Accounting
      Standards Board ("FASB") issued Interpretation No. 46 ("FIN 46")
      "Consolidation of Variable Interest Entities." Until this interpretation,
      a company generally included another entity in its consolidated financial
      statements only if it controlled the entity through voting interests. FIN
      46 requires a variable interest entity to be consolidated by a company if
      that company is subject to a majority of the risk of loss from the
      variable interest entity's activities or entitled to receive a majority of
      the entity's residual returns. In December 2003, the FASB issued FIN 46R,
      "Consolidation of Variable Interest Entities, an Interpretation of ARB 51
      (as revised December 2003)." The primary objectives of FIN 46R are to
      provide guidance on the identification of entities for which control is
      achieved through means other than through voting rights (Variable Interest
      Entities) and how to determine when and which business enterprise should
      consolidate the Variable Interest Entity (the Primary Beneficiary). The
      Partnership does not have any variable interest entities and therefore,
      FIN 46R did not impact the accompanying consolidated financial statements.

      In December 2004, the FASB issued SFAS 123R "Share Based Payment" that
      will require compensation costs related to share-based payment
      transactions to be recognized in the financial statements. With limited
      exception, the amount of compensation cost will be measured based on the
      grant-date fair value of the equity or liability instruments issued. In
      addition, liability awards will be realized each reporting period.
      Compensation costs will be recognized over the period that an employee
      provides service in exchange for the award. This will be effective for the
      Partnership's third quarter of fiscal 2005, and affect the compensation
      expense related to the general partner's stock options recorded in the
      accompanying consolidated financial statements. As of December 31, 2004,
      SFAS 123R did not impact the accompanying consolidated financial
      statements.

3.    RELATED PARTY TRANSACTIONS

      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 14, 12 and 9 properties at
      December 31, 2004, January 2, 2004 and January 3, 2003, respectively. A
      management fee of approximately 3% to 4% of gross revenues (as defined) is
      paid to the Partnership by these hotels, which aggregated approximately,
      $3,324, $2,572 and $2,150 for the fiscal years ended 2004, 2003 and 2002,
      respectively.

      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
      general, administrative, sales and management services expenses, were
      approximately $1,651, $1,615 and

                                       54
<PAGE>

      $1,572 for the fiscal years ended 2004, 2003 and 2002, respectively, of
      which, $109, $107 and $104, respectively, is included in discontinued
      operations.

      In 2002, the Partnership negotiated a new contract with WHI to continue to
      provide accounting and administrative services through June 2005. Charges
      for these services provided by WHI will approximate $35 per year for each
      hotel property for the duration of the agreement.

      INSURANCE COVERAGE -- To supplement the Partnership's self-insurance
      programs, property, auto, commercial liability, workers' compensation and
      medical insurance is provided to the hotel properties under blanket
      commercial policies purchased by the John Q. Hammons Hotels, Inc.,
      covering hotel properties owned by the Partnership or Mr. Hammons. In
      addition, the Partnership's umbrella and crime insurance is provided to
      the hotel properties under blanket commercial policies purchased by the
      Partnership covering hotel properties owned by the Partnership and Mr.
      Hammons or managed by WHI. Generally, expenses allocated to each hotel
      property are based upon factors similar to those used by the insurance
      provider to compute the aggregate group policy expense. Insurance expense
      for the properties included in operating expenses was approximately
      $13,027, $13,284 and $13,281 for the fiscal years ended 2004, 2003 and
      2002, respectively, of which $517, $740 and $868, respectively, is
      included in discontinued operations. Management considers these
      allocations to be reasonable.

      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 and certain marketing managers. These costs were allocated by
      the Partnership to hotels not included in the accompanying consolidated
      statements, based on the respective number of rooms of all hotels owned or
      controlled by Mr. Hammons. Effective 2004, the agreement between the
      Partnership and Mr. Hammons was clarified to exclude compensation and
      related benefits of certain senior hotel executives and approximately $340
      was refunded by the Partnership to Mr. Hammons. These allocated costs
      approximated $71, $365 and $370 for the fiscal years ended 2004, 2003 and
      2002, respectively. Management considers these allocations to be
      reasonable.

      Mr. Hammons utilizes the services of certain of the Partnership's
      employees in his personal enterprises for which he paid $335, $335 and
      $432 for the fiscal years ended 2004, 2003 and 2002, respectively, to such
      employees' total compensation.

