HAMMONS JOHN Q HOTELS LP, 10-K, 1997-04-03

HAMMONS JOHN Q HOTELS LP
10-K, 1997-04-03
HOTELS & MOTELS

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended January 3, 1997 OR

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

Commission File Number 033-73340-01

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

Delaware 43-1523951
Missouri 43-1680322
Missouri 43-1720400
(State of organization) (I.R.S. employer identification nos.)
300 John Q. Hammons Parkway 65806
Suite 900 (Zip Code)
Springfield, Missouri
(Address of principal executive offices)

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

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

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

Indicate by check mark whether the Registrants (John Q. Hammons
Hotels, L.P. and John Q. Hammons Hotels Finance Corporation) (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) have been subject to such
filing requirements for the past 90 days. YES X NO The
------- -------
Registrants (John Q. Hammons Hotels, L.P. and John Q. Hammons Hotels Finance
Corporation) have been subject to the filing requirements since February 11,
1994. The Registrant (John Q. Hammons Hotels Finance Corporation II) has been
subject to the filing requirements since January 10, 1996.

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
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PART I
Item 1. Business.

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

Overview

The Company is a leading independent owner, manager and developer of
affordable upscale hotels in capital city, secondary and airport markets. The
Company owns and manages 39 hotels located in 18 states, containing 9,666 guest
rooms or suites (the "Owned Hotels"), and manages four additional hotels located
in two states, containing 952 guest rooms (the "Managed Hotels"). The Company
also owns eight upscale hotels under construction, which are scheduled to open
during 1997 and 1998 (the "Scheduled Hotels"). The Company's existing 43 Owned
Hotels and Managed Hotels (together the "JQH Hotels") operate primarily under
the Holiday Inn and Embassy Suites trade names. Most of the Company's hotels
serve markets with populations of up to 300,000 people (or larger populations in
the case of airport markets) and generally are near a state capitol, university,
airport, convention center or corporate headquarters, plant or other major
facility. The Managed Hotels are controlled and principally owned by Mr. John
Q. Hammons, founder of the Company, controlling stockholder of the General
Partner and beneficial owner of substantially all of the LP Units of the
Company. The Company earns fees for providing management services to the Managed
Hotels pursuant to long-term management contracts. The Company has an option
granted by Mr. Hammons and entities controlled by him to purchase each of the
Managed Hotels.

The Company's strategy is to expand its business primarily through (i)
developing new hotels in growth market areas in which the Company believes it
can establish a leading and sustainable market position and (ii) capitalizing on
positive industry fundamentals by owning and operating its hotel portfolio. In
implementing its development strategy, the Company works closely with local and
state officials to develop hotels which meet business and social needs of the
community and satisfy long-term demand for hotel rooms. The Company often
benefits from development incentives provided by local governments and other
organizations interested in ensuring the development of a quality hotel in their
community. In addition, the Company engages in extensive analysis of target
markets, customized design and selected pre-selling efforts. The Company's
entire management team, including regional vice presidents, hotel managers,
salespeople, design specialists and architects, is involved in the development
of a hotel. The Company is evaluating development of a number of hotels in
addition to the four Scheduled Hotels already under construction and plans to
develop a number of additional hotels that are not yet under construction.

The JQH Hotels are designed to appeal to a broad range of hotel
customers, including frequent business travelers, large groups or conventions,
as well as leisure travelers. Each of the JQH Hotels is individually designed
by the Company's in-house design staff, and most contain an expansive multi-
storied atrium, large indoor water falls, lush plantings and comfortable lounge
areas. The Company believes that these design features enhance customer comfort
and safety and increase the value perceived by the guest. In addition, the JQH
Hotels typically include extensive meeting facilities that can be readily
adapted to accommodate both larger and smaller meetings, conventions and trade
shows. The 28 Holiday Inn JQH Hotels are affordably priced hotels designed to
attract the business and leisure traveler desiring quality accommodations,
including convention facilities, in-house restaurants, cocktail lounges and room
service, and contain an average of 265 rooms. The seven Embassy Suites JQH
Hotels are upscale all-suite hotels which appeal to the traveler needing or
desiring greater space and specialized services and contain an average of 234
suites. The JQH Hotels also include three non-franchise hotels, one Radisson
Plaza, one Hampton Inn & Suites, one Marriott, and one Days Inn. The non-
franchise hotels have the word "Plaza" in their name and average 232 rooms. The
Company has enjoyed strong performance from both the Holiday Inn and Embassy
Suites brands and from its non-franchise hotels. The Company's franchise
agreements do not preclude the Company from developing hotels under alternative
brand

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names. The Company determines which brand of hotel to develop depending upon
the demographics of the market to be served.

Management of the JQH Hotels is coordinated from the Company's
headquarters in Springfield, Missouri by a central management team. Five
regional vice presidents are responsible for supervising a group of general
managers of JQH Hotels in day-to-day operations. Centralized management services
and functions include development, design, marketing, purchasing and financial
controls. Through these centralized services, significant cost savings are
realized due to economies of scale. The Company markets the JQH Hotels through
its own internal sales force of approximately 250 employees. This sales force
reacts promptly to local changes and market trends in order to customize
programs to meet each hotel's competitive needs. The Company maintains national
and local marketing programs through advertising created by its in-house
marketing department. See" Operations".

The Company's development strategy is to build hotels in underserved
secondary and airport markets in which the Company believes it can establish a
leading market position. The Company attempts to reduce the risks inherent in
development through extensive analysis of target markets, customized design and
selected pre-selling efforts. The Company's entire management team, including
regional vice presidents, hotel managers, salespeople, design specialists and
architects, is involved in the development of a hotel. In addition, the Company
works closely with local and state officials to develop hotels which meet
business and social needs of the community and satisfy long-term demand for
hotel rooms. The Company often benefits from development incentives provided by
local government and other organizations interested in ensuring the development
of a quality hotel in their community.

The General Partner conducts all of its business operations through
the Company and its subsidiaries. Mr. Hammons beneficially owns all 294,100
shares of Class B Common Stock of the General Partner, representing 70.88% of
the combined voting power of both classes of the General Partner's Common Stock.
The General Partner is the sole general partner of the Company through its
ownership of all 6,336,100 general partner units (the "GP Units), representing
28.31% of the total equity in the Company. Mr. Hammons beneficially owns all
16,043,900 limited partnership units of the Partnership (the "LP Units"),
representing 71.69% of the total equity in the Company. The 6,042,000 shares of
the General Partner are listed on the New York Stock Exchange and represent
27.00% of the total equity of the Company, and the Class B Common Stock and LP
Units beneficially owned by Mr. Hammons represent 73.00% of the total equity in
the Company. Mr. Hammons is also the beneficial owner of 110,100 shares of Class
A Common Stock.

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

Lodging Industry

As an owner/operator of hotels, the Company believes that it is well
positioned to benefit from the continuing recovery of the hotel industry.
According to updated Smith Travel Research reports, strong increases in demand
coupled with slower average increases in supply have allowed the industry to
realize growing profitability and improvements in key operating statistics
including occupancy, room rates and revenue per available room ("RevPAR"). As
shown in the following table, from 1995 to 1996, growth in hotel rooms rented
has outpaced growth in rooms available by a ratio of more than 1.4 to 1.0 This
trend of demand growth outpacing supply growth is allowing the industry to
absorb the hotel oversupply brought on by the building activities of the
1980's, when approximately 7,000 hotels with 900,000 rooms were built due to the
greater availability of financing and tax incentives then available.

Because demand for hotel rooms has grown faster than the supply of
hotel rooms over the past two years, occupancy has improved to 65.7% in 1996
from 64.7% in 1994, while average daily room rates have increased to $71.66 in
1996 from $64.24 in 1994, an increase of 11.6%. These most recent increases in
occupancy and average daily room rate resulted in 7.7% growth in RevPAR from
1995 to 1996. The Company expects these trends in demand and supply and their
corresponding impact on occupancy, room rates and RevPAR to have a positive
impact on industry profitability over the next few years. The following table
sets forth (i) the average occupancy for 1995 and 1996, (ii) the average daily
room rate for 1995 and 1996, and (iii) the percentage change from 1995 to 1996
in room revenue, rooms available, and rooms rented, including a breakdown by
price and by property location:

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Lodging Industry Profile

<TABLE>
<CAPTION>
Average
-------
Occupancy Room Rate % Change 1995-96
--------- --------- ----------------
1995 1996 1995 1996 Room Rooms Rooms
---- ---- ---- ---- ---- ----- -----
Revenue Available Rented
------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Segment:
U.S. Industry............. 65.1% 65.7% $ 67.17 $ 71.66 10.0% 2.3% 3.1%

By price:
Luxury................... 72.2% 73.4% $117.70 $125.96 10.3% 1.4% 3.0%
Upscale.................. 68.4 68.4 81.17 85.54 9.0 3.4 3.4
Mid-Price................ 66.3 66.3 61.50 65.63 10.2 3.3 3.3
Economy.................. 62.5 62.6 47.87 51.01 9.1 2.3 2.4
Budget................... 61.7 61.7 36.27 38.48 6.9 .7 0.7

By property location:
Urban.................... 67.9% 69.2% $ 94.01 $102.15 11.8% 0.9% 2.9%
Suburban................. 65.7 65.8 60.80 64.59 9.9 3.2 3.4
Airport.................. 70.8 71.2 66.20 71.01 9.0 1.1 1.6
Highway.................. 62.7 62.0 48.03 50.73 7.5 3.0 1.8
Resort................... 68.6 70.1 103.82 107.72 8.4 0.3 2.5
</TABLE>

- -----------------------
Source: Smith Travel Research Lodging Outlook

The Company believes JQH Hotels are primarily in the Upscale Segment by price
and the Suburban Segment by property location in terms of the above table.
Upscale is defined as a full-service hotel (meaning the hotel has a restaurant
and lounge) which has average published rates between the 70th percentile and
the 85th percentile in its market. In 1996, upscale hotels had an average room
rate of $85.54. For purposes of the above table, suburban is defined as lodging
properties located in the suburban area of a metropolitan market or in a city
not large enough to be considered urban. Most of the JQH Hotels are located in
secondary markets, which the Company believes constitute suburban locations.

Comparing the current performance of the JQH Hotels with segment and industry
averages, the Company believes that it is well positioned both within those
segments displaying significant growth and within an improving lodging industry.

Strategy

The Company's strategy is to own and operate a geographically diverse
portfolio of upscale hotels and to develop, own and operate new hotels in
targeted markets that have the demographic and business characteristics which
fit the Company's market profile. The Company's management believes that this
strategy enhances revenues, cash flow and profitability while simultaneously
providing opportunity for expansion. Specifically, the Company's strategy
employs the following four tenets:

Preeminence in Growth Markets. The Company owns, manages and develops hotels
almost exclusively in growth market areas. In seeking to be the preeminent
quality provider in its selected growth markets, the Company frequently develops
upscale hotels in underserved markets that, due to their size and demographics,
are not expected to support a competitor hotel of similar caliber. Once the
particular market has been selected, the Company's in-house design and
architectural team designs a hotel expressly suited to that particular market's
business and social needs. The equal emphasis on quality and design efficiency
permits the Company to deliver value to the guest in a market where competing
hotels do not offer the same level of facilities or quality of service.

