WYNDHAM INTERNATIONAL INC, 10-Q, 2000-05-15

WYNDHAM INTERNATIONAL INC
10-Q, 2000-05-15
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES

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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 March 31, 2000

[_]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 1-9320

WYNDHAM INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware 94-2878485
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

1950 Stemmons Freeway, Suite 6001
Dallas, Texas 75207
(Address of principal executive offices) (Zip Code)

(214) 863-1000
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last
report)

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

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 [_]

The number of shares outstanding of the registrant's class of common stock,
par value $.01 per share, as of the close of business on May 10, 2000, was
167,721,297.

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<PAGE>

WYNDHAM INTERNATIONAL, INC.

INDEX

PART I--FINANCIAL INFORMATION

<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 1. Financial Statements.............................................. 3

Wyndham International, Inc.:
Condensed Consolidated Balance Sheets as of March 31, 2000 (unaudited)
and December 31, 1999.................................................. 3
Condensed Consolidated Statements of Operations for the three months
ended March 31, 2000 and 1999 (unaudited).............................. 4
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 2000 and 1999 (unaudited).............................. 5
Notes to Condensed Consolidated Financial Statements as of March 31,
2000 (unaudited)....................................................... 6

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................. 15

Item 3. Qualitative and Quantitative Disclosures about Market Risks....... 20

PART II--OTHER INFORMATION

Item 1. Legal Proceedings................................................. 22

Item 2. Changes in Securities and Use of Proceeds......................... 23

Item 3. Defaults Upon Senior Securities................................... 23

Item 4. Submission of Matters to Vote of Security Holders................. 23

Item 5. Other Information................................................. 23

Item 6. Exhibits and Reports on Form 8-K:
Exhibits................................................................ 24
Reports on Form 8-K..................................................... 24

Signature................................................................. 25
</TABLE>

2
<PAGE>

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

WYNDHAM INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 94,471 $ 144,333
Restricted cash.................................... 135,690 102,480
Accounts and lease revenue receivable.............. 255,846 186,321
Inventories........................................ 22,103 23,304
Prepaid expenses and other assets.................. 17,282 21,197
----------- -----------
Total current assets............................... 525,392 477,635
----------- -----------
Investment in real estate and related improvements
net of accumulated depreciation of $543,749 in 2000
and $478,494 in 1999............................... 5,393,076 5,413,178
Investment in unconsolidated subsidiaries........... 165,956 165,663
Notes and other receivables......................... 40,707 42,653
Management contract costs, net of accumulated
amortization $25,275 in 2000 and $26,359 in 1999... 96,734 129,362
Leasehold costs, net of accumulated amortization of
$17,351 in 2000 and $15,305 in 1999................ 128,691 133,102
Trade names and franchise costs, net of accumulated
amortization of $12,700 in 2000 and $11,328 in
1999............................................... 109,109 116,521
Deferred acquisition costs.......................... 3,544 2,584
Goodwill, net of accumulated amortization of $33,534
in 2000 and $30,141 in 1999........................ 368,164 378,916
Deferred expenses, net of accumulated amortization
of $19,833 in 2000 and $46,614 in 1999............. 119,678 97,767
Other assets........................................ 46,023 46,109
----------- -----------
Total assets....................................... $ 6,997,074 $ 7,003,490
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.............. $ 233,714 $ 322,195
Deposits........................................... 35,853 39,452
Current portion of borrowings under credit
facility, term loans, mortgage notes and capital
lease obligations................................. 178,693 130,177
----------- -----------
Total current liabilities.......................... 448,260 491,824
----------- -----------
Borrowings under credit facility, term loans,
mortgage notes and capital lease obligations....... 3,548,259 3,513,379
Deferred income taxes............................... 653,109 656,164
Deferred income..................................... 15,862 15,543
Minority interest in operating partnerships......... 22,192 22,435
Minority interest in other consolidated
subsidiaries....................................... 165,761 166,483

Commitments and contingencies

Shareholders' equity:
Preferred stock, $0.01 par value; authorized:
150,000,000 shares; shares issued and outstanding:
10,523,696 in 2000 and 10,344,662 in 1999......... 105 103
Common stock, $0.01 par value; authorized:
750,000,000 shares; shares issued and outstanding:
167,250,136 in 2000 and 167,193,696 in 1999....... 1,673 1,672
Additional paid in capital......................... 3,771,530 3,753,235
Receivable from shareholders and affiliates........ (17,434) (17,210)
Unearned stock compensation, net of accumulated
amortization of $19,450 in 2000 and $19,297 in
1999.............................................. (102) (255)
Unrealized loss on securities available for sale... (863) (1,000)
Unrealized foreign exchange gain................... (6,555) (7,576)
Accumulated deficit................................ (1,604,723) (1,591,307)
----------- -----------
Total shareholders' equity......................... 2,143,631 2,137,662
----------- -----------
Total liabilities and shareholders' equity......... $ 6,997,074 $ 7,003,490
=========== ===========
</TABLE>

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

3
<PAGE>

WYNDHAM INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

<TABLE>
<CAPTION>
Three Months
Ended
March 31,
------------------
2000 1999
-------- --------
<S> <C> <C>
Revenue:
Hotel revenue........................................... $637,061 $638,830
Participating and land lease revenue.................... -- 333
Racecourse facility..................................... -- 4,561
Management fee and service fee income................... 12,600 22,791
Interest and other income............................... 3,965 4,560
-------- --------
Total revenue......................................... 653,626 671,075
-------- --------
Expenses:
Hotel expenses.......................................... 439,554 445,732
Racing facility operations.............................. -- 3,867
General and administrative.............................. 23,116 51,199
Interest expense........................................ 91,863 90,215
Depreciation and amortization........................... 79,451 76,109
Net loss (gain) on sale of assets....................... 3,208 (2,775)
-------- --------
Total expenses........................................ 637,192 664,347
-------- --------
Operating income.......................................... 16,434 6,728
Equity in earnings of unconsolidated subsidiaries....... 490 2,701
-------- --------
Income before income tax provision and minority
interests................................................ 16,924 9,429
Income tax provision.................................... (2,945) (8,943)
-------- --------
Income before minority interests.......................... 13,979 486
Minority interest in the operating partnerships......... -- 1,958
Minority interest in other consolidated subsidiaries.... (2,382) (1,872)
-------- --------
Net income................................................ $ 11,597 $ 572
======== ========
Basic loss attributable to common shareholders:
Net income.............................................. 11,597 572
Adjustment for equity forwards.......................... -- (8,395)
Preferred stock dividends............................... (25,215) (373)
-------- --------
Basic net loss........................................ $(13,618) $ (8,196)
======== ========
Basic loss per common share: $ (0.08) $ (0.05)
======== ========
Diluted loss attributable to common shareholders:
Net income.............................................. $ 11,597 $ 572
Adjustment for equity forwards.......................... -- (20,033)
Preferred stock dividends............................... (25,215) (373)
-------- --------
Diluted net loss...................................... $(13,618) $(19,834)
======== ========
Diluted loss per common share: $ (0.08) $ (0.13)
======== ========
</TABLE>

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

4
<PAGE>

WYNDHAM INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share amounts)
(unaudited)

<TABLE>
<CAPTION>
Three Months
Ended
March 31,
------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................. $ 11,597 $ 572
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 79,451 76,109
Amortization of unearned stock compensation............... 153 4,330
Amortization of deferred loan costs....................... 5,278 10,636
Net loss (gain) on sale of assets......................... 3,208 (2,775)
Equity in earnings of unconsolidated subsidiaries......... (490) (2,701)
Minority interest in operating partnerships............... -- (1,958)
Minority interest in other consolidated subsidiaries...... 2,382 1,872
Deferred income taxes..................................... (3,055) (10,805)
Provision for doubtful accounts........................... 813 --
Changes in assets and liabilities:
Accounts and lease revenue receivable and other assets.... (39,637) (32,169)
Inventories............................................... 1,312 459
Accounts payable and accrued expenses..................... (34,113) 37,721
-------- --------
Net cash provided by operating activities................. 26,899 81,291
-------- --------
Cash flows from investing activities:
Acquisition of hotel properties and related working
capital assets........................................... (20,626) (32,258)
Improvements and additions to hotel properties............ (40,707) (50,938)
Net proceeds from asset sales............................. 45,967 19,444
Payment of contingent liability........................... (32,825) --
Acquisition of management contracts....................... -- (1,679)
Collections on other notes receivable..................... 312 2,431
Advances on other notes receivable........................ (344) (2,498)
Increase in restricted cash accounts...................... (33,210) (5,145)
Investment in unconsolidated subsidiaries................. (4,370) --
Deferred acquisition costs................................ (963) (1,873)
Net payments collected from unconsolidated subsidiaries... 622 1,874
Other..................................................... 1,426 5,770
-------- --------
Net cash used in investing activities..................... (84,718) (64,872)
-------- --------
Cash flows from financing activities:
Borrowings under credit facility, term loans, mortgage
notes and capital lease obligations...................... 150,081 52,252
Net repayments on credit facility and other debt.......... (105,471) (21,424)
Payment of deferred loan costs............................ -- (12,705)
Premiums paid for financial derivatives................... (34,360) --
Proceeds received from financial derivatives.............. 6,654 --
Distribution to minority interest holders................. (3,147) (18,759)
Dividends and distributions paid.......................... (7,312) --
Foreign currency translation adjustment................... 1,212 (6,472)
Other..................................................... 300 (610)
-------- --------
Net cash provided (used) by financing activities.......... 7,957 (7,718)
-------- --------
Net (decrease) increase in cash and cash equivalents....... (49,862) 8,701
-------- --------
Cash and cash equivalents at beginning of period........... 144,333 123,085
-------- --------
Cash and cash equivalents at end of period................. $ 94,471 $131,786
======== ========
</TABLE>

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

5
<PAGE>

WYNDHAM INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except share amounts)
(unaudited)

1. Organization and Basis of Presentation

Wyndham International, Inc., as currently constituted, was formed through
the June 30, 1999 restructuring and reorganization of Patriot American
Hospitality, Inc. (collectively with its subsidiaries, "Patriot") and Wyndham
International, Inc. (collectively with its subsidiaries, "Old Wyndham"). Prior
to June 30, 1999, the shares of common stock of Patriot were paired and traded
together with the shares of Old Wyndham, on a one for one basis, as a single
unit pursuant to a stock pairing arrangement, and were referred to as paired
shares.

