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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 28, 2001 OR

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

                         Commission File Number 1-13486

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

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

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

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

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

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

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. YES  X   NO ___
                                       ---

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

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                                     PART I

Item 1.  Business.

     We use the term "Company" 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.
We use the term "General Partner" to mean John Q. Hammons Hotels, Inc., a
Delaware corporation, or Hammons, Inc., a Missouri corporation, and the
predecessor general partner of the Company. We use the term "Finance Corp." to
mean John Q. Hammons Hotels Finance Corporation, a wholly owned subsidiary of
the Company which has nominal assets and does not conduct any operations, and we
use Finance Corp. II to mean John Q. Hammons Hotels Finance Corporation II.
Finance Corp. and Finance Corp. II are co-obligors for the 1994 Notes and the
1995 Notes (as defined herein). We use the term "Registrants" to mean John Q.
Hammons Hotels, L.P., Finance Corp. and Finance Corp. II.

Overview

     The Company is a leading independent owner, manager and developer of
affordable upscale hotels in capital city, secondary and airport markets. The
Company owns 47 hotels located in 20 states, containing 11,633 guest rooms or
suites (the "Owned Hotels"). The Company also manages nine additional hotels
located in five states, containing 2,078 guest rooms (the "Managed Hotels"). The
Company's existing 56 Owned Hotels and Managed Hotels (together, the "JQH
Hotels") operate primarily under the Holiday Inn and Embassy Suites trade names.
Most of the Company's hotels are near a state capitol, university, airport or
corporate headquarters, office park or other demand generator.

     The JQH Hotels are designed to appeal to a broad range of hotel customers,
including frequent business travelers, groups and conventions, as well as
leisure travelers. The Company individually designs each hotel and most contain
an impressive multi-storied atrium, expansive meeting space, large guest rooms
or suites and comfortable lounge areas. The hotels' meeting facilities can be
readily adapted to accommodate both large and small meetings, conventions or
trade shows. Of the JQH Hotels, the 17 Embassy Suites Hotels are all-suite
hotels which appeal to the traveler needing or desiring greater space and
specialized services. The 17 Holiday Inn Hotels are affordably priced hotels
designed to attract the business and leisure traveler desiring quality
accommodations. In addition, the Company owns or manages other reputable brands
throughout the country, including Marriott, Radisson and Sheraton.

     Management of the JQH Hotels is coordinated from the Company's headquarters
in Springfield, Missouri, by its senior executive team. Six regional vice
presidents and one district director are responsible for supervising 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, significant cost savings are realized due to
economies of scale.

     The Company conducts all of its business operation directly and through its
subsidiaries. Mr. Hammons beneficially owns all 294,100 shares of Class B Common
Stock of the General

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Partner, representing 75.5% of the combined voting power of both classes of the
General Partner Common Stock. The General Partner is the sole general partner of
the Company through its ownership of all 5,076,279 general partner units (the
"GP Units"), representing 24.04% of the total equity in the Company. Mr. Hammons
beneficially owns all 16,043,900 limited partnership units of the Company (the
"LP Units"), representing 75.96% of the total equity in the Company. The Class A
Common Stock of the General Partner represents approximately 23% of the total
equity of the Company, and the Class B Common Stock and LP Units beneficially
owned by Mr. Hammons represent approximately 77% of the total equity in the
Company. Mr. Hammons is also the beneficial owner of 269,100 shares of Class A
Common Stock.

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

Development

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

     The Company announced on September 11, 1998, that it was ceasing new
development activity, except for the hotels then under construction and
currently has no hotels under construction.

     During 2000, the Company's Board of Directors authorized the Company to
enter into a five-year management contract with Mr. Hammons whereby the General
Partner would pay a maximum of 1 1/2% of the total development costs of Mr.
Hammons' personally developed hotels for the opportunity to manage the hotels
upon opening and the right to purchase the hotels in the event they are offered
for sale. As part of the management contract, the Company paid approximately
$1,455,000 to Mr. Hammons in fiscal 2000, and approximately $487,000 in fiscal
2001. Amortization of these costs will commence upon the opening of the
respective hotels.

Operations

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

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marketing programs aimed at specific target markets. The management team is
indirectly responsible for interior design of all hotels and each hotel's
product quality, and directly oversees the detailed refurbishment of existing
operations.

     Central management utilizes information systems that track each JQH Hotel's
daily occupancy, average room rate, rooms revenues and food and beverage
revenues. By having the latest information available at all times, management is
better able to respond to changes in each market by focusing sales and yield
management efforts on periods of demand extremes (low periods and high periods
of demand) and controlling variable expenses to maximize the profitability of
each JQH Hotel.

     Creating operating, cost and guest service efficiencies in each hotel is a
top priority to the Company. With a total of 56 hotels under management, the
Company is able to realize significant cost savings due to economies of scale.
By leveraging the total hotels/rooms under its management, the Company is able
to secure volume pricing from its vendors that is not available to smaller hotel
companies. The Company employs a systems trainer who is responsible for
installing new computer systems and providing training to hotel employees to
maximize the effectiveness of these systems and to ensure that guest service is
enhanced.

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

Sales and Marketing

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

     The Company's core market consists of business travelers who visit a given
area several times per year, including salespersons covering a regional
territory, government and military personnel and technicians. The profile of the
primary target customer is a college educated business traveler, age 25 to 54,
from a two-income household with a middle management white collar occupation or
upper level blue collar occupation. The Company believes that business

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travelers are attracted to the JQH Hotels because of their convenient locations
in state capitals, their proximity to airports or corporate headquarters,
plants, convention centers or other major facilities, the availability of ample
meeting space and the high level of service relative to other hotel operators
serving the same markets. The Company's sales force markets to organizations
which consistently produce a high volume of room nights and which have a
significant number of individuals traveling in the Company's operating regions.
The Company also targets groups and conventions attracted by a JQH Hotel's
proximity to convention or trade centers (often adjacent). JQH Hotels' group
meetings logistics include flexible space readily adaptable to groups of varying
size, high-tech audio-visual equipment and on-site catering facilities. The
Company believes that suburban convention centers attract more convention
sponsors due to lower prices than larger, more cosmopolitan cities. In addition
to the business market, the Company's targeted customers also include leisure
travelers looking for secure, comfortable lodging at an affordable price as well
as women travelers who find the security benefits of the Company's atrium hotels
appealing.

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

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

Franchise Agreements

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

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     Holiday Inn. The Franchise Agreement grants to the Company a nonassignable,
non-exclusive license to use the 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.
Monthly fees paid by the Company are based on a percentage of gross revenues
attributable to room rentals, plus marketing and reservation contributions which
are also a percentage of gross revenues. The term of the Franchise Agreement is
20 years with a renewal option in the 15th year.

     Embassy Suites. The Franchise Agreement grants to the Company a
nonassignable, non-exclusive license to use the Embassy Suites' service mark and
computerized reservation network. The franchisor maintains the exclusive right
to improve and change the reservation system for the purpose of making it more
efficient, economical and competitive. Monthly fees paid by the Company are
based on a percentage of gross revenues attributable to suite rentals, plus
marketing and reservation contributions which are also a percentage of gross
revenues. The term of the Franchise Agreement is 20 years with a renewal option
in the 18th year.

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

Competition

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

Regulations and Insurance

     General. A number of states regulate the licensing of hotels and
restaurants including liquor license grants by requiring registration,
disclosure statements and compliance with specific standards of conduct. In
addition, various federal and state regulations mandate certain disclosures and
practices with respect to the sales of license agreements and the
licensor/licensee relationship. The Company believes that each of the JQH Hotels
has the necessary permits and approvals to operate its respective businesses. To
supplement the Company's self insurance programs, umbrella, property, auto,
commercial liability and worker's compensation insurance is provided to the JQH
Hotels under blanket policies. Insurance expenses for the JQH Hotels were
approximately $7.3 million, $3.6 million and $1.1 million in 2001, 2000 and
1999, respectively. In the three years ended December 31, 1999, the Company
experienced favorable trends in insurance expenses, due to lower rates and
better claims experiences, and because it was able to engage in favorable
buyouts of several earlier self-insured years. In 2000 and 2001, the

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Company's insurance expense increased as the result of the now fully-insured
nature of most of the Company's insurance programs and the minimal number of
policy years remaining that could be bought out. The Company believes that the
JQH Hotels are adequately covered by insurance.

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

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

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

     Moisture Related Issues. During fiscal 2000, the General Partner initiated
claims against certain of its construction service providers, as well as with
its insurance carrier. These claims resulted from costs the Company incurred and
expected to incur in order to address moisture related problems caused by water
intrusion through defective windows at nine of the Company's hotel properties.
In December 2001, the General Partner initiated legal actions in an effort to
collect claims previously submitted. Subsequent to the filing of the legal
action, the insurance carrier notified the General Partner that a portion of its
claims had been denied. As of December 28, 2001, the Company had incurred
approximately $8.4 million of an estimated $12.0 million of

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costs to correct the underlying moisture problem. The General Partner and its
legal counsel will continue to vigorously pursue collection of these costs;
however, in the fourth quarter the Company recorded additional depreciation
expense of approximately $6.1 million to bring the total charge for the year to
$7.6 million (which is the total estimated impact) to reserve the net historical
costs of the hotel property assets refurbished absent any recoveries. To the
extent recoveries are realized, they will be recorded as a component of other
income.

Employees

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

Management

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

     John Q. Hammons is the Chairman, Chief Executive Officer, a Director and
founder of the General Partner, and a founder of the Company. Mr. Hammons has
been actively engaged in the development, management and acquisition of hotel
properties since 1959. From 1959 through 1969, Mr. Hammons and a business
partner developed 34 Holiday Inn franchises, 23 of which were sold in 1969 to
Holiday Inns, Inc. Since 1969, Mr. Hammons has developed 88 hotels on a
nationwide basis, primarily under the Holiday Inn and Embassy Suites trade
names.

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

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

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

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Vice President of Product Management in Winegardner & Hammons, Inc., a hotel
management company.

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

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

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

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

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

     William T. George, Jr., is Vice President, Capital Planning and Asset
Management, of the General Partner. He joined the General Partner in 1994 from
Promus Hotel Corporation, where he had been Director of Capital Refurbishment.

Forward-Looking Statements

     In addition to historical information, this document contains certain
forward-looking statements within the meaning of the Private Securities
Litigation Act of 1995. These include statements that are predictive in nature,
or which depend upon or refer to future events or conditions. These statements
often include words such as "believe," "anticipate," "estimate," "expect" or
similar expressions. These statements are based on our current expectations and
beliefs about future events, and are subject to risks and uncertainties about
the Company, our economy and the industry, among other things. These statements
are not guarantees of future performance, and we have no specific intention to
update these statements.

     Actual events and results may differ materially from those expressed, due
to a number of factors. Those factors include competition; general economic
conditions; unexpected events,

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such as the September 11th terrorist attacks; our ability to repay or refinance
our debt; and other factors.

Item 2.  Properties.

     The Company leases its headquarters in Springfield, Missouri, from a
Missouri company of which Mr. Hammons is a 50% owner. In 2001, the Company made
aggregate annual lease payments of approximately $247,000 to such Missouri
company. The Company leases from John Q. Hammons the real estate on which three
of the Company's hotels are located. These leases are more fully described in
Item 13 "Certain Relationships and Related Transactions." The Company owns the
land on which 35 of the Owned Hotels are located, while nine of the Owned Hotels
are subject to long-term ground leases.

Description of Hotels - General

     The JQH Hotels are located in 22 states and contain a total of 13,711
rooms. The JQH Hotels operate primarily under the Holiday Inn and Embassy Suites
trade names. Most of the JQH Hotels have assumed a leadership position in their
local market by providing a high quality product in a market unable to
economically support a second competitor of similar quality.

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

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

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         The Company retains responsibility for all aspects of the day-to-day
management of each of the JQH Hotels, including establishing and implementing
standards of operation at all levels; hiring, training and supervising staff;
creating and maintaining financial controls; regulating compliance with laws and
regulations relating to the hotel operations; and providing for the safekeeping,
repair and maintenance of the hotels owned by the Company. The Company typically
refurbishes individual hotels every four to six years, and has spent an average
per year of approximately $20.0 million in the last four years on the Owned
Hotels. During 2002, the Company expects to spend approximately $23.6 million on
refurbishment of the Owned Hotels.