      TRANSACTIONS WITH PARTNERS AND DIRECTORS -- During fiscal year 2000, the
      general partner authorized the Partnership to enter into a five-year
      management contract with Mr. Hammons whereby the Partnership will provide
      internal administrative, architectural design, purchasing and legal
      services to Mr. Hammons in connection with the development of hotels in an
      amount not to exceed 1.5% of the total development cost of any single
      hotel 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. During fiscal years ended 2004, 2003 and 2002, the Partnership
      provided $805, $328 and $326, respectively, of services to Mr. Hammons in
      accordance with the management contract. These costs are recorded as
      management contract costs (Note 2) and amortized over the five-year
      contract period commencing upon opening of the respective hotel. For
      fiscal year 2004, 2003 and 2002, the amortization of management contract
      costs was approximately $404, $298 and $214, respectively.

      Mr. Hammons also utilizes architecture and design and certain other
      services of the Partnership's for his personal enterprises. Certain of
      these services are specifically identifiable tasks which can be tracked
      and accounted for separately while other services are not specifically
      identifiable thus accounted for based upon an allocation percentage.
      Management considers these allocations to be reasonable. The Partnership
      bills Mr. Hammons monthly for use of these services and reports the
      expenses net of reimbursements in general, administrative, sales and
      management services expense. Reimbursements from Mr. Hammons totaled $894,
      $638 and $572 for the fiscal years ended 2004, 2003 and 2002,
      respectively. Mr. Hammons had advanced payments to the Partnership of
      approximately $55 and $51 as of December 31, 2004 and January 2, 2004,
      respectively.

                                       55
<PAGE>

      During fiscal year 2003, the Partnership exchanged an undeveloped land
      parcel for two land parcels owned by Mr. Hammons and leased by the
      Partnership (Notes 2 and 6). The Partnership recognized no gain or loss on
      the exchange.

      During fiscal year 2004, the Partnership authorized Mr. Hammons to
      initiate the refinancing of one of the Partnership's properties. In
      connection with the refinancing, which was not yet complete as of December
      31, 2004, Mr. Hammons personally paid $655 for various related costs and
      expenses. The general partner's Board of Directors resolved that after one
      year, if the Partnership still owns the property, it will refund Mr.
      Hammons $655 for costs incurred in the refinancing. However, if the
      Partnership were to spin off or distribute the property to Mr. Hammons
      within the next year in connection with a sale or merger (Note 1), the
      costs will not be refunded. This transaction is included in the
      accompanying financial statements as deferred financing costs and
      refundable equity. On January 27, 2005, Mr. Hammons paid an additional
      $320 and completed the refinancing.

                                       56
<PAGE>

      SUMMARY OF RELATED PARTY REVENUE, EXPENSES AND REIMBURSED EXPENSES -- The
      following summarizes revenues and expenses reported as a result of
      activities with related parties:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED                                                    2004          2003          2002
<S>                                                                <C>           <C>           <C>
Revenue:

    Hotel management fees                                          $   3,324     $   2,572     $   2,150
                                                                   =========     =========     =========

Expenses:

    Expenses included within depreciation and amortization:
          Amortization of management contract costs                $     404     $     298     $     214
                                                                   ---------     ---------     ---------

    Expenses included within general, administrative,
      sales and management service expenses:

          Accounting and administrative:
              Continuing operations                                    1,542         1,508         1,468
              Discontinued operations                                    109           107           104
                                                                   ---------     ---------     ---------
                                                                       1,651         1,615         1,572
                                                                   ---------     ---------     ---------

          Rental expenses from continuing operations (Note 6)            802           948         1,026
                                                                   ---------     ---------     ---------

    Expenses included within various operating categories:

          Insurance other than medical:
              Continuing operations                                    7,425         8,545         8,481
              Discontinued operations                                    390           616           737
                                                                   ---------     ---------     ---------
                                                                       7,815         9,161         9,218
                                                                   ---------     ---------     ---------
          Medical, net of employee payments:
              Continuing operations                                    5,085         3,999         3,932
              Discontinued operations                                    127           124           131
                                                                   ---------     ---------     ---------
                                                                       5,212         4,123         4,063
                                                                   ---------     ---------     ---------

Total                                                              $  15,884     $  16,145     $  16,093
                                                                   =========     =========     =========