Patriot was formed April 17, 1995 as a self-administered real estate
investment trust ("REIT") for the purpose of acquiring equity interests in
hotel properties. Old Wyndham was formed in connection with Patriot's merger
with and into California Jockey Club and Bay Meadows Operating Company ("Bay
Meadows") on July 1, 1997 (the "Cal Jockey Merger"). Patriot and Old Wyndham
are both Delaware corporations.

Effective June 30, 1999, a subsidiary of Old Wyndham merged with and into
Patriot with Patriot being the surviving entity and becoming a subsidiary of
Old Wyndham. In connection with this restructuring, the pairing agreement
between Patriot and Old Wyndham was terminated, Patriot's status as a real
estate investment trust terminated effective January 1, 1999, and Patriot
became a taxable corporation as of that date. This merger converted each
previously outstanding paired share into one share of Wyndham class A common
stock. Old Wyndham and its subsidiaries, which now include Patriot, are
hereafter referred to as "Wyndham" or the "Company." Unless otherwise stated
herein, all information with respect to shares refers to Wyndham class A
common stock since June 30, 1999 and to paired shares for periods before June
30, 1999.

The restructuring was reflected as a reorganization of two companies under
common control and was accounted for in a manner similar to that used in
pooling of interest accounting. As such, there was no revaluation of the
assets and liabilities of Old Wyndham or Patriot. The financial statements
prior to the reorganization are presented on a combined basis and include the
combined accounts of Patriot and its subsidiaries with Old Wyndham and its
subsidiaries.

As of March 31, 2000, the Company owned interests in 163 hotels with over
43,000 guest rooms and leased 36 hotels from third parties with over 5,400
guest rooms. In addition, the Company managed 65 hotels for third party owners
with over 18,000 guest rooms and franchised 21 hotels with over 4,200 guest
rooms.

Principles of consolidation and combination

The unaudited consolidated financial statements for March 31, 2000 include
the accounts of the Company, its wholly owned subsidiaries, including Patriot,
and the partnerships, corporations and limited liability companies in which
the Company owns a controlling interest.

Partnerships--The condition for control is the ownership of a majority
voting interest and the ownership of the general partnership interest.

Corporations and Limited Liability Companies--The condition for control is
the ownership of a majority voting interest.

The financial statements prior to the reorganization are presented on a
combined basis and include the combined accounts of Patriot and its
subsidiaries with Old Wyndham and its subsidiaries.

These financial statements have been prepared in accordance with Generally
Accepted Accounting Principles ("GAAP") for interim financial information and
with the instructions for Form 10-Q and Article 10

6
<PAGE>

WYNDHAM INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(dollars in thousands, except share amounts)
(unaudited)

of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2000. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999. Certain prior period amounts have been
reclassified to conform to current period presentation with no effect to
previously reported net income or retained earnings.

2. Acquisitions and Disposals

Acquisitions

In January 2000, the Company acquired the remaining interests in Wyndham
Chicago for approximately $20,626.

Disposals

On March 2, 2000, the Company sold Radisson Overland Park for a gross sales
price of $5,500 and received net cash proceeds of $5,280.

On March 17, 2000, the Canal Place retail and garage were sold for a gross
sales price of $38,750 and net cash proceeds of $38,587.

Effective March 31, 2000, the Company sold its Sierra Suites(R) hotel brand,
properties and related assets (the "Sierra transaction") to Sierra Suites
Hotel Company, L.P., an entity affiliated with Mr. Rolf Ruhfus, a director of
Wyndham, for approximately $53,000. The transaction included the sale by the
Company of one owned and three leased properties, seventeen franchise and
management contracts for Sierra Suites(R) and nine management contracts for
Summerfield Suites. Pursuant to the purchase agreement, the Company is to
receive net cash proceeds of $23,045 and is relieved of $29,770 of future
obligations with respect to a related agreement. A gain of $974 was recognized
as a result of the transaction.

3. Restructuring

During 1999, the Company recorded a restructuring charge of $285,267 as a
result of the termination of the paired share structure and management's
decision to streamline its organization and focus on its core brands and
strategic assets. The restructuring activities primarily related to (1) the
termination of the paired share structure, (2) the exiting of the European
market for its non-branded assets, (3) the exiting of the limited service
hotel sector, (4) the closure of the Phoenix division office, (5) the closure
of the Wichita division office, and (6) the elimination of certain brands.
These restructuring activities resulted in the write-down of assets held for
sale to estimated fair value and the write-down of intangible assets. The
Company also incurred costs to sever employees, lease abandonment costs, and
other costs relating to exiting these activities.

7
<PAGE>

WYNDHAM INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(dollars in thousands, except share amounts)
(unaudited)

During the first quarter of 2000, continuing cash payments were made against
the accrued liability as shown in the table below. The remaining accrual will
be relieved throughout fiscal 2000, as leases expire and severance payments,
some of which are paid on a monthly basis, are completed. A detail of the 1999
restructuring charge is as follows:

<TABLE>
<CAPTION>
Accrued Accrued
Cash/ Restructuring Balance Balance
Description Non-Cash Charge at 12/31/99 Activity at 3/31/00
- ----------- ------------- ------------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
Organizational
Restructuring
Write-down of intangible
assets................. Non-cash $ (83,094) $ -- $ -- $ --
Severance packages...... Cash/non-cash (4,675) (500) -- (500)
Downsizing European
division
Write-down of assets
held for sale.......... Non-cash (69,491) -- -- --
Write-down of intangible
assets................. Non-cash (28,394) -- -- --
Severance packages...... Cash (3,578) (2,458) 2,458 --
Lease cancellations and
commitments............ Cash (1,907) (1,907) 1,907 --
Other exit costs........ Cash (4,062) (2,408) 2,127 (281)
Exiting limited service
hotel sector
Write-down of assets
held for sale.......... Non-cash (63,328) -- -- --
Write-down of intangible
assets................. Non-cash (8,834) -- -- --
Closing of the Phoenix
division office
Severance packages...... Cash (2,006) (312) -- (312)
Lease cancellations and
commitments............ Cash (492) (321) 34 (287)
Closing of the Wichita
division office
Severance packages...... Cash (1,872) (1,872) 1,328 (544)
Elimination of certain
hotel brands
Write-down of intangible
assets................. Non-cash (12,821) -- -- --
Other
Other exit costs........ Cash (713) -- -- --
Effect of foreign
currency translation... Non-cash -- 8 (5) 3
--------- ------- ------ -------
Total................... $(285,267) $(9,770) $7,849 $(1,921)
========= ======= ====== =======
</TABLE>

4. Mortgage Notes

In connection with the acquisition of the controlling interest in Wyndham
Chicago, the Company now consolidates mortgage debt associated with the
property of approximately $38,910; the loan bears interest at LIBOR plus 3.5%
and matures on August 20, 2001.

5. Financial Derivatives

The Company enters into interest rate swap and cap agreements to modify the
interest characteristics of its outstanding debt. These agreements involve the
exchange of amounts based on a variable interest rate for amounts based on
fixed interest rates over the life of the agreement without an exchange of the
notional amount upon which the payments are based. The differential to be paid
or received as interest rates change is accrued and recognized as an
adjustment of interest expense related to the debt using a method which
approximates the effective interest method (i.e., the accrual accounting
method). The related amount payable to or receivable from counterparties is
included in accrued expenses or other assets.

The Company also enters into interest rate cap agreements that are designed
to limit its exposure to increasing interest rates and are designated as
hedges of its outstanding debt. An interest rate cap entitles the Company to
receive a payment from the counterparty equal to the excess, if any, of the
hypothetical interest

8
<PAGE>

WYNDHAM INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(dollars in thousands, except share amounts)
(unaudited)

expense (i.e., strike price) on a specified notional amount at a current
market interest rate over an amount specified in the agreement. The only
amount Wyndham is obligated to pay the counterparty is an initial premium. The
cost of the agreements (i.e., the initial premium) is included in deferred
expenses and amortized to interest expense ratably during the life of the
agreement.

As of March 31, 2000, the Company had entered into additional interest rate
hedges for a total notional amount of $1,500,000. The interest rate swaps and
caps are structured such that each hedge has a series of trigger levels in
which the hedge can become ineffective for any reset period that the 1-month
LIBOR rises above the trigger level; however, the Company has the option of
choosing to increase the trigger levels prior to that occurence. If LIBOR
resets below the trigger level, the hedge becomes effective again. The Company
paid approximately $34,360 in premiums to enter into these contracts.

<TABLE>
<CAPTION>
Notional Trigger
Hedge Amount Terms Rate Level
----- -------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Interest Rate Swaps............... $700,000 5 years 6.1% - 6.75% 7.0% - 8.5%
Interest Rate Caps................ $250,000 3 years 4.75% 7.5%
Interest Rate Corridor............ $550,000 3 years 5.25% 7.5%
</TABLE>

In addition, the Company shortened the terms of three existing hedges and
received net proceeds of approximately $6,654. The proceeds received were
capitalized and are included in deferred expenses in the accompanying
condensed consolidated balance sheet as of March 31, 2000. The proceeds will
be amortized over the remaining terms of the contracts as a reduction to
interest expense. The hedges were as follows:

<TABLE>
<CAPTION>
Notional Original Revised
Hedge Amount Maturity Maturity Rate
----- -------- -------- -------- -----
<S> <C> <C> <C> <C>
Interest Rate Swap.......................... $375,000 11/01/02 03/01/02 6.26%
Interest Rate Swap.......................... $125,000 11/01/02 03/01/02 5.56%
Interest Rate Swap.......................... $250,000 06/01/03 03/01/02 5.84%
</TABLE>

The fair value of interest rate swap and cap agreements and changes in the
fair value as a result of changes in market interest rates are not recognized
in the financial statements. The unrealized gain on the Company's derivative
instruments was approximately $41,607 as of March 31, 2000, which represents
the net proceeds the Company would receive if the derivatives were sold.