Owned Hotels

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

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

</TABLE>

                                       11

<PAGE>

<TABLE>
<S>                         <C>                        <C>             <C>             <C>                   <C>
                                                                       Convention      40,000 sq. ft.
                                                                       Center:
Tampa, FL                   Embassy Suites             247             Atrium;                               1/98
                                                                       Meeting         18,000 sq. ft.
                                                                       Space:
Cedar Rapids, IA            Collins Plaza              221             Atrium;                               9/88
                                                                       Meeting         11,250 sq. ft.
                                                                       Space:
Davenport, IA               Radisson                   221             Atrium;                              10/95
                                                                       Meeting          7,800 sq. ft.  (c)
                                                                       Space:
Des Moines, IA              Embassy Suites             234             Atrium;                               9/90
                                                                       Meeting         13,000 sq. ft.
                                                                       Space:
Des Moines, IA              Holiday Inn                288             Atrium;                               1/87
                                                                       Meeting         15,000 sq. ft.
                                                                       Space:
Topeka, KS                  Capitol Plaza              224             Atrium;                               8/98
                                                                       Convention      26,000 sq. ft.
                                                                       Center:
Bowling Green, KY           University Plaza           218             Atrium;
                                                                       Meeting          4,000 sq. ft.  (c)   8/95
                                                                       Space:
Branson, MO                 Chateau on the Lake        301             Atrium;                               5/97
                                                                       Meeting         40,000 sq. ft.
                                                                       Space:
Jefferson City, MO          Capitol Plaza              255             Atrium;                               9/87
                                                                       Meeting         14,600 sq. ft.
                                                                       Space:
Joplin, MO                  Holiday Inn                262             Atrium;                               6/79
                                                                       Meeting          8,000 sq. ft.
                                                                       Space:
                                                                       Trade Center:   32,000 sq. ft.  (b)
Kansas City, MO(a)          Embassy Suites             236             Atrium;                               4/89
                                                                       Meeting         12,000 sq. ft.
                                                                       Space:
Kansas City, MO             Homewood Suites            117             Extended Stay                         5/97
Springfield, MO             Holiday Inn                188             Atrium;                               9/87
                                                                       Meeting          3,020 sq. ft.
                                                                       Space:
Omaha, NE                   Embassy Suites             249             Atrium;                               1/97
                                                                       Meeting         13,000 sq. ft.
                                                                       Space:
Reno, NV                    Holiday Inn                283             Meeting          8,700 sq. ft.        2/74
                                                                       Space:
Albuquerque, NM             Crowne Plaza               311             Atrium;                               12/86
                                                                       Meeting         12,300 sq. ft.
                                                                       Space:
Charlotte, NC               Renaissance Suites         275             Atrium;                               12/99
                                                                       Meeting         17,400 sq. ft.
                                                                       Space:
Greensboro, NC(a)           Embassy Suites             219             Atrium;                               1/89
                                                                       Meeting         10,250 sq. ft.
                                                                       Space:
Greensboro, NC(a)           Homewood Suites            104             Extended Stay                         8/96
Raleigh-Durham, NC          Embassy Suites             273             Atrium;                               9/97
                                                                       Meeting         20,000 sq. ft.
                                                                       Space:
Oklahoma City, OK           Renaissance                311             Atrium;                               1/00
                                                                       Meeting         10,150 sq. ft.  (c)
                                                                       Space:
Portland, OR(a)             Holiday Inn                286             Atrium;                               4/79
</TABLE>

                                       12

<PAGE>

<TABLE>
<S>                         <C>                     <C>        <C>             <C>                   <C>
                                                               Trade Center:   37,000 sq. ft.  (b)
Portland, OR(a)             Embassy Suites          251        Atrium;                               9/98
                                                               Meeting         11,000 sq. ft.
                                                               Space:
Columbia, SC                Embassy Suites          214        Atrium;                               3/88
                                                               Meeting         13,000 sq. ft.
                                                               Space:
Greenville, SC              Embassy Suites          268        Atrium;                               4/93
                                                               Meeting         20,000 sq. ft.
                                                               Space:
North Charleston, SC        Embassy Suites          255        Atrium;                               2/00
                                                               Meeting          3,000 sq. ft.  (c)
                                                               Space:
Beaumont, TX                Holiday Inn             253        Atrium;                               3/84
                                                               Meeting         12,000 sq. ft.
                                                               Space:
Dallas/Ft. Worth Airport,   Embassy Suites          329        Atrium;                               8/99
TX (a)                                                         Meeting         18,900 sq. ft.
                                                               Space:
Houston, TX(a)              Radisson                288        Atrium;                               12/85
                                                               Meeting         14,300 sq. ft.
                                                               Space:
Mesquite, TX                Hampton Inn Suites      160        Meeting         21,200 sq. ft.        4/99
                                                               Space:
                                                               Convention      35,100 sq. ft.  (c)
                                                               Center:
Charleston, WV              Embassy Suites          253        Atrium;                               12/97
                                                               Meeting         14,600 sq. ft.
                                                               Space:
Madison, WI                 Marriott                292        Atrium;                               10/85
                                                               Meeting         15,000 sq. ft.  (b)
                                                               Space:
                                                               Convention      50,000 sq. ft.
                                                               Center:
</TABLE>

_________________________

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

Managed Hotels

         The Managed Hotels consist of nine hotels, three Holiday Inns, one
Sheraton, two Embassy Suites, one Marriott Courtyard, one Marriott Residence Inn
and one Renaissance, located in five states (Missouri, Nebraska, South Dakota,
Tennessee and Texas), and contain a total of 2,078 guest rooms. Mr. Hammons
directly owns eight of these nine hotels. The remaining hotel is owned by an
entity controlled by Mr. Hammons in which he has a 50% interest. Jacqueline
Dowdy, a director and officer of the General Partner, and Lonnie A. Funk, a
former officer of the General Partner, each own a 25% interest in this entity.
There is a convention and trade center adjacent to four of the Managed Hotels.

         The Company provides management services to the Managed Hotels within
the guidelines contained in annual operating and capital plans submitted to the
hotel owner for review and approval during the final 30 days of the preceding
year. The Company is responsible for the day-to-day operations of the Managed
Hotels. While the Company is responsible for the

                                       13

<PAGE>

implementation of major refurbishment and repairs, the actual cost of such
refurbishments and repairs is borne by the hotel owner. The Company earns annual
management fees of 3% to 5% of the hotel's gross revenues. Each of the Managed
Hotels' management contracts is for an initial term of 20 years, which
automatically extends for four periods of five years, unless otherwise canceled.
The Company has received an option from Mr. Hammons or entities controlled by
him to purchase each of the Managed Hotels.

Item 3.  Legal Proceedings.

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

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

       None.

                                    PART II

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

         Not Applicable

Item 6.  Selected Financial Data.

         The selected consolidated financial information of the Company for the
2001, 2000, 1999, 1998 and 1997 Fiscal Years has been derived from and should be
read in conjunction with the audited consolidated financial statements of the
Company, which statements have been audited by Arthur Andersen LLP, independent
public accountants. The information presented below also should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included under Item 7. The Company's fiscal year ends
on the Friday nearest December 31.

                                       14

<PAGE>

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


<TABLE>
<CAPTION>
                                                                                     FISCAL YEAR ENDED
                                                              2001           2000           1999           1998           1997
<S>                                                        <C>             <C>            <C>             <C>           <C>
REVENUES:
    Rooms (a)                                              $ 266,353       $267,596       $229,807        $211,989      $195,296
    Food and beverage                                        118,042        119,865        101,231          91,982        86,183
    Meeting room rental and other (b)                         52,263         49,113         40,646          35,003        31,795
                                                           ---------       --------       --------        --------      --------
      Total revenues                                         436,658        436,574        371,684         338,974       313,274
                                                           ---------       --------       --------        --------      --------

OPERATING EXPENSES:
    Direct operating costs and expenses (c)
      Rooms                                                   68,061         68,224         59,507          54,600        50,265
      Food and beverage                                       94,690         98,398         84,035          77,018        73,383
      Other                                                    3,288          3,716          3,667           3,389         3,385
    General, administrative, sales and
    management service expenses (d,e)                        131,522        124,393        104,876          95,500        85,766
    Repairs and maintenance                                   17,847         17,065         15,059          13,438        12,578
    Depreciation and amortization                             62,174         53,367         45,669          45,580        34,781
                                                           ---------       --------       --------        --------      --------
      Total operating expenses                               377,582        365,163        312,813         289,525       260,158
                                                           ---------       --------       --------        --------      --------

INCOME FROM OPERATIONS                                        59,076         71,411         58,871          49,449        53,116

OTHER (INCOME) EXPENSE:
    Interest expense and amortization of
      deferred financing fees, net                            70,975         73,833         62,209          57,286        44,325
    Gain property disposition (f)                                 --             --         (2,365)         (8,175)           --
                                                           ---------       --------       --------        --------      --------

INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE(g)(h)                                 $ (11,899)      $ (2,422)      $   (973)       $    338      $  8,791
                                                           =========       ========       ========        ========      ========

BALANCE SHEET DATA
            Total Assets                                   $ 881,724       $920,884       $934,312        $876,486      $816,733
            Total Debt, including current portion          $ 813,007        836,707        828,843         759,716       695,791
</TABLE>


(a)  Includes revenues derived from rooms.
(b)  Includes meeting room rental, management fees for providing management
     services to the Managed Hotels and other.
(c)  Includes expenses incurred in connection with rooms, food and beverage
     and telephones.
(d)  Includes expenses incurred in connection with franchise fees,
     administrative, marketing and advertising, utilities,
     insurance, property taxes, rent and other.
(e)  Includes expenses incurred providing management services to the Managed
     Hotels.
(f)  Gain on sales includes six hotels sold February 6, 1998 and one hotel sold
     December 31, 1998 and one hotel sold June 16, 1999.
(g)  The 1998, 1999 and 2001 fiscal years do not include a $2.2 million, $0.2
     million and $0.5 million, respectively, extraordinary charge related to
     early extinguishment of debt.
(h)  The Company adopted a new accounting pronouncement in 1999 which requires
     cost of start up activities, including pre-opening expenses, to be expensed
     as incurred. The 1999 Fiscal Year does not include a $1.8 million charge
     related to the change in accounting.

Supplemental Financial Information Relating to the 1994 and 1995 Collateral
Hotels

                                       15

<PAGE>

         The following tables set forth, as of December 28, 2001, unaudited
selected financial information with respect to the 17 hotels collateralizing the
1994 Notes (the "1994 Collateral Hotels") and the eight hotels collateralizing
the 1995 notes (the "1995 Collateral Hotels") of the Company, excluding
Unrestricted Subsidiaries (as defined in the indentures relating to the 1994
Notes and the 1995 Indentures) (the "Restricted Group"). Under the heading
"Management Operations," information with respect to revenues and expenses
generated by the Company as manager of the 1994 Collateral Hotels, the 1995
Collateral Hotels, the other Owned Hotels owned by John Q. Hammons Hotels Two,
L.P. ("L.P. Two"), and the Managed Hotels is provided.

<TABLE>
<CAPTION>
                                                                  12 Months Ended December 28, 2001
                                                                  ---------------------------------
                                                -------------------------------------------------------------
                                                   1994            1995        Management         Total
                                                 Collateral     Collateral     Operations      Restricted
                                                   Hotels         Hotels         Groups           Group
                                                -------------------------------------------------------------
<S>                                             <C>             <C>            <C>             <C>
                                                         (Dollars in Thousands, except operating data)
STATEMENT OF OPERATIONS DATA:
Operating Revenues                              $149,995          $54,568        $11,611  (a)   $216,174

OPERATING EXPENSES:
   Direct Operating Costs and
       Expenses                                   57,237           20,637              -          77,874
   General, Administrative, Sales and
    Management Expenses (b)                       45,037           17,961          1,755  (c)     64,753
   Repairs and Maintenance                         6,212            2,601              -           8,813
   Depreciation and Amortization                  18,744            6,794            719          26,257
                                                --------          -------        -------        --------
TOTAL OPERATING EXPENSES
                                                 127,230           47,993          2,474         177,697
                                                --------          -------        -------        --------
INCOME FROM OPERATIONS                          $ 22,765          $ 6,575        $ 9,137        $ 38,477
                                                ========          =======        =======        ========

Operating Data:
Occupancy                                           64.8%            61.6%
Average Daily Room Rate                         $  92.60          $ 81.06
RevPar                                          $  60.00          $ 49.93
</TABLE>

                                       16

<PAGE>

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

OPERATING EXPENSES:
   Direct Operating Costs and
         Expenses                                  59,454         21,585                 -                81,039
   General, Administrative, Sales and
   Management Expenses (b)                         43,364         17,322                65  (c)           60,751
   Repairs and Maintenance                          6,144          2,525                 -                 8,669
   Depreciation and Amortization                   13,637          5,295               399                19,331
                                              ------------  -------------        ----------            ----------

TOTAL OPERATING
EXPENSES                                          122,599         46,727               464               169,790
                                              -----------   ------------         ---------              --------
INCOME FROM OPERATIONS                           $ 33,360       $  8,648          $ 10,448              $ 52,456
                                              ============  =============        ==========            ==========

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

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

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

     General

         The following discussion and analysis primarily addresses results of
operations of the Company for the fiscal years ended December 28, 2001 ("2001"),
December 29, 2000 ("2000") and December 31, 1999 ("1999"). The following
discussion should be read in conjunction with the selected consolidated
financial information of the Company and the consolidated financial statements
of the Company included elsewhere herein.