Reimbursed expenses:
    Reimbursements from Mr. Hammons reflected net within
      general, administrative, sales and management
      service expenses:

              Common costs                                         $      71     $     365     $     370
              Architecture and design and certain other services         894           638           572
                                                                   ---------     ---------     ---------

Total                                                              $     965     $   1,003     $     942
                                                                   =========     =========     =========
</TABLE>

4.    FRANCHISE AGREEMENTS

      As of December 31, 2004, and January 2, 2004, 42 and 43, respectively, of
      the hotel properties included in the accompanying consolidated financial
      statements operated under franchise agreements with national hotel chains
      which require each hotel to remit to the franchisor monthly fees equal to
      approximately 3% to 6% of gross room revenues, as defined. Franchise fees
      expensed under these contracts were $11,909, $11,275 and $12,944 for the
      fiscal years ended 2004, 2003 and 2002, respectively, of which $535, $550
      and $582, respectively, is included in discontinued operations.

      As part of the franchise agreements, each hotel also pays additional
      advertising, reservation and maintenance fees to the franchisor which
      range from 1.0% to 4.0% of gross room revenues, as defined. The

                                       57
<PAGE>

      amount of expense related to these fees included in the consolidated
      statements of operations as a component of general, administrative, sales
      and management service expenses was $10,447, $9,698 and $9,255 for the
      fiscal years ended 2004, 2003 and 2002, respectively, of which, $444, $442
      and $436, respectively, is included in discontinued operations.

5.    LONG-TERM DEBT

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

<TABLE>
<CAPTION>
FISCAL YEAR END                                                                        2004          2003
<S>                                                                                  <C>           <C>
2002 First Mortgage Notes, interest at 8.875% interest only payable May 15 and
  November 15, principal due May 15, 2012, secured by a first mortgage lien on
  29 hotel properties, cash from the sales proceeds of one collateral property
  until sufficient replacement collateral is provided and an agreement for
  additional capital contributions of up to $195 million by Mr. Hammons.             $ 499,000     $ 499,000

Mortgage notes payable to banks, insurance companies and a state retirement
  plan, fixed rates ranging from 7.5% to 9.5% payable in scheduled installments
  with maturities through November 2018, secured by certain hotel facilities,
  fixtures and an assignment of rents, with certain instruments subject to
  cross-collateralization provisions, and a personal guarantee of
  Mr. Hammons.                                                                         231,010       245,297

Mortgage notes payable to banks, variable interest rates at prime to prime plus
  0.50% with a certain instrument subject to a ceiling and a floor, payable in
  scheduled installments with maturities through February 2008, secured by
  certain hotel facilities, fixtures and an assignment of rents, and a personal
  guarantee of Mr. Hammons.                                                             35,194        36,447

Other notes payable, interest at 3%, paid in full during 2004.                               -           328
                                                                                     ---------     ---------

                                                                                       765,204       781,072

Less:  Current portion                                                                 (25,719)       (7,423)
                                                                                     ---------     ---------

                                                                                     $ 739,485     $ 773,649
                                                                                     =========     =========
</TABLE>

      During May 2002, the Partnership issued $510 million of 2002 First
      Mortgage Notes. The Partnership utilized the proceeds from these notes to
      pay in full the 1994 First Mortgage Notes and the 1995 First Mortgage
      Notes and certain fixed and variable rate mortgage notes. The indenture
      agreements relating to the 2002 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 and engage
      in mergers or consolidations. 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
      require the achievement or maintenance of certain financial covenants. The
      2002 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 repaid or refinanced $15,868, $25,598
      and $516,385 of long-term debt in fiscal year 2004, 2003 and 2002,
      respectively. In connection

                                       58
<PAGE>

      with these transactions, the Partnership incurred approximately $144, $774
      and $7,411 in fiscal year 2004, 2003 and 2002, respectively, for charges
      related to the early extinguishment of debt.

      Scheduled maturities of long-term debt as of December 31, 2004, after
      giving effect to the early extinguishment of a mortgage note payable
      subsequent to year end (Note 10) and refinancing of a note payable (Note
      3) are summarized as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDING          AMOUNT
<S>                       <C>
2005                      $    25,719
2006                           36,865
2007                           42,111
2008                           48,880
2009                            4,228
Thereafter                    607,401
                          -----------
                          $   765,204
                          ===========
</TABLE>

6.    COMMITMENTS AND CONTINGENCIES

      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 non-related party leases, which is included in general,
      administrative, sales and management service expenses, was approximately
      $3,715, $3,123 and $3,502 for the fiscal years ended 2004, 2003 and 2002,
      respectively, of which $22, $42 and $56, respectively, is included in
      discontinued operations.