Before entering a market, the Company thoroughly researches the demographics
of the market to ensure the presence of strong demand attributes. For example,
many of the JQH Hotels are located in state capitols or in cities affiliated
with a university, convention center or corporate headquarters, plant or other
major facility. The high traffic nature of such locations helps provide the
Company with a reliable source of customers throughout the year, while the
population size reduces the likelihood of a second competitor of similar
quality. The Company also enhances a market's demand by coordinating hotel
development with local civic leaders on downtown revitalization projects. Often,
civic leaders seek the Company's support in providing the community with an
increased supply of quality hotel rooms. In the same manner, the Company has
formed alliances with other developers on development projects which include a
demand generating factor such as a trade or convention center together with the
Company's hotel.

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High Quality Product at an Affordable Price. The Company provides high-
quality, affordably priced accommodations within its markets. The Company's
hotels are often the highest quality hotel in their respective markets. By
providing full service in an appealing atmosphere and amenities typically
exceeding those offered by local competitors, the Company is able to attract a
broad range of guests who desire the look and feel of an upscale hotel, and are
willing to pay the associated premium rate for that market. The Company believes
that this broad range of customers includes both business and leisure travelers
who are looking for affordable accommodations with the atmosphere and amenities
of an upscale hotel. To solicit and retain the business of these guests, the
Company designs, owns and manages hotels with multi-storied atrium lobbies, well
furnished rooms, attractive restaurants and expansive meeting and convention
space, emphasizing quality and efficiency in order to maximize the value
perceived by the guest.

Owner/Operator of Hotels. The Company believes that its ownership interest in
hotels results in product quality and service at a consistently higher level
than that of its competitors, which are often operated by third-party management
companies. The Company's ownership and management of its properties permits
immediate integration of new services and allows the Company to directly control
expansion, affect pricing and execute other marketing decisions on a regional
and local basis without the time delay of consulting third-party owners or
management companies. The combined ownership/management of the JQH Hotels has
the advantage of significant economies of scale which increases the ability to
control costs and allocate resources efficiently among the JQH Hotels. The
Company intends to continue to be an owner/operator of hotels instead of
strictly an operator because of the existing competitive hotel management
market.

Multiple Trade Names. The Company's franchising agreements with Holiday Inn
and Embassy Suites provide the Company with the flexibility to develop
properties either with those well known trade names, the Company's own Plaza
name or with other hotel trade names, whichever is best suited for each local
market's demand characteristics. As the Company develops hotels, it considers
using the trade names with which it has had success as well as others in order
to best meet the demand characteristics of the target market.

Development

The Company believes that it is one of the leading developers of full service
hotels and its status creates significant opportunities to identify markets in
need of a full service hotel. The Company believes that given the current lack
of new full service hotels under construction, it can continue to capitalize on
attractive development projects over the next few years. The Company plans to
build hotels that meet its strict development criteria, which consists of the
following elements:

Target Growth Market Areas. The Company's market focus is underserved
secondary and airport market areas which typically contain a state capitol,
university, convention center or corporate headquarters, plant or other major
facility. The Company targets markets that exhibit strong demand attributes.
When considering a market, the Company analyzes the demographics of the area,
marketability of the property, competition, traveler traffic and surrounding
complementary facilities.

Maximize Return on Development. The Company seeks to leverage its past
development success by obtaining favorable land, tax and other financial
concessions from state and local governments attempting to attract the Company
to develop hotels in their local markets. Such incentives often permit the
Company to invest less capital into a new hotel, thereby increasing the
Company's return on investment. In many cases, local sponsors anticipate that a
new hotel developed by the Company will stimulate business and tourist travel to
the region thereby providing additional demand for the new hotel. In addition,
the Company estimates the hotel's premium potential, in terms of price per room,
so that it may decide which brand name (Embassy Suites, Holiday Inn, other
franchise name or no franchise) will best fit the market's demand
characteristics and therefore maximize the economic return on the project. The
Company's sales force begins pre-selling efforts for a new hotel up to 12 months
prior to opening.

Build Rather than Buy. The Company prefers to build new hotels rather than buy
existing hotels. Management believes it is both better able to provide value to
the consumer and realize a higher return on capital for four reasons: (i) the
Company is better positioned to precisely meet the demand characteristics of a
specific market; (ii) the Company avoids the expense and time delay of
correcting existing limitations of an older hotel; (iii) the Company can design
and implement the latest safety features which are often incompatible with older
designs; and (iv) the Company's growth plan is not dependent on the hotel
acquisition market. The Company maintains an in-house architecture staff which

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(i) drafts plans for proposed hotels that provide design efficiencies inherent
in building rather than buying and (ii) focuses on the cost to build a hotel
complementary to the local market and aesthetically pleasing to the community.
The Company's entire management team, including regional vice presidents, hotel
managers, salespeople, design specialists and architects, is involved in the
development and design of a new hotel to ensure that each hotel is built to best
serve guests and meet the operational needs of the hotel staff.

The Company plans to continue expanding into targeted markets where it
believes it can establish a leading market position. The following table sets
forth information as to the eight Scheduled Hotels:

<TABLE>
<CAPTION>
Number of
---------
Location Franchise/Name Rooms/Suites Description Stage of Development
- -------- -------------- ------------ ----------- --------------------
<S> <C> <C> <C> <C>
Omaha, NE............... Embassy Suites 249 Atrium; Convention Center Construction commenced;
1/97 opening

Kansas City, MO......... Homewood Suites 120 Extended stay Construction commenced
6/97 expected opening

Branson, MO............. Resort 301 Atrium; Convention Center Construction commenced;
6/97 expected opening

Raleigh Durham, NC...... Embassy Suites 279 Atrium; Convention Center Construction commenced;
10/97 expected opening

Little Rock, AR......... Embassy Suites 250 Atrium; Convention Center Construction commenced;
10/97 expected opening

Charleston, WV.......... Embassy Suites 253 Atrium; Convention Center Construction commenced;
11/97 expected opening

Tampa, FL............... Embassy Suites 301 Atrium; Convention Center Construction commenced;
12/97 expected opening

World Golf Village, FL.. Resort 300 Atrium; Convention Center Construction commenced;
5/98 expected opening
</TABLE>

The Company is currently evaluating development of a number of hotels
in addition to the Scheduled Hotels already under construction.

Because of the Company's reputation as a market leader that develops
upscale, full-service, convention type hotels, community leaders frequently
initiate contact with the Company regarding potential hotel development in their
localities. When responding to those contacts, the Company applies strict
evaluation criteria, which includes market demographics, existing competition,
community participation, projected investment return, and the relative
attractiveness of the potential hotel development as compared with other hotel
developments then being considered by the Company. Accordingly, the Company
frequently declines potential hotel developments because they do not meet the
Company's development criteria or because more favorable opportunities present
themselves to the Company.

Although the Company has in the past chosen to develop rather than
acquire existing hotels, the Company may in the future acquire hotels if
suitable opportunities arise. The Company is approached from time to time by
third-party hotel owners seeking to sell or buy hotels. The Company would
evaluate each offer and base its decision on the market location, capital
required, and return on investment alternatives. The Company continually
monitors its portfolio for under performing hotels which are then evaluated for
potential sale based on investment considerations.

Operations

Management of the JQH Hotels network is coordinated by the central
management team at the Company's headquarters in Springfield, Missouri. The
management team is responsible for managing the day-to-day financial needs of
the Company, including the Company's internal accounting audits. The Company's
management team administers

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insurance plans and business contract review, oversees the financial budgeting
and forecasting for the JQH Hotels, analyzes the financial feasibility of new
hotel developments, and identifies new systems and procedures to employ within
the JQH Hotels to improve efficiency and profitability. The management team also
coordinates each JQH Hotel's sales force, designing sales training programs,
tracking future business under contract, and identifying, employing and
monitoring marketing programs aimed at specific target markets. The management
team is indirectly responsible for interior design of all hotels and each
hotel's product quality, and directly oversees the detailed refurbishment of
existing operations. The overall management of the JQH Hotels is coordinated by
the central management team through five regional vice presidents responsible
for guiding the general managers of each JQH Hotel in day-to-day operations.

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

Creating operating, cost and guest service efficiencies in each hotel
is a top priority to the Company. With a total of 43 hotels under management,
the Company is able to realize significant cost savings due to economies of
scale. By leveraging off of the total hotels/rooms under its management, the
Company is able to secure volume pricing from its vendors that is not available
to smaller hotel companies.

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

Sales and Marketing

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

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

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Company's targeted customers also include leisure travelers looking for secure,
comfortable lodging at an affordable price as well as women travelers who find
the security benefits of the Company's atrium hotel appealing.

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

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

Franchise Agreements

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

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

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

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

Competition

Each of the JQH Hotels competes in its market area with numerous full
service lodging brands, especially in the Upscale Segment, and with numerous
other hotels, motels and other lodging establishments. Chains such as Sheraton
Inns, Marriott Hotels, Holiday Inn, Ramada Inns, Radisson Inns, Comfort Inns,
Hilton Hotels and Red Lion Inns are direct competitors of the JQH Hotels in
their respective markets. There is, however, no single competitor or group of

8
<PAGE>

competitors of the JQH Hotels that is consistently located nearby and competing
with most of the JQH Hotels. Competitive factors in the lodging industry include
reasonableness of room rates, quality of accommodations, level of service and
convenience of locations.

Regulations and Insurance

General. A number of states regulate the licensing of hotels and
restaurants including liquor license grants by requiring registration,
disclosure statements and compliance with specific standards of conduct. In
addition, various federal and state regulations mandate certain disclosures and
practices with respect to the sales of license agreements and the
licensor/licensee relationship. The Company believes that each of the JQH Hotels
has the necessary permits and approvals to operate its respective businesses.
The Company believes that all necessary permits and approvals to operate the
Scheduled Hotels will be obtained in the ordinary course of business. Umbrella,
property, auto, commercial liability and worker's compensation insurance are
provided to the JQH Hotels under a blanket policy. Insurance expense for the JQH
Hotels was approximately $5.5 million, $5.8 million and $6.3 million in 1994,
1995 and 1996, respectively. The Company believes that the JQH Hotels are
adequately covered by insurance.

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

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

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

Employees

The Company employs approximately 5,200 full-time employees
approximately 350 of whom are members of labor unions. The Company believes
that labor relations with employees are good.