6. Comprehensive Income

Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" establishes standards for reporting and displaying
comprehensive income and its components. Total comprehensive income (loss) for
the periods is as follows:

<TABLE>
<CAPTION>
Three Months
Ended
March 31,
---------------
2000 1999
------- -------
<S> <C> <C>
Net income................................................. $11,597 $ 572
Unrealized gain (loss) on securities available for sale.... 1,021 (36)
Unrealized foreign exchange gain (loss).................... 137 (6,472)
------- -------
Total comprehensive income (loss)........................ $12,755 $(5,936)
======= =======
</TABLE>

9
<PAGE>

WYNDHAM INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(dollars in thousands, except share amounts)
(unaudited)

7. Computation of Earnings Per Share

Earnings per share have been computed as follows:

<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
-------------------- --------------------
Basic Diluted(1) Basic Diluted(1)
-------- ---------- -------- ----------
(in thousands, except per share
amounts)
<S> <C> <C> <C> <C>
Net income.......................... $ 11,597 $ 11,597 $ 572 $ 572
Adjustment for equity forwards(2)... -- -- (8,395) (20,033)
Preferred stock dividends........... (25,215) (25,215) (373) (373)
-------- -------- -------- --------
Net loss attributable to common
shareholders....................... $(13,618) $(13,618) $ (8,196) $(19,834)
======== ======== ======== ========
Weighted average number of common
shares outstanding................. 167,204 167,204 154,990 154,990
======== ======== ======== ========
Net loss per share.................. $ (0.08) $ (0.08) $ (0.05) $ (0.13)
======== ======== ======== ========
</TABLE>
- --------
(1) For the three months ended March 31, 2000, the dilutive effect of unvested
stock grants of 810, the option to purchase common stock of 44 and
preferred stock of 122,511 were not included in the computation of diluted
earnings per share because they are anti-dilutive. For the three months
ended March 31, 1999, the dilutive effect of unvested stock grants of 796,
the option to purchase common stock of 15, and 8,423 of preferred shares
were not included in the computation of diluted earnings per share because
they are anti-dilutive.
(2) The adjustment relates to the mark-to-market and yield adjustment for the
forward equity contracts which could be settled in cash or stock, at the
Company's option.

8. Commitments and Contingencies

Future Earn-out Obligations

In connection with the acquisition of the partnership interests in SF Hotel
Company, L.P., the Company was subject to future purchase price adjustments.
These adjustments were based on (i) the achievement of certain performance
criteria through 2000 for hotels which were not open for business (or had
recently opened) as of the date of acquisition and (ii) the fulfillment of the
Company's obligation to develop seven hotels. The obligations related to the
purchase price adjustments were payable in 2000 and 2001. Effective February
8, 2000, the Company paid an additional $32,825 to SF Hotel Company, L.P., an
entity affiliated with Mr. Rolf Ruhfus, a director of Wyndham, as additional
consideration pursuant to the purchase agreement. In addition, as a result of
the Sierra transaction, the Company will not be liable for any additional
amounts due in 2000 or 2001.

Contingencies

10
<PAGE>

WYNDHAM INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(dollars in thousands, except share amounts)
(unaudited)

Court, Appellate Division, First Department. In January 1999, Wyndham moved
for a stay of the injunction pending appeal, which motion was granted by the
Appellate Division, First Department on February 4, 1999. On May 18, 1999, the
Appellate Division, First Department rendered a decision and order affirming
the final judgment. On May 24, 1999, Wyndham filed a motion for permission to
appeal that decision to the Court of Appeals of the State of New York. In July
1999, Wyndham received notice that the Court of Appeals of the State of New
York would not hear the appeal.

On February 3, 1999, McNeill Investment Company, Inc. filed a lawsuit
against Patriot in the United States District Court for the Western District
of Pennsylvania. In the lawsuit, captioned McNeill Investment Company, Inc. v.
Patriot American Hospitality, Inc., No. 99-165, the plaintiff alleges that
Patriot breached its obligations under a registration rights agreement that
Patriot became obligated under through its merger transaction with Interstate
Hotels Corporation. The plaintiff claims approximately $9 million in damages.
On or about May 8, 2000, the parties to the litigation participated in a
voluntary mediation in which they agreed, in principal, to settle the dispute.
The settlement provides for a payment by Wyndham of $3 million, subject to a
refund of up to approximately $715,000, due May 25, 2001, depending on the
amount by which Wyndham's stock price increases between now and May 8, 2001.
The parties expect the settlement to be finalized shortly.

On May 7, 1999, Doris Johnson and Charles Dougherty filed a lawsuit in the
Northern District of California against Patriot, Wyndham, their respective
operating partnerships and Paine Webber Group, Inc. This action, Johnson, et
al. v. Patriot American Hospitality, Inc. et al., C-99-2153, was commenced on
behalf of all former stockholders of Bay Meadows stock during a class period
from June 2, 1997 to the date the lawsuit was filed. The action asserts
securities fraud claims and alleges that the purported class members
wrongfully were induced to tender their Bay Meadows shares as part of the Cal
Jockey Merger based on a fraudulent prospectus. The action further alleges
that defendants continued to defraud stockholders about their intentions to
acquire numerous hotels and saddle the Company with massive debt during the
class period. Three other actions against the same defendants subsequently
were filed in the Northern District of California: (i) Ansell v. Patriot
American Hospitality, Inc., et al., No. C-99-2239 (filed May 14, 1999), (ii)
Sola v. Paine Webber Group, Inc., et al., No. C-99-2770 (filed June 11, 1999),
and (iii) Gunderson v. Patriot American Hospitality, Inc., et al., No. C-99-
3040 (filed June 23, 1999). Another action with substantially identical
allegations, Susnow v. Patriot American Hospitality, Inc., et al., No. 3-99-
CV1354-T (filed June 15, 1999), also subsequently was filed in the Northern
District of Texas. The complaints in these actions seek unspecified damages
but assert that the defendants are liable for the diminution in value of
Patriot stock held by class members during the class period. By order of the
Judicial Panel on Multidistrict Litigation, these actions along with certain
actions identified below have been consolidated in Northern District of
California for consolidated purposes. To date, none of the defendants have
been required to answer, move or otherwise respond to the complaints, and no
discovery has been taken. Wyndham plans to vigorously defend those lawsuits.

On or about June 22, 1999, a punative class action lawsuit, captioned
Levitch v. Patriot American Hospitality, Inc., et al., No. 3-99-CV1416-D, was
filed in the Northern District of Texas against Patriot, Wyndham, James D.
Carreker and Paul A. Nussbaum. This action asserts securities fraud claims and
alleges that, during the period from January 5, 1998 to December 17, 1998, the
defendants defrauded stockholders by issuing false statements about Wyndham.
The complaint was filed on behalf of all stockholders who purchased Patriot
and Wyndham stock during that period. Three other actions, Gallagher v.
Patriot American Hospitality, Inc., et al., No. 3-99-CV1429-L, (filed on June
23, 1999), David Lee Meisenburg v. Patriot American Hospitality, Inc., Wyndham
International, Inc. James D. Carreker, and Paul A. Nussbaum, No. 3-99-CV1686-
X, (filed July 27, 1999) and Deborah Szekely v. Patriot American Hospitality,
Inc., et al., No. 3-99-CV1866-D, (filed on or about August 27, 1999), allege
substantially the same allegations. The complaints in these actions seek
unspecified damages but assert that the defendants are liable for the
diminution in value of Patriot stock held by class

11
<PAGE>

WYNDHAM INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(dollars in thousands, except share amounts)
(unaudited)

members during the class period. By order of the Judicial Panel on
Multidistrict Litigation, these actions have been consolidated with certain
other stockholder actions and transferred to the Northern District of
California for consolidated pre-trial purposes. To date, none of the
defendants have been required to answer, move or otherwise respond to the
complaint, and no discovery has been taken. Wyndham plans to vigorously defend
those lawsuits.

Wyndham has received a draft complaint which threatens to assert claims on
behalf of Golden Door, LLC, Golden Springs, LLC, Golden Door, Inc., Deer
Springs Ranch, LLC, Deborah Szekely and Sarah Livia Brightwood. The potential
plaintiffs appear to be the same as the plaintiffs who filed the action
referenced above, Deborah Szekely v. Patriot American Hospitality, Inc., et
al., No. 3-99-CV1866-D, however the allegations in the complaints are not the
same. The draft complaint purports to assert claims against Patriot, Wyndham
and their respective operating partnerships for securities fraud under the
California securities code, common law fraud, breach of fiduciary duty and
deceit in connection with the purchase of Patriot of the Golden Door Spa in
February 1998. The draft complaint seeks compensatory damages for the alleged
lost value of the potential plaintiff's stock and other unspecified damages.
Although the Company has received a draft complaint, to date no complaint has
been filed.

Patriot and PAH Stanley Ranch ("PAH") are engaged in a dispute with Carneros
Valley Investors involving a contract which calls for a purchase price of $14
million with an additional $5 million to be paid if PAH gets approval for a
development in the Napa Valley. PAH did not get approval for this development.
In September 1999, Carneros Valley Investors filed a complaint in the Superior
Court of California, San Francisco, which alleges that Patriot owes Carneros
Valley Investors $5 million and alleges that Patriot acted negligently,
fraudulently and in bad faith in attempting to get the approval for the
development. The complaint has been amended to allege fraud, purportedly
entitling the plaintiff to rescind the sale. Patriot has answered the
complaint, but to date, no discovery has been taken. Wyndham intends to defend
the suit vigorously.

Patriot IHC/Jacksonville Corporation and IHC Realty Partnership are parties
to a dispute with another limited partner of the partnership relating to a
proposed hotel development in Jacksonville, Florida. The case is captioned C&M
Investors Limited v. Patriot American Hospitality, Inc. et al., and was
originally filed in the Florida Circuit Court, Fourth Judicial Circuit, in and
for Duval County, Florida, but was later removed and is now pending in the
United States District Court, Middle District of Florida, Jacksonville
Division, Civil Action No. 98-1236-Civ. J 20B. Wyndham plans to vigorously
defend this lawsuit.