      The Partnership operates two trade centers located in Joplin, Missouri and
      Portland, Oregon, both of which are owned by Mr. Hammons and leased by the
      Partnership. The lease agreement for the Joplin trade center stipulates
      nominal rentals for the fiscal years ended 2004, 2003 and 2002, and for
      each ensuing year through 2014. The lease agreement for the Portland
      facility stipulates annual rents of $300 payable on a month-to-month
      basis. In addition, the Partnership leases office space in Springfield,
      Missouri, from a partnership (of which Mr. Hammons is a partner) for
      annual payments of $288 payable monthly through December 2005. The
      Partnership also leased land from Mr. Hammons during fiscal year 2004 for
      one hotel property, and during 2003 and 2002 for three hotel properties.
      The Partnership exchanged certain undeveloped land for two of these leased
      parcels during fiscal year 2003. Subject to the Partnership exercising the
      purchase option provided under the agreement, the remaining land lease
      extends through 2045 and requires aggregate minimum annual payments of
      approximately $150 and additional contingent rent based upon a percentage
      of the property's operating revenues. Rent expense for these related party
      leases was approximately $802, $948 and $1,026 for the fiscal years ended
      2004, 2003 and 2002, respectively.

                                       59
<PAGE>

      The minimum annual commitments for non-cancelable leases and contracts as
      of December 31, 2004 are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR     RELATED PARTY        OTHER            TOTAL
<S>             <C>                <C>              <C>
2005              $   1,208        $   2,744        $   3,952
2006                    150            2,650            2,800
2007                    150            2,629            2,779
2008                    150            2,521            2,671
2009                    150            1,324            1,474
Thereafter            5,575           53,415           58,990
                  ---------        ---------        ---------
                  $   7,383        $  65,283        $  72,666
                  =========        =========        =========
</TABLE>

      HOTEL DEVELOPMENT -- Currently, the Partnership does not have any hotels
      under construction nor does it have any plans to start construction.

      LEGAL MATTERS -- Two lawsuits have been filed against the general partner
      (in the Court of Chancery of the State of Delaware in and for New Castle
      County), Jolly Roger Fund L.P. and Jolly Roger Offshore Fund, Ltd. vs.
      John Q. Hammons Hotels Inc., et al, filed October 19, 2004 and Garco
      Investments LLP v. John Q. Hammons Hotels, Inc., et al., filed October 20,
      2004. Both of these class action lawsuits originally sought injunctive
      relief to prevent any merger transaction and asserted that the original
      price offered to the public shareholders was not equivalent to the
      "sweetheart deal" offered to John Q. Hammons. These lawsuits have been
      consolidated into one action and the complaint has been amended to seek
      compensation, attorney fees and costs of the action for plaintiffs'
      efforts because they allegedly added value for the minority public
      shareholders as evidenced by the fact the proposed stock acquisition price
      has risen from the initial $13.00 a share to the current proposal of
      $24.00 per share. The parties have agreed that no responsive pleadings are
      required to be filed until March 31, 2005. The Partnership has not
      recorded an obligation with regard to this matter, as a loss is not yet
      probable nor can an amount of loss be reasonably estimated. Management
      will continue to assess the situation and adjustments will be recorded, if
      necessary, in the period in which new facts and circumstances arise.

      The Partnership is party to various other legal proceedings arising from
      its consolidated operations. Management 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.    ASSETS HELD FOR SALE

      During 2004, the Partnership completed a comprehensive review of its
      investment strategy and of its existing hotel portfolio to identify
      properties which the Partnership believes are either non-core or no longer
      complement the business. As of December 31, 2004, only one hotel property,
      the Holiday Inn property located in Emeryville, California, met the
      Company's criteria for held for sale classification. The other assets
      identified for disposition program did not meet the probability criteria
      as prescribed by SFAS 144 to classify as held for sale. See Note 10 for
      asset sale subsequent to December 31, 2004.

