<PAGE>
--------------------------------------------------------------------------------
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-Q
 
(MARK ONE)
 
  /X/    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934
 
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
 
                                       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 1-13719
 
                            ------------------------
 
                            PROMUS HOTEL CORPORATION
 
             (Exact name of registrant as specified in its charter)
 
                  DELAWARE                        I.R.S. NO. 62-1716020
          (State of Incorporation)           (I.R.S. Employer Identification
                                                          No.)
 
                               755 CROSSOVER LANE
                         MEMPHIS, TENNESSEE 38117-4900
               (Address of principal executive offices)(Zip Code)
                                 (901) 374-5000
              (Registrant's telephone number, including area code)
 
                            ------------------------
 
    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /
 
    Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of June 30, 1998.
 
<TABLE>
<S>                                                  <C>
                                                           87,312,780
Common Stock.......................................            shares
</TABLE>
 
                                  Page 1 of 24
                             Exhibit Index Page 23
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                         PART I--FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
    The accompanying unaudited consolidated condensed financial statements of
Promus Hotel Corporation (Promus or the Company), incorporated in the state of
Delaware, have been prepared in accordance with the instructions to Form 10-Q,
and therefore do not include all information and notes necessary for complete
financial statements in conformity with generally accepted accounting
principles. The results for the periods indicated are unaudited, but reflect all
adjustments (consisting only of normal recurring adjustments) which management
considers necessary for a fair presentation of operating results. Results of
operations for interim periods are not necessarily indicative of a full year of
operations. These unaudited consolidated condensed financial statements should
be read in conjunction with Promus' consolidated financial statements and notes
thereto included in the Company's 1997 Annual Report to Stockholders.
 
                                       2
<PAGE>
                            PROMUS HOTEL CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,    JUNE 30,
                                                                                           1997          1998
                                                                                       ------------  ------------
<S>                                                                                    <C>           <C>
ASSETS
Cash and cash equivalents............................................................   $   24,066   $     11,405
Accounts receivable, net.............................................................       78,941         91,950
Other................................................................................       43,222         24,979
                                                                                       ------------  ------------
  Total current assets...............................................................      146,229        128,334
                                                                                       ------------  ------------
Property and equipment, net..........................................................      960,231      1,078,464
Investments..........................................................................      250,688        247,374
Management and franchise contracts, net..............................................      440,568        435,130
Goodwill, net........................................................................      374,500        397,718
Notes receivable.....................................................................       89,452         68,400
Investment in franchise system.......................................................       50,421         53,208
Deferred costs and other assets......................................................       66,957         49,063
                                                                                       ------------  ------------
                                                                                        $2,379,046   $  2,457,691
                                                                                       ------------  ------------
                                                                                       ------------  ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses................................................   $  220,924   $    187,479
Current portion of notes payable.....................................................       46,020          1,382
                                                                                       ------------  ------------
  Total current liabilities..........................................................      266,944        188,861
                                                                                       ------------  ------------
Deferred income taxes................................................................      264,859        279,580
Notes payable........................................................................      671,978        693,647
Other long-term obligations..........................................................       79,530         72,808
                                                                                       ------------  ------------
                                                                                         1,283,311      1,234,896
                                                                                       ------------  ------------
Commitments and contingencies
Stockholders' equity:
  Common stock, $0.01 par value. Authorized 500,000,000 shares; 86,118,141 and
    87,312,780 shares issued and outstanding.........................................          861            873
  Additional paid-in capital.........................................................      856,008        896,344
  Unearned employee compensation.....................................................          (70)           (35)
  Retained earnings..................................................................      225,335        313,540
  Accumulated other comprehensive income.............................................       13,601         12,073
                                                                                       ------------  ------------
                                                                                         1,095,735      1,222,795
                                                                                       ------------  ------------
                                                                                        $2,379,046   $  2,457,691
                                                                                       ------------  ------------
                                                                                       ------------  ------------
 
        The accompanying notes are an integral part of these consolidated condensed financial statements.
</TABLE>
 
                                       3
<PAGE>
                            PROMUS HOTEL CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED     SIX MONTHS ENDED
                                                                             JUNE 30,              JUNE 30,
                                                                       --------------------  ---------------------
<S>                                                                    <C>        <C>        <C>        <C>
                                                                         1997       1998       1997        1998
                                                                       ---------  ---------  ---------  ----------
Revenues:
  Franchise and management fees......................................  $  49,477  $  59,088  $  90,294  $  108,432
  Owned hotel revenues...............................................     97,860    102,010    188,389     193,591
  Leased hotel revenues..............................................    107,881    109,187    202,714     207,666
  Purchasing and service fees........................................      3,760      6,198      7,059      11,288
  Other fees and income..............................................      1,087     14,244     31,095      24,293
                                                                       ---------  ---------  ---------  ----------
    Total revenues...................................................    260,065    290,727    519,551     545,270
                                                                       ---------  ---------  ---------  ----------
Operating costs and expenses:
  General and administrative expenses................................     19,501     20,059     42,568      38,594
  Owned hotel expenses...............................................     58,063     62,071    114,689     119,737
  Leased hotel expenses..............................................     94,195     94,810    180,891     184,069
  Depreciation and amortization......................................     18,185     19,357     36,461      38,537
                                                                       ---------  ---------  ---------  ----------
    Total operating costs and expenses...............................    189,944    196,297    374,609     380,937
                                                                       ---------  ---------  ---------  ----------
Operating income.....................................................     70,121     94,430    144,942     164,333
 
  Interest and dividend income.......................................      5,484      5,007     11,372      10,625
  Interest expense, net..............................................    (18,235)   (14,923)   (36,656)    (30,228)
  Gain on sale of real estate and securities.........................     21,056      2,289     23,164       2,285
                                                                       ---------  ---------  ---------  ----------
Income before income taxes and minority interest.....................     78,426     86,803    142,822     147,015
  Minority interest share of net income..............................       (790)      (824)    (1,446)     (1,703)
                                                                       ---------  ---------  ---------  ----------
Income before income taxes...........................................     77,636     85,979    141,376     145,312
  Income tax expense.................................................    (30,260)   (33,790)   (55,098)    (57,107)
                                                                       ---------  ---------  ---------  ----------
Net income...........................................................  $  47,376  $  52,189  $  86,278  $   88,205
                                                                       ---------  ---------  ---------  ----------
                                                                       ---------  ---------  ---------  ----------
Net income per share
    Basic............................................................  $    0.55  $    0.60  $    0.99  $     1.02
                                                                       ---------  ---------  ---------  ----------
                                                                       ---------  ---------  ---------  ----------
    Diluted..........................................................  $    0.54  $    0.59  $    0.98  $     1.00
                                                                       ---------  ---------  ---------  ----------
                                                                       ---------  ---------  ---------  ----------
 
  The accompanying notes are an integral part of these consolidated condensed financial statements.
</TABLE>
 