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

9
<PAGE>

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

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

John Q. Hammons is the Chairman, Chief Executive Officer, and a
director of the General Partner and the founder of the Company. Mr. Hammons has
been actively engaged in the acquisition, development and management of hotel
properties since 1959. From 1959 through 1969, Mr. Hammons and a business
partner developed 34 Holiday Inn franchises, 23 of which were sold in 1969 to
Holiday Inns, Inc. Since 1969, Mr. Hammons has individually developed 75 hotels
on a nationwide basis, primarily under the Holiday Inn and Embassy Suites trade
names.

David B. Jones is the President, Chief Operating Officer and a
director of the General Partner. Mr. Jones has been President and a director of
the General Partner since February 1993. From 1992 until joining the General
Partner, Mr. Jones was Chief Executive Officer of Davidson Hotel Partnership, a
Memphis-based hotel management company. Prior to 1992, Mr. Jones was President
and Chief Executive Officer of Homewood Suites, Inc., a subsidiary of The Promus
Companies Incorporated, which also then owned Holiday Inns, Inc. Mr. Jones began
his career in the hotel industry with Holiday Inns, Inc. in 1966. While with
Holiday Inns, Inc., Mr. Jones held the positions of Senior Vice President of
Franchise and Senior Vice President of Development. He is a former board member
of the American Hotel and Motel Association.

Glenn R. Malone is Senior Vice President, Financial Planning and
Corporate Development, of the General Partner since April 1993. From 1989 until
1993, he served as Senior Manager, Operations Support for the national chains
operated by Hampton Inns, Inc. and Homewood Suites, Inc. (each a subsidiary of
The Promus Companies Incorporated). Mr. Malone held the position of Manager,
Finance and Administration for Embassy Suites, the national chain, from 1988
through 1989. Beginning in 1978 through the end of 1987, he held various
accounting, financial, and operations positions at Holiday Inns, Inc.

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

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

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

Mel J. Volmert is Executive Vice President, Finance, Chief Financial
Officer, Treasurer and a director of the General Partner. He joined the General
Partner in January 1994. Prior thereto, Mr. Volmert was a partner of Baird,
Kurtz & Dobson, a public accounting firm which serves as Mr. Hammons' personal
accountants. Mr. Volmert had been with that firm for over five years.

Lawrence A. Welch has been Vice President, Food and Beverage, of the
General Partner since March 1994. Prior to joining the General Partner, Mr.
Welch worked in the Food and Beverage division with Davidson Hotel Company for
ten years.

10
<PAGE>

Item 2. Properties.

The Company leases its headquarters in Springfield, Missouri from a
Missouri general partnership of which Mr. Hammons is a 50% partner. In 1996, the
Company made aggregate annual lease payments of approximately $220,000 to such
Missouri general partnership. The Company leases the real estate on which two of
the Company's hotels are being built from John Q. Hammons. These leases are more
fully described in item 13 "Certain Relationships and Related Transactions". The
Company owns the land on which 33 of the Owned Hotels are located, while six of
the Owned Hotels are subject to long-term ground leases.

Description of Hotels

General

The JQH Hotels are located in 18 states and contain a total of 10,618
rooms. Each of the JQH Hotels has an average of 247 guest rooms or suites. The
JQH Hotels operate primarily under the Holiday Inn and Embassy Suites trade
names, as well as with non-franchise affiliated names. The average sizes of a
Holiday Inn hotel room and an Embassy Suites suite are 350 square feet and 545
square feet, respectively. Most of the JQH Hotels have assumed a leadership
position in their local market by providing a high quality product in a market
unable to economically support a second competitor of similar quality.

Each of the JQH Hotels is individually designed by the in-house design
staff. Thirty-two of the JQH Hotels contain an expansive multi-storied atrium,
large indoor water falls, lush plantings and comfortable lounge areas. In
addition to the visual appeal, the Company believes that an atrium design in
which each of the hotel's room doors face into the atrium, combined with glass
elevators, achieves a greater level of security for all guests. The Company
believes this safety factor is particularly relevant to women, who represent a
growing portion of its business clientele. The JQH Hotels also appeal to fitness
conscious guests as all of the JQH Hotels have at least one swimming pool and 32
of the JQH Hotels have exercise facilities.

The JQH Hotels provide customers with access to an average of 13,000
square feet of meeting and/or convention space providing average capacity for
approximately 1,200 meeting attendees. In addition, 15 JQH Hotels are located
adjacent to convention or trade centers which have an average of approximately
40,000 square feet of meeting space providing average capacity for approximately
3,600 meeting attendees. The Company believes that the presence of adjacent
convention centers provides incremental revenues for its hotel rooms, meeting
facilities and catering services. The Company believes that hotels which are
adjacent to convention centers occupy a particularly successful niche within the
hotel industry. These convention or trade centers are available for rent by
hotel guests.

Each of the JQH Hotels has a restaurant/catering service on its
premises which provides an essential amenity to the convention trade. The
Company generally chooses not to lease out the restaurant business to third-
party caterers or vendors since it considers the restaurant business as an
important component of securing convention business. All of the restaurants in
the JQH Hotels are owned and managed by the Company specifically to maintain
direct quality control over a vital aspect of the convention and hotel business.
The Company also derives significant revenue and operating profit from food and
beverage sales due to its ownership and management of all of the restaurants in
the JQH Hotels. The Company believes that its food and beverage sales are more
profitable than its competitors due to the amount of catering business provided
to convention and other meetings at the Owned Hotels.

The Company retains responsibility for all aspects of the day-to-day
management of each of the JQH Hotels, including establishing and implementing
standards of operation at all levels; hiring, training and supervising staff;
creating and maintaining financial controls; regulating compliance with laws and
regulations relating to the hotel operations; and providing for the safekeeping,
repair and maintenance of the hotels owned by the Company. The Company typically
refurbishes individual hotels every four to six years, and has spent an average
per year of $21.9 million in 1994, 1995 and 1996 on the Owned Hotels. During
1997, the Company expects to spend approximately $19 million on refurbishment of
the Owned Hotels.

11
<PAGE>

Owned Hotels

The Owned Hotels consist of 39 hotels, which are located in 18 states
and contain a total of 9,666 guest rooms or suites. The following table sets
forth certain key operating statistics for the Mature Owned Hotels (hotels open
over one year):

<TABLE>
<CAPTION>
Average Room Revenue
------- ------------
Average Daily Per Available
------- ----- -------------
Period Occupancy Room Rate Rooms (a)
- ------ --------- --------- ---------
<S> <C> <C> <C>
Holiday Inn:
Fiscal Year 1994.......................................... 67.6% $64.47 $43.60
Fiscal Year 1995.......................................... 67.2 67.00 45.04
Fiscal Year 1996.......................................... 64.3 69.51 44.69

Embassy Suites:
Fiscal Year 1994.......................................... 72.2% $88.76 $64.11
Fiscal Year 1995.......................................... 75.5 93.79 70.85
Fiscal Year 1996.......................................... 73.4 99.52 73.01

Non-Franchise Hotels:
Fiscal Year 1994.......................................... 70.7% $68.51 $48.47
Fiscal Year 1995.......................................... 72.9 69.45 50.63
Fiscal Year 1996.......................................... 67.4 70.06 47.19
</TABLE>

- ---------------------------
(a) Total room revenue divided by number of available rooms. Available rooms
represents the number of rooms available for rent multiplied by the number
of days in the period presented.

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

<TABLE>
<CAPTION>
Number of
---------
Location Franchise/Name Rooms/Suites Description Opening Date
- -------- -------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Montgomery, AL Embassy Suites 237 Atrium: 8/95
Meeting Space: 15,000 sq. ft.(c)
Fort Smith, AR(a) Holiday Inn 255 Atrium; 5/86
Meeting Space: 15,000 sq. ft.
Springdale, AR Holiday Inn 206 Atrium; 7/89
Meeting Space: 18,000 sq. ft.
Convention Ctr: 29,280 sq. ft.
Springdale, AR Hampton Inn & Suites 102 Meeting Space 400 sq. ft. 10/95
Tucson, AZ Holiday Inn 299 Atrium; 11/81
Meeting Space: 14,000 sq. ft.
Tucson, AZ Marriott 250 Atrium; 12/96
Meeting Space: 11,500 sq. ft.
Bakersfield, CA Holiday Inn Select 259 Meeting Space 9,735 sq. ft.(c) 6/95
Fresno, CA(a) Holiday Inn 210 Meeting Space: 5,000 sq. ft. 12/73
Fresno, CA Holiday Inn (Centre Plaza) 321 Atrium; 10/83
Meeting Space: 16,000 sq. ft.(c)
Monterey, CA Embassy Suites 225 Meeting Space 13,700 sq. ft. 11/95
Sacramento, CA Holiday Inn 364 Meeting Space: 9,000 sq. ft. 8/79
San Francisco, CA Holiday Inn 279 Meeting Space: 9,000 sq. ft. 6/72
Denver, CO(a) Holiday Inn (International 256 Atrium; 10/82
Airport) Trade Center: 66,000 sq. ft.(b)
Denver, CO Holiday Inn (Northglenn) 236 Meeting Space: 20,000 sq. ft. 12/80
Fort Collins, CO Holiday Inn 259 Atrium; 8/85
Meeting Space: 12,000 sq. ft.
Cedar Rapids, IA Collins Plaza 221 Atrium; 9/88
Meeting Space: 11,250 sq. ft.
Davenport, IA Radisson 223 Meeting Space 7,800 sq. ft.(c) 10/95
Des Moines, IA Embassy Suites 234 Atrium; 9/90
Meeting Space: 13,000 sq. ft.
Des Moines, IA Holiday Inn 288 Atrium; 1/87
Meeting Space: 15,000 sq. ft.
Joliet, IL Holiday Inn 200 Meeting Space: 5,500 sq. ft. 3/71
Bowling Green, KY University Plaza 219 Meeting Space: 4,000 sq. ft.(c) 8/95
Jefferson City, MO Capitol Plaza 255 Atrium; 9/87
Meeting Space: 14,600 sq. ft.
Joplin, MO Holiday Inn 264 Atrium; 6/79
Meeting Space: 8,000 sq. ft.
</TABLE>