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

                                       17

<PAGE>

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

          From 1997 through 2001, the Company's total revenues grew at an annual
     compounded growth rate of 8.7%, from $313.3 million to $436.7 million.
     Occupancy for the Owned Hotels during that period remained constant at
     62.9%. However, the Owned Hotels' average daily room rate (ADR) increased
     by 21.5% from $82.38 to $100.07 during that period. Room revenue per
     available room (RevPAR) increased by 21.3% from $51.84 to $62.90.

          In general, hotels opened during the period from 1997 to 2001
     increased overall average room rate, while occupancy remained relatively
     constant. The Company tracks the performance of the Owned Hotels in two
     groups. One group of hotels are those opened by the Company during the
     current and prior fiscal years (the "New Hotels"). During 2001, the New
     Hotels included two hotels opened in 2000. The remainder of the Owned
     Hotels, excluding the New Hotels, are defined as Mature Hotels. In 2001,
     the Mature Hotels included 45 hotels opened prior to 2000. New hotels
     typically generate positive cash flow from operations before debt service
     in the first year, generate cash sufficient to service mortgage debt in the
     second year and create positive cash flow after debt service in the third
     year.

<TABLE>
<CAPTION>
                                                               FISCAL YEAR ENDED
                                             2001        2000          1999          1998         1997
<S>                                     <C>          <C>           <C>           <C>          <C>
OWNED HOTELS
   Average occupancy                          62.9%        64.4%         62.9%         62.1%        62.9%
   Average daily room rate (ADR)        $   100.07   $    98.56    $    94.87    $    91.38   $    82.38
   Room revenue per available room
      (RevPAR)                          $    62.90   $    63.50    $    59.64    $    56.79   $    51.84
   Available rooms (a)                   4,234,594    4,213,947     3,853,403     3,733,166    3,767,387
   Number of hotels                             47           47            45            42           45

MATURE HOTELS
   Average occupancy                          62.7%        65.1%         64.7%         64.1%        63.8%
   Average daily room rate (ADR)        $    99.50   $    96.90    $    93.60    $    86.50   $    79.80
   Room revenue per available room
      (RevPAR)                          $    62.36   $    63.09    $    60.57    $    55.41   $    50.90
   Available rooms (a)                   4,028,570    3,669,239     3,332,718     3,012,845    3,388,896
   Number of hotels                             45           41            37            32           37

NEW HOTELS
   Average occupancy                          66.4%        59.9%         51.0%         54.1%        55.3%
   Average daily room rate (ADR)        $   110.55   $   110.68    $   105.25    $   115.55   $   108.97
   Room revenue per available room
      (RevPAR)                          $    73.37   $    66.29    $    53.70    $    62.54   $    60.21
   Available rooms (a)                     206,024      544,708       520,685       720,321      378,491
   Number of hotels                              2            6             8            10            8
</TABLE>

PERCENTAGES OF TOTAL REVENUES

                                       18

<PAGE>

   Rooms                                 61.0%   61.3%   61.8%   62.6%   62.3%
   Food and beverage                     27.0%   27.5%   27.3%   27.1%   27.5%
   Meeting room rental and other         12.0%   11.2%   10.9%   10.3%   10.2%
                                        -----   -----   -----   -----   -----
      Total revenues                    100.0%  100.0%  100.0%  100.0%  100.0%
                                        -----   -----   -----   -----   -----

OPERATING EXPENSES
  Direct operating costs and expenses
      Rooms                              15.6%   15.6%   16.0%   16.1%   16.0%
      Food and beverage                  21.7%   22.5%   22.6%   22.7%   23.4%
      Other                               0.8%    0.9%    1.0%    1.0%    1.1%
  General, administrative, sales and
      Management service expenses        30.1%   28.5%   28.2%   28.2%   27.4%
  Repairs and maintenance                 4.1%    3.9%    4.1%    4.0%    4.0%
  Depreciation and amortization          14.2%   12.2%   12.3%   13.4%   11.1%
                                        -----   -----   -----   -----   -----
      Total operating expenses           86.5%   83.6%   84.2%   85.4%   83.0%
                                        -----   -----   -----   -----   -----
  Income from operations                 13.5%   16.4%   15.8%   14.6%   17.0%
                                        =====   =====   =====   =====   =====


(a) Available rooms represent the number of rooms available for rent multiplied
by the number of days in the period reported or, in the case of New Hotels, the
number of days the hotel was opened during the period reported. Fiscal years
above each contained 52 weeks, or 364 days.

2001 FISCAL YEAR COMPARED TO 2000 FISCAL YEAR

Total revenues increased slightly to $436.7 million in 2001 from $436.6 million
in 2000. Of total revenues, 61.0% were revenues from rooms, compared to 61.3% in
2000. Revenues from food and beverage represented 27.0% of total revenues in
2001, compared to 27.5% in 2000, and revenues from meeting room rental and other
represented 12.0% of total revenues in 2001 and 11.2% in 2000.

Rooms revenues decreased slightly to $266.4 million in 2001 from $267.6 million
in 2000, a decrease of $1.2 million, or 0.4% as a result of the softer economy
in late 2001 and the decreased travel related to the September 11, 2001
terrorist attacks. Average daily room rates (ADR) of Mature Hotels increased to
$99.50 in 2001 from $96.90 in 2000. Occupancy in the Mature Hotels decreased 2.4
percentage points to 62.7% in 2001, compared to 65.1% in 2000. The Mature
Hotels' room revenue per available room (RevPAR) decreased to $62.36 in 2001
from $63.09 in 2000, a decrease of $0.73, or 1.2%. In 2001, the New Hotels
included two hotels, which generated RevPAR of $73.37, up 10.7% from the 2000
RevPAR of $66.29, when six New Hotels were open. In general, management believes
the New Hotels are more insulated from the effects of new hotel supply than are
the Mature Hotels, since the New Hotels utilize franchise brands that are
considered to be more upscale in nature, and the New Hotels have higher-quality
guest rooms and public spaces.

Food and beverage revenues decreased to $118.0 million in 2001 from $119.9
million in 2000, a decrease of $1.9 million, or 1.6%. This decrease was
primarily related to the lower occupancy.

                                       19

<PAGE>

Meeting room rental and other revenues increased to $52.3 million in 2001 from
$49.1 million in 2000, an increase of $3.2 million, or 6.5%. This increase was
primarily due to the movement of business conventions to secondary markets and
increased management fees from recently opened managed hotels.

Direct operating costs and expenses for rooms decreased to $68.1 million in 2001
from $68.2 million in 2000, a decrease of $0.1 million, or 0.1%. As a percentage
of rooms revenues, these expenses increased slightly to 25.6% in 2001 from 25.5%
in 2000. The dollar decrease related to variable costs that decline as rooms
revenues decrease.

Direct operating costs and expenses for food and beverage decreased to $94.7
million in 2001 from $98.4 million in 2000, a decrease of $3.7 million, or 3.8%,
and decreased as a percentage of food and beverage revenues to 80.3% from 82.1%
in 2000. The dollar decrease was due to decreased costs associated with the
lower volume of sales and the decrease as a percentage of food and beverage
revenues was related to improved inventory and labor controls.

Direct operating costs and expenses for other were $3.3 million in 2001 and $3.7
million in 2000, a 10.8% decrease. As a percentage of meeting room rental and
other revenues, these expenses were 6.3% in 2001 and 7.5% in 2000. The decrease
resulted from lower telephone expenses during 2001.

General, administrative, sales and management service expenses increased to
$131.5 million in 2001 from $124.4 million in 2000, an increase of $7.1 million,
or 5.7%, and increased as a percentage of total revenues to 30.1% in 2001 from
28.5% in 2000. The increases in these expenses were primarily attributable to
higher utility and guest frequency program costs during 2001 and other fees
associated with the moisture related problems, as discussed in Liquidity and
Capital Resources.

Repairs and maintenance expenses increased to $17.8 million in 2001 from $17.1
million in 2000, an increase of $0.7 million, or 4.1%, and increased slightly as
a percentage of revenues to 4.1% in 2001 from 3.9% in 2000.

Depreciation and amortization increased by $8.8 million, or 16.5%, to $62.2
million in 2001 from $53.4 million in 2000. As a percentage of total revenues,
these expenses increased to 14.2% in 2001 from 12.2% in 2000. The increase was a
direct result of the additional charge to depreciation expense resulting from
the moisture related issues, as discussed in Liquidity and Capital Resources.

Income from operations decreased to $59.1 million in 2001 from $71.4 million in
2000, a decrease of $12.3 million, or 17.2%. As a percentage of total revenues,
income from operations was 13.5% in 2001, compared to 16.4% in 2000. The change
related primarily to decreased revenues due to a softer economy in 2001 and the
additional depreciation expense, as discussed above.

Interest expense and amortization of deferred financing fees decreased to $71.0
million in 2001 from $73.8 million in 2000, a decrease of $2.8 million, or 3.8%.
The decrease was attributable to the Company's use of excess cash to reduce debt
by approximately $23.7 million during the fiscal year.

Loss before extraordinary item and cumulative effect of change in accounting
principle was $11.9 million in 2001 compared to $2.4 million in 2000, an
increase of $9.5 million.

                                       20

<PAGE>

2000 FISCAL YEAR COMPARED TO 1999 FISCAL YEAR

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

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

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

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

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

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

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

General, administrative, sales and management service expenses increased to
$124.4 million in 2000 from $104.9 million in 1999, an increase of $19.5
million, or 18.6%. Increases in these

                                       21

<PAGE>

expenses were primarily attributable to expenses associated with the opening of
new hotels in 1999. A large portion of expenses associated with new hotel
openings are fixed costs in nature. As a result, these expenses rise faster than
revenues in the first one to two years of operation. As a percentage of total
revenues, these expenses increased slightly to 28.5% in 2000 from 28.2% in 1999.

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

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

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

     In general, the Company has financed its operations through internal cash
flow, loans from financial institutions, the issuance of public debt and equity
and the issuance of industrial revenue bonds. The Company's principal uses of
cash are to pay operating expenses, to service debt and to fund capital
expenditures.

     At December 28, 2001, the Company had $33.2 million of cash and equivalents
and also had $11.0 million of marketable securities, compared to $45.6 million
in cash and cash equivalents and $3.6 million of marketable securities at the
end of 2000. Such amounts are available for working capital requirements of the
Company.

     Net cash provided by operating activities increased to $51.1 million at the
end of 2001 from $36.4 million at the end of 2000, an increase of $14.7 million,
or 40.4%, primarily as the result of a reduction of construction expenditures of
approximately $12.1 million in 2001 from 2000 and an increase in depreciation
expense of $8.8 million. These variances are partially offset by the increase in
losses in 2001.

                                       22

<PAGE>

     The Company incurred net capital expenditures of $32.1 million
(approximately $8.4 million of which was related to correcting the moisture
related issues discussed below) and $43.5 million, respectively, for 2001 and
2000. Capital expenditures typically include capital improvements on existing
hotel properties and expenditures for development of new hotels. Capital
expenditures of $32.1 million during 2001 were for existing hotels, compared to
$21.5 million for new hotel development and $22.0 million for existing hotels in
2000. During 2002, the Company expects capital expenditures to approximate $23.6
million.

     During fiscal 2000, the General Partner initiated claims against certain of
its construction service providers, as well as with its insurance carrier. These
claims resulted from costs the Company incurred and expected to incur in order
to address moisture related problems caused by water intrusion through defective
windows at nine of the Company's hotel properties. In December 2001, the General
Partner initiated legal actions in an effort to collect claims previously
submitted. Subsequent to the filing of the legal action, the insurance carrier
notified the General Partner that a portion of its claims had been denied. As of
December 28, 2001, the General Partner had incurred approximately $8.4 million
of an estimated $12.0 million of costs to correct the underlying moisture
problem. The General Partner and its legal counsel will continue to vigorously
pursue collection of these costs; however, in the fourth quarter the Company
recorded additional depreciation expense of approximately $6.1 million to bring
the total charge for the year to $7.6 million (which is the total estimated
impact) to reserve the net historical costs of the hotel property assets
refurbished absent any recoveries. To the extent recoveries are realized, they
will be recorded as a component of other income.