                                       4
<PAGE>
                            PROMUS HOTEL CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                                               SIX MONTHS ENDED
                                                                                                   JUNE 30,
                                                                                             ---------------------
<S>                                                                                          <C>        <C>
                                                                                               1997        1998
                                                                                             ---------  ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.................................................................................  $  86,278  $   88,205
  Adjustments to reconcile net income to net cash provided by operations:
    Payment of business combination expenses...............................................         --     (36,817)
    Depreciation and amortization..........................................................     36,461      38,537
    Other non-cash expenses................................................................      8,298      (1,012)
    Equity in earnings of nonconsolidated affiliates.......................................     (6,430)    (10,098)
    (Gain) loss on sale of investments in partnerships and affiliates......................      1,117      (1,565)
    Gain on sale of real estate and securities.............................................    (23,164)     (2,285)
  Changes in assets and liabilities:
    Increase in accounts receivable, net...................................................    (11,443)    (16,916)
    Decrease in other current assets.......................................................        997      12,969
    Increase in accounts payable and accrued expenses......................................      2,554      22,059
    Increase in deferred costs and other assets............................................     (1,550)     (4,701)
    Increase in other long-term obligations and deferred income taxes......................      1,351         946
                                                                                             ---------  ----------
      NET CASH PROVIDED BY OPERATING ACTIVITIES............................................     94,469      89,322
                                                                                             ---------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment....................................................    (36,346)    (93,531)
    Purchase of Harrison Conference Associates.............................................         --     (61,150)
    Purchase of Red Lion Hotels, Inc.......................................................    (15,888)         --
    Proceeds from sale of investments......................................................     55,004       4,548
    Proceeds from the sale of property and equipment.......................................         --       1,664
    Investments in and advances to partnerships and affiliates.............................    (20,746)    (19,659)
    Distributions from partnerships and affiliates.........................................      3,660      20,540
    Net investment in management and franchise contracts...................................      1,323         449
    Escrow deposits used for development...................................................         --      20,537
    Loans to owners of managed and franchised hotels.......................................    (10,425)    (10,663)
    Collections of loans to owners of managed and franchised hotels........................      8,107      31,493
    Net investment in franchise system.....................................................     (5,452)     (3,008)
    Other..................................................................................     (1,273)       (643)
                                                                                             ---------  ----------
      NET CASH USED IN INVESTING ACTIVITIES................................................    (22,036)   (109,423)
                                                                                             ---------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from exercise of common stock options.........................................      2,138      30,442
    Purchases of treasury stock............................................................    (23,761)         --
    Net activity under revolving credit facilities.........................................    (37,900)    (21,125)
    Principal payments on notes payable....................................................    (13,878)     (1,877)
    Other..................................................................................          1          --
                                                                                             ---------  ----------
      NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES..................................    (73,400)      7,440
                                                                                             ---------  ----------
Net decrease in cash and cash equivalents..................................................       (967)    (12,661)
Cash and cash equivalents, beginning of period.............................................     29,288      24,066
                                                                                             ---------  ----------
Cash and cash equivalents, end of period...................................................  $  28,321  $   11,405
                                                                                             ---------  ----------
                                                                                             ---------  ----------
 
        The accompanying notes are an integral part of these consolidated condensed financial statements.
</TABLE>
 
                                       5
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                                 JUNE 30, 1998
 
                                  (UNAUDITED)
 
NOTE 1--BASIS OF PRESENTATION
 
    On December 19, 1997, Doubletree Corporation (Doubletree) and Promus Hotel
Corporation (PHC) merged in accordance with the Agreement and Plan of Merger
(the Merger Agreement or the Merger) by and among Doubletree, PHC and Parent
Holding Corp., a newly-formed corporation jointly owned by Doubletree and PHC.
This transaction was accounted for as a pooling-of-interests and, accordingly,
the accompanying consolidated financial statements have been restated to combine
the historical results of both Doubletree and PHC for all periods presented.
Concurrent with consummation of the Merger, PHC was renamed Promus Operating
Company, Inc. and Parent Holding Corp. was renamed Promus Hotel Corporation.
Promus Hotel Corporation and subsidiaries are collectively referred to herein as
Promus or the Company.
 
    The accompanying consolidated financial statements include the accounts of
the Company and its majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated. The preparation of financial
statements in accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and the disclosure of contingent
assets and liabilities. While management endeavors to make accurate estimates,
actual results could differ from these estimates. Certain financial statement
items from prior years have been reclassified to achieve consistency in
presentation between Doubletree and PHC.
 
    During the first quarter of 1998, Promus adopted the provisions of Statement
of Financial Accounting Standard No. 130, "Reporting Comprehensive Income." The
standard requires that entities include within their financial statements
information on comprehensive income, which is defined as all activity impacting
equity from non-owner sources. For Promus, adjustments to derive comprehensive
income are comprised exclusively of changes in unrealized gains, net of gains
realized, on its investments in common stock. Comprehensive income, net of tax,
for the six months ended June 30, 1997 and 1998 was $1,010,000 and $(565,000),
respectively.
 
NOTE 2--NATURE OF OPERATIONS
 
    Through its wholly-owned subsidiaries, Promus franchises and manages hotels
with the following brands: Club Hotels by Doubletree, Doubletree Hotels,
Doubletree Guest Suites, Embassy Suites, Hampton Inn, Hampton Inn & Suites and
Homewood Suites. Promus may also own all or a portion of these hotels or lease
these hotels from others. In addition, Promus leases and manages hotels that are
not Promus-branded. At June 30, 1998, Promus franchises 932 hotels and operates
343 hotels, of which 59 hotels are wholly-owned, 22 are partially-owned through
joint ventures, 82 are leased from third parties and 180 are managed for third
parties. These hotels are located in all 50 states, the District of Columbia,
Puerto Rico, the U.S. Virgin Islands and six foreign countries. The Company also
operates and licenses vacation interval ownership systems under the Embassy
Vacation Resort and Hampton Vacation Resort names.
 
    Promus' primary focus is to develop, grow and support its franchise and
management business. Promus' primary sources of revenues are from the operations
of owned and leased hotels, franchise royalty fees and management fees. Promus
charges franchisees a royalty fee of up to four percent of room revenues.
Management fees are based on a percentage of the managed hotels' gross revenues,
operating profits, cash flow, or a combination thereof. Generally, the Company
is also reimbursed for certain costs associated with providing central
reservations, sales, marketing, accounting, data processing, internal audit and
employee training services to hotels.
 
                                       6
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                                 JUNE 30, 1998
 
                                  (UNAUDITED)
 
NOTE 3--BUSINESS COMBINATIONS
 
DOUBLETREE/PROMUS MERGER
 
    The Company was formed on December 19, 1997, as a result of the Merger of
Doubletree and PHC. As a result of the Merger Agreement, (i) Doubletree and PHC
became wholly-owned subsidiaries of Promus; (ii) each outstanding share of
common stock of Doubletree was converted into one share of common stock of
Promus; and (iii) each outstanding share of PHC common stock was converted into
0.925 of a share of common stock of Promus. The Merger qualified as a tax free
exchange and was accounted for as a pooling-of-interests. Historical financial
results of Doubletree and PHC have been combined for all periods presented.
 
    The results of operations for the separate companies and the pro forma
combined results presented in the accompanying consolidated financial statements
are as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                             (UNAUDITED)        (UNAUDITED)
                                                         THREE MONTHS ENDED   SIX MONTHS ENDED
                                                            JUNE 30, 1997      JUNE 30, 1997
                                                         -------------------  ----------------
<S>                                                      <C>                  <C>
Revenues:
  Doubletree...........................................      $   191,239         $  374,419
  PHC..................................................           68,826            145,132
                                                                --------           --------
  Combined.............................................      $   260,065         $  519,551
                                                                --------           --------
                                                                --------           --------
Net Income:
  Doubletree...........................................      $    18,436         $   33,618
  PHC..................................................           28,940             52,660
                                                                --------           --------
  Combined.............................................      $    47,376         $   86,278
                                                                --------           --------
                                                                --------           --------
</TABLE>
 
    In connection with the Merger, the Company recorded a $115.0 million
provision for business combination expenses in December 1997. At June 30, 1998,
$29.0 million of this provision remained and was classified within current
liabilities.
 
ACQUISITION OF HARRISON CONFERENCE ASSOCIATES, INC.
 