12
<PAGE>

<TABLE>
<S> <C> <C> <C> <C>
Trade Center: 32,000 sq. ft.(b)
Kansas City, MO(a) Embassy Suites 236 Atrium; 4/89
Meeting Space: 12,000 sq. ft.
Springfield, MO Holiday Inn 188 Atrium; 9/87
Meeting Space: 3,020 sq. ft.
Billings, MT Holiday Inn 315 Atrium; 10/72
Meeting Space: 15,000 sq. ft.
Trade Center: 30,000 sq. ft.(b)
Reno, NV Holiday Inn 286 Meeting Space: 8,700 sq. ft. 2/74
Albuquerque, NM Holiday Inn 311 Atrium; 12/86
Meeting Space: 12,300 sq. ft.
Greensboro, NC(a) Embassy Suites 221 Atrium; 1/89
Meeting Space: 10,250 sq. ft.
Greensboro, NC(a) Homewood Suites 104 Extended stay 8/96
Portland, OR(a) Holiday Inn 286 Atrium; 4/79
Trade Center: 37,000 sq. ft.(b)
Columbia, SC Embassy Suites 214 Atrium; 3/88
Meeting Space: 13,000 sq. ft.
Greenville, SC Embassy Suites 268 Atrium; 4/93
Meeting Space: 20,000 sq. ft.
Beaumont, TX Holiday Inn 253 Atrium; 3/84
Meeting Space: 12,000 sq. ft.
Houston, TX(a) Holiday Inn 288 Atrium;
Meeting Space: 14,300 sq. ft. 12/85
Lubbock, TX Holiday Inn (Civic Center) 293 Atrium;
Meeting Space: 7,000 sq. ft.(c) 9/82
Lubbock, TX Holiday Inn 202 Atrium;
Meeting Space: 24,000 sq. ft. 10/85
Madison, WI Holiday Inn 295 Atrium;
Meeting Space: 15,000 sq. ft. 10/85
Convention Ctr: 50,000 sq. ft.(b)
Cheyenne, WY Holiday Inn 244 Meeting Space: 12,000 sq. ft. 6/81
</TABLE>

- ---------------------------
(a) Airport location

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

Managed Hotels

The Managed Hotels consist of four hotels (three Holiday Inns and one
Days Inn), are located in two states (Missouri and South Dakota), and contain a
total of 952 guest rooms. Mr. Hammons directly owns three of these four hotels.
The remaining hotel is owned by an entity controlled by Mr. Hammons in which he
has a 50% interest. Jacqueline Dowdy, a director and officer of the Company, and
Daniel L. Earley, a director of the Company, each own a 25% interest in this
entity. The Managed Hotels contain an average of 238 rooms per hotel and two of
the Managed Hotels have an atrium. There is a convention and trade center
adjacent to two of the Managed Hotels.

The Company provides management services to the Managed Hotels within the
guidelines contained in annual operating and capital plans submitted to the
hotel owner for review and approval during the final 30 days of the preceding
year. The Company is responsible for the day-to-day operations of the Managed
Hotels. While the Company is responsible for the implementation of major
refurbishments and repairs, the actual cost of such refurbishments and repairs
is borne by the hotel owner. The Company earns a fee based on the size of the
project. The Company earns an average annual management fee of 3.0% of the
hotel's gross revenues. Each of the Managed Hotel management contracts is for an
initial term of 20 years, which automatically extends for four periods of five
years, unless otherwise canceled. The Company has received an option from Mr.
Hammons or entities controlled by him to purchase each of the Managed Hotels.

13
<PAGE>

Item 3. Legal Proceedings.

The Tucson lawsuit previously disclosed in the Company's 10-Q is in the final
stages of settlement on terms which will call for the Company to spend a nominal
amount for additional improvements to the Tucson hotel.

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

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

Not applicable.

PART II

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

Not Applicable.

Item 6. Selected Financial Data

The selected consolidated financial information of the Company for the 1992,
1993, 1994, 1995 and 1996 Fiscal Years has been derived from and should be read
in conjunction with the audited consolidated financial statements of the
Company, which statements have been audited by Arthur Andersen LLP, independent
public accountants. The information presented below should be read in
conjunction with the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere herein. The Company's
fiscal year ends on the Friday nearest December 31. Consequently, the Company's
1996 Fiscal Year included 53 weeks of operations while the 1992, 1993, 1994 and
1995 Fiscal Years included 52 weeks of operations.

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
(Dollars in thousands, except operating and per share data)
<S> <C> <C> <C> <C> <C>
Statement of operations data:
Revenues:
Rooms(a)............................................ $ 124,102 $ 130,754 $ 137,387 $ 148,432 $ 171,206
Food and beverage................................... 67,573 67,748 65,308 70,840 79,580
Meeting room rental and other(b).................... 10,962 12,360 13,998 15,907 18,061
--------- --------- --------- --------- ---------
Total revenues....................................... 202,637 210,862 216,693 235,179 268,847
--------- --------- --------- --------- ---------
Operating expenses:
Direct operating costs and expenses (c)
Rooms.............................................. 31,525 33,189 34,413 38,543 43,610
Food and beverage.................................. 52,759 51,772 49,721 54,228 57,956
Other.............................................. 2,250 2,225 2,397 2,521 2,929
General, administrative, sales and
management expenses(d)(e).......................... 53,503 57,097 57,981 64,234 74,646
Repairs and maintenance............................. 7,988 9,624 9,888 10,131 11,528
Depreciation and amortization....................... 14,365 14,153 13,975 18,346 24,034
--------- --------- --------- --------- ---------
Total operating expenses............................ 162,390 168,060 168,375 188,003 214,703
--------- --------- --------- --------- ---------
Income from operations............................... 40,247 42,802 48,318 47,176 54,144
Interest expense and amortization of
deferred financing fees, net........................ 30,127 27,412 32,932 28,447 35,620
--------- --------- --------- --------- ---------
Income before extraordinary item(f).................. 10,120 15,390 15,386 18,729 18,524
========= ========= ========= ========= =========
Other data:
EBITDA(g)........................................... $ 54,612 $ 56,955 $ 62,293 $ 65,522 $ 78,178
Net cash provided by operating activities........... 26,674 32,341 46,107 44,037 72,052
</TABLE>

14
<PAGE>

<TABLE>
<S> <C> <C> <C> <C> <C>
Net cash used in investing activities............... (11,388) (9,259) (149,510) (78,085) (136,296)
Net cash provided by (used in) financing
activities......................................... (15,234) (17,742) 104,884 66,113 68,916
Margin and ratio data:
EBITDA margin (% of total revenue)(g)................ 27.0% 27.0% 28.8% 27.9% 29.1%
Earnings to fixed charges ratio(h)................... 1.33x 1.55x 1.42x 1.39x 1.26x
Operating data:
Owned Hotels:
Number of hotels.................................... 30 31 31 37 39
Number of rooms..................................... 7,786 8,054 8,054 9,312 9,666
Average occupancy (mature hotels)................... 67.9% 68.7% 68.5% 68.8% 65.9%
Average daily room rate (mature hotels)............. $ 64.50 $ 65.63 $ 68.45 $ 71.44 $ 74.47
Average daily room revenue per
available room (mature hotels)(i).................. $ 43.79 $ 45.11 $ 46.88 $ 49.13 $ 49.11
Increase in yield(j)................................ 6.3% 3.0% 3.9% 4.8% --
Balance sheet data:
Total assets......................................... $ 299,640 $ 297,599 $ 443,044 $ 542,371 $ 658,072
Total debt, including current portion................ 341,389 342,165 380,869 458,094 531,143
Equity (deficit)..................................... (67,181) (71,626) 20,673 34,145 49,862
</TABLE>

(a) Includes revenues derived from rooms.

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

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

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

(f) The 1994 and 1995 Fiscal Years do not include a $3.3 million and a $0.3
million, respectively, extraordinary charge related to prepayment fees on
early debt retirement in connection with (i) the issuance by the Company
and John Q. Hammons Hotels Finance Corporation ("Finance Corp."), as co-
obligers, of $300 million aggregate principal amount of 8 7/8% First
Mortgage Notes due 2004 (the "1994 Notes") in February 1994 (the "1994 Note
Offering") and the issuance by the General Partner of 6,042,000 shares of
its class A common stock (the "Class A Common Stock") in November 1994 (the
"Common Stock Offering"), and (ii) the issuance by the Company and John Q.
Hammons Hotels Finance Corporation II ("Finance Corp. II"), as co-obligers,
of $90 million aggregate principal amount of 9 3/4% First Mortgage Notes
due 2005 (the "1995 Notes") in October 1995 (the "1995 Note Offering").
After such charges, net income is $12.0 million for the 1994 Fiscal Year
and $18.4 million for the 1995 Fiscal Year.

(g) EBITDA represents earnings before interest expense, net, provision for
income taxes (if applicable) and depreciation and amortization. EBITDA is
used by the Company for the purpose of analyzing its operating performance,
leverage and liquidity. Such data are not a measure of financial
performance under generally accepted accounting principles and should not
be considered as an alternative to net earnings as an indicator of the
Company's operating performance or as an alternative to cash flows as a
measure of liquidity.

(h) Earnings used in computing the earnings to fixed charges ratios consist of
net income plus fixed charges. Fixed charges consist of interest expense
and that portion of rental expense representative of interest (deemed to be
one third of rental expense).

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

(j) Increase in yield represents the period-over-period increases in yield.
Yield is defined to be the average daily room revenue per available room.

15
<PAGE>

Supplemental Financial Information Relating to the 1994 and 1995 Collateral
Hotels

The following tables set forth, as of January 3, 1997, unaudited
selected financial information with respect to the 20 hotels collateralizing the
1994 Notes (the "1994 Collateral Hotels") and the eight hotels collateralizing
the 1995 notes ("the 1995 Collateral Hotels") and the Company, excluding
Unrestricted Subsidiaries (as defined in the indentures relating to the 1994
Notes and the 1995 Indentures) (the "Restricted Group"). Under the heading
"Management Operations," information with respect to revenues and expenses
generated by the Company as manager of the 1994 Collateral Hotels, the 1995
Collateral Hotels, the other Owned Hotels owned by John Q. Hammons Hotels Two,
L.P. ("L.P. Two"), and the Managed hotels is provided.