     At the end of 2001, total debt was $813.0 million compared with $836.7
million in 2000. The decrease is attributable to the Company's debt reduction
program in 2001. The current portion of long-term debt was $38.9 million at the
end of 2001, compared with $56.3 million at the end of 2000. Of the 2001 current
portion of long-term debt, $23.0 million is attributable to the Omaha Embassy
Suites property, which is expected to be refinanced prior to its maturity in
August 2002. Options are being explored for the refinancing of the two
outstanding First Mortgage Notes, due in 2004 and 2005.

     The Company expects 2002 capital requirements to be funded by cash, cash
flow from operations and refinancing of certain existing hotels. Based upon
current plans, the Company anticipates that its capital resources will be
adequate to satisfy its 2002 capital requirements for normal recurring capital
improvement projects. The Company remains cautiously optimistic about its
performance in the first and second quarters of 2002. January RevPAR in 2002 was
down 7.0% compared to January 2001, yet EBITDA from hotels increased 8.5% over
the same period. First quarter revenues and EBITDA are expected to be comparable
to 2001, and potentially improve as economic recovery continues. The Company is
expected to produce cash as it has historically, which will be used to fund
capital expenditures, reduce debt and further deleverage the Company in 2002.

     The Company did not distribute or accrue any amounts in 2001 or 2000 to its
partners for income taxes. Distributions by the Company must be made in
accordance with the provisions of the Indentures.

                                       23

<PAGE>

     We discuss recent accounting pronouncements and their potential effects on
the Company in Note 2(s) and we discuss financial transactions with related
parties in Note 3 of the Notes to Consolidated Financial Statements.

Seasonality

     Demand is affected by normally recurring seasonal patterns. For most of the
JQH Hotels, demand is higher in the spring and summer months (March through
October) than during the remainder of the year. Accordingly, the Company's
operations are seasonal in nature, with lower revenue, operating profit and cash
flow in the first and fourth quarters due to decreased travel during the winter
months.

Inflation

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

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

The Company is exposed to changes in interest rates primarily as a result of its
investing and financing activities. Investing activity includes operating cash
accounts and investments, with an original maturity of three months or less, and
certain balances of various money market and common bank accounts. The financing
activities of the Company are comprised of long-term fixed and variable rate
debt obligations utilized to fund business operations and maintain liquidity.
The following table presents the principal cash repayments and related weighted
average interest rates by maturity date for the Company's long-term fixed and
variable rate debt obligations as of December 28, 2001:

                             Expected Maturity Date
                                  (in millions)

<TABLE>
<CAPTION>
                                            2002      2003     2004       2005      2006   Thereafter    Total     Fair Value (d)
<S>                                       <C>       <C>       <C>        <C>       <C>     <C>           <C>       <C>
Long-Term Debt(a)
    $300 Million First Mortgage Notes     $    --   $   --    $  295     $  --     $   --    $   --      $  295       $ 295
    Average interest rate (b)                 8.9%     8.9%      8.9%                                       8.9%
    $90 Million First Mortgage Notes      $    --   $   --    $   --     $  79     $   --    $   --      $   79       $  81
    Average interest rate(b)                  9.8%     9.8%      9.8%      9.8%                             9.8%
    Other fixed-rate debt obligations     $    36   $   55    $    7     $   8     $    8    $  209      $  323       $ 323
    Average interest rate(b)                  8.6%     8.3%      8.3%      8.3%       8.3%      8.6%        8.5%
    Other variable-rate debt obligations  $     3   $   29    $   48     $    1    $   11    $   24      $  116       $ 116
    Average interest rate(c)                  4.8%     4.8%      4.8%      4.8%       4.8%      4.8%        4.8%
</TABLE>

                                       24

<PAGE>

(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 28, 2001, 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 $90 million First
Mortgage Notes. The fair value of the first mortgage note issues is estimated by
obtaining quotes from brokers.

    Item 8.  Financial Statements and Supplementary Data.

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

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

             None.

                                    PART III

    Item 10. Directors and Executive Officers of the Registrant.

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

             Donald H. Dempsey, age 57 became a director of the General Partner
in August 1999. Mr. Dempsey currently serves as Executive Vice President,
Secretary, Treasurer and Chief Financial Officer of Equity Inns, Inc., where he
also serves on its board of directors. Equity Inns, Inc. is a large lodging real
estate investment trust headquartered in Germantown, Tennessee, which owns 96
hotels in 34 states. Mr. Dempsey has more than 30 years' experience in corporate
and financial management 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.

                                       25

<PAGE>

     Daniel L. Earley, age 59, has been a director of the General Partner since
1994. Since 1985, Mr. Earley has been President, Chief Executive Officer and a
director of First Clermont Bank, a community bank located Milford, Ohio, which
is owned by Mr. Hammons.

     William J. Hart, age 61, has been a director of the 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 the Company and personally for
Mr. Hammons. Mr. Hart has also been a director since 1981 of Johnson Industries,
Inc.

     John E. Lopez-Ona, age 44, became a director of the General Partner in May
1996. Mr. Lopez-Ona was a managing director of Kidder Peabody & Company, Inc.,
an investment banking firm, from March 1990 through March 1995. Since June 1995,
Mr. Lopez-Ona has been the President of Anvil Capital, Inc., a firm owned by
him, which specializes in principal investments.

     James F. Moore, age 59, became a director of the General Partner in May
1995. From 1987 until 2001, Mr. Moore served as Chairman, Chief Executive
Officer and a Director of Champion Products, Incorporated, a privately owned
manufacturing company serving the telecommunications industry located in
Strafford, Missouri. Prior to 1987, Mr. Moore served as President of the
Manufacturing Division of Service Corporation International, a company listed on
the New York Stock Exchange.

     David C. Sullivan, age 62, became a director of the General Partner in May,
1999. From May 1998 until 2001, 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. From 1993 to 1995, Mr. Sullivan was the Executive Vice
President and Chief Officer of the Hotel Division of The Promus Companies
Incorporated ("PCI"). He was the Senior Vice President of Development and
Operations of the Hampton Inn/Homewood Suites Division of PCI from 1991 to 1993.
From 1990 to 1991, Mr. Sullivan was the Vice President of Development of the
Hampton Inn Hotel Division of PCI.

     Compensation of Directors. For 2001, each non-employee director received:

     .    $1,000 for each regular board meeting attended and $500 for each
          regular committee meeting attended ($750 per meeting for the committee
          chair),

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

     .    1,658 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

                                       26

<PAGE>

     .    an option to purchase 10,000 shares of the General Partner's Class A
          Common Stock at a per share exercise price of $6.03, exercisable in
          four equal annual installments, beginning May 2, 2002, and expiring
          May 1, 2011.

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

     In addition, on June 22, 2001, Messrs. Sullivan and Dempsey each received
1,000 shares of Class A Common Stock, and Messrs. Moore and Lopez-Ona each
received 600 shares of General Partner's Class A Common Stock, as a special,
one-time award, for their attendance of meetings of a special ad hoc committee
formed to evaluate possible corporate financial opportunities.

Item 11.  Executive Compensation.

Cash Compensation

     The following table sets forth the salary, cash bonus and certain other
forms of compensation paid by the General Partner and its subsidiaries for
services rendered in all capacities during the 2001, 2000 and 1999 fiscal years
to the Chief Executive Officer of the General Partner and the four other most
highly compensated executive officers of the General Partner serving at the end
of the 2001 fiscal year (the "Named Executive Officers").

                                       27

<PAGE>

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                   Long Term Compensation
                                                                                   ----------------------
                                Fiscal   Annual Compensation   All Other                    Awards
                                ------   -------------------   ---------                    ------
Name and Principal Positions    Year     Salary($)  Bonus($)  Compensation($)(a)  Securities Underlying Options(#)
----------------------------    ----     --------   -------   -----------------   ---------------------------------
<S>                             <C>      <C>        <C>       <C>                 <C>
John Q. Hammons                  2001     315,000    110,000        --                          --
Chairman of the Board and        2000     287,500    125,000        --                     100,000(c)
Chief Executive Officer          1999     250,000     90,000        --                          --

William A. Mead(b)               2001     225,000     40,000     3,000                          --
Regional Vice President          2000     200,150     40,000     2,871                      20,000(c)
Eastern Region                   1999     128,700     40,000     2,134
                                                                                                --
Paul E. Muellner                 2001     165,000     44,000     3,225                          --
Chief Financial Officer          2000     137,100     50,000     2,057                          --
                                 1999     130,000     40,000       650                      30,000(c)

Debra M. Shantz                  2001     153,100     44,000     3,047                          --
General Counsel                  2000     145,600     50,000     2,934                      30,000(c)
                                 1999     140,000     50,000     2,709                          --

Louis Weckstein(e)               2001     150,800     31,090        --                     100,000
President                        2000          --         --        --                          --
                                 1999          --         --        --                          --
</TABLE>

________________
(a)  Matching contributions to General Partner's 401(k) Plan.
(b)  Salary includes $160,000 and $151,400 paid by the Company, and $65,000 and
     $48,750 paid personally by Mr. Hammons, in 2001 and 2000, respectively.
(c)  Comprised of options with an exercise price of $5.00 per share.
(d)  Comprised of options with an exercise price of $5.15 per share.
(e)  Joined the Company September 17, 2001. Salary includes $88,300 paid by the
     Company and $62,500 paid personally by Mr. Hammons.

                                       28

<PAGE>

                      Option/SAR Grants in Last Fiscal Year

<TABLE>
<CAPTION>
                                                                                                   Potential Realizable
                                                                                                   Value at Assumed Rates
                                                                                                   of Stock Price
                                                                                                   Appreciation for
                                                    Individual Grants                              Option Term (b)(c)
                       --------------------------------------------------------------------------------------------------
                          Number of             % of Total
                          Securities          Options Granted
                        Underlying Options     to Employees in    Exercise Price     Expiration
    Name                 Granted (#)(a)          Fiscal Year        ($/Share)           Date          5%($)     10%($)
    ----                 -------------           -----------         -------            ----          ----      ------
<S>                     <C>                   <C>                 <C>                <C>             <C>        <C>
John Q. Hammons                     -                    -                  -                 -            -          -
Louis Weckstein               100,000                100.0              $5.15           9/16/11      323,881    820,777
Paul E. Muellner                    -                    -                  -                 -            -          -
William A. Mead                     -                    -                  -                 -            -          -
Debra M. Shantz                     -                    -                  -                 -            -          -
All Employees                 100,000                100.0              $5.15           9/16/11      323,881    820,777
</TABLE>


    (a) Awarded on November 27, 2001. Exercisable in four equal annual
        installments, beginning on September 17, 2002, and expiring on September
        16, 2011.

    (b) No gain to the optionees is possible without appreciation in the stock
        price which will benefit all shareholders commensurately. The dollar
        amounts under these columns are in result of calculations at the 5% and
        10% assumption rates set by the SEC and therefore are not intended to
        forecast possible future appreciation of the General Partner's stock
        price or to establish any present value of the options.

    (c) Realizable values are computed based on the number of options granted in
        2001 and still outstanding at year-end.


                          Fiscal Year End Option Values

<TABLE>
<CAPTION>
                            Number of Securities Underlying              Value of Unexercised
                                  Unexercised Options                 In-the-Money Options(1)(2)
Name                    Exercisable (#)    Unexercisable (#)     Exercisable ($)    Unexercisable ($)
----                    ---------------    -----------------     ---------------    -----------------
<S>                     <C>                <C>                   <C>                <C>
John Q. Hammons                 175,000              125,000              18,750               56,250
Louis Weckstein                      --              100,000                  --               60,000
Paul E. Muellner                 15,000               25,000               5,625               16,875
William A. Mead                  35,000               25,000               3,750               11,250
Debra M. Shantz                  60,000               40,000               5,625               16,875
</TABLE>

(1)  Calculated based upon the excess of the exercise price per share of the
     stock options ($5.15 for the options granted in 2001, and $5.00 for the
     options granted in 2000) over the closing price of the General Partner's
     Class A Common Stock as reported on the American Stock Exchange on December
     28, 2001. Does not include the stock options granted in 1998, as the
     exercise price per share of those stock options ($7.375) is greater than
     the $5.75 closing price on December 28, 2001, and so these options are not
     "In the Money."