    In January 1998, the Company acquired Harrison Conference Associates, Inc.
(Harrison) for approximately $61.2 million cash, including acquisition costs, in
a transaction accounted for as a purchase. Harrison is a leading conference
center operator with over 1,200 rooms under management, including two owned and
seven managed properties.
 
NOTE 4--INVESTMENTS
 
    Investments consist of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                     DECEMBER 31,   JUNE 30,
                                                                         1997         1998
                                                                     ------------  ----------
<S>                                                                  <C>           <C>
Hotel partnerships.................................................   $  168,884   $  167,720
Investments in common stock (at market)............................       63,304       61,154
Convertible preferred stock........................................       18,500       18,500
                                                                     ------------  ----------
                                                                      $  250,688   $  247,374
                                                                     ------------  ----------
                                                                     ------------  ----------
</TABLE>
 
                                       7
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                                 JUNE 30, 1998
 
                                  (UNAUDITED)
 
NOTE 4--INVESTMENTS (CONTINUED)
    The Company's non-controlling general and/or limited partnership interests
in hotel partnerships range from less than 1.0% to 50.0%. Investments in common
stock are carried at market value. Promus' cost of these investments at June 30,
1998 was approximately $40.9 million.
 
NOTE 5--NOTES PAYABLE
 
    Promus' indebtedness consists of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                     DECEMBER 31,   JUNE 30,
                                                                         1997         1998
                                                                     ------------  ----------
<S>                                                                  <C>           <C>
Promus Facility....................................................   $  607,050   $  584,650
Mortgages, LIBOR plus 1.5%-8.0%, maturities through 2005...........       85,037       84,475
Convertible rate term loan.........................................       20,000       20,000
Notes payable and other unsecured debt, 8.4%-13.0%, maturities
  through 2022.....................................................        5,911        5,904
                                                                     ------------  ----------
                                                                         717,998      695,029
Current portion of notes payable...................................      (46,020)      (1,382)
                                                                     ------------  ----------
                                                                      $  671,978   $  693,647
                                                                     ------------  ----------
                                                                     ------------  ----------
</TABLE>
 
    Subsequent to June 30, 1998, a consolidated joint venture of the Company
refinanced its debt. At June 30, 1998 and at December 31, 1997 the debt
outstanding was $45 million and was included in the current portion of notes
payable at December 31, 1997.
 
DERIVATIVE FINANCIAL INSTRUMENTS
 
    In order to manage its interest rate sensitivity, Promus maintains several
interest rate swap agreements which serve to convert a portion of the Promus
Facility from a floating to a fixed rate. At June 30, 1998, the fair value of
Promus' swap agreements, which Promus would have been required to pay to
terminate them, was approximately $2.8 million.
 
NOTE 6--EARNINGS PER SHARE
 
    The following table reflects Promus' weighted average common shares
outstanding and the impact of its dilutive common share equivalents (in
thousands):
 
<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED     SIX MONTHS ENDED
                                                                           JUNE 30,              JUNE 30,
                                                                     --------------------  --------------------
<S>                                                                  <C>        <C>        <C>        <C>
                                                                       1997       1998       1997       1998
                                                                     ---------  ---------  ---------  ---------
Basic weighted average shares outstanding..........................     86,916     87,202     86,992     86,773
Effect of dilutive securities:
  Restricted stock.................................................          8         --          7         --
  Stock options and warrants.......................................      1,301        935      1,280      1,057
                                                                     ---------  ---------  ---------  ---------
Diluted weighted average shares outstanding........................     88,225     88,137     88,279     87,830
                                                                     ---------  ---------  ---------  ---------
                                                                     ---------  ---------  ---------  ---------
</TABLE>
 
                                       8
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                                 JUNE 30, 1998
 
                                  (UNAUDITED)
 
NOTE 6--EARNINGS PER SHARE (CONTINUED)
    Options to purchase approximately 15,950 and 117,654 shares of common stock
were outstanding at June 30, 1997 and 1998, respectively, but were not included
in the above computations of diluted weighted average outstanding shares because
the options' exercise prices were greater than the average market price of the
common shares.
 
NOTE 7--STOCK OPTIONS
 
    The 1997 Equity Participation Plan (the Plan) allows options to be granted
to key personnel to purchase shares of the Company's stock at a price not less
than the current market price at the date of grant. The options vest annually
and ratably over a four year period from the date of grant and expire ten years
after the grant date. An aggregate of 10,000,000 shares have been authorized for
issuance under the Plan. In addition, shares existing prior to the Merger under
Doubletree and PHC's former plans were converted into options under the Plan.
These converted options were issued with identical remaining terms and
conditions, except such options were immediately vested, in accordance with the
terms of the prior plans. The Plan also provides for the issuance of stock
appreciation rights, restricted stock or other awards. As of June 30, 1998,
approximately 7,615,000 options were outstanding under the Plan.
 
NOTE 8--SUPPLEMENTAL CASH FLOW INFORMATION
 
    Cash paid for interest, net of interest capitalized, amounted to $30.8
million and $23.1 million for the six months ended June 30, 1997 and 1998,
respectively. Cash paid for income taxes, net of refunds received, amounted to
$47.8 million and $12.4 million for the six months ended June 30, 1997 and 1998,
respectively.
 
NOTE 9--RFS HOTEL INVESTORS, INC. LEASES
 
    In April 1998, RFS Hotel Investors, Inc. (RFS REIT), the lessor of 56 hotels
to the Company, announced that they had entered into an agreement in which
Equity Inns, Inc. would acquire RFS REIT. In connection with this proposed
transaction, RFS REIT has informed the Company that they intend to terminate the
Company's leasehold interests. The lease agreement requires, in the event of a
termination, that the Company receive a termination payment based on the fair
market value of the remaining term of the leases (approximately 12 years). This
payment is expected to be at least $95.0 million. In 1997, 47.1% and 49.1% of
leased hotel revenues and leased hotel expenses, respectively, were realized
from leasing hotels from RFS REIT. These leases contributed approximately 5.9%
of the Company's 1997 operating income. The transaction, if consummated and the
leases terminated, is not expected to have a material impact on earnings after
considering the reinvestment of the proceeds.
 
                                       9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
    On December 19, 1997, Doubletree Corporation (Doubletree) and Promus Hotel
Corporation (PHC) merged in a transaction that qualified as a tax free exchange
and was accounted for as a pooling-of-interests; accordingly, the accompanying
consolidated financial statements and financial information contained herein
have been restated to combine the historical results of both Doubletree and PHC
for all periods presented.
 
    As of June 30, 1998, the Promus hotel system contained 1,275 hotels,
representing over 186,000 hotel rooms, in all 50 states, the District of
Columbia, Puerto Rico, the U.S. Virgin Islands and six foreign countries. Promus
brands include some of America's premier hotel products, including Club Hotels
by Doubletree, Doubletree Hotels, Doubletree Guest Suites, Embassy Suites,
Hampton Inn, Hampton Inn & Suites and Homewood Suites. The Promus system also
includes certain properties that are not Promus-branded.
 
    Of these 1,275 hotels, 932 are owned and operated by franchisees, and 343
are operated by the Company. Depending on the hotel brand, Promus charges each
franchisee royalty fees of up to four percent of suite or room revenues in
exchange for the use of one of its brand names and franchise-related services.
Company operated properties include 59 wholly-owned hotels, 82 leased hotels, 22
hotels partially-owned through joint ventures and 180 hotels managed for third
parties. As a manager of hotels, Promus is typically responsible for supervising
or operating the hotel in exchange for fees based on a percentage of the hotel's
gross revenues, operating profits, cash flow, or a combination thereof. The
Company's results of operations for owned and leased hotels reflect the revenues
and expenses of these hotel operations.
 