9. Dividends

On March 31, 2000, the Company paid a quarterly dividend, at an annual rate
of 9.75%, on its series A and B preferred stock. The dividend was paid partly
in cash and partly in additional shares of preferred stock. The Company paid a
total of $7,312 in cash and issued approximately 972 shares of series A
preferred stock and 178,062 shares of series B preferred stock.

10. Segment Reporting

The Company classifies its business into proprietary owned brands and non-
proprietary brand hotel divisions, under which it manages the business.

Wyndham is the brand umbrella under which all of its proprietary products
are marketed. It includes three four-star, upscale hotel brands that offer
full-service accommodations to business and leisure travelers, as well as the
five-star luxury resort hotel brand.

12
<PAGE>

WYNDHAM INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(dollars in thousands, except share amounts)
(unaudited)

Description of reportable segments

The Company has seven reportable segments: Wyndham Hotel & Resorts(R),
Wyndham Luxury Resorts, Summerfield Suites by Wyndham(TM), Wyndham Gardens(R),
other proprietary branded hotel properties, non-proprietary branded hotel
properties and other.

. Wyndham Hotels & Resorts(R) are upscale, full-service hotel properties
that contain an average of 400 hotel rooms, generally between 15,000 and
250,000 square feet of meeting space and a full range of guest services
and amenities for business and leisure travelers, as well as conferences
and conventions. The hotels are located primarily in the central
business districts and dominant suburbs of major metropolitan markets
and are targeted to business groups, meetings, and individual business
and leisure travelers. These hotels offer elegantly appointed facilities
and high levels of guest service.

. Wyndham Luxury Resorts are five-star hotel properties that are
distinguished by their focus on incorporating the local environment into
every aspect of the property, from decor to cuisine to recreation. The
luxury collection includes the Golden Door Spa, one of the world's
preeminent spas.

. Wyndham Gardens(R) are full-service properties, which serve individual
business travelers and are located principally near major airports and
suburban business districts. Amenities and services generally include a
three-meal restaurant, signature Wyndham Garden(R) libraries and laundry
and room service.

. Summerfield Suites by Wyndham(TM) offers guests the highest quality
lodging in the upscale all suites segment. Each suite has a fully
equipped kitchen, a spacious living room and a private bedroom. Many
suites feature two bedroom, two bath units. The hotels also have a
swimming pool, exercise room and other amenities to serve business and
leisure travelers.

. Other proprietary branded hotel properties include Malmaison, Sierra
Suites, Clubhouse and the hotels acquired in the Arcadian acquisition.

. Non-proprietary branded properties include all properties which are not
Wyndham branded hotel properties or other proprietary branded
properties. The properties consist of non-Wyndham branded assets, such
as Crowne Plaza(R), Embassy Suites(R), Marriott(R), Courtyard by
Marriott(R), Sheraton(R) and other independents.

. Other includes management fee and service fee income, participating
lease revenues, racecourse facility revenue and expenses, interest and
other income, general and administrative costs, interest expense,
depreciation and amortization and other charges. General and
administrative costs, interest expenses and depreciation and
amortization are not allocated to each reportable segment; therefore,
they are reported in the aggregate within this segment.

Factors management used to identify the reportable segments

The Company's reportable segments are determined by brand affiliation and
type of property. The reportable segments are each managed separately due to
the specified characteristics of each segment.

13
<PAGE>

WYNDHAM INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(dollars in thousands, except share amounts)
(unaudited)

Measurement of segment profit or loss

The Company evaluates performance based on the operating income or loss from
each business segment. The accounting policies of the reportable segments are
the same as those described in Note 1. The total revenue and operating income
(loss) for each segment for the three months ended March 31, 2000 and 1999,
respectively, are as follows:

<TABLE>
<CAPTION>
Wyndham Wyndham Summerfield Other Non
Hotels & Luxury Wyndham Suites by Proprietary Proprietary
Resorts(R) Resorts Gardens(R) Wyndham(TM) Branded Branded Other Total
---------- ------- ---------- ----------- ----------- ----------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Three Months Ended March
31, 2000
Total revenue........... $301,704 $30,100 $23,909 $33,299 $14,375 $233,674 $ 16,565 $653,626
Operating income
(loss)................. $ 94,723 $10,824 $ 4,604 $ 6,605 $ 3,504 $ 64,387 $(168,213) $ 16,434

Three Months Ended March
31, 1999
Total revenue........... $266,556 $28,596 $23,450 $31,395 $23,340 $265,495 $ 32,243 $671,075
Operating income
(loss)................. $ 89,699 $ 9,196 $ 5,335 $ 6,331 $ 5,703 $ 60,432 $(169,968) $ 6,728
</TABLE>

The following table represents revenue information by geographic area for
the three months ended March 31, 2000 and 1999, respectively. Revenues are
attributed to the United States and its territories and Europe based on the
location of hotel properties.

<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
------------------------ -------------------------
United United
States Europe Total States Europe Total
-------- ------ -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues.................. $645,578 $8,048 $653,626 $653,968 $17,107 $671,075
</TABLE>

11. Subsequent Events

As part of the merger with Wyndham Hotel Corporation, Patriot entered into
an Omnibus Purchase and Sale Agreement with various descendants of Mr. and
Mrs. Trammell Crow, and various corporations, partnerships, trusts and other
entities beneficially owned or controlled by such persons (collectively, the
"Crow Family Members"). As part of the agreement, Crow Family Members and
certain Wyndham senior executives retained the right to receive additional
consideration on April 30, 2000 based on a formula pertaining to the
performance of Wyndham Riverfront New Orleans and Wyndham Garden Laguardia as
set forth in the Omnibus Purchase and Sale Agreement. In April 2000, the
Company paid $9,556 and $7,156 respectively, to the Crow Family Members and
the Wyndham senior executives as additional consideration.

14
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The following discussion and analysis should be read in conjunction with the
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999.

Certain statements in this Form 10-Q constitute "forward-looking statements"
as that term is defined under (S) 21E of the Securities and Exchange Act of
1934, as amended, and the Private Securities Litigation Reform Act of 1995.
The words "believe," "expect," "anticipate," "intend," "estimate" and other
expressions which are predictions of or indicate future events and trends and
which do not relate to historical matters identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements. Although forward-looking statements reflect management's good
faith beliefs, reliance should not be placed on forward-looking statements
because they involve known and unknown risks, uncertainties and other factors,
which may cause the actual results, performance or achievements of the Company
to differ materially from anticipated future results, performance or
achievements expressed or implied by such forward-looking statements. The
Company undertakes no obligation to publicly update or revise any forward-
looking statement, whether as a result of new information, future events or
otherwise. Certain factors that might cause a difference include, but are not
limited to, risks associated with the availability of equity or debt financing
at terms and conditions favorable to the Company, the Company's ability to
effect sales of assets on favorable terms and conditions, and risks associated
with the hotel industry and real estate markets in general and other risks set
forth under "Certain Risk Factors" in the Company's 1999 Annual Report on Form
10-K.

Results of operations:

Three months ended March 31, 2000 compared with the three months ended March
31, 1999

For the three months ended March 31, 2000, hotel revenues were $637,061,000
as compared to $638,830,000 during the three months ended March 31, 1999. The
$1,769,000 decrease in revenue between periods was caused primarily by asset
sales subsequent to March 31, 1999. The first quarter 1999 revenues included
hotel revenues from the hotels included in the Interstate spin-off on June 18,
1999 of $42,595,000 and revenues of $17,160,000 from 20 hotel asset sales.
These decreases in revenues were partially offset by asset acquisitions and
new assets placed in service which had revenues of approximately $41,483,000
for the three months ended March 31, 2000. The remaining increase in revenue
was due to increases in revenues per available rooms ("REVPAR") throughout the
Company's portfolio.

Hotel expenses were $439,554,000 and $445,732,000 for the three months ended
March 31, 2000 and 1999, respectively. As a percentage of revenues, gross
operating profits remained relatively stable between periods, rising from
30.2% for the three months ended March 31, 1999 to 31.0% for the three months
ended March 31, 2000. Although expenses decreased $6,178,000, as with
revenues, this was caused primarily by asset sales subsequent to March 31,
1999. The decrease was offset in part by acquisitions made during the same
period and assets placed in service which were under development in the first
quarter of 1999.

Management fee and service fee income was $12,600,000 and $22,791,000 for
the three months ended March 31, 2000 and 1999, respectively. The decrease
resulted primarily from the spin-off of Interstate's third party management
business on June 18, 1999.

Total revenues and expenses from the racecourse facility operations were
$4,561,000 and $3,867,000 respectively, for the three months ended March 31,
1999. There were no revenues or expenses for the same period in 2000 because
the racecourse facility was sold in February of 1999.

General and administrative expenses were $23,116,000 for the three months
ended March 31, 2000, as compared to $51,199,000 for the three months ended
March 31, 1999. The decrease of $28,083,000 was primarily attributable to the
following:

In the first quarter of 1999, the Company incurred costs of $8,986,000
related to the third party management business of Interstate Hotels
Corporation and $1,301,000 related to the Phoenix divisional office. No such

15
<PAGE>

expenses were reflected in the first quarter of 2000. In addition, the first
quarter of 1999 included costs associated with the forward equity contracts of
$2,010,000 and costs associated with terminating license agreements of
$803,000, which were not incurred in the first quarter of 2000. In addition,
severance related costs decreased from $10,182,000 in the first quarter of
1999 to $2,965,000 in the first quarter of 2000, and abandoned transaction
costs decreased from $3,658,000 in the first quarter of 1999 to $162,000 in
the first quarter of 2000. In addition, management made efforts to streamline
the organization such as consolidating the Company's divisional and sales
offices in Dallas and eliminating certain layers of management.

Depreciation and amortization expense was $79,451,000 for the three months
ended March 31, 2000 compared to $76,109,000 for the three months ended March
31, 1999. The increase in depreciation was primarily due to the increase in
capital renovations during the year, as well as the placement in service of
additional assets that were previously under development. This increase was
offset in part by the asset sales that occurred during subsequent to March 31,
1999.