(2)  Seventy-five percent of the 1998 options are currently exercisable,
     twenty-five percent of the 2000 options are currently exercisable and none
     of the 2001 options are currently exercisable.

                                       29

<PAGE>

401(k) Plan

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

Employment Agreements

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

         The General Partner entered into an employment agreement with Lou
Weckstein, our President, effective September 17, 2001. Mr. Weckstein's base
salary under the agreement is $300,000 per year. He also may participate in
incentive or supplemental compensation plans for which he is eligible, and is
eligible for a cash bonus of up to $120,000 for his first year of employment.
The actual of amount of any such bonus will be determined based on 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 the difference between his
annual salary from the General Partner and $550,000, up to a maximum of
$250,000.

         The General Partner entered into an employment agreement with Bill
Mead, one of its 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 our 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, Mr.
Hammons will pay Mr. Mead an additional $65,000 per year, in equal monthly
installments, during the term of his employment agreement with the 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.

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

         Mr. Hammons is the beneficial owner of all 16,043,900 limited
partnership units of the Company, representing 75.96% of the total equity in the
Company. The General Partner owns all general partner units of the Company,
representing 24.04% of the total equity of the Company.

Item 13. Certain Relationships and Related Transactions.

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

                                       30

<PAGE>

         Mr. Hart is a non-employee director of the General Partner and is a
member of the law firm of Husch & Eppenberger, LLC, which performs legal
services on a regular basis for the Company and personally for Mr. Hammons. The
Company paid such firm approximately $264,000 in legal fees during the fiscal
year ended December 28, 2001.

         The Company is controlled by Mr. Hammons through his control of the
General Partner, the sole general partner of the Company. His equity interest in
the Company (based on his beneficial ownership of 269,100 shares of Class A
Common Stock of the General Partner, all 294,100 shares of Class B Common Stock
of the General Partner and all 16,043,900 limited partnership units of the
Company (the "LP Units")) is 78.8%. There are significant potential conflicts of
interests between Mr. Hammons as a limited partner of the Company, and the
holders of Class A Common Stock of the General Partner, which conflicts may be
resolved in favor of Mr. Hammons.

         Holders of LP Units have the right to require the redemption of their
LP Units. This redemption right will be satisfied, at the sole option of the
General Partner, by the payment of the then cash equivalent thereof or by the
issuance of shares of Class A Common Stock on a one-for-one basis. Mr. Hammons
beneficially owns all 16,043,900 LP Units. If Mr. Hammons, as a holder of LP
Units, requires the Company to redeem LP Units, the non-employee directors of
the General Partner would decide, consistent with their fiduciary duties as to
the best interests of the Company, whether to redeem the LP Units for cash or
for shares of Class A Common Stock. Mr. Hammons would not vote or otherwise
participate in the decision of the non-employee directors. Mr. Hammons has
informed the Company that he has no current plan to require the Company to
redeem his LP Units.

         During 2001, the Company provided management services to nine hotels
not owned by the Company (the "Managed Hotels") pursuant to management contracts
(the "Management Contracts"). Eight of the Managed Hotels are owned by Mr.
Hammons and one is owned 50% by Mr. Hammons; 25% by Jacqueline A. Dowdy, the
Secretary and a director of the General Partner; and 25% by Lonnie A. Funk, a
former officer of the General Partner. Management fees of 3% to 5% of gross
revenues were paid to the Company by the Managed Hotels in the aggregate amount
of $1,684,000 in the fiscal year ended December 28, 2001. In addition to the
management fees paid by the Managed Hotels to the Company in that year, the
Managed Hotels reimbursed the Company for a portion of the salaries paid by the
Company to its six regional vice presidents and one district director, whose
duties include management services related to the Managed Hotels, and for
certain marketing and other expenses allocated to the Managed Hotels. Such
reimbursed services and expenses aggregated $328,000 in the fiscal year ended
December 28, 2001. Each of the Management Contracts is for an initial term of 20
years, which automatically extends for four periods of five years, unless
otherwise canceled.

         During 2000, the General Partner's Board of Directors authorized the
Company to enter into a five-year management contract with Mr. Hammons whereby
the Company would pay a maximum 1 1/2% of the total development costs of Mr.
Hammons' personally developed hotels for the opportunity to manage the hotels
upon opening and the right to purchase the hotels in the event they are offered
for sale. During fiscal year 2001 and 2000, the Company paid approximately
$487,000 and $1,455,000, respectively, of additional costs in accordance with
the management contract. These costs will be amortized over the five-year
contract period. Amortization for these costs will commence upon the opening of
the respective hotels.

         The Company has an option granted by 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 owned by the Company and three Managed Hotels are located in
Springfield, Missouri. These hotels are potentially competing with one another
for customers. The Company believes that these hotels do not significantly
compete with one another due to their respective locations and attributes.

                                       31

<PAGE>

         Mr. Hammons has a 45% ownership interest in Winegardner & Hammons, Inc.
("WHI"). All of the hotels owned by the Company (the "Owned Hotels") have
contracted with WHI to provide accounting and other administrative services. The
accounting and administrative charges expensed by the Owned Hotels were
approximately $1,574,000 in the fiscal year ended December 28, 2001. The fee may
increase if the number of hotels for which accounting and administrative
services are performed drops below 35 hotels. The accounting services contract
expires in June of 2002, but the Company plans to extend the current agreement.

         The Company leases space in the John Q. Hammons Building for its
headquarters from a Missouri company, of which Mr. Hammons is a 50% owner and
the remaining 50% is collectively held by other employees, including Jacqueline
A. Dowdy, the Secretary and a director of the General Partner, who is a 9.5%
owner. Pursuant to four lease agreements, expiring December 31, 2001, the
Company paid monthly rental payments of approximately $20,600 in 2001. The
Company made aggregate annual lease payments to the Missouri company of
approximately $247,000 in 2001. Beginning January 1, 2002, the Company extended
the four lease agreements for a term expiring December 31, 2004 under the same
terms and conditions.

         Certain of the General Partner's 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 plans to implement an appropriate cost-allocation system for 2002.

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

         The Company leases the real estate for the Company's Chateau on the
Lake Resort, opened in mid-1997, in Branson, Missouri, from Mr. Hammons. Annual
rent is based on adjusted gross revenues from room sales on the property and was
$190,000 in 2001. The lease term is 50 years, with an option to renew for an
additional 10 years. The Company also has an option to purchase the land after
March 1, 2118, at a proposed transfer price of the greater of $3,000,000 or the
current appraised value.

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

         The Company also leases the real estate for the Company's Renaissance
Suites Hotel in Charlotte, NC, which opened in December of 1999 from Tulsa Hills
Investments, Inc., an Ohio corporation, of which Mr. Hammons is a 99% owner and
Jacqueline A. Dowdy is a 1% owner. The lease term is 99 years. Aggregate annual
lease payments were $120,000 in 2001, and will be $124,800 per year for 2002
through 2006, and the greater of $124,800 or 1% of gross rooms revenues plus
0.5% of gross revenues from food and beverage sales thereafter.

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

                                       32

<PAGE>

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

         Mr. Hammons has a written agreement with Bill Mead, one of the General
Partner's regional vice-presidents to supplement Mr. Mead's salary from the
General Partner by $65,000 per year for five years, ending March 31, 2005, 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 the General Partner by up to $250,000 per
year during his employment.

                                     PART IV

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

14(a)(1)       Financial Statements

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

14(a)(2)       Financial Statement Schedules

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

14(a)(3)       Exhibits

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

   10.4     Form of Option Purchase Agreement
   10.8     Employment Agreement between the General Partner and Debra M. Shantz
            dated as of May 1, 1995, as amended on October 31, 1997 and October
            31, 2000.
   10.8a    Employment Agreement between John Q. Hammons Hotels, Inc. and Lou
            Weckstein dated as of September 17, 2001
   10.8b    Employment Agreement between John Q Hammons Hotels, Inc. and William
            A. Mead dated as of January 25, 2000
   10.8c    Letter Agreement between John Q. Hammons and William A. Mead dated
            as of January 27, 2000
   10.18    1994 Stock Option Plan of the General Partner
   10.19    1999 Non-Employer Director Stock and Stock Option Plan of the
            General Partner

14(b)  Reports on Form 8-K

     No reports on Form 8-K were filed during the quarter ended December 28,
2001.

                                       33

<PAGE>

14(c)  Exhibits

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

14(d)  Financial Statements

      Report of Independent Public Accountants

      Consolidated Balance Sheets at Fiscal 2001 and 2000 Year-Ends

      Consolidated Statements of Operations for the 2001, 2000 and 1999 Fiscal
      Years Ended

      Consolidated Statements of Changes In Equity for 2001, 2000 and 1999
      Fiscal Years Ended

      Consolidated Statements of Cash Flows for 2001, 2000 and 1999 Fiscal Years
      Ended

      Notes to Consolidated Financial Statements

                                       34

<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 27th day of March, 2002.

                                        JOHN Q. HAMMONS HOTELS, L.P.

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


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

                                        JOHN Q. HAMMONS HOTELS FINANCE
                                        CORPORATION

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

                                        JOHN Q. HAMMONS HOTELS FINANCE
                                        CORPORATION II

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

       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
in their capacities at John Q. Hammons Hotels, Inc. as general partner of John
Q. Hammons Hotels, L.P., and in the capacities indicated for John Q. Hammons
Hotels Finance Corporation, and John Q Hammons Hotels Finance Corporation II, on
March 27, 2002.

                                       35

<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       36

<PAGE>

EXHIBIT INDEX

    No.         Title
    --          -----
       *3.1     Second Amended and Restated Agreement of Limited Partnership of
                the Company (the "Partnership Agreement")
        3.2     Amendment No. 1 to Partnership Agreement (incorporated by
                reference to the Company's Annual Report on Form 10-K for the
                fiscal year ended December 30, 1994)
      **3.3     Amendment No. 2 to Partnership Agreement
    ****3.4     Certificate of Limited Partnership of the Company filed with the
                Secretary of State of the State of Delaware
       *3.5     Restated Certificate of Incorporation of the General Partner
     ***3.6     Certificate of Incorporation of John Q. Hammons Hotels Finance
                Corporation II
     **10.1     1994 Note Indenture
     **10.2     1995 Note Indenture
     **10.3     Holiday Inn License Agreement
     **10.4     Embassy Suites License Agreement
     **10.5     Form of Option Purchase Agreement
      *10.6     Collective Bargaining Agreement between East Bay Hospitality
                Industry Association, Inc. and Service Employee's International
                Union
       10.6(a)  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
      *10.7     Letter Agreement re: Hotel Financial Services for Certain Hotels
                Owned and Operated by John Q. Hammons or JQH Controlled
                Companies
       10.8     Employment Agreement between John Q. Hammons Hotels, Inc. and
                Debra M. Shantz dated as of May 1, 1995, as amended on October
                31, 1997 and October 31, 2000 (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.)
       10.8a    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.)
       10.8b    Employment Agreement between John Q. Hammons Hotels, Inc. and
                William A. Mead dated as of January 25, 2000
       10.8c    Letter Agreement between John Q. Hammons and William A. Mead
                dated as of January 27, 2000
    ***10.9a    John Q. Hammons Building Lease Agreement - 9th Floor (6000 sq.
                ft.)
        10.9a.1 Lease Renewal for John Q. Hammons Building Lease Agreement -
                9th Floor (6000 sq. ft.)  effective January 1, 2002
    ***10.9b    John Q. Hammons Building Lease Agreement - 7th Floor (2775 sq.
                ft.)
        10.9b.1 Lease Renewal for John Q. Hammons Building Lease Agreement -
                7th Floor (2775 sq. ft.) effective January 1, 2002
    ***10.9c    John Q. Hammons Building Lease Agreement - 7th Floor (2116 sq.
                ft.)
       10.9c.1  Lease Renewal for John Q. Hammons Building Lease Agreement - 7th
                Floor (2116 sq. ft.) effective January 1, 2002
    ***10.9d    John Q. Hammons Building Lease Agreement - 8th Floor (6000 sq.
                ft.)
        10.9d.1 Lease Renewal for John Q. Hammons Building Lease Agreement - 8th
                Floor (6000 sq. ft.) effective January 1, 2002
      *10.10    Triple Net Lease
      *10.11    Lease Agreement between John Q. Hammons and John Q. Hammons
                Hotels, L.P.
    ***10.14    Ground lease between John Q. Hammons and John Q. Hammons-
                Branson, L.P. - (Chateau on the Lake, Branson, Missouri)
    ***10.15    Ground lease between John Q. Hammons and John Q. Hammons-Hotels
                Two, L.P. - (Little Rock, Arkansas)
      *10.16    Operating Agreement of Rivercenter Plaza Development Co., L.C.,
                an Iowa limited liability company
      *10.17    Agreement of Limited Partnership of John Q. Hammons Hotels, L.P.
                Two

                                       37

<PAGE>

          *10.18    1994 Stock Option Plan
           10.19    1999 Non-Employee Director Stock and Stock Option Plan of
                    the General Partner (incorporated by reference to the
                    Company's Annual Report on Form 10-K for the fiscal year
                    ended January 1, 1999)
            12.1    Computations of Ratio of Earnings to Fixed Charges of the
                    Company

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

                                       38

<PAGE>










John Q. Hammons Hotels, L.P.