    Promus also licenses eight vacation interval ownership properties under the
Embassy Vacation Resort and Hampton Vacation Resort brand names, for which the
Company earns franchise fees on net interval sales and on revenues related to
the rental of interval units. Promus also earns management fees for its role as
manager of some of the vacation resort properties.
 
    Promus' primary focus is to grow its franchise and management businesses,
while limiting its ownership of real estate. The Company owns a mix of
Promus-brand hotels that can enhance its role as manager and franchisor for its
brands, but periodically sells hotels as opportunities arise to realize a
hotel's appreciated value.
 
RESULTS OF OPERATIONS
 
    The principal factors which affect Promus' results are: continued growth in
the number of system hotels; occupancy and room rates achieved by hotels; the
relative mix of owned, leased, managed and franchised hotels; and Promus'
ability to manage costs. The number of rooms at franchised and managed
properties and revenue per available room (RevPAR) significantly affect Promus'
results because franchise royalty and management fees are generally based upon a
percentage of room revenues. Increases in franchise royalty and management fee
revenues have a favorable impact on Promus' operating margin due to minimal
incremental costs associated with this type of revenue.
 
                                       10
<PAGE>
    Though its revenues come from various sources, nearly all components of
Promus' revenues are favorably impacted by system-wide increases in RevPAR. On a
comparable hotel basis, RevPAR increases were as follows:
 
                REVENUE PER AVAILABLE ROOM COMPARABLE HOTELS (a)
 
<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED JUNE 30,           SIX MONTHS ENDED JUNE 30,
                                       -----------------------------------  -----------------------------------
<S>                                    <C>        <C>        <C>            <C>        <C>        <C>
                                         1997       1998       INCREASE       1997       1998       INCREASE
                                       ---------  ---------  -------------  ---------  ---------  -------------
Doubletree Hotels....................  $   79.15  $   83.80          5.9%   $   77.16  $   82.76          7.4%
Red Lion hotels converted to
  Doubletree Hotels (b)..............      66.54      68.32          2.7%       63.21      63.72          0.8%
Embassy Suites.......................      88.88      93.00          4.6%       86.56      90.84          4.9%
Hampton Inn..........................      49.00      51.10          4.3%       45.30      47.25          4.3%
Hampton Inn & Suites.................      59.70      65.38          9.5%       55.80      61.05          9.4%
Homewood Suites......................      73.52      78.07          6.2%       71.69      75.70          5.6%
Other hotels (c).....................      63.31      64.35          1.6%       58.06      60.25          3.8%
</TABLE>
 
------------------------
 
(a) Revenue statistics are for comparable hotels, and include information only
    for those hotels in the system as of June 30, 1998 and managed or franchised
    by PHC or managed by Doubletree since April 1, 1997 for the second quarter
    results and January 1, 1997 for the six months results. Doubletree
    franchised hotels are not included in the statistical information.
 
(b) Include results for the 4 Red Lion hotels converted to the Doubletree brand
    on April 1, 1997 and the 36 Red Lion hotels converted to the Doubletree
    brand on July 1, 1997.
 
(c) Includes results for the 15 Red Lion hotels that have not been converted to
    the Doubletree brand as well as the results for comparable hotels managed
    under other franchisors' brands or as independent hotels.
 
THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1997
 
    Second quarter 1998 revenues increased 11.8%, or $30.6 million, to $290.7
million compared to second quarter 1997 revenues of $260.1 million.
 
    Revenues from franchise and management fees increased $9.6 million, or
19.4%, for the second quarter 1998 as compared with the second quarter of 1997.
The increase was due to growth in the number of franchised and managed
properties as well as improved performance at existing franchised and managed
properties. Since June 1997 the Company has added 174 franchise and management
contracts (net of terminations). New contracts represented 53.3% of the second
quarter 1998 increase in franchise and management fees. Incentive management
fees increased 13.8% in the second quarter of 1998 compared to the second
quarter of 1997 to approximately $8.1 million.
 
    Owned hotel revenues for the second quarter increased 4.2%, or $4.1 million,
from the second quarter of 1997. Revenues from newly opened or acquired hotels,
including the Harrison Conference Associates, Inc. (Harrison) hotels, and higher
revenues from comparable hotels, were substantially offset by the effects of
1997 hotel sales. Owned hotel expenses increased by 6.9%, or $4.0 million in the
second quarter of 1998 as compared to 1997, and operating margins decreased to
39.2% for the three month period ended June 30, 1998 from 40.7% for the same
period in 1997.
 
    Leased hotel revenues increased $1.3 million, or 1.2%, for the second
quarter of 1998 over the second quarter of 1997, due to property performance
improvements and the impact of a full year of operations for 1997 additions.
Leased hotel expenses increased 0.7% in the second quarter of 1998 compared to
the second quarter of 1997, also primarily due to the increase in the number of
leased properties. The
 
                                       11
<PAGE>
operating margin on leased hotels increased to 13.2% in the quarter ended June
30, 1998 from 12.7% for the same period in 1997.
 
    Purchasing and service fees increased 64.8%, or $2.4 million for the three
months ended June 30, 1998, over the same period in 1997. The increase is due to
an increase in the number of preferred vendor programs, whereby the Company
earns an administrative fee as opposed to purchasing and reselling goods,
combined with improvements related to the integration of existing purchasing
programs. Revenues are also increasing as Promus makes its preferred vendor
programs available to all system hotels.
 
    Other fees and income increased $13.2 million in the 1998 second quarter as
compared with the same period in 1997. Included in the quarters ended June 30,
1998 and 1997 are certain unusual items. In the second quarter of 1998, the
Company realized gains of $1.3 million on the sale of excess joint venture land.
During the second quarter of 1997, the Company realized an $8.9 million loss
related to the sale of 19 joint venture hotels. Excluding these unusual items,
other fees and income for the quarter ended June 30, 1998 compared to the
quarter ended June 30, 1997 would have increased $2.9 million or 28.9%,
primarily due to an increase in earnings from unconsolidated joint ventures.
 
    General and administrative expenses in the 1998 second quarter include $0.3
million related to Harrison. Excluding the effect of Harrison, general and
administrative expenses increased $0.3 million, or 1.5%, in the second quarter
of 1998 over the second quarter of 1997. The Company expects to realize annual
savings of $15.0 to $20.0 million in general and administrative costs after the
integration of Doubletree and PHC is complete. Depreciation and amortization
increased 6.4%, or $1.2 million, in the quarter ended June 30, 1998 compared to
the same period in 1997, due primarily to the acquisition of Harrison in early
January 1998.
 
    Interest and dividend income decreased $0.5 million or 8.7%, for the second
quarter of 1998 compared to the second quarter of 1997, due to lower dividend
income resulting from the 1997 sales of portions of the Company's common stock
investments. Interest expense decreased $3.3 million or 18.2% in 1998 as
compared to 1997, due to lower overall borrowing costs and a decrease in the
amount of borrowings. The Company's current interest rate is more favorable than
Doubletree and PHC's borrowing rates prior to the Merger.
 
    Operating results for the second quarter of 1998 reflect an overall tax rate
of 39.3%, compared with an overall rate of 39.0% for the 1997 period. Minority
interest share of net income reflects the profits allocable to third party
owners of consolidated joint venture hotels, and remained consistent between the
six month periods.
 