Interest expense for the three months ended March 31, 2000 was $91,863,000
compared to $90,215,000 for the three months ended March 31, 1999. The
increase in interest expense is primarily related to higher interest rates for
the first quarter of 2000 as compared to 1999 and higher interest rate spreads
on the current credit facility as compared to the old credit facility. The
impact of these higher rates was partially offset by a reduction of loan cost
amortization expense and lower debt balances. During the first quarter of
1999, the Company paid fees of $11.7 million associated with extending the
maturity of certain term loans. These costs were capitalized and amortized as
interest expense over the life of the extension. The Company's outstanding
debt balance as of March 31, 2000 was approximately $3.7 billion as compared
to $3.9 billion as of March 31, 1999.

The Company's share of equity in earnings from unconsolidated subsidiaries
was $490,000 for the three months ended March 31, 2000 as compared to
$2,701,000 for the three months ended March 31, 1999. This decrease is a
result of the purchase of the controlling interest in hotels which were
accounted for under the equity method of accounting in 1999 but consolidated
in 2000, in addition to the allocation of losses of the Company's approximate
55% equity investment in Interstate Hotels Company.

The provision for income taxes decreased from $8,943,000 for the three
months ended March 31, 1999 to $2,945,000 for the three months ended March 31,
2000. The decrease is due in part to the conversion of Patriot from a REIT to
a C corporation and the restructuring of certain special purpose controlled
subsidiaries, which previously could not be consolidated with Wyndham's
taxable income or loss.

Minority interest's share of loss associated with the operating partnerships
was $1,958,000 for the three months ended March 31, 1999. There was no
minority interest's share of the income (loss) associated with the operating
partnerships for the first quarter of 2000 due to amendments in the
partnership agreements on June 30, 1999, which amended the allocation of
profit and loss to the limited partners.

Minority interest's share of income in the Company's other consolidated
subsidiaries was $2,382,000 for the three months ended March 31, 2000 as
compared to $1,872,000 in the same period in 1999. The increase is due to
better operating results in the joint venture partnerships.

As a result, the net income was $11,597,000 and $572,000 for the three
months ended March 31, 2000 and 1999, respectively.

Results of reporting segments:

Three months ended March 31, 2000 compared with the three months ended March
31, 1999

The Company's results of operations are classified into seven reportable
segments. Those segments include Wyndham Hotel & Resorts(R), Wyndham Luxury
Resorts, Wyndham Gardens(R), Summerfield Suites by Wyndham(TM), other
proprietary branded hotel properties, non-proprietary branded hotel properties
and other.

16
<PAGE>

Wyndham Hotels & Resorts(R) represented approximately 46.2% and 39.7% of
total revenue for the three months ended March 31, 2000 and 1999,
respectively. Total revenue was $301,704,000 for the first quarter of 2000
compared to $266,556,000 for the quarter ended March 31, 1999. Operating
income was $94,723,000 and $89,699,000 for the quarters ended March 31, 2000
and 1999, respectively. The increases in revenues and operating income can be
primarily attributed to the opening of several Wyndham branded hotels
subsequent to March 31, 1999 including Wyndham Boston, Wyndham Downtown
Atlanta, Wyndham Chicago, and Wyndham Canal Place.

Wyndham Luxury Resorts represented approximately 4.6% and 4.3% of total
revenue for the three months ended March 31, 2000 and 1999, respectively.
Total revenue was $30,100,000 for the first quarter of 2000 compared to
$28,596,000 for the quarter ended March 31, 1999. The increase can be
attributable in large part to increases in REVPAR of 2.2%. Operating income
was $10,824,000 compared to $9,196,000 for the same period, respectively.

Wyndham Gardens(R) represented approximately 3.7% and 3.5% of total revenue
for the three months ended March 31, 2000 and 1999, respectively. Total
revenue was $23,909,000 for the first quarter of 2000 compared to $23,450,000
for the quarter ended March 31, 1999. Operating income was $4,604,000 and
$5,335,000 for the quarters ended March 31, 2000 and 1999, respectively.
Revenues and operating results remained relatively consistent between periods,
as a decrease in average daily rates ("ADR") of 6.5% was offset by increases
in occupancy of 5.1%.

Summerfield Suites by Wyndham(TM) represented approximately 5.1% as compared
to 4.7% of total revenue for the three months ended March 31, 2000 and 1999,
respectively. Total revenue was $33,299,000 for the first quarter of 2000
compared to $31,395,000 for the quarter ended March 31, 1999. Operating income
was $6,605,000 and $6,331,000 for the quarters ended March 31, 2000 and 1999,
respectively. Revenues and operating results remained relatively consistent
between periods as a slight increase of ADR of 2.1% was offset by a decrease
in occupancy of 1.6%.

Other proprietary branded properties, including Malmaison, Sierra Suites,
Clubhouse and hotels acquired in the Arcadian acquisition, represented
approximately 2.2% and 3.5% of total revenue for the three months ended March
31, 2000 and 1999, respectively. Total revenue was $14,375,000 for the first
quarter of 2000 compared to $23,340,000 for the quarter ended March 31, 1999.
Operating income for these properties was $3,504,000 and $5,703,000 for the
quarters ended March 31, 2000 and 1999, respectively. The decrease in both
revenues and operating income primarily resulted from the sale in December
1999 of the 11 hotels acquired in the Arcadian acquisition.

Non-proprietary branded properties, including Hilton(R), Holiday Inn(R),
Marriott(R), Ramada(R), Radisson(R), and other major hotel franchises,
represented approximately 35.7% and 39.4% of total revenue for the quarters
ended March 31, 2000 and 1999, respectively. Total revenue was $233,674,000
for the first quarter of 2000 compared to $265,495,000 for the quarter ended
March 31, 1999. The decrease is due primarily to the spin-off of several
leases in connection with the Interstate spin-off on June 18, 1999, as well as
the sale of non-proprietary branded assets throughout the year. The Interstate
spin-off had a significant impact on revenues for the period, but a nominal
impact on operating income, as during the first three months of 1999, the
entities which were spun-off generated an operating loss. Operating income for
these properties was $64,387,000 and $60,432,000 for the quarters ended March
31, 2000 and 1999, respectively.

Other represented revenue from various operating businesses including
management and other service companies, and participating lease revenue for
one hotel and a parcel of land. Expenses in this segment are primarily
interest, depreciation, amortization and corporate general and administrative
expenses. Total revenue for the other segment was $16,565,000 and $32,243,000
for the quarters ended March 31, 2000, and 1999, respectively. The overall
$15,678,000 decrease in this segment's revenue was caused by several factors
including the spin-off of Interstate's third party management business which
reduced revenue by $9,706,000 in this segment, and the sale of the racecourse
facility operations which reduced revenue by approximately $4,561,000.

17
<PAGE>

Operating losses for the segment were $168,213,000 and $169,968,000 for the
quarters ended March 31, 2000, and 1999, respectively. The loss of revenues in
this segment was partially offset by a reduction in expenses for this segment,
consisting primarily of a reduction of general administrative expenses in the
amount of $28,083,000 and elimination of expenses of the racecourse facility
in the amount of $3,867,000.

Statistical information

During 2000, the Company's portfolio of owned and leased hotels experienced
moderate growth in both ADR and REVPAR of approximately 1.8% and 0.7% for the
three months ended March 31, 2000 and 1999, respectively, while occupancy was
down 1.0%. Management attributes this to continued marketing efforts
throughout the portfolio on hotels that have been newly renovated, and
repositioned in certain cases, as well as to the current market conditions in
the U.S. lodging industry. The following table sets forth certain statistical
information for the Company's owned and leased hotels for the three months
ended March 31, 2000 and 1999, respectively as if the hotels were owned at the
beginning of the periods presented.

<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------
Occupancy ADR REVPAR
----------- --------------- ---------------
2000 1999 2000 1999 2000 1999
----- ----- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Wyndham Hotels & Resorts........... 71.7% 73.2% $147.52 $148.17 $105.83 $108.46
Wyndham Luxury Resorts............. 71.4% 73.7% $381.89 $362.15 $272.80 $267.03
Wyndham Garden Hotels.............. 64.5% 61.4% $ 86.85 $ 92.89 $ 55.99 $ 56.99
Summerfield Suites by Wyndham...... 77.7% 79.0% $123.56 $121.03 $ 95.99 $ 95.55
Other Proprietary Branded Hotels... 61.7% 64.4% $ 85.64 $ 83.81 $ 52.80 $ 53.91
Non-Proprietary Branded Hotels..... 69.2% 69.8% $109.52 $105.66 $ 75.82 $ 73.76
----- ----- ------- ------- ------- -------
Weighted average................... 70.1% 70.8% $124.70 $122.55 $ 87.40 $ 86.80
===== ===== ======= ======= ======= =======
</TABLE>

Restructuring Charges

During 1999, the Company recorded a restructuring charge of $285.3 million
as a result of the termination of the paired share structure and management's
decision to streamline its organization and focus on its core brands and
strategic assets. The restructuring activities primarily related to (1) the
termination of the paired share structure, (2) the exiting of the European
market for its non-branded assets, (3) the exiting of the limited service
hotel sector, (4) the closure of the Phoenix division office, (5) the closure
of the Wichita division office, and (6) the elimination of certain brands.
These restructuring activities resulted in the write-down of assets held for
sale to estimated fair value and the write-down of intangible assets. The
Company also incurred costs to sever employees, lease abandonment costs, and
other costs relating to exiting these activities.

18
<PAGE>

<TABLE>
<CAPTION>
Accrued Accrued
Cash/ Restructuring Balance Balance
Description Non-Cash Charge at 12/31/99 Activity at 3/31/00
- ----------- ------------- ------------- ----------- -------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Organizational
Restructuring
Write-down of
intangible assets..... Non-cash $ (83,094) $ -- $ -- $ --
Severance packages..... Cash/non-cash (4,675) (500) -- (500)
Downsizing European
division
Write-down of assets
held for sale......... Non-cash (69,491) -- -- --
Write-down of
intangible assets..... Non-cash (28,394) -- -- --
Severance packages..... Cash (3,578) (2,458) 2,458 --
Lease cancellations and
commitments........... Cash (1,907) (1,907) 1,907 --
Other exit costs....... Cash (4,062) (2,408) 2,127 (281)
Exiting limited service
hotel sector
Write-down of assets
held for sale......... Non-cash (63,328) -- -- --
Write-down of
intangible assets..... Non-cash (8,834) -- -- --
Closing of the Phoenix
division office
Severance packages..... Cash (2,006) (312) -- (312)
Lease cancellations and
commitments........... Cash (492) (321) 34 (287)
Closing of the Wichita
division office
Severance packages..... Cash (1,872) (1,872) 1,328 (544)
Elimination of certain
hotel brands
Write-down of
intangible assets..... Non-cash (12,821) -- -- --
Other
Other exit costs....... Cash (713) -- -- --
Effect of foreign
currency translation.. Non-cash -- 8 (5) 3
--------- ------- ------ -------
Total................... $(285,267) $(9,770) $7,849 $(1,921)
========= ======= ====== =======
</TABLE>

Liquidity and Capital Resources

Cash and cash equivalents as of March 31, 2000 were $94.5 million and
restricted cash was $135.7 million. Cash and cash equivalents as of March 31,
1999 were $131.8 million and restricted cash was $41.0 million.