<TABLE>
<CAPTION>
12 Months Ended January 3, 1997
----------------------------------------------------
1994 1995 Total
Collateral Collateral Management Restricted
Hotels Hotels Operations Group
------ ------ ---------- -----
(Dollars in thousands, except operating data)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Operating Revenues $153,000 $61,375 $ 3,211(a) $217,586
Operating Expenses:
Direct operating costs and expenses 59,013 24,255 -- 83,268
General, administrative, sales and management expenses(b) 42,196 18,193 (2,451)(c) 57,938
Repairs and maintenance 6,322 2,835 -- 9,157
Depreciation and amortization 10,235 4,714 120 15,069
-------- ------- ------- --------
Total operating expenses 117,766 49,997 (2,331) 165,432
-------- ------- ------- --------
Income from operations $ 35,234 $11,378 $ 5,542 $ 52,154
======== ======= ======= ========
Operating Data:
Occupancy 66.5% 67.1%
Average daily room rate $77.06 $71.40
RevPAR $51.23 $47.92
</TABLE>

<TABLE>
<CAPTION>
12 Months Ended December 29, 1995
----------------------------------------------------
1994 1995 Total
Collateral Collateral Management Restricted
Hotels Hotels Operations Group
------ ------ ---------- -----
(Dollars in thousands, except operating data)
<S> <C> <C> <C> <C>
Statement of Operations Data:
Operating Revenues $149,486 $60,001 $ 1,733(a) $211,220
Operating Expenses:
Direct operating costs and expenses 60,431 23,973 84,404
General, administrative, sales and management expenses(b) 40,767 17,933 (3,096)(c) 55,604
Repairs and maintenance 6,194 2,745 -- 8,939
Depreciation and amortization 8,771 4,711 99 13,581
-------- ------- ------- --------
Total operating expenses 116,163 49,362 (2,997) 162,528
-------- ------- ------- --------
Income from operations $ 33,323 $10,639 $ 4,730 $ 48,692
======== ======= ======= ========
Operating Data:
Occupancy 69.1% 70.1%
Average daily room rate $73.94 $68.80
RevPAR $51.10 $48.26
</TABLE>

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

16
<PAGE>

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

General

The following discussion and analysis primarily addresses results of
operations of the Company for the Fiscal Years ended January 3, 1997 (the "1996
Fiscal Year"), December 29, 1995 (the "1995 Fiscal Year"), and December 30, 1994
(the "1994 Fiscal Year"). For periods presented, the consolidated financial
statements of the Company present the consolidated assets, liabilities, revenues
and expenses of those entities which now comprise the Company as if the Company
had been a single entity for all the periods presented. The following discussion
should be read in conjunction with the selected consolidated financial
information of the Company and the consolidated financial statements of the
Company included elsewhere herein.

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

During the period from 1992 through 1996, the Company's total revenues
grew at an annual compounded growth rate of 7.3% from $202.6 million to $268.8
million. Occupancy for the Mature Hotels (hotels open over one year) during
that period decreased 2.0 percentage points from 67.9% to 65.9%. However, the
Mature Hotels average daily room rates increased by 15.5% from $64.50 to $74.47
during that period.

Given the current positive trends in the full service hotel industry
and the completion of the Note Offerings and Common Stock Offering, the Company
continues to develop new hotels, including the eight Scheduled Hotels
anticipated to open in 1997 and 1998. The Company has generally experienced a
three-year maturation process with its hotel developments. New hotels typically
generate positive cash flow from operations before debt service in the first
year, generate cash sufficient to service mortgage debt in the second year and
create positive earnings after debt service in the third year. The Company
believes that the recent improvement in the hotel industry should accelerate
this maturation process for the Scheduled Hotels, although there can be no
assurance that this will be the case.

Results of Operations of the Company

The following table shows selected consolidated operating statistics
for the Mature Owned Hotels.

<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------------------------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Average occupancy................. 67.9% 68.7% 68.5% 68.8% 65.9%
Average room rate................. $64.50 $65.63 $68.45 $71.44 $74.47
Room revenue per available room... $43.79 $45.11 $46.88 $49.13 $49.11
Available rooms(a)................ 2,834,104 2,901,516 2,930,893 3,087,700 3,476,279
</TABLE>

- -----------------------
(a) Available rooms represent the number of rooms available for rent multiplied
by the number of days in the period reported. The Company's 1996 Fiscal
Year contained 53 weeks or 371 days while its 1992, 1993, 1994 and 1995
Fiscal Years each contained 52 weeks or 364 days.

17
<PAGE>

The following table shows selected components of the Company's
operating income as a percentage of revenues:

<TABLE>
<CAPTION>
Fiscal Year Ended
------------------
1992 1993 1994 1995 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Rooms.......................................... 61.2% 62.0% 63.4% 63.1% 63.7%
Food and beverage.............................. 33.4 32.1 30.1 30.1 29.6
Meeting room rental and other.................. 5.4 5.9 6.5 6.8 6.7
----- ----- ----- ----- -----
Total Revenues............................... 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- -----
Direct operating costs and expenses............
Rooms....................................... 15.6 15.7 15.9 16.4 16.2
Food and beverage........................... 26.0 24.6 22.9 23.0 21.6
Other....................................... 1.1 1.0 1.1 1.1 1.1
General, administrative, sales and
management service expenses................. 26.4 27.1 26.8 27.3 27.8
Repairs and maintenance expenses............... 3.9 4.6 4.6 4.3 4.3
Depreciation and amortization.................. 7.1 6.7 6.4 7.8 8.9
----- ----- ----- ----- -----
Total Operating Expenses..................... 80.1 79.7 77.7 79.9 79.9
----- ----- ----- ----- -----
Income from Operations......................... 19.9% 20.3% 22.3% 20.1% 20.1%
===== ===== ===== ===== =====
</TABLE>

1996 Fiscal Year Compared to 1995 Fiscal Year

Total revenues increased to $268.8 million in 1996 from $235.2 million
in 1995, an increase of $33.6 million or 14.3%. Of the total revenues reported
in 1996, 63.7% were revenues from rooms, 29.6% were revenues from food and
beverage, and 6.7% were revenues from meeting room rental and other, compared
with 63.1%, 30.1%, and 6.8%, respectively, during 1995.

Rooms revenue increased to $171.2 million in 1996 from $148.4 million
in 1995, an increase of $22.8 million or 15.3% as a result of the operation of
six hotels which opened in 1995, two hotels which opened in 1996 and the
increase in average daily room rate. Average daily room rates of Mature Hotels
increased to $74.47 in 1996 from $71.44 in 1995, an increase of $3.03 or 4.2%.
The higher average daily room rate was attributable to continued increases in
pricing schedules allowed by increased demand in both the transient and
corporate market segments. RevPAR was flat with $49.11 in 1996 and $49.13 in
1995.

Food and beverage revenues increased to $79.6 million in 1996 from
$70.8 million in 1995, an increase of $8.8 million or 12.3%. This increase was
due to revenues associated with newly opened hotels and new food franchise
operations.

Meeting room rental and other revenues increased to $18.1 million in
1996 from $15.9 million in 1995, an increase of $2.2 million or 13.5%. This
increase was due to the addition of meeting space in the new hotels.

Direct operating costs and expenses for rooms increased to $43.6
million in 1996 from $38.5 million in 1995, an increase of $5.1 million or
13.1%. As a percentage of rooms revenue, these expenses decreased slightly to
25.5% in 1996 from 26.0% in 1995.

Direct operating costs and expenses for food and beverage increased to
$58.0 million in 1996 from $54.2 million in 1995, an increase of $3.8 million or
6.9%. The increase was due to costs associated with the higher volume of sales.

Direct operating costs and expenses for other increased to $2.9
million in 1996 from $2.5 million in 1995, an increase of $0.4 million or 16.2%.

General, administrative, sales and management services expenses
increased to $74.6 million in 1996 from $64.2 million in 1995, an increase of
$10.4 million or 16.2%. Increases in these expenses are primarily attributable
to expenses associated with the opening of new hotels in 1995 and 1996,
increases in certain insurance costs and certain other increases in expenses
associated with increased room revenues. As a percentage of total revenues,
these expenses increased to 27.8% in 1996 from 27.3% in 1995.

Repairs and maintenance expenses increased to $11.5 million in 1996
from $10.1 million in 1995, an increase of $1.4 million or 13.8%.

18
<PAGE>

Depreciation and amortization increased to $24.0 million in 1996 from
$18.3 million in 1995. As a percentage of total revenues, these expenses
increased to 8.9% in 1996 from 7.8% in 1995. The increase was a direct result of
the increased level of capital expenditures for renovation and the newly opened
hotels.

Income from operations increased to $54.1 million in 1996 from $47.2
million in 1995, an increase of $6.9 million or 14.8%. The increase was due to
higher profit margins related to the six new hotels opened in 1995. As a
percentage of total revenues, income from operations was 20.1% in 1996 and 1995.

Interest expense and amortization of deferred financing fees, net
increased to $35.6 million in 1996 from $28.5 million in 1995, an increase of
$7.1 million or 25.2%. The increase was primarily attributable to new hotel
borrowing for new construction offset in part by capitalized interest associated
with projects under construction during the year.

Income before minority interest and extraordinary item decreased to
$18.5 million in 1996 from $18.7 million in 1995, a decrease of $0.2 million or
1.1%. The $18.7 million in 1995 does not include $0.3 million extraordinary
charge related to prepayment fees on early debt retirement in connection with
the Note Offering incurred in 1995. 1995 Fiscal Year Compared to 1994 Fiscal
Year

Total revenues increased to $235.2 million in 1995 from $216.7 million
in 1994, an increase of $18.5 million or 8.5%. Of the total revenues reported in
1995, 63.1% were revenues from rooms, 30.1% were revenues from food and
beverage, and 6.8% were revenues from meeting room rental and other, compared
with 63.4%, 30.1%, and 6.5%, respectively, during 1994.

Rooms revenue increased to $148.4 million in 1995 from $137.4 million
in 1994, an increase of $11.0 million or 8.0% as a result of the partial year
operation of six hotels which opened in 1995 and the increase in average daily
room rate. Average daily room rates of Mature Hotels increased to $71.44 in 1995
from $68.45 in 1994, an increase of $2.99 or 4.4%. The higher average daily room
rate was attributable to increases in pricing schedules allowed by increased
demand in both the transient and corporate market segments. RevPAR improved to
$49.13 in 1995 from $46.88 in 1994, an increase of $2.25 or 4.8%.

Food and beverage revenues increased to $70.8 million in 1995 from
$65.3 million in 1994, an increase of $5.5 million or 8.4%. This increase was
due to revenues associated with six newly opened hotels and new food franchise
operations.

Meeting room rental and other revenues increased to $15.9 million in
1995 from $14.0 million in 1994, an increase of $1.9 million or 13.6%. This
increase was due to the addition of meeting space in six new hotels.

Direct operating costs and expenses for rooms increased to $38.5
million in 1995 from $34.4 million in 1994, an increase of $4.1 million or
11.9%. As a percentage of rooms revenue, these expenses increased slightly to
26.0% in 1995 from 25.0% in 1994.

Direct operating costs and expenses for food and beverage increased to
$54.2 million in 1995 from $49.7 million in 1994, an increase of $4.5 million or
9.1%. The increase was due to costs associated with the higher volume of sales.

Direct operating costs and expenses for other were $2.5 million in
1995 and $2.4 million in 1994.

General, administrative, sales and management services expenses
increased to $64.2 million in 1995 from $58.0 million in 1994, an increase of
$6.2 million or 10.7%. Increases in these expenses are primarily attributable to
expenses associated with the opening of six new hotels in 1995, increases in
certain insurance costs and certain other increases in expenses associated with
increased room revenues. As a percentage of total revenues, these expenses
increased to 27.3% in 1995 from 26.8% in 1994.

Repairs and maintenance expenses increased to $10.1 million in 1995
from $9.9 million in 1994, an increase of $0.2 million or 2.0%.