    Net income and earnings per diluted share for the quarter ended June 30,
1998 were $52.2 million and $0.59, respectively, compared to $47.4 million and
$0.54, respectively for 1997. Comparison of these operating results is difficult
due to the inclusion in the second quarters of 1998 and 1997 of certain unusual
items. Included in second quarter 1998 results were a realized gain of $1.3
million on the sale of excess joint venture land, a $1.0 million gain on the
sale of securities, and $1.3 million of previously deferred gains on the sale of
hotels. Unusual items for the second quarter of 1997 include an $11.9 million
gain on the sale of two hotels, a gain of $9.1 million on the sale of
securities, and an $8.9 million loss on the sale of 19 joint venture hotels.
Excluding these items, net income and earnings per diluted share for the second
quarter of 1998 and 1997 would have been $50.0 million and $0.57 and $40.0
million and $0.45, respectively.
 
SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997
 
    Revenues for the first six months of 1998 increased 5.0%, or $25.7 million
over the same period in 1997, to $545.3 million.
 
    Revenues from franchise and management fees increased $18.1 million, or
20.1% for the first half of 1998 as compared to the first half of 1997. The
increase was due to growth in the number of franchised and
 
                                       12
<PAGE>
managed properties as well as improved performance at existing franchised and
managed properties. Since June 1997 the Company has added 174 franchise and
management contracts (net of terminations). New contracts represented 54.2% of
the year-over-year increase in franchise and management fees. Incentive
management fees increased 24.6% for the first half of 1998 over the same period
in 1997 to approximately $15.4 million.
 
    Owned hotel revenues increased 2.8%, or $5.2 million for the first six
months of 1998 compared to the first six months of 1997. Revenues from newly
opened or acquired hotels, including the Harrison Conference Associates, Inc.
(Harrison) hotels, and higher revenues from comparable hotels, were
substantially offset by the effects of 1997 hotel sales. Owned hotel expenses
increased by 4.4%, or $5.0 million for the six months ended June 30, 1998 as
compared to the same period in 1997, and caused operating margins to decrease
slightly to 38.1% for the first half of 1998 from 39.1% for the same period in
1997.
 
    Leased hotel revenues increased $4.9 million, or 2.4% for the first half of
1998 when compared to the same period in 1997, due to property performance
improvements and the impact of a full year of operations for 1997 additions.
Leased hotel expenses increased 1.8% in 1998 on a year-to-year comparison with
1997, also primarily due to the increase in the number of leased properties. The
operating margin on leased hotels increased to 11.4% for the six months ended
June 30, 1998 from 10.8% for the same period in 1997.
 
    Purchasing and service fees increased 59.9%, or $4.2 million for the six
months ended June 30, 1998 over the same period in 1997. The increase is due to
an increase in the number of preferred vendor programs, whereby the Company
earns an administrative fee as opposed to purchasing and reselling goods,
combined with improvements related to the integration of existing purchasing
programs. Revenues are also increasing as Promus makes its preferred vendor
programs available to all system hotels.
 
    Other fees and income decreased $6.8 million, or 21.9% in the first half of
1998 compared to the same period in 1997. Included in the six months ended June
30, 1998 and 1997 are certain unusual items. In the first half of 1998, the
Company realized gains of $1.3 million on the sale of excess joint venture land.
During the first half of 1997, the Company realized a break-up fee of $10.9
million (net of expenses) resulting from the terminated Renaissance transaction,
a net gain of $1.9 million from the sale of 21 joint venture hotels and the
Company's management rights for a planned hotel in Atlantic City. Excluding
these unusual items, other fees and income on a year-to-year comparison
increased $4.7 million or 25.7%, primarily due to an increase in earnings from
unconsolidated joint ventures.
 
    General and administrative expenses decreased $4.0 million, or 9.3%, in the
first six months of 1998. The first six months of 1997 included a $5.5 million
charge related to the establishment of certain long-term executive compensation
programs. Excluding this charge, general and administrative expenses increased
$1.5 million, of which $0.6 million relates to Harrison. The Company expects to
realize annual savings of $15.0 to $20.0 million in general and administrative
costs after the integration of Doubletree and PHC is complete. Depreciation and
amortization increased 5.7%, or $2.1 million, in the first half of 1998, due
primarily to the acquisition of Harrison in early January 1998.
 
    Interest and dividend income decreased $0.7 million or 6.6%, in the 1998 six
month period, primarily due to lower dividend income resulting from sales during
1997 of portions of the Company's common stock investments. Interest expense
decreased $6.4 million or 17.5% in 1998 as compared to 1997, primarily due to
lower overall borrowing costs and a decrease in the amount of borrowings. The
Company's current interest rate is more favorable than Doubletree and PHC's
borrowing rates prior to the Merger.
 
    Operating results for the first six months of 1998 reflect an overall tax
rate of 39.3%, compared with an overall rate of 39.0% for the 1997 period.
Minority interest share of net income reflects the profits allocable to third
party owners of consolidated joint venture hotels, and remained consistent
between the six month periods.
 
                                       13
<PAGE>
    Net income and earnings per diluted share for the six months ended June 30,
1998, were $88.2 million and $1.00, respectively compared to $86.3 million and
$0.98, respectively for 1997. Comparison of these operating results is difficult
due to the inclusion in 1998 and 1997 of certain unusual items. Unusual items
included in the operating results for the first six months of 1998 are a
realized gain of $1.3 million on the sale of excess joint venture land, a $1.0
million gain on the sale of securities, and $1.3 million of previously deferred
gains on the sale of hotels. Unusual items for 1997 include the $10.9 million
breakup fee received in connection with the terminated Renaissance Hotel Group
transaction, gains of $11.9 million on the sale of two hotels, gains of $1.9
million on the sale of 21 joint venture hotels and Promus' management rights for
a hotel under development, gains of $11.2 million on the sale of securities, and
$5.5 million of expenses for the establishment of long-term compensation plans.
Excluding these items, net income and earnings per diluted share for 1998 and
1997 would have been $86.0 million and $0.98 and $67.7 million and $0.77,
respectively.
 
OVERALL
 
    The Company's operating income, excluding the effect of unusual items,
increased 17.8% to $93.1 million for the second quarter of 1998 from $79.1
million for the same period in 1997. Promus' operating income, excluding the
effect of unusual items, increased 18.5% to $163.0 million in the first half of
1998 from $137.6 million in 1997. Though increases in operating income are in
part due to revenue growth, growth has also come from the changing mix of
Promus' business. Due to the size and strength of Promus' infrastructure and
systems, openings of additional franchised or managed properties require fewer
incremental costs, and the growth which has occurred in Promus' franchise and
management portfolio over the past several years has served to improve overall
operating profitability.
 
                                       14
<PAGE>
                                  DEVELOPMENT
 
HOTELS
 
    Promus is an industry leader in hotel development. In the first six months
of 1998, the Company added 76 net hotels and 7,454 net rooms to its hotel
system, compared to the addition of 85 net hotels and 9,589 net rooms during the
first six months of 1997. Net room additions, by brand, are as follows:
<TABLE>
<CAPTION>
                                                                               NET ROOMS ADDED
                                                                  ------------------------------------------
<S>                                                               <C>        <C>        <C>        <C>
                                                                     QUARTER ENDED        SIX MONTHS ENDED
                                                                        JUNE 30,              JUNE 30,
                                                                  --------------------  --------------------
 
<CAPTION>
                                                                    1997       1998       1997       1998
                                                                  ---------  ---------  ---------  ---------
<S>                                                               <C>        <C>        <C>        <C>
Doubletree Hotels (a)...........................................     11,643       (580)    14,636        (93)
Hampton Inn.....................................................      2,723      3,208      5,788      5,223
Hampton Inn & Suites............................................         19        960        654      1,440
Embassy Suites..................................................       (384)      (358)       163       (158)
Homewood Suites.................................................        449        940        540      1,739
Other (a).......................................................    (10,509)      (254)   (12,192)      (697)
                                                                  ---------  ---------  ---------  ---------
                                                                      3,941      3,916      9,589      7,454
                                                                  ---------  ---------  ---------  ---------
                                                                  ---------  ---------  ---------  ---------
</TABLE>
 
------------------------
 
(a) Reflects the conversion of 40 Red Lion Hotels to Doubletree full-service
    hotels.
 