Consolidated Financial Statements
As of December 28, 2001 and December 29, 2000

Together with Auditors' Report








<PAGE>

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


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


We have audited the accompanying consolidated balance sheets of John Q. Hammons
Hotels, L.P. (Note 1) as of December 28, 2001 and December 29, 2000 and the
related consolidated statements of operations, changes in equity and cash flows
for each of the three fiscal years ended December 28, 2001, December 29, 2000
and December 31, 1999. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of John Q.
Hammons Hotels, L.P. (Note 1) as of December 28, 2001 and December, 29, 2000,
and the results of their operations and their cash flows for each of the three
fiscal years ended December 28, 2001, December 29, 2000 and December 31, 1999 in
conformity with accounting principles generally accepted in the United States.

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


Cincinnati, Ohio,
     February 8, 2002






<PAGE>

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


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

<TABLE>
<CAPTION>

                                                                                        December 28,        December 29,
                                                                                            2001                2000
                                                                                        ------------        ------------
<S>                                                                              <C>                    <C>
ASSETS
------

CASH AND EQUIVALENTS (Restricted cash of $882 and $715 in 2001 and 2000,
   respectively) (Note 2)                                                                 $    33,180       $     45,554

MARKETABLE SECURITIES (Note 2)                                                                 11,016              3,617

RECEIVABLES:

     Trade, less allowance for doubtful accounts of $231 in 2001 and 2000                      10,771             11,606
     Pending insurance claims and other (Note 2)                                                  824              2,438
     Management fees (Note 3)                                                                     148                101

INVENTORIES                                                                                     1,288              1,496

PREPAID EXPENSES AND OTHER                                                                      3,446              2,396
                                                                                           ----------        -----------
                  Total current assets                                                         60,673             67,208
                                                                                           ----------        -----------
     PROPERTY AND EQUIPMENT, at cost (Notes 2, 5 and 6):

     Land and improvements                                                                     61,140             58,229
     Buildings and improvements                                                               745,277            740,618
     Furniture, fixtures and equipment                                                        312,079            297,946
     Construction in progress                                                                   1,868                  -
                                                                                           ----------        -----------
                                                                                            1,120,364          1,096,793
     Less: Accumulated depreciation and amortization                                         (326,906)          (273,535)
                                                                                           ----------        -----------
                                                                                              793,458            823,258
DEFERRED FINANCING COSTS, FRANCHISE FEES
   AND OTHER, net (Notes 2, 4 and 5)                                                           27,593             30,418
                                                                                           ----------        -----------

TOTAL ASSETS                                                                               $  881,724        $   920,884
                                                                                           ==========        ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.


<PAGE>

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

Consolidated Balance Sheets
(000's omitted)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                        December 28,        December 29,
                                                                                           2001                2000
                                                                                      ---------------     ---------------

<S>                                                                                    <C>             <C>
LIABILITIES AND EQUITY
----------------------
LIABILITIES:
     Current portion of long-term debt (Note 5)                                             $  38,862          $  56,258
     Accounts payable                                                                           5,626              5,990
     Accrued expenses:
         Payroll and related benefits                                                           7,307              9,077
         Sales and property taxes                                                              11,680             11,642
         Insurance (Notes 2 and 3)                                                              2,308              2,292
         Interest                                                                              11,999             12,639
         Utilities, franchise fees and other                                                    6,152              6,747
                                                                                           ----------        -----------
                  Total current liabilities                                                    83,934            104,645

     Long-term debt (Note 5)                                                                  774,145            780,449
     Other obligations (Note 2)                                                                 2,339              2,032
                                                                                           ----------        -----------
                  Total liabilities                                                           860,418            887,126
                                                                                           ----------        -----------

COMMITMENTS AND CONTINGENCIES (Note 6)

EQUITY (Note 1):
     Contributed capital                                                                       96,436             96,436
     Partners' and other deficits, net                                                        (75,130)           (62,678)
                                                                                           ----------        -----------
                  Total equity                                                                 21,306             33,758
                                                                                           ----------        -----------

TOTAL LIABILITIES AND EQUITY                                                                 $881,724           $920,884
                                                                                           ==========        ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated balance sheets.

<PAGE>

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

Consolidated Statements of Operations
(000's omitted)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                        Fiscal Year Ended
                                                                           -----------------------------------------------
                                                                             2001                2000               1999
                                                                           --------           --------           ---------
<S>                                                                        <C>              <C>                <C>
REVENUES:

     Rooms                                                                 $266,353           $267,596            $229,807
     Food and beverage                                                      118,042            119,865             101,231
     Meeting room rental and other                                           52,263             49,113              40,646
                                                                           --------           --------           ---------
                  Total revenues                                            436,658            436,574             371,684
                                                                           --------           --------           ---------

OPERATING EXPENSES (Notes 3, 4 and 6):
     Direct operating costs and expenses:
         Rooms                                                               68,061             68,224              59,507
         Food and beverage                                                   94,690             98,398              84,035
         Other                                                                3,288              3,716               3,667
     General, administrative, sales and management service
       expenses                                                             131,522            124,393             104,876
     Repairs and maintenance                                                 17,847             17,065              15,059
     Depreciation and amortization (Note 2)                                  62,174             53,367              45,669
                                                                           --------           --------           ---------
                  Total operating expenses                                  377,582            365,163             312,813
                                                                           --------           --------           ---------

INCOME FROM OPERATIONS                                                       59,076             71,411              58,871

OTHER (INCOME) EXPENSES:
     Interest expense and amortization of deferred financing
       fees, net of $1,909, $2,798 and $3,161 of interest income
       in 2001, 2000 and 1999, respectively (Note 2)                         70,975             73,833              62,209
     Gain on sale of property and equipment                                       -                  -              (2,365)
                                                                          ---------          ---------          ----------

LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE                                                   (11,899)            (2,422)               (973)

       Extraordinary item; cost of early extinguishment of debt
         (Note 5)                                                              (474)                 -                (194)
                                                                          ---------          ---------          ----------

LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE             (12,373)            (2,422)             (1,167)

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

NET LOSS (Note 2(l))                                                      $ (12,373)        $   (2,422)         $   (2,986)
                                                                          =========         ==========          ==========

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

<PAGE>

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

Consolidated Statements of Changes in Equity (1)
(000's omitted)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                       Partners and
                                                     Contributed Capital           Other Equity (Deficit)
                                                ---------------------------      -------------------------
                                                 General            Limited       General          Limited
                                                 Partner            Partner       Partner          Partner          Total
                                                 -------            --------      --------         -------         -------
<S>                                         <C>               <C>              <C>             <C>             <C>
BALANCE, at January 1, 1999                     $96,436              $   -        $(78,588)        $27,392        $ 45,240
   Distributions (Note 1(b))                          -                  -            (150)              -            (150)
   Advances to General Partner to
     purchase Treasury Stock (Note 1(b))              -                  -          (2,997)              -          (2,997)
   Net loss                                           -                  -            (845)         (2,141)         (2,986)
                                                -------             ------        --------         -------         -------
BALANCE, at December 31, 1999                    96,436                  -         (82,580)         25,251          39,107

   Distributions (Note 1(b))                          -                  -            (150)              -            (150)
   Advances to General Partner to
     purchase Treasury Stock (Note 1(b))              -                  -          (2,777)              -          (2,777)
   Net loss                                           -                  -            (686)         (1,736)         (2,422)
                                                -------             ------        --------         -------         -------
BALANCE, at December 29, 2000                    96,436                  -         (86,193)         23,515           33,758
   Distributions (Note 1(b))                          -                  -            (150)              -            (150)
   Advances from General Partner for
     issuance of Treasury Stock (Note
     1(b))                                            -                  -              71               -              71
   Net loss                                           -                  -          (2,969)         (9,404)        (12,373)
                                                -------             ------        --------         -------         -------
BALANCE, at December 28, 2001                   $96,436              $   -        $(89,241)        $14,111         $ 21,306
                                                =======             ======        ========         =======         ========



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

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

<PAGE>

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

Consolidated Statements of Cash Flows
(000's omitted)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                       Fiscal Year Ended
                                                                        ------------------------------------------------
                                                                          2001               2000                1999
                                                                        --------           --------           ----------
<S>                                                                     <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                           $(12,373)          $ (2,422)           $ (2,986)
     Adjustments to reconcile net loss to cash provided by
       operating activities:
         Depreciation, amortization and loan cost amortization            64,496             55,718              47,655
         Extraordinary item (Note 5)                                         474                  -                 194
         Cumulative effect of change in accounting principle
           (Note 2)                                                            -                  -               1,819
         Gain on sales of property and equipment                               -                  -              (2,365)
         Non-cash director compensation                                       71                 50                  40

     Changes in certain assets and liabilities:

         Receivables                                                       2,402                (35)                 73
         Inventories                                                         208               (147)               (144)
         Prepaid expenses and other                                       (1,050)              (697)               (610)
         Accounts payable                                                   (364)            (5,887)             (1,264)
         Accrued expenses                                                 (2,951)            (2,686)                513
         Other obligations                                                   307             (7,370)             (1,481)
                                                                        --------           --------            --------
                  Net cash provided by operating activities               51,220             36,524              41,444
                                                                        --------           --------            --------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Additions to property and equipment                                 (32,101)           (43,499)           (123,620)
     Franchise fees and other, net                                          (158)            (3,450)             15,353
     Sale (purchase) of marketable securities                             (7,399)             1,365               1,551
     Proceeds from sales of property and equipment                             -                  -               6,500
                                                                        --------           --------            --------
                  Net cash used in investing activities                  (39,658)           (45,584)           (100,216)
                                                                        --------           --------            --------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from borrowings                                             48,936             24,436             104,477
     Repayments of debt                                                  (72,636)           (16,572)            (35,350)
     Advances for Treasury Stock and other                                     -             (2,827)             (3,037)
     Distributions to partners                                              (150)              (150)             (3,086)
     Loan financing fees                                                     (86)                 -                (738)
                                                                        --------           --------            --------
                  Net cash provided by (used in) financing
                    activities                                           (23,936)             4,887              62,266
                                                                        --------           --------            --------
                  Increase (decrease) in cash and equivalents            (12,374)            (4,173)              3,494

CASH AND EQUIVALENTS, beginning of period                                 45,554             49,727              46,233
                                                                        --------           --------            --------

CASH AND EQUIVALENTS, end of period                                     $ 33,180           $ 45,554            $ 49,727
                                                                        ========           ========            ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  CASH PAID FOR INTEREST, net of amounts capitalized                    $ 71,208           $ 74,552            $ 63,312
                                                                        ========           ========            ========
</TABLE>

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

<PAGE>

John Q. Hammons Hotels, L.P.

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

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

     (a)  Entity Matters--The accompanying consolidated financial statements
          --------------
          include the accounts of John Q. Hammons Hotels, L.P. and its
          wholly-owned subsidiaries (the Partnership), John Q. Hammons Hotels
          Finance Corporation, a corporation with nominal assets and no
          operations, the catering corporations, which consist of separate
          corporations for each hotel location chartered to own the respective
          food and liquor licenses as well as operate the related food and
          beverage facilities and certain wholly-owned subsidiaries which
          consist of certain hotel operations. As of fiscal year end 2001, 2000
          and 1999, the Partnership had 47, 47 and 45, respectively, hotels in
          operation of which 30 in 2001, 30 in 2000, and 29 in 1999 operate
          under the Holiday Inn and Embassy Suites trade names. The
          Partnership's hotels are located in 20 states throughout the United
          States.