Depreciation and amortization increased to $18.3 million in 1995 from
$14.0 million in 1994. As a percentage of total revenues, these expenses
increased to 7.8% in 1995 from 6.4% in 1994. The increase was a direct result of
the increased level of capital expenditures for renovation and newly opened
hotels.

Income from operations decreased to $47.2 million in 1995 from $48.3
million in 1994, a decrease of $1.1 million or 2.3%. The decrease was due to an
increase in general, administrative, sales and management services expenses and
lower profit margins

19
<PAGE>

related to the opening of six new hotels in 1995. As a percentage of total
revenues, income from operations decreased to 20.1% in 1995 from 22.3% in 1994.

Interest expense and amortization of deferred financing fees, net
decreased to $28.4 million in 1995 from $32.9 million in 1994, a decrease of
$4.5 million or 13.7%. The decrease was primarily attributable to an increased
amount of capitalized interest in the second and third quarters prior to opening
the new hotels, offset in part by an higher overall debt balance as a result of
the Note Offerings completed in 1994 and 1995.

Income before minority interest and extraordinary item increased to
$18.7 million in 1995 from $15.4 million in 1994, an increase of $3.3 million or
21.4%. The $15.4 million in 1994 does not include a $3.3 million extraordinary
charge related to prepayment fees on early debt retirement in connection with
the Note Offering and Common Stock Offering incurred in 1994. The $18.7 million
in 1995 does not include a $0.3 million extraordinary charge related to
prepayment fees on early debt retirement in connection with the Note Offering
incurred in 1995.

Liquidity and Capital Resources

In general, the Company has financed its operations through internal
cash flow, loans from financial institutions, the issuance of public debt and
equity and the issuance of industrial revenue bonds. The Company in the future
may obtain mortgage financing secured by unencumbered hotels and construction in
progress to provide additional liquidity, if necessary. The Company's principal
uses of cash are to pay operating expenses, to service debt and to fund capital
expenditures, new hotel development and partnership distributions.

At January 3, 1997, the Company had $46.4 million of cash and
equivalents and also had $2.4 million of marketable securities, which
represented investment of a portion of the proceeds of the Note Offerings and
Common Stock Offering. Such investment is expected to be used for development of
new hotels and other working capital requirements of the Company.

Net cash provided by operating activities increased to $72.1 million
at the end of 1996 from $44.0 million at the end of 1995, an increase of $28.1
million or 63.6%. This increase was due to an increase in construction payables,
increases in depreciation and amortization, and a decrease in construction
reimbursements at year end.

The Company incurred net capital expenditures of $155.6 million and
$132.4 million, respectively, for the 1996 and 1995 Fiscal Years. Capital
expenditures typically include capital improvements on existing hotel properties
and expenditures for development of new hotels. During 1996, capital
expenditures for existing hotels and new hotel development were $26.5 million
and $129.1 million, respectively. During 1995, capital expenditures for existing
hotels and new hotel development were $17.6 million and $114.8 million,
respectively. During 1997, the Company expects capital expenditures to total
$209 million, representing approximately $19 million for capital improvements on
existing hotels and $190 million for continued new hotel development.

The Company estimates that building, pre-opening, and other costs of
the eight Scheduled Hotels will require aggregate funding of $153 million from
the Company (net of $119 million included in construction in progress and other
assets at year end.) The Company has obtained loans and commitments of $156.6
million ($25.4 million of which had been drawn at year end) on the Scheduled
Hotels and expects the remaining 1996 capital requirements to be funded by cash,
operating income and additional loans on four unencumbered hotels.

In addition to the capital expenditures for the Scheduled Hotels, the
Company is at various stages in evaluating other new hotel development. Capital
requirements for the hotels under development are expected to be provided by (i)
mortgage financing secured by the Owned Hotels which are unencumbered; (ii)
mortgage financing secured by the Scheduled Hotels as described above; and (iii)
contributions from third parties.

The Company expects to fund development of new hotels through limited
partnerships in which the Company will be the general partner and a wholly owned
corporate subsidiary of the Company will be the limited partner. As permitted by
the indenture relating to the Notes (the "Note Indenture"), each of these
entities will be an "Unrestricted Subsidiary" for purposes thereof, and,
accordingly, the ability of the Company to fund these entities is subject to
certain limitations contained in the Note Indenture. All of the indebtedness of
this entity will be non-recourse to the Company. The Company believes that
funding permitted under the Note Indenture will be sufficient to meet its
current hotel development plans.

20
<PAGE>

Based upon current plans relating to the timing of new hotel development and
loan draw schedules, the Company anticipates that its capital resources will be
adequate to satisfy its 1997 capital requirements for the currently planned
projects and normally recurring capital improvement projects.

The Company distributed $2.8 million in 1996 and $4.9 million in the 1995
Fiscal Years to its partners. Following consummation of the First Note
Offering, distributions by the Company to its partners must be made in
accordance with the provisions of the Note Indentures.

Seasonality

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

Inflation

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

Item 8. Financial Statements and Supplementary Data.

Reference is made to the Index to Consolidated Financial Statements on Page 28
and the Consolidated Financial Statements following such index.

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

None.

PART III
--------

Item 10. Directors and Executive Officers of the Registrants.

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

Daniel L. Earley, age 54, has been a director of the General Partner since
February 1994. Since 1985, Mr. Earley has been President, Chief Executive
Officer and a director of The Clermont Savings Bank, a community bank located in
Milford, Ohio, which is owned by Mr. Hammons.

William J. Hart, age 55, has been a director of the General Partner since
December 1993. He is a partner in the law firm of Husch & Eppenberger, formerly
Farrington & Curtis, P.C., a position he has held since 1970. Mr. Hart's firm
performs legal services on a regular basis for the Company and personally for
Mr. Hammons. Mr. Hart has also been a director since 1981 of Johnston
Industries, Inc., a commercial textiles company listed on the New York Stock
Exchange.

21
<PAGE>

Robert Trent Jones, Jr., age 57, became a director of the General Partner in
November 1994. Since 1969, Mr. Jones has been President and principal designer
for Robert Trent Jones II, a golf course architectural company located in Palo
Alto, California. Mr. Jones has designed more than 150 golf courses on five
continents in 33 countries. Mr. Robert Trent Jones, Jr. is not related to David
B. Jones.

John E. Lopez-Ona, age 39, became a director of the General Partner in May
1996. Mr. Lopez-Ona was a managing director of Kidder Peabody & Company, Inc.,
an investment banking firm, from March 1990 through March 1995. Since June 1995,
Mr. Lopez-Ona has been the President of Anvil Capital, Inc., a firm owned by
him, which specializes in principal investments.

James F. Moore, age 54, became a director of the General Partner in May 1995.
Since 1987, Mr. Moore has been Chairman, Chief Executive Officer and a Director
of Champion Products, Incorporated, a privately owned manufacturing company
serving the telecommunications industry located in Strafford, Missouri. Prior
to 1987, Mr. Moore had served as President of the Manufacturing Division of
Service Corporation International, a company listed on the New York Stock
Exchange.

Item 11. Executive Compensation.

Cash Compensation

The following table sets forth the salary compensation, cash bonus and certain
other forms of compensation paid by the General Partner and its subsidiaries for
services rendered in all capacities during the 1996, 1995 and 1994 fiscal years
to the Chief Executive Officer of the General Partner, and the four other most
highly compensated executive officers of the General Partner serving at the end
of the 1995 fiscal year (the "named executive officers").

<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
Awards/Securities All Other
Fiscal Underlying Compensation
Name and Principal Position(s) Year Salary ($) Bonus ($) Options (#)(c) ($) (d)
- ------------------------------- ---- ---------- --------- -------------- -------
<S> <C> <C> <C> <C> <C>
John Q. Hammons, age 78 1996 $100,000 $ -- -- $ --
Chairman of the Board 1995 36,000 -- -- --
and Chief Executive Officer 1994 36,000 -- -- --

David B. Jones, age 53 1996 251,750 89,200 -- 3,547
President and Chief Operating 1995 240,250 85,000 -- --
Officer 1994 232,500 82,000 175,000 --

Mel J. Volmert, age 49 1996 186,375 66,937 -- 3,902
Executive Vice President, 1995 180,188 63,550 -- --
Finance, Chief Financial 1994(a) 159,716 61,688 131,250 --
Officer and Treasurer

Pat A. Shivers, age 45 1996 112,125 30,000 -- 2,072
Senior Vice President, 1995 103,000 25,000 -- --
Administration and Control 1994 100,500 25,000 25,000 --

Lawrence A. Welch, age 43 1996 110,923 38,850 -- 2,288
Vice President, 1995 107,192 37,800 -- --
Food & Beverage 1994(b) 88,401 35,000 30,000 --
</TABLE>
(a) Represents actual amount earned by Mr. Volmert for the 1994 fiscal year.
Mr. Volmert was not employed by the General Partner for the full 1994
fiscal year. On an annualized basis, Mr. Volmert would have earned
$176,250 in base salary and the same $61,688 bonus.

22
<PAGE>

(b) Represents actual amount earned by Mr. Welch for the 1994 fiscal year. Mr.
Welch was not employed by the General Partner for the full 1994 fiscal year.
On an annualized basis, Mr. Welch would have earned $105,000 in base salary
and the same $35,000 bonus.
(c) Options relate to Class A Common Stock of the General Partner.
(d) Matching contributions to Company's 401 (k) Plan

Option Grants

No stock options were granted by the General Partner during the fiscal year
ended January 3, 1997.

401(k) Plan

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

Employment Agreements

David B. Jones entered into an Amended and Restated employment agreement with
the General Partner on July 28, 1996. Under the agreement Mr. Jones' annual
base salary for the current year is $300,000 plus a discretionary bonus of up
to $100,000, with such annual increases in compensation as may be determined by
the Board of Directors of the General Partner. In the event the General Partner
terminates or fails to renew the agreement , Mr. Jones is entitled to a $350,000
payment. The agreement contains significant non-competition provisions extending
for one year after termination of the agreement. Mr. Jones' agreement
continues on a year to year basis unless either the Company or Mr. Jones
terminates the agreement by giving the other 45 days' written notice.

Mr. Volmert entered into an employment agreement when he joined the General
Partner in January 1994. The agreement was amended effective July 28, 1996 to
provide for a base salary of $200,000, plus a discretionary bonus of up to
$75,000. In the event the Company fails to renew the agreement or terminates
Mr. Volmert, without cause, he is entitled to a $275,000 payment. Mr. Volmert's
agreement continues on a year to year basis unless either party terminates the
agreement at the end of a one-year term by giving the other not less than six
months' written notice.

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

Mr. Hammons is the beneficial owner of all 16,043,900 limited partnership
units of the Company, representing 71.69% of the total equity in the Company.
The General Partner owns all 6,336,100 general partner units of the Company,
representing 28.31% of the total equity in the Company.