Cash flow provided by operating activities

The Company's principal source of cash to fund operating expenses and pay
dividends on its preferred stock is cash flow provided by operating
activities. Wyndham's principal source of cash flow is from the operation of
the hotels that it owns, leases and manages. Cash flows from operating
activities were $26.9 million for the three months ended March 31, 2000 and
$81.3 million for the three months ended March 31, 1999.

Cash flows from investing and financing activities

Cash flows used in investing activities were $84.7 million for the three
months ended March 31, 2000, resulting primarily from the acquisition of hotel
properties and renovation expenditures at certain hotels. This was offset by
proceeds received from asset sales during the period. Cash flows provided by
financing activities of $8.0 million for the three months ended March 31, 2000
were primarily related to borrowings under the credit facility. This was
offset by repayments on the credit facility and other mortgage debt and
dividend payments made on preferred stock. In addition, during the first
quarter, the Company paid $34.4 million in premiums to enter into financial
derivatives with a total notional amount of $1.5 billion to limit its exposure
to rising interest rates.

19
<PAGE>

Cash flows used in investing activities were $64.9 million for the three
months ended March 31, 1999, resulting primarily from the acquisition of hotel
properties and management companies and renovation expenditures at certain
hotels. Cash flows from financing activities of $7.7 million for the three
months ended March 31, 1999 were primarily related to repayments on the credit
facility and mortgage notes and payments of deferred loan costs.

The Company does not anticipate paying a dividend to its common
shareholders. However, for the first six years dividends on the preferred
stock are structured to ensure an aggregate fixed cash dividend payment of
$29.25 million per year, so long as there is no redemption or conversion of
the preferred stock; therefore, for that period, dividends are payable partly
in cash and partly in additional shares of preferred stock. For the following
four years, dividends are payable in cash or additional shares of convertible
preferred stock as determined by the Board of Directors. After year ten,
dividends are payable solely in cash.

As of March 31, 2000, the Company had approximately $1.3 billion outstanding
under the term loan, $650 million outstanding under the increasing rate loan
facility, and $320 million outstanding under the revolving credit facility.
Additionally, the Company had outstanding letters of credit totaling $21.2
million. As of March 31, 2000, the Company also had over $1.4 billion of
mortgage debt outstanding that encumbered 74 hotels and approximately $32.1
million in other debt, resulting in total indebtedness of approximately $3.7
billion. As of March 31, 2000, the Company had $158.8 million of additional
availability under the revolving credit facility.

Renovations and capital improvements

During the first three months of 2000, the Company invested approximately
$40.7 million in capital improvements and renovations. During 2000, the
capital expenditures include (i) costs related to converting hotels to one of
the Company's proprietary brands, (ii) costs related to converting certain
Wyndham Garden hotels to Wyndham hotels, (iii) costs related to enhancing the
revenue-producing capabilities of the Company's hotels, and (iv) costs related
to recurring maintenance capital expenditures.

The Company attempts to schedule renovations and improvements during
traditionally lower occupancy periods in an effort to minimize disruption to
the hotel's operations. Therefore, management does not believe such
renovations and capital improvements will have a material effect on the
results of operations of the hotels. Capital expenditures are financed through
capital expenditure reserves or with working capital.

Inflation

Operators of hotels in general possess the ability to adjust room rates
quickly. However, competitive pressures may limit the Company's ability to
raise room rates in the face of inflation.

Seasonality

The hotel industry is seasonal in nature; however, the periods during which
the Company's hotel properties experience higher revenues vary from property
to property and depend predominantly on the property's location. The Company's
revenues typically have been higher in the first and second quarters than in
the third or fourth quarters.

Item 3. Qualitative and Quantitative Disclosures about Market Risks

The Company's primary market risk exposure is to future changes in interest
rates related to its derivative financial instruments and other financial
instruments including debt obligations, interest rate swaps, interest rate
caps, and future debt commitments.

The Company manages its debt portfolio by periodically entering into
interest rate swaps and caps to achieve an overall desired position of fixed
and floating rates or to limit its exposure to rising interest rates.

20
<PAGE>

The following table provides information about the Company's derivative and
other financial instruments that are sensitive to changes in interest rates.

. For fixed rate debt obligations, the table presents principal cash flows
and related weighted-average interest rates by expected maturity date
and contracted interest rates at March 31, 2000. For variable rate debt
obligations, the table presents principal cash flows by expected
maturity date and contracted interest rates at March 31, 2000.

. For interest rate swaps and caps, the table presents notional amounts
and weighted-average interest rates or strike rates by expected
(contractual) maturity dates. Notional amounts are used to calculate the
contractual cash flows to be exchanged under the contract. Weighted
average variable rates are based on implied forward rates in the yield
curve at March 31, 2000.

<TABLE>
<CAPTION>
2000 2001 2002 2003 2004 Thereafter Face Value Fair Value
---------- -------- -------- -------- ---------- ---------- ---------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt
Long-term debt
obligations including
Current Portion Fixed
Rate................... $ 22,477 $ 17,914 $ 46,092 $ 6,726 $ 52,467 $ 282,721 $ 428,397 $ 428,397
Average Interest Rate.. 8.98% 7.92% 8.89% 8.55% 8.21% 8.17% 8.29%
Variable Rate.......... $ 103,202 $183,668 $279,221 $ 36,912 $1,376,589 $1,318,963 $3,298,555 $3,298,555
Average Interest Rate.. 9.17% 8.80% 9.34% 8.99% 9.76% 9.32% 9.21%
Interest Rate Derivative
Financial Instruments
Related to Debt
Interest Rate Swaps
Pay Fixed/Receive
Variable.............. $ 72,000 $ 30,453 $500,000 $250,000 $ -- $ 700,000 $1,552,453 $ 10,251
Average Pay Rate....... 6.03% 6.04% 6.05% 6.51% 6.75% 6.75%
Average Receive Rate... 6.61% 7.42% 7.46% 7.49% 7.57% 7.69%
Interest Rate Caps
Notional Amount........ $1,500,000 $ 57,475 $800,000 $ -- $ 340,615 $ -- $2,698,090 $ 31,356
Strike Rate............ 6.46% 5.78% 5.70% 7.12% 7.12% --
Forward Rate........... 6.61% 7.42% 7.46% 7.49% 7.57% --
</TABLE>

21
<PAGE>

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

On June 29, 1992, an action for trademark infringement was filed in the New
York Supreme Court of New York, Index No. 17474/92 titled Wyndham Hotel
Company, John Mados, and Suzanne Mados et al. v. Wyndham Hotel Company. Ltd.
It is based upon the Madoses' alleged use of the trademark Wyndham(R) in
connection with the Wyndham Hotel located in Manhattan, New York City, and
operated by the Madoses since 1966 pursuant to a lease agreement entered into
by the Madoses on June 1, 1957. The case was tried in May 1996, and an order
and partial judgment were entered in March 1998. The order enjoins the Company
from using the name and trademark "Wyndham" in connection with advertising,
promoting, managing or operating a hotel in Manhattan, New York City, and
places restrictions on Wyndham's use of the name and mark "Wyndham" in all
other areas of New York outside of Manhattan. In November 1998, an order was
issued clarifying the original order and a final judgment was entered. In
December 1998, Wyndham appealed that judgment to the New York Supreme Court,
Appellate Division, First Department. In January 1999, Wyndham moved for a
stay of the injunction pending appeal, which motion was granted by the
Appellate Division, First Department on February 4, 1999. On May 18, 1999, the
Appellate Division, First Department rendered a decision and order affirming
the final judgment. On May 24, 1999, Wyndham filed a motion for permission to
appeal that decision to the Court of Appeals of the State of New York. In July
1999, Wyndham received notice that the Court of Appeals of the State of New
York would not hear the appeal.

22
<PAGE>

false statements about Wyndham. The complaint was filed on behalf of all
stockholders who purchased Patriot American and Wyndham stock during that
period. Three other actions, Gallagher v. Patriot American Hospitality, Inc.,
et al., No. 3-99-CV1429-L, (filed on June 23, 1999), David Lee Meisenburg v.
Patriot American Hospitality, Inc., Wyndham International, Inc. James D.
Carreker, and Paul A. Nussbaum, No. 3-99-CV1686-X, (filed July 27, 1999) and
Deborah Szekely v. Patriot American Hospitality, Inc., et al., No. 3-99-
CV1866-D, (filed on or about August 27, 1999), allege substantially the same
allegations. The complaints in these actions seek unspecified damages but
assert that the defendants are liable for the diminution in value of Patriot
stock held by class members during the class period. By order of the Judicial
Panel on Multidistrict Litigation, these actions have been consolidated with
certain other stockholder actions and transferred to the Northern District of
California for consolidated pre-trial purposes. To date, none of the
defendants have been required to answer, move or otherwise respond to the
complaint, and no discovery has been taken. Wyndham plans to vigorously defend
those lawsuits.

Patriot and PAH Stanley Ranch ("PAH") are engaged in a dispute with Carneros
Valley Investors involving a contract which calls for a purchase price of $14
million with an additional $5 million to be paid in PAH gets approval for a
development in the Napa Valley. PAH did not get approval for this development.
In September 1999, Carneros Valley Investors filed a complaint in the Superior
Court of California, San Francisco, which alleges that Patriot owes Carneros
Valley Investors $5 million and alleges that Patriot acted negligently,
fraudulently and in bad faith if attempting to get the approval for the
development. The complaint has been amended to allege fraud, allegedly
entitling the plaintiff to rescind the sale. Patriot has answered the
complaint, but to date, no discovery had been taken. Wyndham intends to defend
the suit vigorously.