      Assets held for sale consisted of the following:

                                       60

<PAGE>

<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                                                             2004
<S>                                                      <C>
Land and improvements                                      $   791
Building and improvements                                    5,755
Furniture, fixtures and equipment                            4,705
                                                           -------
                                                            11,251
Less: Accumulated depreciation and amortizaiton             (6,951)
                                                           -------
Assets held for sale                                       $ 4,300
                                                           =======
</TABLE>

8.      DISCONTINUED OPERATIONS

        Included in discontinued operations are the results of operations of the
        Holiday Inn Bakersfield, California sold in August 2004 and the Holiday
        Inn Northglenn, Colorado sold in December 2004. In addition, the Holiday
        Inn Emeryville, California hotel property met the Partnership's criteria
        for held for sale classification as of December 31, 2004, which requires
        it to be classified as discontinued operations for the periods
        presented.

        Condensed financial information for these three hotels included in
        discontinued operations is as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED                                  2004        2003          2002
<S>                                             <C>          <C>           <C>
Revenues                                        $ 17,573     $ 17,770      $ 20,059

Direct operating expenses                          8,044        8,041         8,719
General, administrative, sales and
  management service expenses                      5,597        6,222         6,295
Repairs and maintenance                              815          891           909
Asset impairment                                   4,619            -             -
Depreciation and amortizaiton                      1,499        1,940         2,096
                                                --------       ------      --------
  Total operating expenses                        20,574       17,094        18,019
                                                --------       ------      --------
Operating income (loss)                           (3,001)         676         2,040

Allocated interest expense                         1,759        1,759         1,759
Other income                                           -          (56)         (111)
Loss on sale                                         390            -             -
                                                --------     --------      --------

Income (loss) from discontinued operations      $ (5,150)    $ (1,027)     $    392
                                                ========     ========      ========
</TABLE>

        The Partnership sold a Holiday Inn located in Bakersfield, California in
        August 2004 for net proceeds of $8,048. In December 2004, the
        Partnership sold a Holiday Inn located in Northglenn, Colorado for net
        proceeds of $4,170. From these sales, the Partnership recognized a net
        loss of $5,009, including $4,619 of asset impairment charges and loss on
        dispositions of $390. The Holiday Inn located in Northglenn, Colorado
        served as collateral under the 2002 First Mortgage Notes (Note 5). Under
        the terms of these indentures, the Partnership plans to provide
        replacement collateral in accordance with the indenture provisions.

9.      FAIR VALUE OF FINANCIAL INSTRUMENTS

        The fair values of long-term debt approximate their respective
        historical carrying amounts except with respect to the 2002 First
        Mortgage Notes. The fair market value of the 2002 First Mortgage Notes
        ranged from approximately $561,000 to $569,000 as of December 31, 2004.
        The fair market value of the 2002 First Mortgage Notes issued is
        estimated by obtaining market quotes from brokers.

                                       61
<PAGE>

10.     SUBSEQUENT EVENT

        Subsequent to December 31, 2004, the Partnership has agreed to issue
        278,096 general partner units to John Q. Hammons Hotels, Inc. The number
        of general partner units to be issued is equivalent to the number of
        John Q. Hammons Hotels, Inc. Class A and Class B Common Stock issued as
        outlined by the partnership agreement.

        On January 27, 2005, the Partnership completed the sale of a Holiday Inn
        property located in Emeryville, California for net proceeds of $15,739,
        resulting in a gain of $11,161. This hotel property served as collateral
        under the 2002 First Mortgage Notes (Note 5). Under the terms of these
        indentures, the Partnership plans to provide replacement collateral in
        accordance with the indenture provisions.

        On February 23, 2005, the Partnership utilized the net cash proceeds
        from the sale of the Northglenn, Colorado and the Emeryville, California
        hotel properties to pay-off the existing mortgage our World Golf Village
        Hotel in St. Augustine, Florida and substitute it as the replacement
        collateral for the 2002 First Mortgage Notes in accordance with the
        indenture provisions.

                                       62
<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 31st day of March, 2005.

                                               JOHN Q. HAMMONS HOTELS, L.P.

                                               By: John Q. Hammons Hotels, Inc.,
                                                   its General Partner

                                               By: /s/ John Q. Hammons
                                                  ------------------------
                                                    John Q. Hammons
                                                    Founder, Chairman and CEO

                                               JOHN Q. HAMMONS HOTELS FINANCE
                                               CORPORATION III

                                               By: /s/ John Q. Hammons
                                                   -----------------------
                                                   John Q. Hammons
                                                   Founder, Chairman and CEO

        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 III, on March 31, 2005.