    Hampton Inn continued to lead the Company's unit growth, with 36 franchised
properties added during the quarter and 54 added in the first half. Promus will
continue growing the Hampton Inn brand as demand from franchisees and guests
remains strong, but the pace of Hampton Inn approvals has declined slightly, in
part because of the supply growth over the past several years in Hampton Inn's
mid-price market segment. Doubletree lost a net of 93 rooms during the first six
months of 1998, due to management's decision to terminate two franchised
properties and the loss of three franchised properties due to changes in
ownership, this was offset by the addition of five new franchise and management
contracts. The greatest percentage growth occurred within the Homewood Suites
and Hampton Inn & Suites brands, which added 1,739 rooms and 1,440 rooms,
respectively, during the first six months of 1998, representing 33.0% and 41.7%
increases in these brands' total rooms.
 
    During the first six months of 1997, Doubletree added 52 new hotels
containing 14,636 rooms. Forty of these additions, containing 11,957 rooms,
resulted from the conversion of Red Lion hotels to the Doubletree brand (these
conversions also account for the decrease in other rooms).
 
    Promus' pipeline as of June 30, 1998 contained 354 properties that were
either in the design or construction phase, as follows:
 
<TABLE>
<CAPTION>
                                                                               UNDER
                                                                           CONSTRUCTION/        IN
                                                                            CONVERSION        DESIGN        TOTAL
                                                                         -----------------  -----------     -----
<S>                                                                      <C>                <C>          <C>
Hampton Inn............................................................             93             108          201
Homewood Suites........................................................             16              20           36
Hampton Inn & Suites...................................................             18              32           50
Embassy Suites.........................................................              9              21           30
Doubletree Hotels and Guest Suites.....................................              6              12           18
Club Hotels by Doubletree..............................................              4              12           16
Other..................................................................              3              --            3
                                                                                   ---             ---          ---
                                                                                   149             205          354
                                                                                   ---             ---          ---
                                                                                   ---             ---          ---
</TABLE>
 
                                       15
<PAGE>
    The 354 properties in the development pipeline represent almost 45,000
rooms. Twenty-eight of the properties within the pipeline are being developed by
the Company to be sold to strategic alliance partners or for operation as
Company owned hotels; the remainder are being developed by franchisees.
 
    Promus plans to actively pursue development opportunities for all its
brands. This development is expected to come through both the ground-up
construction of new hotels discussed above and the acquisition of management
contracts and/or existing hotels. In addition, Promus is assessing the market
position of individual properties/markets, and could consider repositioning some
hotels by rebranding existing properties or acquiring or selling selected
properties.
 
STRATEGIC ALLIANCES AND ACQUISITIONS
 
    On May 1, 1998, Promus announced an agreement with FelCor under which Promus
will manage five Embassy Suites hotels and one Doubletree hotel that were
purchased by FelCor. These hotels, all of which were previously franchised
properties, will operate under 20-year license agreements and 10-year management
contracts. Under the terms of this agreement, Promus has guaranteed payment of
12.5% of the first year's rent to the lessee in order to capitalize the lessee
for REIT purposes.
 
    In January 1998, Promus announced its acquisition of Harrison Conference
Associates, Inc. (Harrison) for $61.2 million in cash, including acquisition
costs. Harrison is a leading conference center operator with over 1,200 rooms
under management, including two owned and seven managed properties.
 
VACATION RESORTS
 
    The Company has two licensed Promus Vacation Resort (PVR) products: Embassy
Vacation Resorts and Hampton Vacation Resorts. PVR statistics are as follows:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,    JUNE 30,
                                                                       1997          1998
                                                                   -------------  -----------
<S>                                                                <C>            <C>
Total vacation resorts open......................................            6             8
Total available timeshare units..................................        1,046         1,234
Total available timeshare intervals..............................       53,346        62,934
Total timeshare intervals sold*..................................       10,304        14,950
</TABLE>
 
------------------------
 
*   Includes presold intervals for resorts under construction
 
    PVR also manages a non-branded resort property in Miami, Florida.
 
OTHER
 
    In addition to ground-up development of hotels, strategic alliances with
others, and incentives provided to hotel owners as a means of obtaining
franchise and management contracts, the Company pursues other means of system
growth, including strategic hotel acquisitions. The hotel industry is in an
intense period of consolidation, which is expected to continue for several more
years. Promus is well positioned to take advantage of these unique market
conditions and may, from time to time, pursue attractive opportunities as they
arise.
 
CAPITAL SPENDING
 
    The Company expects to spend between $250.0 million and $300.0 million
during 1998, excluding the Harrison purchase, to fund hotel and resort
development, refurbish existing facilities, support its hotel management and
business systems, loan funds to hotel owners, invest in joint ventures and
pursue other corporate related projects. If the Company identifies other
significant acquisition and/or investment opportunities, 1998 capital spending
could increase from these planned levels. In order to maintain Promus' quality
standards, ongoing refurbishment of existing company owned and leased hotel
properties
 
                                       16
<PAGE>
will continue in 1998 with estimated annual expenditures of approximately $40.0
million. Promus' capital expenditures, including the Harrison purchase, totaled
$185.4 million for the six months ended June 30, 1998.
 
    Cash necessary to finance projects currently identified, as well as
additional projects to be pursued by Promus, will be made available from
operating cash flows, the revolving credit facility, joint venture partners,
specific project financing, sales of existing hotel assets and/or investments
and, if necessary, Promus debt and/or equity offerings.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    Operating cash flow decreased $5.1 million in the first six months of 1998
from 1997 levels. This decrease is primarily due to the payment of $36.8 million
of business combination expenses in the current year, partially offset by higher
income before unusual items. Net income in the 1997 period included $11.9
million in nonoperating pre-tax gains from property sales, along with $18.5
million in other pre-tax income, which was of a nonrecurring nature.
 
    Cash flows used in investing activities increased in 1998 from 1997 levels,
due to the 1998 $61.2 million purchase of Harrison and the acquisition of two
Homewood Suites hotels for $17.9 million, partially offset by higher
distributions from partnerships and affiliates, the release of escrow deposits,
and repayments of loans to hotel owners.
 
    Financing activities served as a net source of cash during 1998 as a result
of proceeds from the exercise of stock options partially offset by the net
repayment of borrowings.
 
    On June 30, 1998, the Company had a working capital deficit of $60.5
million, compared to a $120.7 million deficit that existed at December 31, 1997.
 
    The Company's cash management program uses all excess cash to pay down
amounts outstanding under the Promus Facility. Promus does not believe that the
current ratio is an appropriate measure of its short-term liquidity without
considering the aggregate availability of its capital resources. Promus believes
that these resources, consisting of strong operating cash flow, available
borrowings under the Promus Facility, and Promus' ability to obtain additional
financing through various financial markets, are sufficient to meet its
liquidity needs.
 
YEAR 2000
 
    With the approach of the year 2000, there has been concern over the impact
of this event on computer systems worldwide. Promus has assessed the impact of
the year 2000 on its business, and does not believe this event will materially
or adversely affect its future operations, financial results or financial
position.
 