Patriot, IHC/Jacksonville Corporation and IHC Realty Partnership are parties
to a dispute with another limited partner of the partnership relating to a
proposed hotel development in Jacksonville, Florida. The case is captioned C&M
Investors Limited v. Patriot American Hospitality, Inc. et al., and was
originally filed in the Florida Circuit Court, Fourth Judicial Circuit, in and
for Duval County, Florida, but was later removed and is now pending in the
United States District Court, Middle District of Florida, Jacksonville
Division, Civil Action No. 98-1236-Civ. J 20B. Wyndham plans to vigorously
defend this lawsuit.

Item 2. Changes in Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

23
<PAGE>

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

<TABLE>
<CAPTION>
Item No. Description
-------- -----------
<C> <S>
2.1* Amendment No. 1 to Amended and Restated Bylaws of Wyndham
International, Inc.
10.1* Letter Agreement dated April 14, 2000 between Anne L. Raymond and
Wyndham.
27.1* Financial Data Schedule--Wyndham.
</TABLE>
- --------
* Filed herewith

(b) Reports on Form 8-K for the quarter ended March 31, 2000.

None.

24
<PAGE>

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

Wyndham International, Inc.

/s/ Richard A. Smith
By___________________________________
Richard A. Smith
Executive Vice President and Chief
Financial Officer
(Authorized Officer and
PrincipalAccounting and Financial
Officer)

Dated: May 12, 2000

<PAGE>

EXHIBIT 2.1

AMENDMENT NO. 1 TO
AMENDED AND RESTATED
BYLAWS OF
WYNDHAM INTERNATIONAL, INC.

Section 2.5 of the Bylaws is hereby amended and restated in its
entirety as follows:

2.5 Quorum. Except as otherwise required by the Certificate,
------
any number of stockholders together holding shares representing a
majority of the votes entitled to be cast with respect to the
business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a
quorum for the transaction of business. If less than a quorum shall
be in attendance at the time for which a meeting shall have been
called, the meeting may be adjourned from time to time by the holders
of shares representing a majority of the votes present or represented
by proxy.

The first sentence of Section 2.7 of the Bylaws is hereby amended and
restated in its entirety as follows:

2.7 Action at Meeting. When a quorum is present, any matter
-----------------
before any meeting of stockholders shall be decided by the
affirmative vote of holders of shares representing a majority of the
votes entitled to be cast on such matter who shall be present in
person or represented by proxy at such meeting, except where a larger
vote is required by law, by the Certificate or by these Bylaws.

<PAGE>

EXHIBIT 10.1

April 14, 2000

Ms. Anne Raymond
c/o Wyndham International, Inc.
1950 Stemmons Freeway, Suite 6001
Dallas, Texas 75207

Dear Ms. Raymond:

This letter agreement (the "Agreement") confirms the agreement that we
have reached regarding the termination of your employment with Wyndham
International, Inc. ("WII") and its respective related and affiliated entities
(collectively, the "Companies").

The purpose of this Agreement is to establish a mutually agreeable
arrangement for ending your employment. This Agreement does not constitute and
should not be construed as an admission by the Companies that they have in any
way violated any legal obligation that they owe to you or to any other person
or as an admission by you that you have in any way violated any legal
obligation that you owe to the Companies or to any other person. To the
contrary, the parties' willingness to enter into this Agreement demonstrates
that they are continuing to deal with each other fairly and in good faith.

With those understandings and in exchange for the promises set forth
below, you and the Companies agree as follows:

Termination
- -----------

You hereby acknowledge that your employment with WII will terminate
effective as of July 1, 2000 (the "Date of Termination"). Any offices or
affiliations that you hold with any of the Companies will also terminate as of
the Date of Termination. You and WII acknowledge that your termination from
employment is a termination for Good Reason as defined by Subparagraph 6(e) of
the April 19, 1999 (Amended and Restated) Executive Employment Agreement
between you and WII (the "Employment Agreement"). WII will continue your salary
and benefits through the Date of Termination pursuant to Paragraph 7(d) of the
Employment Agreement, and shall on the date of termination pay you a pro rata
bonus of Ninety Thousand, Seven Hundred and Twenty-Five Dollars ($90,725) in
respect of 2000.
<PAGE>

2. Compensation and Benefits.
-------------------------

(a) Effect of Termination on Equity Grants. You understand and
--------------------------------------
acknowledge that the Option (as defined in the Employment Agreement)
granted to you on April 19, 1999 will continue to vest for 24 months
following the Date of Termination and remain exercisable thereafter in
accordance with and subject to the terms and conditions of Paragraph 3(c)
of the Wyndham International, Inc. Non-Qualified Stock Option Agreement,
dated as of April 19, 1999, by and between you and WII; all remaining
unvested portions of the Option then will lapse. Your rights to any vested
stock options and other stock-based awards granted to you by the Companies
shall survive the Date of Termination in accordance and upon the terms
provided in the employee stock option or incentive plan or any agreement
or other instrument attendant thereto pursuant to which such options or
awards were granted.

(b) Severance. In recognition of your service to WII, and in full
---------
satisfaction of any and all claims you may have against the Companies, as
more fully set forth in Paragraph 3 below, the Companies will pay you Nine
Hundred Eighty Three Thousand Eight Hundred Dollars ($983,800) (the
"Severance Payment") subject to the conditions set forth in Paragraph
7(d)(i) of the Employment Agreement, including but not limited, your
continuing strict adherence to the restrictions set forth in Paragraphs 4
and 5 of the Employment Agreement. You acknowledge and agree that this
Severance Payment fully and completely satisfies the Companies' obligation
to pay your severance under Paragraph (7)(d)(i) of the Employment
Agreement. The Severance Payment shall be reduced by applicable
withholdings and shall be payable in equal bi-weekly installments over a
period of twenty-four (24) months commencing on the regular payroll date
next following the Date of Termination (the "Severance Period"). In the
event that you commence any employment, whether as an employee or through
self-employment, during the Severance Period, the Companies shall be
entitled to set-off against the remaining installments of the Severance
Payment fifty percent (50%) of the amount of any cash compensation
received by you during the Severance Period from the new employment. You
shall provide the Companies notice of any new employment and cash
compensation received during the Severance Period after the Date of
Termination.

(c) Health/Dental/Vision Benefits. You and your eligible dependents
-----------------------------
will be eligible to receive continuation coverage under WII's group
health, dental and vision plans to the extent authorized by and consistent
with 29 U.S.C. (S) 1161 et seq. (commonly known as "COBRA") and applicable
group health, dental and vision plan terms. To the extent you and your
eligible dependents elect to continue coverage in one or more plans under
COBRA, the company will pay the costs of such coverage(s) on your behalf
until the earlier of (A) twelve (12) months after the Date of Termination
Date or (B) the date you become eligible for similar coverage provided by
another employer. WII will permit you to continue coverage in one or more
plans under COBRA at your own cost until the
<PAGE>

earlier of (A) eighteen (18) months after the Termination Date or (B) the
date you become eligible for similar coverage provided by another
employer.

(d) Tax Preparation. The Companies shall provide reasonable assistance
---------------
in connection with preparation of tax returns, among other support, for a
period of five (5) years beginning on the Date of Termination, in
accordance with Paragraph 7(f) of the Employment Agreement.

(e) Outplacement. WII shall pay for the reasonable costs (not to
------------
exceed $27,000) of executive outplacement services selected by you for use
in connection with obtaining other employment for up to six (6) months
from the Date of Termination or through the date you secure new
employment, whichever occurs first.

(f) Promissory Note. Section 3 of that certain No Personal Liability
---------------
Nonrecourse Promissory Note, dated April 19, 1999, made by you and
attached to the Employment Agreement as Exhibit B (the "Note") is hereby
amended to provide that so long as you continue to adhere strictly to your
continuing obligations under Paragraphs 4 and 5 of the Employment
Agreement, as incorporated and modified herein below, WII agrees that the
principal balance and accrued interest on the Note shall not become due
and payable until June 1, 2002. In the event you breach any of your
continuing obligations under Paragraphs 4 or 5 of the Employment
Agreement, as incorporated and modified herein below, the principal
balance and accrued interest on the Note shall become due and payable
immediately. WII further agrees that in the event you comply faithfully
with your continuing obligations under Paragraphs 4 and 5 of the
Employment Agreement, as incorporated and modified herein below, through
June 1, 2002, the principal balance and accrued interest on the Note shall
not become due and payable until June 1, 2004.

(g) Gross Up Payment. You remain eligible for a Gross Up Payment, if
----------------
necessary, as provided for in Paragraph 8(b) of the Employment Agreement.

(h) Other Benefits. Except as expressly provided above, your
--------------
eligibility to participate in any of the Companies' respective employee
benefit plans and programs ceases on or after the Date of Termination in
accordance with the terms and conditions of each of those benefit plans
and programs and your rights to benefits under any of the employee benefit
plans and programs, if any, are governed by the terms and conditions of
each of those employee benefit plans and programs.

(i) Employee Rates. You and your family will be entitled to stay in
--------------
any Company hotels at employee rates, subject to availability, throughout
the Severance Period.
<PAGE>

3. Release of Claims. So long as the Companies recognize and honor the
-----------------
agreements herein made, you voluntarily and irrevocably release and discharge
the Companies, their related or affiliated entities, and their respective
predecessors, successors, and assigns, (including but not limited to Patriot
American Hospitality, Inc. ("PAHI")), and the current and former officers,
directors, shareholders, employees, and agents of each of the foregoing (any and
all of which are referred to as "Releases") generally from all charges,
complaints, claims, promises, agreements, causes of action, damages, and debts
that relate in any manner to your employment with or services for the Companies,
known or unknown ("Claims"), which you have, claim to have, ever had, or ever
claimed to have had against any of the Releases through the date on which you
execute this Agreement. This general release of Claims includes, without
implication of limitation, all Claims for or related to: the Employment
Agreement; the compensation provided to you by the Companies; your termination
as described in Paragraph 1; wrongful or constructive discharge; breach of
contract; breach of any implied covenant of good faith and fair dealing;
tortious interference with advantageous relations; intentional or negligent
misrepresentation, fraud or deceit; infliction of emotional distress, and
unlawful retaliation or discrimination under the common law or any federal,
state or local statute or law (including, without implication of limitation, the
Employee Retirement Income Security Act, Title VII of the Civil Rights Act of
1964, the American with Disabilities Act, the Age Discrimination in Employment
Act, Tex. Lab. Code (S)(S)21.001, et seq., Tex. Hum. Res. Code (S)(S)121.001,
et seq.). You also waive any Claim for reinstatement, severance, incentive or
retention pay (except as expressly provided in this Agreement), attorney's fees,
or costs, relating to the above waived claims. This paragraph 3 does not
release any claim for non-performance or breach of this Agreement.