<TABLE>
<CAPTION>
       Signatures                                     Title
-----------------------                               -----
<S>                              <C>
/s/ John Q. Hammons              Founder, Chairman and CEO of John Q. Hammons Hotels, Inc. and John Q.
-----------------------          Hammons Hotels Finance Corporation III (Principal Executive Officer)
John Q. Hammons

/s/ Paul E. Muellner             Chief Financial Officer of John Q. Hammons Hotels, Inc. and John Q. Hammons
-----------------------          Hotels Finance Corporation III (Principal Financial and Accounting Officer)
Paul E. Muellner

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

/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.
-----------------------
</TABLE>

                                       63
<PAGE>

<TABLE>
<S>                              <C>
David C. Sullivan

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

                                       64
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
   NO.                       TITLE
-------                      -----
<S>         <C>
    3.1     Restated Certificate of Incorporation of the Company (Incorporated
            by reference to Exhibit 3.3 of the Limited Partnership's
            Registration Statement on Form S-4, Registration Number
            333-89856-01)

    3.2     Bylaws of the Company, as amended (Incorporated by reference to
            Exhibit 3.4 of the Limited Partnership's Registration Statement on
            Form S-4, Registration Number 333-89856-01)

    3.3     Second Amended and Restated Agreement of Limited Partnership of the
            Partnership (Incorporated by reference to Exhibit 3.1 of the Limited
            Partnership's Registration Statement on Form S-4, Registration
            Number 333-89856-01)

    3.4     Certificate of Limited Partnership of the Partnership, filed with
            the Secretary of State of the State of Delaware (Incorporated by
            reference to Exhibit 3.2 of the Limited Partnership's Registration
            Statement on Form S-4, Registration Number 333-89856-01)

    3.5     Articles of Incorporation of John Q. Hammons Hotels Finance
            Corporation III (Incorporated by reference to Exhibit 3.5 of the
            Limited Partnership's Registration Statement on Form S-4,
            Registration Number 333-89856-01)

    3.6     By-laws of John Q. Hammons Hotels Finance Corporation III
            (Incorporated by reference to Exhibit 3.6 of the Limited
            Partnership's Registration Statement on Form S-4, Registration
            Number 333-89856-01)

    4.1     Indenture dated May 21, 2002 among the Limited Partnership and John
            Q. Hammons Hotels Finance Corporation III and Wachovia Bank,
            National Association, as trustee (Incorporated by reference to
            Exhibit 4.1 of the Limited Partnership's Registration Statement on
            Form S-4, Registration Number 333-89856-01)

    4.2     Form of Global Note evidencing the 8-7/8% First Mortgage Notes due
            2012 (Incorporated by reference to Exhibit 4.2 of the Limited
            Partnership's Registration Statement on Form S-4, Registration
            Number 333-89856-01)

   10.1     Letter Agreement re: Hotel Financial Services for Certain Hotels
            Owned and Operated by John Q. Hammons or John Q. Hammons Controlled
            Companies (Incorporated by reference to Exhibit 10.7 to the
            Registration Statement of the Company on Form S-1, No. 33-84570)

(a)10.2     Holiday Inn License Agreement

(a)10.3     Embassy Suites License Agreement

(a)10.4     Form of Option Purchase Agreement

   10.5     Lease Agreement between The Plaza Associates and John Q. Hammons
            Hotels, Inc., dated December 14, 2004 (Suite 701)

   10.6     Collective Bargaining Agreement between Hotel Employee and
            Restaurant Employee Union Local 49 and Holiday Inn Sacramento
            Capitol Plaza, for 06/01/01 to 5/31/06 (Incorporated by reference to
            Exhibit 10.6a from the Company's Annual Report on Form 10-K for the
            Fiscal Year Ended December 28, 2001)

   10.7     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 November 1, 2001 (Incorporated by reference to the same numbered
            exhibit in the Company's Annual Report on Form 10-K for the Fiscal
            Year Ended December 29, 2000)

  10.7a     Employment Agreement between John Q. Hammons Hotels, Inc. and Lou
            Weckstein dated as of September 17, 2001 (Incorporated by reference
            to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
            the Fiscal Quarter Ended September 28, 2001)