Item 13. Certain Relationships and Related Transactions.

The Company is controlled by Mr. Hammons through his control of the General
Partner. His equity interest in the Company (based on his beneficial ownership
of 110,100 shares of Class A Common Stock of the General Partner, all of the
294,100 shares of Class B Common Stock of the General Partner, and all of the
16,043,900 limited partnership units of the Company (the "LP Units")) is 73.4%.
There are significant potential conflicts of interests between Mr. Hammons, as a
limited partner of the Company, and the holders of Class A Common Stock of the
General Partner, which conflicts may be resolved in favor of Mr. Hammons.

The holders of the LP Units have the right to require the redemption of their
LP Units. Such redemption right will be satisfied, at the sole option of the
General Partner, by the payment of the cash equivalent thereof or by the
issuance of shares of Class A Common Stock on a one-for-one basis. Mr. Hammons
beneficially owns all 16,043,900 LP Units. If Mr. Hammons, as a holder of LP
Units, requires the Company to redeem LP Units, the non-employee

23
<PAGE>

directors of the General Partner would decide consistently with their fiduciary
duties as to the best interests of the General Partner whether to redeem the LP
Units for cash or for shares of Class A Common Stock. Mr. Hammons would not vote
or otherwise participate in the decision of the non-employee directors. Mr.
Hammons has informed the General Partner that he has no current plan to require
the Company to redeem his L.P. Units.

During 1996, the Company provided management services to five hotels not
owned by the Company (the "Managed Hotels") pursuant to management contracts
(the "Management Contracts"). Three of the Managed Hotels are owned by Mr.
Hammons and the one hotel is owned 50% by Mr. Hammons, 25% by Jacqueline A.
Dowdy, the Secretary and a director of the General Partner, and 25% by Daniel L.
Earley, a director of the General Partner. The fifth hotel was sold in 1996 and
prior to the sale was owned 90% by Mr. Hammons. Management fees of approximately
3% of gross revenues were paid to the Company by the Managed Hotels in the
aggregate amount of $717,275 in 1996. Each of the Management Contracts is for an
initial term of 20 years, which automatically extends for four periods of five
years, unless otherwise canceled. In addition to the management fees paid by the
Managed Hotels to the Partnership in 1996, the Managed Hotels reimbursed the
Partnership for a portion of the salaries paid by the Company to its five
regional vice presidents, whose duties include management services related to
the Managed Hotels, and for certain marketing and other expenses allocated to
the Managed Hotels. Such reimbursed services and expenses aggregated $150,000 in
1996.

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

Mr. Hammons has a 45% ownership interest in Winegardner & Hammons, Inc.
("WHI"). The JQH Hotels have contracted with WHI to provide accounting and other
administrative services. The accounting and administrative charges expensed by
the Owned Hotels were approximately $1.2 million in 1996. The fee may increase
if the number of hotels for which accounting and administrative services are
performed drops below 35 hotels. The accounting services contract expires in
June 1999.

The Company leases space in the John Q. Hammons Building for its headquarters
from a Missouri general partnership, of which Mr. Hammons is a 50% partner and
the remaining 50% is collectively held by other employees including Jacqueline
A. Dowdy, the Secretary and a director of the Company, who is a 9.5% partner.
Pursuant to four lease agreements, expiring December 31, 1998, the Company pays
monthly rental payments of approximately $19,250. The company made aggregate
annual lease payments to the Missouri general partnership of $220,000 in 1996.

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

The Company leases the real estate on which the Company's new Chateau on the
Lake Resort in Branson, Missouri, is built from Mr. Hammons. When the hotel
opens in mid - 1997, annual rent will be $80,000 in the first year of operation,
and $120,019 in the second year. Thereafter, rent will be an amount based on
adjusted gross revenues from room sales on the property. The lease runs for 50
years, with an option to renew for an additional 10 years. The Company also has
an option to purchase the land after March 1, 2118 at the greater of $3,000,000
or the current appraised value.

The Company also leases the real estate on which the Company's Embassy Suites
hotel in Little Rock, Arkansas, is built from Mr. Hammons. When the hotel opens
in the fall of 1997, annual rent will be $80,000 in the first year of operation,
$100,000 for the second year, and $120,000 a year for the next three years. The
lease runs for 55 years, with options to renew for three 10-year periods. The
Company also has an option to purchase the land after the fifth lease year, at
the greater of $1,900,000 or the current appraised value.

24
<PAGE>

Mr. Hammons owns parcels of undeveloped land throughout the United States.
Although there are no current plans to do so, the Company may purchase or lease
one or more of these parcels in the future in order to develop hotels. Since Mr.
Hammons controls the Company, such purchases would not be arm's-length
transactions but will be subject to restrictions contained in the 1994 and 1995
Note Indentures.

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

As of January 1, 1996, the Company entered into a two year agreement with
Anvil Capital, an investment firm owned by Mr. Lopez-Ona (a director of the
Board of Directors of the General Partner), to provide the Company with
financial consulting services in exchange for annual payment of $188,000
(including expenses) by the Company. Mr. Hammons also has engaged Anvil Capital
to provide personal financial advisory services. Mr. Hammons and Anvil Capital
also have formed a limited liability company to invest in securities of one or
more companies in industries unrelated to the Company's business.

PART IV

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

14(a)(1) Financial Statements

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

14(a)(2) Financial Statement Schedules

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

14(a)(3) Exhibits
* 3.1 Second Amended and Restated Agreement of Limited Partnership of the
Company (the "Partnership Agreement")
*** 3.2 Amendment No. 1 to the Partnership Agreement (incorporated herein by
reference to the Company's Annual Report on Form 10-K for the fiscal
year ended December 30, 1994)
*** 3.3 Amendment No. 2 to the Partnership Agreement
*** 3.4 Certificate of Limited Partnership of the Company, as amended
* 3.5 Restated Certificate of Incorporation of the General Partner
*** 3.6 Certificate of Incorporation of John Q. Hammons Hotels Finance
Corporation II
** 10.1 1994 Note Indenture
** 10.2 1995 Note Indenture
** 10.3 Embassy Suites License Agreement
** 10.4 Option Purchase Agreement
* 10.5 Collective Bargaining Agreement between East Bay Hospitality Industry
Association, Inc. and Service Employees' International Union
10.6a Collective Bargaining Agreement for 06/01/92 to 5/31/95
* 10.7 Letter Agreement re: Hotel Financial Services for Certain Hotels Owned
and Operated by John Q. Hammons or JQH Controlled Companies
10.9a John Q. Hammons Building Lease Agreement
10.9b John Q. Hammons Building Lease Agreement
10.9c John Q. Hammons Building Lease Agreement
10.9d John Q. Hammons Building Lease Agreement
* 10.10 Triple Net Lease

25
<PAGE>

* 10.11 Lease Agreement between John Q. Hammons and John Q. Hammons
Hotels, L.P.

* 10.13 Employment Agreement between John Q. Hammons Hotels, Inc. and Mel J.
Volmert
10.14a Amendment No. 1 to the Employment Agreement between John Q. Hammons
Hotels, Inc. and Mel J. Volmert
10.14b Amended and restated Employment Agreement between John Q. Hammons
Hotels, Inc. and David B. Jones
10.15a Ground lease between John Q. Hammons and John Q. Hammons-Branson L.P.
10.15b Ground lease between John Q. Hammons and John Q. Hammons
Hotels,Two L.P.
* 10.16 Operating Agreement of RiverCenter Plaza Development Co., L.C., an
Iowa limited liability company
***10.17 Agreement of Limited Partnership of John Q. Hammons Hotels, L.P. Two
***10.18 Agreement of Limited Partnership of John Q. Hammons Hotels -
Montgomery L.P.
12.1 Computations of Ratio of Earnings to Fixed Charges of the Company
***21 Subsidiaries of the Company
23.1 Consent of Arthur Andersen LLP

* Incorporated herein by reference to the General Partner's Registration
Statement (Registration No. 33-84570) previously filed with the Commission.
** Incorporated herein by reference to the Company's Registration Statement
(Registration No. 33-73340) previously filed with the Commission.
*** Incorporated herein by reference to the Company's Registration Statement
(Registration No. 33-99614) previously filed with the Commission.

14(b) Reports on Form 8-K

None

14(c) Exhibits

The list of Exhibits filed with this report is set forth in response to
Item 14(a)(3). The required exhibit index has been filed with the exhibits.

14(d) Financial Statements

None.

26
<PAGE>

JOHN Q. HAMMONS HOTELS, L.P.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Public Accountants............................................................... F-1
Consolidated Balance Sheets at Fiscal 1996 Year-End and Fiscal 1995 Year-End........................... F-2
Consolidated Statements of Income for the 1996, 1995 and 1994 Fiscal Years............................. F-4
Consolidated Statements of Changes in Equity (Deficit) for the Fiscal Years-Ended 1996, 1995 and 1994.. F-5
Consolidated Statements of Cash Flows for the Fiscal Years-Ended 1996, 1995 and 1994................... F-6
Notes to Consolidated Financial Statements F-7
</TABLE>

27
<PAGE>

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

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

We have audited the accompanying consolidated balance sheets of John Q.
Hammons Hotels, L.P. (Note 1) as of January 3, 1997 and December 29, 1995 and
the related consolidated statements of income, changes in equity and cash flows
for each of the three fiscal years ended January 3, 1997, December 29, 1995 and
December 30, 1994. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
John Q. Hammons Hotels, L.P. (Note 1) as of January 3, 1997, December 29, 1995
and December 30, 1994 and the results of their operations and their cash flows
for each of the three fiscal years ended January 3, 1997, December 29, 1995 and
December 30, 1994 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Cincinnati, Ohio,
February 3, 1997

F-1
<PAGE>

JOHN Q. HAMMONS HOTELS, L.P. (NOTE 1)

CONSOLIDATED BALANCE SHEETS

(000'S OMITTED)

ASSETS
------

<TABLE>
<CAPTION>
Fiscal Fiscal
1996 1995
Year-End Year-End
--------- ---------
<S> <C> <C>
CASH AND EQUIVALENTS (Restricted cash
of $5,191 and $2,078 in 1996 and 1995,
respectively) (Notes 2 and 5) $ 46,449 $ 41,777

MARKETABLE SECURITIES (Notes 2 and 5) 2,355 26,574

RECEIVABLES:
Trade, less allowance for doubtful
accounts of $163 and $157 in 1996 and
1995, respectively 5,790 4,852