          In conjunction with a public offering of debt securities in February,
          1994 and a public offering of equity securities in November, 1994 by
          John Q. Hammons Hotels, Inc., J.Q.H. Hotels, L.P., which owned and
          operated ten hotel properties, obtained through transfers or
          contributions from Mr. John Q. Hammons (Mr. Hammons) or enterprises
          which he controlled, twenty-one additional operating hotel properties,
          equity interests in two hotels under construction, the stock of the
          catering corporations and management contracts relating to all of Mr.
          Hammons' hotels. Upon consummation of these transactions J.Q.H.
          Hotels, L.P. changed its name to John Q. Hammons Hotels, L.P. and the
          allocation of income or loss was modified from 1% to its general
          partner and 99% to its limited partner to 10% and 90%, respectively,
          upon completion of the public debt offering and to 28.31% to its
          general partner and 71.69% to its limited partner upon completion of
          the public equity offering. Effective December 30, 2000, the
          Partnership redeemed 1,271,581 Partnership units held by the general
          partner for funds advanced by the Partnership to the general partner
          to repurchase 1,271,581 shares of the general partner's Class A Common
          Stock. The number of Partnership units exchanged is equivalent to the
          number of shares repurchased as outlined by the partnership agreement.
          As a result, for fiscal year 2001 the allocation percentages changed
          to approximately 24% for the general partner and approximately 76% for
          the limited partner.

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

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

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

<PAGE>

John Q. Hammons Hotels, L.P.

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

          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.

          In the event the Partnership has taxable income, distributions are to
          be made to the partners in an aggregate amount equal to the amount
          that the Partnership would have paid for income taxes had it been a C
          Corporation during the applicable period. Aggregate tax distributions
          will first be allocated to the general partner, if applicable, with
          the remainder allocated to the limited partners. There were no
          distributions to the limited partner for taxes for the fiscal year
          ended 2001 and 2000.

          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 for 2001. As of December 28, 2001, $5,703 of stock had
          been purchased, net of reissued stock. For financial reporting
          purposes, the advances by the partnership to its general partner to
          purchase stock have been reflected as a reduction of equity in the
          accompanying consolidated balance sheet and statement of changes in
          equity.

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

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

<PAGE>

John Q. Hammons Hotels, L.P.

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

          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.

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

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

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

     (b)  Marketable Securities--Marketable securities consist of
          ---------------------
          available-for-sale commercial paper and government agency obligations
          which mature or will be available for use in operations in 2002. These
          securities are valued at current market value which approximates cost.
          Realized gains and losses in 2001, 2000 and 1999, determined using the
          specific identification method, were nominal.

     (c)  Pending Insurance Claims--During fiscal 2000, the Partnership
          ------------------------
          initiated claims against certain of its construction contractors and
          its insurance carrier to recover repair costs related to moisture
          related problems at certain of its hotels. At December 29, 2000, $1.7
          million of these capital expenditures were classified as claims
          pending with insurance carrier and $2.6 million of these capital
          expenditures were classified as deferred costs as claims to be filed
          with insurance carrier as management and its outside counsel were of
          the opinion that it was remote that these amounts would not be
          realized. In December 2001, the Partnership initiated legal action to
          collect the claims submitted to the insurance carrier. The insurance
          carrier subsequently notified the Partnership that a portion of its
          claims had been denied, while others are pending review and ultimate
          resolution. Accordingly, at December 28, 2001, the Partnership has
          reflected the $8.4 million of capital expenditures to date as property
          additions and has recorded additional depreciation expense of $7.6
          million to fully reserve the net historical cost of all damaged
          property. The Partnership estimates an additional $3.6 million of
          capital expenditures will be necessary to complete repair of the
          moisture related damage. The Partnership and its legal counsel will
          continue to vigorously pursue collection of these costs and, to the
          extent recoveries are realized, they will be recorded as other income.

<PAGE>

John Q. Hammons Hotels, L.P.

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

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

          The following summarizes activity in the allowance for doubtful
          accounts on trade accounts receivable:
<TABLE>
<CAPTION>
                                                         Additions
                                            Balance,    Charged to
                                          Beginning of   Costs and                Balance,
                                            Period        Expenses  Deductions  End of Period
                                          ------------  ----------  ----------  -------------
<S>                                       <C>           <C>         <C>         <C>
          Year ended December 28, 2001       $231           $664      $(664)       $231

          Year ended December 29, 2000        226            558       (553)        231

          Year ended December 31, 1999        206            272       (252)        226
</TABLE>

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

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

          The components of deferred financing costs, franchise fees and other
          are summarized as follows:
<TABLE>
<CAPTION>
                                                                                       Fiscal Year End
                                                                                 --------------------------
                                                                                   2001              2000
                                                                                 --------          --------
<S>                                                                              <C>               <C>
          Deferred financing costs                                               $ 21,650          $ 21,732
          Franchise fees                                                            5,186             5,186
          Managed contract costs and other (Note 3(e))                              1,942             1,455
          Less- Accumulated amortization                                          (16,439)          (13,586)
                                                                                 --------          --------
                                                                                   12,339            14,787

          Deposits                                                                 14,771            12,543
          Pending insurance claims (Note 2(c))                                          -             2,600
          Restricted cash deposits, interest-bearing,
            related to sales of hotels and a component of
            replacement collateral for 1994 and 1995 First Mortgage notes             166               160
          Other, net                                                                  317               328
                                                                                 --------          --------
                                                                                 $ 27,593          $ 30,418
                                                                                 ========          ========
</TABLE>

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

<PAGE>

John Q. Hammons Hotels, L.P.

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


          method while all other property is depreciated using both
          straight-line and accelerated methods. The estimated useful lives of
          the assets are summarized as follows:
<TABLE>
<CAPTION>
                                                              Lives In Years
                                                              --------------
<S>                                                           <C>
                    Land improvements                               5-25
                    New buildings and improvements                 10-40
                    Purchased buildings                              25
                    Furniture, fixtures and equipment               3-10
</TABLE>

          Construction in progress includes refurbishment costs of certain hotel
          developments at December 28, 2001. There was no construction in
          progress at December 29, 2000.

          The Partnership periodically reviews the carrying value of these
          assets and other long-lived assets and impairment losses are
          recognized when the expected undiscounted future cash flows are less
          than the carrying amount of the asset. Based on its most recent
          analysis, the Partnership believes no impairment existed at December
          28, 2001.

          Interest costs, construction overhead and certain other carrying costs
          are capitalized during the period hotel properties are under
          construction. Interest costs capitalized were $0, $504 and $6,770 for
          the fiscal years ended 2001, 2000 and 1999, respectively. Costs
          incurred for prospective hotel projects ultimately abandoned are
          charged to operations in the period such plans are finalized. Costs of
          significant improvements are capitalized, while costs of normal
          recurring repairs and maintenance are charged to expense as incurred.

          The accompanying 2001 consolidated financial statements include the
          land costs for 35 of the operating hotel properties. Land for 9 of the
          remaining 12 operating hotel properties is leased by the Partnership
          from unrelated parties over long-term leases. Land for the remaining
          three operating hotel properties is leased by the Partnership from a
          related party over long-term leases (Note 3(f)). Rent expense for all
          land leases was $1,514, $1,489 and $1,109 for the fiscal years ended
          2001, 2000 and 1999, respectively.

     (h)  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.

     (i)  Advertising--The Partnership expenses the cost of advertising
          -----------
          associated with operating hotels as incurred. Advertising expense for
          2001, 2000 and 1999 was approximately $32,899, $31,815 and $26,834,
          respectively.

     (j)  Pensions and Other Benefits--The Partnership contractually provides
          ---------------------------
          retirement benefits for certain union employees at two of its hotel
          properties under a union-sponsored defined benefit plan and a defined
          contribution plan. Contributions to these plans, based upon the
          provisions of the respective

<PAGE>

John Q. Hammons Hotels, L.P.

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

          union contracts, approximated $99, $86 and $77 for the fiscal years
          ended 2001, 2000 and 1999, respectively.

          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 income were approximately
          $647, $506 and $258 in 2001, 2000 and 1999, respectively. The
          Partnership does not offer any other post-employment or
          post-retirement benefits to its employees.

     (k)  Self-Insurance--The Partnership was self-insured for general liability
          --------------
          and workers' compensation claims that occurred prior to November 1999
          and October 1998, respectively. The Partnership became self-insured
          for medical coverage effective January 1999. Estimated costs related
          to these self-insurance programs are accrued based on known claims and
          projected settlements of unasserted claims. Subsequent changes in,
          among others, unasserted claims, claims costs, claim frequency, as
          well as changes in actual experience, could cause these estimates to
          change. See Note 3(c) for additional insurance coverage.

          The Partnership has an $800 irrevocable stand-by letter of credit
          agreement with a bank, which was required by an insurance carrier for
          the Partnership's self-insurance programs. The letter of credit
          expires in October 2002.

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

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

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

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

<PAGE>

John Q. Hammons Hotels, L.P.

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

     (o)  Fiscal Year--The Partnership's fiscal year ends on the Friday nearest
          -----------
          December 31 which includes 52 weeks in 2001, 2000 and 1999.

          The periods ended in the accompanying consolidated financial
          statements are summarized as follows:
<TABLE>
<CAPTION>
                    Year                           Fiscal Year End
                 ----------                       -----------------
<S>                                               <C>
                    2001                          December 28, 2001
                    2000                          December 29, 2000
                    1999                          December 31, 1999
</TABLE>

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

     (q)  Reclassifications--Certain prior years' amounts have been reclassified
          -----------------
          to conform with the 2001 presentation.

     (r)  Derivative Financial Instruments--In the fourth quarter of fiscal
          --------------------------------
          2000, the Partnership adopted the Statement of Financial Accounting
          Standards No. 133, Accounting for Derivative Instruments and Hedging
          Activities (SFAS No. 133), which requires companies to recognize all
          derivatives as either assets or liabilities in the statement of
          financial position and measure those instruments at fair value.
          Adoption of this standard did not have a material impact on its
          reported financial position, results of operations, cash flows or
          related disclosures. See additional disclosures in Note 7.

     (s)  Accounting Pronouncements-- In April 1998, the American Institute of
          -------------------------
          Certified Public Accountants issued Statement of Position 98-5,
          "Reporting on the Costs of Start-Up Activities" (SOP 98-5), which
          requires costs of start-up activities, including preopening expenses,
          to be expensed as incurred. Prior to January 1, 1999, the
          Partnership's practice was to defer these expenses until a hotel had
          commenced operations, at which time the costs, other than advertising
          costs which were expensed upon opening, were amortized over a one-year
          period. The Partnership adopted the provisions of this statement in
          the first quarter of fiscal 1999 and, as a result, cumulative
          unamortized preopening costs of approximately $1,800 were charged to
          expense. Preopening expenses in 1999 approximated $4,161 and are
          included in general, administrative, sales and management service
          expenses in the accompanying consolidated statement of operations.

          In June 2001, the FASB issued Financial Accounting Standards Statement
          No. 142, "Goodwill and Other Intangible Assets", which addresses how
          intangible assets that are acquired individually, or with a group of
          other assets, should be accounted for in financial statements upon
          their acquisition. This statement also addresses how goodwill and
          other intangible assets should be accounted for after they have been
          initially recognized in the financial statements. The provisions of
          this statement are required to be applied starting with fiscal years
          beginning after December 15, 2001. The Company does not anticipate the
          adoption of this statement to have a significant impact on its
          consolidated financial position, results of operations, cash flows or
          related disclosures.

          In October 2001, the Financial Accounting Standards Board issued
          Statement No. 144 "Accounting for the Impairment or Disposal of
          Long-Lived Assets". This statement addresses financial accounting for
          the impairment or disposal of long-lived assets and requires that one
          accounting model

<PAGE>

John Q. Hammons Hotels, L.P.

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

          be used for long-lived assets to be disposed of by sale and broadens
          the presentation of discontinued operations to include more disposal
          transactions. This standard is required to be adopted for the fiscal
          years beginning after December 15, 2001. As such, the Company is not
          required to adopt this standard until the fiscal year 2002. Management
          does not believe that the adoption of this standard will have a
          material impact on the financial position of the Company.

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

     (a)  Hotel Management Fees--In addition to managing the hotel properties
          ---------------------
          included in the accompanying consolidated financial statements, the
          Partnership provides similar services for other hotel properties owned
          or controlled by Mr. Hammons which included 9, 6 and 5 properties at
          December 28, 2001, December 29, 2000 and December 31, 1999,
          respectively. A management fee of approximately 3% to 5% of gross
          revenues (as defined) is paid to the Partnership by these hotels which
          aggregated approximately $1,684, $1,245 and $844 for the fiscal years
          ended 2001, 2000 and 1999, respectively.

     (b)  Accounting and Administrative Services--The hotels have contracted for
          --------------------------------------
          accounting and other administrative services with Winegardner &
          Hammons, Inc. (WHI), a company related by common ownership. The
          accounting and administrative charges expensed by the hotel
          properties, included in administrative expenses, were approximately
          $1,574, $1,577 and $1,440 for the fiscal years ended 2001, 2000 and
          1999, respectively.