  10.7b     Employment Agreement between John Q. Hammons Hotels, Inc. and
            William A. Mead dated as of January 25, 2000 (Incorporated by
            reference to Exhibit 10.7b from the Company's Annual Report on Form
            10-K for the Fiscal Year Ended December 28, 2001)

  10.7c     Letter Agreement between John Q. Hammons and William A. Mead dated
            as of January 27, 2000 (Incorporated by reference to Exhibit 10.7c
            from the Company's Annual Report on Form 10-K for the Fiscal Year
            Ended December 28, 2001)

  10.7d     Employment Agreement between John Q. Hammons Hotels, Inc. and Paul
            E. Muellner dated as of December 1, 2003 (Incorporated by reference
            to Exhibit 10.7d from the Company's Annual Report on Form 10-K for
            the Fiscal Year Ended January 2, 2004)
</TABLE>

                                       65
<PAGE>

<TABLE>
<S>         <C>
    10.8    John Q. Hammons Building Lease Agreement - 9th Floor (6000 sq. ft.)
            (Incorporated by reference to Exhibit 10.7a of the Registration
            Statement of the Company on Form S-1, No. 33-84570)

   10.8a    Lease Renewal for John Q. Hammons Building Lease Agreement - 9th
            Floor (6000 sq. ft.) effective January 1, 2005

   10.8b    John Q. Hammons Building Lease Agreement - 7th Floor (2775 sq. ft.)
            (Incorporated by reference to Exhibit 10.7b of the Limited
            Partnership's Registration Statement on Form S-4, Registration
            Number 333-89856-01)

   10.8c    Lease Renewal for John Q. Hammons Building Lease Agreement - 7th
            Floor (2775 sq. ft.) effective January 1, 2005

   10.8d    John Q. Hammons Building Lease Agreement - 7th Floor (2116 sq. ft.)
            (Incorporated by reference to Exhibit 10.7c of the Limited
            Partnership's Registration Statement on Form S-4, Registration
            Number 333-89856-01)

   10.8e    Lease Renewal for John Q. Hammons Building Lease Agreement - 7th
            Floor (2116 sq. ft.) effective January 1, 2005

    10.9    John Q. Hammons Building Lease Agreement - 8th Floor (6000 sq. ft.)
            (Incorporated by reference to Exhibit 10.7d of the Limited
            Partnership's Registration Statement on Form S-4, Registration
            Number 333-89856-01)

   10.9a    Lease Renewal for John Q. Hammons Building Lease Agreement - 8th
            Floor (6000 sq. ft.) effective January 1, 2005

(a)10.10    Triple Net Lease

(a)10.11    Lease Agreement between John Q. Hammons and John Q. Hammons Hotels,
            L.P.

   10.12    Ground lease between John Q. Hammons and John Q. Hammons-Branson,
            L.P. - (Chateau on the Lake, Branson, Missouri) (Incorporated by
            reference to Exhibit 10.10 of the Limited Partnership's Registration
            Statement on Form S-4, Registration Number 333-89856-01)

   10.13    1994 Stock Option Plan (Incorporated by reference to Exhibit 10.12
            of the Limited Partnership's Registration Statement on Form S-4,
            Registration Number 333-89856-01)

   10.14    1999 Non-Employee Director Stock and Stock Option Plan (Incorporated
            by reference to the Exhibit 10.19 in the Company's Annual Report on
            Form 10-K for the Fiscal Year Ended January 1, 1999)

    12.1    Computation of Historical Ratio of Earnings to Fixed Charges of the
            Company

    31.1    Certification Statement of Chief Executive Officer pursuant to Rules
            13a-14(a) and 15d-14(a) of the Securities and Exchange Act, as
            amended

    31.2    Certification Statement of Chief Financial Officer pursuant to Rules
            13a-14(a) and 15d-14(a) of the Securities and Exchange Act, as
            amended

      32    Certification of Chief Executive Officer and Chief Financial Officer
            pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of
            Sarbanes-Oxley Act of 2002, as amended
</TABLE>

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

(a)     INCORPORATED BY REFERENCE TO THE SAME NUMBERED EXHIBIT IN THE COMPANY'S
        REGISTRATION STATEMENT ON FORM S-1, NO. 33-84570.

                                       66