RECENTLY ISSUED ACCOUNTING STANDARDS
 
    In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognize
all derivatives either as assets or liabilities in the statement of financial
position and measure those instruments at fair value.
 
    SFAS No. 133 allows an entity to designate a derivative instrument, if
certain conditions are met, as one of the following three types: 1) a Fair Value
Hedge, which is a hedge of the exposure to changes in the fair value of a
recognized asset or liability, or of an unrecognized firm commitment, 2) a Cash
Flow Hedge, which is a hedge of the exposure to variability in the cash flow of
a recognized asset or liability, or of a forecasted transaction, or 3) a Foreign
Currency Hedge, which is a hedge of the foreign currency exposure
 
                                       17
<PAGE>
of an unrecognized firm commitment, an available-for-sale security, a forecasted
transaction, or a net investment in a foreign operation. The accounting for
changes in the fair value of a derivative (that is, gains and losses) depends on
the intended use of the derivative and the resulting designation. The Company's
derivatives at June 30, 1998 would be considered as Cash Flow Hedges.
 
    SFAS No. 133 amends SFAS No. 52, "Foreign Currency Translation", SFAS No.
80, "Accounting for Futures Contracts", SFAS No. 105, "Disclosure of Information
about Financial Instruments with Off-Balance Sheet Risk and Financial
Instruments with Concentrations of Credit Risk" and SFAS No. 119, "Disclosure
about Derivative Financial Instruments and Fair Value of Financial Instruments."
This Statement is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. Earlier application is encouraged, but the Statement should
not be applied retroactively to financial statements of prior periods. The
adoption of SFAS No. 133 is not anticipated to have a material impact on the
financial position or results of operations of the Company.
 
                           FORWARD LOOKING STATEMENTS
 
    The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward looking statements. Certain information included in this
document and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contains statements based on management's beliefs and assumptions, which are
based on information currently available to management. Forward looking
statements include information relating to, and may be impacted by changes in,
the following activities, among others: (A) operations of existing hotel
properties, including the effects of competition and customer demand, which can
impact future performance; (B) changes in the size of Promus' hotel system,
including anticipated scope and opening dates of new developments and planned
future capital spending; (C) relationships with third parties, including
franchisees, lessors, hotel owners, lenders and others; (D) litigation or other
judicial actions; (E) changes in the economy; and (F) adverse changes in
interest rates for both Promus and its franchisees and business partners. These
activities involve important factors, some of which are beyond Promus' ability
to control and predict, that could cause actual results to differ materially
from those expressed in any forward looking statements made by or on behalf of
the Company. Any forward looking statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 and, as such, speak only as of the date
made.
 
                                       18
<PAGE>
                             PERFORMANCE STATISTICS
 
<TABLE>
<CAPTION>
                                                       NUMBER OF HOTELS                       NUMBER OF ROOMS
                                                     --------------------                   --------------------
                                                           JUNE 30,                               JUNE 30,
                                                     --------------------     INCREASE      --------------------   INCREASE
                                                       1997       1998       (DECREASE)       1997       1998     (DECREASE)
                                                     ---------  ---------  ---------------  ---------  ---------  -----------
<S>                                                  <C>        <C>        <C>              <C>        <C>        <C>
Doubletree Hotels
  Company owned....................................         16         16            --         4,749      4,748          (1)
  Leased...........................................         18         18            --         4,756      4,809          53
  Joint venture (a)................................          3          3            --           812        812          --
  Management contract..............................         83         86             3        23,589     24,268         679
  Franchised.......................................         42         46             4         9,426     10,082         656
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                           162        169             7        43,332     44,719       1,387
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                     ---------  ---------           ---     ---------  ---------  -----------
Embassy Suites
  Company owned....................................          7          6            (1)        1,566      1,366        (200)
  Joint venture (a)................................         21         19            (2)        5,470      4,946        (524)
  Management contract..............................         48         58            10        11,592     14,268       2,676
  Franchised.......................................         60         59            (1)       14,182     13,353        (829)
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                           136        142             6        32,810     33,933       1,123
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                     ---------  ---------           ---     ---------  ---------  -----------
Hampton Inn
  Company owned....................................         12         11            (1)        1,654      1,506        (148)
  Leased...........................................         19         19            --         2,359      2,359          --
  Joint venture (a)................................         19         --           (19)        2,376         --      (2,376)
  Management contract..............................          6          7             1           738        929         191
  Franchised.......................................        623        743           120        66,199     78,016      11,817
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                           679        780           101        73,326     82,810       9,484
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                     ---------  ---------           ---     ---------  ---------  -----------
Hampton Inn & Suites
  Management contract..............................          2          2            --           203        287          84
  Franchised.......................................         21         40            19         2,297      4,607       2,310
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                            23         42            19         2,500      4,894       2,394
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                     ---------  ---------           ---     ---------  ---------  -----------
Homewood Suites
  Company owned....................................          8         16             8           891      1,828         937
  Management contract..............................          4          6             2           471        677         206
  Franchised.......................................         31         44            13         3,077      4,497       1,420
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                            43         66            23         4,439      7,002       2,563
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                     ---------  ---------           ---     ---------  ---------  -----------
Other Hotels
  Company owned....................................          7         10             3         1,039      1,620         581
  Leased...........................................         49         45            (4)        7,293      6,848        (445)
  Management contract..............................         18         21             3         4,515      4,430         (85)
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                            74         76             2        12,847     12,898          51
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                     ---------  ---------           ---     ---------  ---------  -----------
Total System
  Company owned....................................         50         59             9         9,899     11,068       1,169
  Leased...........................................         86         82            (4)       14,408     14,016        (392)
  Joint venture (a)................................         43         22           (21)        8,658      5,758      (2,900)
  Management contract..............................        161        180            19        41,108     44,859       3,751
  Franchised.......................................        777        932           155        95,181    110,555      15,374
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                         1,117      1,275           158       169,254    186,256      17,002
                                                     ---------  ---------           ---     ---------  ---------  -----------
                                                     ---------  ---------           ---     ---------  ---------  -----------
</TABLE>
 
------------------------
 
(a) For statistical purposes only, the Company classifies unconsolidated joint
    ventures in which it holds less than a 20% interest as management contracts
    and consolidated joint ventures in which it owns more than a 50% interest as
    Company owned.
 
                                       19
<PAGE>
<TABLE>
<CAPTION>
                                                              MANAGED              FRANCHISED              TOTAL
                                                        --------------------  --------------------  --------------------
                                                              JUNE 30,              JUNE 30,              JUNE 30,
                                                        --------------------  --------------------  --------------------
                                                          1997       1998       1997       1998       1997       1998
                                                        ---------  ---------  ---------  ---------  ---------  ---------
<S>                                                     <C>        <C>        <C>        <C>        <C>        <C>
Promus Vacation Resorts (a)
  Resort properties...................................          2          5          2          3          4          8
  Timeshare units.....................................        188        360        405        874        593      1,234
  Timeshare intervals available.......................      9,588     18,360     20,655     44,574     30,243     62,934
  Timeshare intervals sold (b)........................      3,789      8,673      2,712      6,277      6,501     14,950
 
<CAPTION>
 
                                                         INCREASE
                                                        -----------
<S>                                                     <C>
Promus Vacation Resorts (a)
  Resort properties...................................           4
  Timeshare units.....................................         641
  Timeshare intervals available.......................      32,691
  Timeshare intervals sold (b)........................       8,449
</TABLE>
 
------------------------
 
(a) 1997 statistics do not include 40 nonbranded resort units managed by Promus.
 