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

     (c)  Insurance Coverage--To supplement the Partnership's self-insurance
          ------------------
          programs, umbrella, property, auto, commercial liability, workers'
          compensation and, commencing in 1999, medical insurance is provided to
          the hotel properties under blanket commercial policies purchased by
          John Q. Hammons Hotels, Inc. or WHI, covering hotel properties owned
          by the Partnership, Mr. Hammons, or managed by WHI. Generally,
          premiums allocated to each hotel property are based upon factors
          similar to those used by the insurance provider to compute the
          aggregate group policy premium. Insurance expense for the properties
          included in operating expenses was approximately $7,341, $3,578 and
          $1,088 for the fiscal years ended 2001, 2000 and 1999, respectively.
          During fiscal 2000 and 1999, the Partnership realized continued
          favorable trends in insurance expense as a result of claims
          experience, rate improvements and favorable buyouts of several prior
          self-insured years.

     (d)  Allocation of Common Costs--The Partnership incurs certain hotel
          --------------------------
          management expenses incidental to the operations of all hotels
          beneficially owned or controlled by Mr. Hammons. These costs
          principally include the compensation and related benefits of certain
          senior hotel executives. Commencing in May of 1993, these costs were
          allocated by the Partnership to hotels not included in the
          accompanying statements, based on the respective number of rooms of
          all hotels owned or controlled by Mr. Hammons. These costs
          approximated $328, $184 and $132 for the fiscal years ended 2001, 2000
          and 1999, respectively. Management considers these allocations to be
          reasonable.

<PAGE>

John Q. Hammons Hotels, L.P.


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

     e)   Transactions with Partners and Directors--Advances to Mr. Hammons
          ----------------------------------------

          as of December 28, 2001 approximated $368, which were repaid
          subsequent to year end. There were no advances to JQH as of December
          29, 2000.

          During 2000, the Partnership's Board of Directors authorized the
          Partnership to enter into a five-year management contract with Mr.
          Hammons whereby the Partnership would pay a maximum 1 1/2% of the
          total development cost of Mr. Hammon's personally developed hotels for
          the opportunity to manage the hotels upon opening and the right to
          purchase the hotels in the event they are offered for sale. During
          fiscal 2001 and 2000, the Partnership paid $487 and $1,455,
          respectively, of additional costs in accordance with the management
          contract. These costs will be amortized over the five-year contract
          period. Amortization for these costs will commence upon the opening of
          the respective hotels. The hotel management fee received by the
          Company from these hotels is discussed in Note 3(a) above.

          During 2001 and 2000, John Q. Hammons personally paid $128 and $49,
          respectively, to certain employees pursuant to the agreements.

     (f)  Summary of Related Party Expenses--The following summarizes
          ---------------------------------
          expenses reported as a result of activities with related parties:
<TABLE>
<CAPTION>
          Fiscal Year Ending                                                   2001           2000             1999
          ------------------                                                  -------        ------          -------
 <S>                                                                          <C>           <C>                <C>
          Expenses included within general, administrative, sales and
           management service expenses:
             Accounting and administrative                                     $1,574        $1,577           $1,440
             Rental expenses (Note 6)                                             937           830              787
                                                                               ------        ------           ------
                                                                               $2,511        $2,407           $2,227
                                                                               ======        ======           ======


          Allocated insurance expense from the pooled coverage included within
           various operating categories:

             Insurance other than medical                                      $7,341        $3,578           $1,088
                                                                               ======        ======           ======
           Medical, net of employee payments                                   $4,105        $3,404           $3,167
                                                                               ======        ======           ======
 </TABLE>
(4)  Franchise Agreements-
     --------------------

     As of December 28, 2001 and December 29, 2000, 42 of the 47 operating hotel
     properties included in the accompanying consolidated balance sheets have
     franchise agreements with national hotel chains which require each hotel to
     remit to the franchisor monthly fees equal to approximately 3% to 6%
     percent of gross room revenues, as defined. Franchise fees expensed under
     these contracts were $10,496, $10,305 and $8,478 for the fiscal years ended
     2001, 2000 and 1999, respectively.

     As part of the franchise agreements, each hotel also pays additional
     advertising, reservation and maintenance fees to the franchisor which range
     from 1% to 3.5% of gross room revenues, as defined. The amount of expense
     related to these fees included in the consolidated statements of operations
     as a


<PAGE>

John Q. Hammons Hotels, L.P.


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

     component of sales expenses was approximately $8,975, $9,021 and $7,720 for
     the fiscal years ended 2001, 2000 and 1999, respectively.

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

     The components of long-term debt are summarized as follows:
<TABLE>
<CAPTION>
                                                                                            Fiscal Year End
                                                                                       ----------------------------
                                                                                          2001              2000
                                                                                       -----------       -----------
<S>                                                                                    <C>               <C>

      1994 First Mortgage Notes, interest at 8.875%, interest only payable
         February 15 and August 15, principal due February 15, 2004, secured by
         a first mortgage lien on the original 20 hotel properties (or
         applicable replacement collateral) and additional capital contributions
         of up to $150 million by Mr. Hammons and an entity under his control.
         (Note 1(b))                                                                     $294,775          $300,000

      1995 First Mortgage Notes, interest at 9.75%, interest only payable April
         1 and October 1, principal due October 1, 2005, secured by a first
         mortgage lien on the original six hotel properties (or applicable
         replacement collateral), a second mortgage lien on the original two
         hotel properties and additional capital contributions of up to $45
         million by Mr. Hammons.  (Note 1(b))                                              79,293            90,000

      Development bonds, interest rates at 7.125%, payable in scheduled
         installments through August 2015, certain of the obligations are
         subject to optional acceleration by the bondholders, secured by certain
         hotel facilities, fixtures and an assignment of rents.                            12,881            13,439

      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 through April 2027, secured by certain hotel
        facilities, fixtures and an assignment of rents, with certain
        instruments subject to cross-collateralization provisions and with
        respect to approximately $280,909 and $285,706 for 2001 and 2000,
        respectively, of mortgage notes, a personal guarantee of JQH.                     303,237           308,793

      Mortgage notes payable to banks, variable interest rates at LIBOR plus
         2.25% to prime plus 0.50% payable in scheduled installments through
         February 2008, with a certain instrument subject to a ceiling and a
         floor, also with a certain instrument subject to an interest rate swap
         agreement (Note 7), secured by certain hotel facilities, fixtures and
         an assignment of rents, and with respect to approximately $115,874 and
         $117,184 for 2001 and 2000, respectively, of mortgage notes, a personal
         guarantee of JQH.                                                                115,874           117,370

      Other notes payable, interest at 8.125%, payable in scheduled installments
         through March 2003, secured by certain hotel improvements, furniture,
         fixtures and related equipment.                                                    6,947             7,105
                                                                                         --------           -------


</TABLE>

<PAGE>

John Q. Hammons Hotels, L.P.


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

                                              Fiscal Year End
                                        ---------------------------

                                            2001              2000
                                        -----------       ---------

                                          813,007           836,707
      Less- current portion               (38,862)          (56,258)
                                        -----------       ----------

                                         $774,145          $780,449
                                        ===========       ==========

     The indenture agreements relating to the 1994 and 1995 First Mortgage Notes
     include certain covenants which, among others, limit the ability of the
     Partnership and its restricted subsidiaries (as defined) to make
     distributions, incur debt and issue preferred equity interests, engage in
     certain transactions with its partners, stockholders or affiliates, incur
     certain liens, engage in mergers or consolidations and requires certain
     interest coverage ratios, as defined. In addition, certain of the other
     credit agreements include subjective acceleration clauses and limit, among
     others, the incurrence of certain liens and additional indebtedness and
     require the achievement or maintenance of certain financial covenants. The
     1994 and 1995 First Mortgage Notes and certain other obligations include
     scheduled prepayment penalties in the event the obligations are paid prior
     to their scheduled maturity.

     The Partnership paid or refinanced approximately $63,268, $9,701 and
     $28,000 of long-term debt in 2001, 2000 and 1999, respectively. In
     connection with these transactions, the Partnership incurred approximately
     $474, $0 and $200, respectively, in charges related to the early
     extingushment of debt. These debt extinguishment charges have been
     reflected in the accompanying consolidated statements of operations as
     extraordinary items.

     Scheduled maturities of long-term debt as of December 28, 2001 are
     summarized as follows:

                      Fiscal Year Ending                  Amount
            -----------------------------------------------------------
              2002                                         $  38,862
              2003                                            84,852
              2004                                           349,589
              2005                                            87,879
              2006                                            18,775
              Thereafter                                     233,050
                                                           ----------
                                                            $813,007
                                                           ==========

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

     (a)  Operating Leases--The hotel properties lease certain equipment and
          ----------------
          land from unrelated parties under various lease arrangements. In
          addition, the Partnership leases certain parking spaces at one hotel
          for the use of its patrons and is billed by the lessor based on actual
          usage. Rent expense for these non-related party leases was
          approximately $3,114, $3,311 and $3,350 for the fiscal years ended
          2001, 2000 and 1999, respectively, which has been included in general,
          administrative, sales and management service expenses.

<PAGE>

John Q. Hammons Hotels, L.P.


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


          The Partnership operates two trade centers located in Joplin,
          Missouri, and Portland, Oregon. Both of the facilities in which these
          trade centers operate are owned by Mr. Hammons. The lease agreement
          for the Joplin trade center stipulates nominal rentals for each of the
          fiscal years ended 2001, 2000 and 1999 and for each ensuing year
          through 2014. The lease agreement for the Portland facility extends
          through 2004 and requires minimum annual rents of $300 to Mr. Hammons.
          In addition, the Partnership leases office space in Springfield,
          Missouri, from a partnership (of which Mr. Hammons is a partner).
          Annual payments for 2001 were approximately $247. Beginning January 1,
          2002, the Partnership extended the leases for the home office for a
          term expiring December 31, 2004 for approximately $250 per year. The
          Partnership has also entered into land leases with Mr. Hammons for
          three operating hotel properties. Subject to the Partnership
          exercising purchase options provided under these agreements, these
          leases extend through 2008, 2036 and 2045, respectively, and require
          aggregate minimum annual payments of approximately $390. Rent expense
          for these related party leases was approximately $937, $890 and $787
          for the fiscal years ended 2001, 2000 and 1999, respectively.

          The minimum annual rental commitments for noncancellable operating
          leases at December 28, 2001 are as follows:

              Fiscal Year
                Ending         Mr. Hammons             Other            Total
             -----------       -----------         -----------        ---------
                2002            $     943           $  1,679         $  2,622
                2003                  943                968            1,911
                2004                  948                734            1,682
                2005                  395                605            1,000
                2006                  395                495              890
             Thereafter             9,945             38,321           48,266
                                  -------            -------          -------
                                  $13,569            $42,802          $56,371
                                  =======            =======          =======

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

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

(7)  Financial Instruments with Off-Balance-Sheet Risk-
     -------------------------------------------------

     During 2001, the Partnership has entered into an interest rate swap
     agreement in order to manage its interest rate risk on a long-term bank
     borrowing approximating $27,665 discussed in Note 5. The initial notional
     amount under the swap agreement was also $27,665. This notional amount is
     scheduled to decline over the life of the swap agreement consistent with
     the scheduled maturities of long-term debt. The swap agreement is scheduled
     to expire in October 2003 concurrent with maturing of debt. The notional
     amount of this

<PAGE>

John Q. Hammons Hotels, L.P.


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

     agreement was $27,610 at December 28, 2001. The fixed interest rate
     (Partnership pay rate) per the agreement is 5.5%. The floating interest
     rate for the agreement (Partnership receive rate) is a variable rate tied
     to LIBOR plus 2.25% (4.4% at December 28, 2001).

(8)  Fair Value of Financial Instruments-
     -----------------------------------

     The fair values of marketable securities and long-term debt approximate
     their respective historical carrying amounts except with respect to the
     1994 and 1995 First Mortgage Notes for which the aggregate fair market
     value was approximately $376,000 and $353,000 at December 28, 2001 and
     December 29, 2000, respectively. The fair value of the First Mortgage Notes
     issued is estimated by obtaining quotes from brokers.


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

     Subsequent to December 28, 2001, the Partnership has agreed to issue
     approximately 12,000 general partner units to the Company with the proceeds
     from the issuance of the Company's Common Stock to the board of directors.
     The number of general partner units to be issued is equivalent to the
     number of shares issued as outlined by the partnership agreement. Had the
     units been issued in fiscal 2001, the effect would not have had a material
     impact on the net loss.