You agree that you will not hereafter pursue any Claim against any Release
filing a lawsuit in any local, state or federal court for or on account of
anything which has occurred up to the present time as a result of your
employment, and you shall not seek reinstatement with, or damages of any nature,
severance, incentive or retention pay, attorney's fees, or costs from the
Companies or any of the other Releases.

4. Employment Agreement
--------------------

This Agreement supersedes all provisions of the Employment Agreement other
than Paragraphs 4 (Unauthorized Disclosure), 5 (Covenant Not to Compete), 6
(Termination), 7 (Compensation Upon Termination or During Disability), 8(b)
(Gross Up Payment), 13 (Arbitration; Other Disputes) and 15 (Litigation and
Regulatory Cooperation) thereof, which provisions are incorporated herein by
reference and shall continue to bind you in accordance with their respective
terms.
<PAGE>

5. Return of Property
------------------

All documents, records, material and all copies of any of the foregoing
pertaining to Confidential Information (as defined in Paragraph 4(a) of the
Employment Agreement), and all software, equipment, and other supplies, whether
or not pertaining to Confidential Information, that have come into your
possession or been produced by you in connection with your employment
("Property") have been and remain the sole property of the Companies. You shall
return all Property (except your IBM Think pad 240 notebook computer which can
be retained by you) to the Companies on or before the Date of Termination. In no
event should this provision be construed to require you to return to the Company
any document or other materials concerning your remuneration and benefits during
your employment with the Companies.

6. Nondisparagement
----------------

You agree not to take any action or make any statement, written or oral,
which disparages or criticizes the Companies or their respective officers,
directors, agents, or management and business practices, or which disrupts or
impairs the Companies' normal operations. The Companies, on behalf of
themselves, agree (a) not to take any action or make any statement, written or
oral, which disparages or criticizes you or your management and business
practices, and (b) to instruct their respective directors and officers not to
take any action or make any statement, written or oral, which disparages or
criticizes you or your management and business practices. The provisions of this
Paragraph 6 shall not apply to any truthful statement required to be made by you
or the Companies, as the case may be, in any legal proceeding or governmental or
regulatory investigation.

7. Additional Representations, Warranties and Covenants. As a material
----------------------------------------------------
inducement to the Companies to enter into this Agreement, you represent, warrant
and covenant as follows:

(a) You have not assigned to any third party any Claim released by
this Agreement.

(b) You have not heretofore filed with any agency or court any Claim
released by this Agreement.

8. Further Assurances
------------------

Upon the terms and subject to the conditions herein provided, each of the
parties hereto agrees to use its reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, subject, in the case
of the Companies, to the provisions of any credit agreement or financing
agreement or other contract or agreement by which any of the Companies may be
bound.
<PAGE>

9. Exclusivity
-----------

This Agreement sets forth all the consideration to which you are entitled
from the Companies by reason of your termination and your duties for the
Companies while employed, and you agree that you shall not be entitled to or
eligible for any payments or benefits under any other Company severance, bonus,
retention or incentive policy, arrangement or plan.

10. Tax Matters
-----------

All payments and other consideration provided to you pursuant to this
Agreement shall be subject to any deductions, withholding or tax reporting that
the Companies reasonably determine to be required for tax purposes.

11. Arbitration of Disputes
-----------------------

Any controversy or claim arising out of or relating to this Agreement or
the breach thereof shall, to the fullest extent permitted by law, be settled by
arbitration in accordance with Paragraph 13 of the Employment Agreement. This
Paragraph 11 shall be specifically enforceable. Notwithstanding the foregoing,
this Paragraph 11 shall not preclude either party from pursuing a court action
for the sole purpose of obtaining a temporary restraining order or a preliminary
injunction in circumstances in which such relief is appropriate; provided that
--------
any other relief shall be pursued through an arbitration proceeding pursuant to
this Paragraph 11.

12. Consent to Jurisdiction
-----------------------

To the extent that any court action is permitted consistent with or to
enforce Paragraph 11 of this Agreement, the parties hereby consent to the
jurisdiction of the state and federal courts in or for Dallas, Texas.
Accordingly, with respect to any such court action, you and the Companies (a)
submit to the personal jurisdiction of such courts; (b) consent to service of
process; and (c) waive any other requirement (whether imposed by statute, rule
of court, or otherwise) with respect to personal jurisdiction or service of
process.

13. Notices, Acknowledgments and Other Terms
----------------------------------------

(a) You are advised to consult with an attorney before signing this
Agreement.

(b) You acknowledge and agree that the Companies' promises in this
Agreement constitute consideration in addition to anything of value to
which you are otherwise entitled by reason of the termination of your
employment.

(c) By signing this Agreement, you acknowledge that you are doing so
voluntarily and knowingly, fully intending to be bound by this Agreement.
You also acknowledge that you are not relying on any representations by us
or any other representative of the Companies concerning the meaning of any
aspect of this Agreement.
<PAGE>

You understand that this Agreement shall not in any way be construed as an
admission by the Companies of any liability or any act of wrongdoing
whatsoever by the Companies against you and that the Companies
specifically disclaim any liability or wrongdoing whatsoever against you
on the part of themselves and their respective officers, directors,
shareholders, employees and agents. You understand that if you do not
enter into this Agreement and bring any claims against the Companies, the
Companies will dispute the merits of those claims and contend that they
acted lawfully and for good business reasons with respect to you.

(d) You acknowledge that you have been given the opportunity, if you
so desired, to consider this Agreement for twenty-one (21) days before
executing it. If not signed by you and returned to the General Counsel of
WII so that it is received by close of business on the twenty-second
(22nd) day after your receipt of the Agreement, this Agreement will not be
valid. In addition, if you breach any of the conditions of the Agreement
within the twenty- one (21) day period, the offer of this Agreement will
be withdrawn and your execution of the Agreement will not be valid. In the
event that you execute and return this Agreement within twenty-one (21)
days or less of the date of its delivery to you, you acknowledge that such
decision was entirely voluntary and that you had the opportunity to
consider this letter agreement for the entire twenty-one (21) day period.
The Companies acknowledge that for a period of seven (7) days from the
date of the execution of this Agreement, you shall retain the right to
revoke this Agreement by written notice delivered to the General Counsel
of WII before the end of such period, and that this Agreement shall not
become effective or enforceable until the expiration of such revocation
period (the "Effective Date").

(e) In the event of any dispute, this Agreement will be construed as
a whole, will be interpreted in accordance with its fair meaning, and will
not be construed strictly for or against either you or the Companies.

(f) The law of the State of Texas will govern any dispute about this
Agreement, including any interpretation or enforcement of this Agreement.

(g) In the event that any provision or portion of a provision of this
Agreement shall be determined to be illegal, invalid or unenforceable, the
remainder of this Agreement shall be enforced to the fullest extent
possible and the illegal, invalid or unenforceable provision or portion of
a provision will be amended by a court of competent jurisdiction to
reflect the parties' intent if possible. If such amendment is not
possible, the illegal, invalid or unenforceable provision or portion of a
provision will be severed from the remainder of this Agreement and the
remainder of this Agreement shall be enforced to the fullest extent
possible as if such illegal, invalid or unenforceable provision or portion
of a provision was not included.

(h) This Agreement may be modified only by a written agreement signed
by you and authorized representatives of the Companies.
<PAGE>

(i) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter,
except as provided in Paragraph 4 hereof and except for the Non Recourse
Promissory Note between the parties dated April 19, 1999 which remains in
effect in accordance with its terms, as amended by this agreement.

(j) This Agreement shall be binding upon each of the parties and upon
their respective heirs, administrators, representatives, executors,
successors and assigns and shall inure to the benefit of each party and to
their heirs, administrators, representatives, executors, successors, and
assigns.

If you agree to these terms, please sign and date below and return this
Agreement to the General Counsel of WII within 22 days.

Sincerely,

WYNDHAM INTERNATIONAL, INC.

By /s/ Fred Kleisner
-----------------------------------
Fred Kleisner
Chief Executive Officer & President

Accepted and agreed to:

/s/ Anne L. Raymond April 15, 2000
- ----------------------------- ---------------------------------------
Anne Raymond Date

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF WYNDHAM, INTERNATIONAL, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-1999 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 94,471 144,333
<SECURITIES> 0 0
<RECEIVABLES> 255,846 186,321
<ALLOWANCES> 0 0
<INVENTORY> 22,103 23,304
<CURRENT-ASSETS> 525,392 477,635
<PP&E> 5,936,825 5,891,672
<DEPRECIATION> 543,749 478,494
<TOTAL-ASSETS> 6,997,074 7,003,490
<CURRENT-LIABILITIES> 448,260 491,824
<BONDS> 0 0
0 0
105 103
<COMMON> 1,673 1,672
<OTHER-SE> 2,141,853 2,135,087
<TOTAL-LIABILITY-AND-EQUITY> 6,997,074 7,003,490
<SALES> 0 0
<TOTAL-REVENUES> 653,626 671,075
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 545,329 574,132
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 91,863 90,215
<INCOME-PRETAX> 16,924 9,429
<INCOME-TAX> (2,945) (8,943)
<INCOME-CONTINUING> 13,979 486
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 11,597 572
<EPS-BASIC> (0.08) (0.05)
<EPS-DILUTED> (0.08) (0.13)

</TABLE>