(b) Includes presales for resorts under construction but not yet open.
 
<TABLE>
<CAPTION>
                      
                                                      SECOND QUARTER ENDED JUNE 30, (a)      SIX MONTHS ENDED JUNE 30, (a)
                                                      --------------------------------     --------------------------------
                                                       1997       1998        CHANGE        1997       1998        CHANGE
                                                      -------    -------    ----------     -------    -------    ----------
<S>                                                   <C>        <C>        <C>            <C>        <C>        <C>
Doubletree Hotels
  Occupancy.......................................       75.6%      74.6%       (1.0) pts     73.1%      73.0%       (0.1) pts
  ADR.............................................    $ 104.74   $ 112.38        7.3%      $ 105.53   $ 113.46        7.5%
  RevPAR..........................................    $  79.15   $  83.80        5.9%      $  77.16   $  82.76        7.4%
 
Red Lion Hotels converted to
Doubletree Hotels (b)
  Occupancy.......................................       73.6%      74.1%        0.5pts       69.3%      69.3%       --pts
  ADR.............................................    $  90.40   $  92.25        2.0%      $  89.94   $  91.99        2.3%
  RevPAR..........................................    $  66.54   $  68.32        2.7%      $  63.21   $  63.72        0.8%
 
Embassy Suites
  Occupancy.......................................       78.5%      77.3%       (1.2) pts     76.1%      75.1%       (1.0) pts
  ADR.............................................    $ 113.22   $ 120.32        6.3%      $ 113.75   $ 121.00        6.4%
  RevPAR..........................................    $  88.88   $  93.00        4.6%      $  86.56   $  90.84        4.9%
 
Hampton Inn
  Occupancy.......................................       76.2%      75.8%       (0.4) pts     71.6%      71.1%       (0.5) pts
  ADR.............................................    $  64.30   $  67.40        4.8%      $  63.30   $  66.44        5.0%
  RevPAR..........................................    $  49.00   $  51.10        4.3%      $  45.30   $  47.25        4.3%
 
Hampton Inn & Suites
  Occupancy.......................................       74.5%      78.0%        3.5pts       71.5%      74.4%        2.9
  ADR.............................................    $  80.10   $  83.77        4.6%      $  78.02   $  82.08        5.2%
  RevPAR..........................................    $  59.70   $  65.38        9.5%      $  55.80   $  61.05        9.4%
 
Homewood Suites
  Occupancy.......................................       79.8%      80.2%        0.4pts       77.3%      77.3%       --pts
  ADR.............................................    $  92.16   $  97.34        5.6%      $  92.80   $  97.97        5.6%
  RevPAR..........................................    $  73.52   $  78.07        6.2%      $  71.69   $  75.70        5.6%
 
Other Hotels (c)
  Occupancy.......................................       77.7%      73.6%       (4.1) pts     72.5%      70.4%       (2.1) pts
  ADR.............................................    $  81.46   $  87.42        7.3%      $  80.11   $  85.86        7.2%
  RevPAR..........................................    $  63.31   $  64.35        1.6%      $  58.06   $  60.25        3.8%
</TABLE>
 
------------------------
 
(a) Revenue statistics are for comparable hotels, and include information only
    for those hotels in the system as of June 30, 1998 and managed or franchised
    by PHC or managed by Doubletree since April 1, 1997 for the second quarter
    results and January 1, 1997 for the six months results. Doubletree
    franchised hotels are not included in the statistical information.
 
(b) Includes results for the 4 Red Lion hotels converted to the Doubletree brand
    on April 1, 1997 and the 36 Red Lion hotels converted to the Doubletree
    brand on July 1, 1997.
 
(c) Includes results for the 15 Red Lion hotels that have not been converted to
    the Doubletree brand as well as the results for comparable hotels managed
    under other franchisors' brands or as independent hotels.
 
                                       20
<PAGE>
                           ITEM 5. OTHER INFORMATION
 
MANAGEMENT ANNOUNCEMENT
 
    On August 4, 1998, the Company issued a press release announcing certain
anticipated changes in the composition of the Board of Directors and the
executive management of the Company. On August 5, 1998, the Company filed a
Current Report on Form 8-K containing the press release with the Securities and
Exchange Commission.
 
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
 
    Any stockholder who meets the requirements of the proxy rules under the
Securities Exchange Act of 1934 (the "1934 Act") may submit to the Board of
Directors proposals to be considered for submission to the stockholders at the
1999 Annual Meeting of Stockholders. Any such proposal must comply with the
requirements of Rule 14a8 under the 1934 Act and be submitted in writing by
notice delivered or mailed by firstclass United States mail, postage prepaid, to
the Corporate Secretary, Promus Hotel Corporation, 755 Crossover Lane, Memphis,
Tennessee 38117, and must be received no later than November 26, 1998. Pursuant
to Rule 14a8, any such notice shall set forth, among other things: (a) the name
and address of the stockholder and the text of the proposal to be introduced;
(b) the number of shares of stock held of record, owned beneficially and
represented by proxy by such stockholder as of the date of such notice, the
dates upon which he acquired the securities, and documentary support for a claim
of beneficial ownership; and (c) a representation that the stockholder intends
to continue ownership of such securities through the date on which the meeting
is held.
 
    In addition, the Company's Bylaws provide for notice procedures to recommend
a person for nomination as a director and to propose business to be considered
by stockholders at a meeting. In addition to any other applicable requirements,
the Bylaws of Promus Hotel Corporation require that for business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof, containing the information required by the Bylaws
and in writing, to the Corporate Secretary of Promus Hotel Corporation. To be
timely, a stockholder's notice containing the information required by the Bylaws
must be delivered to or mailed and received at the principal executive offices
of Promus not less than sixty days nor more than ninety days prior to the
meeting; provided, however, that in the event that less than seventy days notice
or prior public disclosure of the date of the annual meeting is given or made to
stockholders, notice by a stockholder, to be timely, must be received no later
than the close of business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made, whichever first occurs.
 
                    ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
 
    (a) Exhibits
 
    EX-11  Computation of Per Share Earnings. (1)
 
    EX-27  Financial Data Schedule. (1)
 
    (b) No reports on Form 8-K were filed during the quarter ended June 30,
1998, however, the Company filed a report on Form 8-K on August 5, 1998, for an
event dated August 4, 1998.
 
------------------------
 
Footnotes
 
File No. 113719.
 
(1) Filed herewith.
 
                                       21
<PAGE>
                                   SIGNATURE
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
 
<TABLE>
<S>                             <C>  <C>
                                PROMUS HOTEL CORPORATION
 
                                By:           /s/ WILLIAM L. PEROCCHI
                                     -----------------------------------------
                                                William L. Perocchi
                                         EXECUTIVE VICE PRESIDENT AND CHIEF
                                                 FINANCIAL OFFICER
                                       (PRINCIPAL FINANCIAL OFFICER AND DULY
August 7, 1998                                  AUTHORIZED OFFICER)
</TABLE>
 
                                       22
<PAGE>
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
                                                                                                         SEQUENTIAL
EXHIBIT NO.                                         DESCRIPTION                                           PAGE NO.
------------  ---------------------------------------------------------------------------------------  ---------------
<S>           <C>                                                                                      <C>
 
(a) EX-11     Computation of Per Share Earnings. (1)
 
(b) EX-27     Financial Data Schedule. (1)
 
(c)  No reports on Form 8-K were filed during the quarter ended June 30, 1998, however, the Company filed a report on
     Form 8-K on August 5, 1998, for an event dated August 4, 1998.
</TABLE>
 
------------------------
 
Footnotes
 
(1) Filed herewith.
 
                                       23