Management fees (Note 3) 45 53
Construction reimbursements and other 780 2,709

INVENTORIES 1,019 1,110

PREPAID EXPENSES AND OTHER 1,928 1,124
--------- ---------
Total current assets 58,366 78,199
--------- ---------
PROPERTY AND EQUIPMENT, at cost (Notes
2, 5 and 6):
Land and improvements 29,712 27,974
Buildings and improvements 433,059 399,746
Furniture, fixtures and equipment 160,198 149,535
Construction in progress 120,525 27,395
--------- ---------
743,494 604,650
Less-Accumulated depreciation and
amortization (174,899) (169,811)
--------- ---------
568,595 434,839
--------- ---------
DEFERRED FINANCING COSTS, FRANCHISE FEES
AND OTHER, net (Notes 2 and 5) 31,111 29,333
--------- ---------
$ 658,072 $ 542,371
========= =========
</TABLE>

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

F-2
<PAGE>

JOHN Q. HAMMONS HOTELS, L.P. (NOTE 1)

CONSOLIDATED BALANCE SHEETS

(000'S OMITTED)

LIABILITIES AND EQUITY
----------------------

<TABLE>
<CAPTION>
Fiscal Fiscal
1996 1995
Year-End Year-End
--------- ---------
<S> <C> <C>
LIABILITIES:
Current portion of long-term debt (Note 5) $ 12,444 $ 7,981
Accounts payable, including
construction payables of approximately
$17,721 and $6,549 respectively 29,977 8,382

Accrued expenses-
Payroll and related benefits 4,611 3,800
Sales and property taxes 7,069 7,012
Insurance (Notes 2 and 3) 9,511 8,446
Interest 12,634 12,171
Utilities, franchise fees and other 6,242 4,742
-------- --------
Total current liabilities 82,488 52,534

Long-term debt (Note 5) 518,699 450,113
Other obligations and deferred revenue
(Notes 2 and 3) 7,023 5,579
-------- --------
Total liabilities 608,210 508,226
-------- --------

COMMITMENTS AND CONTINGENCIES (Note 6)

EQUITY (Notes 1 and 8):
Contributed capital 96,436 96,436
Partners' and other deficits, net (46,574) (62,291)
-------- --------
Total equity 49,862 34,145
-------- --------
$658,072 $542,371
======== ========
</TABLE>

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

F-3
<PAGE>

JOHN Q. HAMMONS HOTELS, L.P. (NOTE 1)

CONSOLIDATED STATEMENTS OF INCOME

(000'S OMITTED)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Rooms $171,206 $148,432 $137,387
Food and beverage 79,580 70,840 65,308
Meeting room rental and other 18,061 15,907 13,998
-------- -------- --------
Total revenues 268,847 235,179 216,693
-------- -------- --------

OPERATING EXPENSES, (Notes 3, 4 and 6):
Direct operating costs and expenses-
Rooms 43,610 38,543 34,413
Food and beverage 57,956 54,228 49,721
Other 2,929 2,521 2,397
General, administrative, sales and
management service expenses 74,646 64,234 57,981

Repairs and maintenance 11,528 10,131 9,888
Depreciation and amortization 24,034 18,346 13,975
-------- -------- --------
Total operating expenses 214,703 188,003 168,375
-------- -------- --------

INCOME FROM OPERATIONS 54,144 47,176 48,318

OTHER EXPENSE:
Interest expense and amortization of
deferred financing fees, net of
$2,103, $4,044 and $1,788 of interest
income in 1996, 1995 and 1994,
respectively (Note 2(e)) 35,620 28,447 32,932
-------- -------- --------

Income before extraordinary item 18,524 18,729 15,386

EXTRAORDINARY ITEM:
Loss from early extinguishment of debt
(Note 8) - (325) (3,343)
-------- -------- --------
Net income (Note 2(k)) $ 18,524 $ 18,404 $ 12,043
======== ======== ========
</TABLE>

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

F-4
<PAGE>

JOHN Q. HAMMONS HOTELS, L.P. (NOTE 1)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(000'S OMITTED)

<TABLE>
<CAPTION>
PARTNERS AND
CONTRIBUTED CAPITAL OTHER EQUITY (DEFICIT)
------------------------------- ---------------------------------
GENERAL LIMITED GENERAL LIMITED
PARTNER PARTNER OTHER PARTNER PARTNER OTHER TOTAL
------- ------- ----- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, Year-End 1993 $ - $ - $ 342 $ - $ - $(71,968) $(71,626)
Distributions, net, prior
to the reorganization
(Note 1) - - - - - (16,181) (16,181)
Net income - - - - - 12,043 12,043
Effect of reorganization
(Note 1):
Capital contribution by
general partner 96,437 - - - - - 96,437
Realignment of capital
accounts to conform with
respective partnership
interests (1) - (342) (90,583) 14,820 76,106 -
-------- --------- ------- --------- --------- -------- --------

Balance, Year-End 1994 96,436 - - (90,583) 14,820 - 20,673
Distributions - - - - (4,932) - (4,932)
Net income - - - 5,210 13,194 - 18,404
-------- --------- ------- --------- --------- -------- --------

Balance, Year-End 1995 96,436 - - (85,373) 23,082 - 34,145
Distributions - - - (107) (2,700) - (2,807)
Net income - - - 5,244 13,280 - 18,524
-------- --------- ------- --------- --------- -------- --------
Balance, Year-End 1996 $ 96,436 $ - $ - $ (80,236) $ 33,662 $ - $ 49,862
======== ========= ======= ========= ========= ======== ========
</TABLE>

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

F-5
<PAGE>

JOHN Q. HAMMONS HOTELS, L.P. (NOTE 1)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(000'S OMITTED)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 18,524 $ 18,404 $ 12,043
Adjustments to reconcile net income to
cash provided by operating activities-
Depreciation, amortization and loan
cost amortization 26,414 19,956 16,279

Extraordinary item - 325 3,343
Changes in certain assets and
liabilities-
Receivables 999 (3,003) (25)
Inventories 91 (137) 188
Prepaid expenses and other (804) (138) 337
Accounts payable 21,595 (236) 4,023
Accrued expenses 3,896 4,268 10,351
Other obligations and deferred revenue 1,444 4,598 (432)
--------- --------- ---------
Net cash provided by operating
activities 72,159 44,037 46,107
--------- --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net (155,579) (132,419) (59,207)
Franchise fees and other (4,936) (5,755) (3,640)
(Purchase) sale of marketable
securities, net 24,219 60,089 (86,663)
--------- --------- ---------
Net cash used in investing
activities (136,296) (78,085) (149,510)
--------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Loan financing fees and debt offering
costs (1,433) (6,180) (11,183)
Proceeds from borrowings 76,239 112,296 322,825
Payment of notes payable to affiliates - (547) (10,114)
Repayments of debt (3,190) (34,524) (276,900)
Contributions by general partner - - 96,437
Distributions to partners, net (2,807) (4,932) (16,181)
--------- --------- ---------
Net cash provided by financing
activities 68,809 66,113 104,884
--------- --------- ---------

Increase in cash and equivalents 4,672 32,065 1,481

CASH AND EQUIVALENTS, beginning of period 41,777 9,712 8,231
--------- --------- ---------

CASH AND EQUIVALENTS, end of period $ 46,449 $ 41,777 $ 9,712
========= ========= =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:

CASH PAID FOR INTEREST, net of amounts
capitalized $ 35,441 $ 29,035 $ 24,216
========= ========= =========
</TABLE>

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

F-6
<PAGE>

JOHN Q. HAMMONS HOTELS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(000'S OMITTED)

(1) Basis of Presentation-

(a) Entity Matters--The accompanying consolidated financial statements
--------------
include the accounts of John Q. Hammons Hotels, L.P. and its wholly-
owned subsidiaries (the Partnership), John Q. Hammons Hotels Finance
Corporation, a corporation with nominal assets and no operations, the
catering corporations, which consist of separate corporations for each
hotel location chartered to own the respective food and liquor licenses
as well as operate the related food and beverage facilities and certain
wholly-owned subsidiaries which consist of certain hotel operations. As
of fiscal year-end 1996, 1995 and 1994, the Partnership had thirty-
nine, thirty-seven and thirty-one, respectively, hotels in operation of
which thirty-two in 1996 and 1995 and twenty-nine in 1994, operate
under the Holiday Inn and Embassy Suites tradenames. The Partnership's
hotels are located in eighteen states throughout the United States.

In conjunction with a public offering of debt securities in February,
1994 and a public offering of equity securities in November, 1994 by
John Q. Hammons Hotels, Inc., J.Q.H. Hotels, L.P., which owned and
operated ten hotel properties, obtained through transfers or
contributions from Mr. John Q. Hammons (Mr. Hammons) or enterprises
which he controlled, twenty-one additional operating hotel properties,
equity interests in two hotels under construction (Note 2(f)), the
stock of the catering corporations and management contracts relating to
all of Mr. Hammons' hotels. Upon consummation of these transactions
J.Q.H. Hotels, L.P. changed its name to John Q. Hammons Hotels, L.P.
and the allocation of income or loss was modified from 1% to its
general partner and 99% to its limited partner to 10% and 90%,
respectively, upon completion of the public debt offering and to 28.31%
to its general partner and 71.69% to its limited partner upon
completion of the public equity offering.

The Partnership is directly or indirectly owned and controlled by Mr.
Hammons, as were all enterprises which transferred or contributed net
assets to the Partnership. Accordingly, the accompanying financial
statements present, as a combination of entities under common control
as if using the

F-7
<PAGE>

pooling method of accounting, the financial position and related
results of operations of all entities on a consolidated basis for all
periods presented. All significant balances and transactions between
the entities and properties have been eliminated.

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

General and Limited Partner; John Q. Hammons Hotels, Inc. was formed in
---------------------------
September 1994 and had no operations or assets prior to its initial
public offering of 6,042,000 Class A common shares at $16.50 per share
on November 23, 1994. Immediately prior to the initial public offering
Mr. Hammons contributed approximately $5 million in cash in exchange
for approximately 294,000 shares of Class B common stock (which
represents approximately 71% of the voting control of the company).
John Q. Hammons Hotels, Inc. contributed the approximate $96 million of
the net proceeds from the Class A and Class B common stock offerings to
the Partnership in exchange for an approximate 28% general partnership
interest.

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

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

In the event the Partnership has taxable income, distributions are to
be made to the partners in an aggregate amount equal to the amount that
the Partnership would have paid for income taxes had it been a C
corporation during the applicable period. Aggregate tax distributions
will first be allocated to the general partner, if applicable, with the
remainder allocated to the limited partners.

Additional Capital Contributions; In the event proceeds from the sale
--------------------------------
of the twenty hotel properties which secure the $300 million first
mortgage notes (1994 notes) (Note 5) are insufficient to satisfy
amounts due on the 1994 notes, Mr. Hammons and Hammons, Inc. (as
general partners at the time the 1994 notes were secured) are severally
obligated to contribute up to $135 million and $15 million,
respectively, to satisfy amounts due, if any. In the event proceeds
from the sale of the eight hotel properties which secure the $90
million first mortgage notes (1995 notes) (Note 5) are insufficient to
satisfy amounts due on the 1995 notes, Mr. Hammons is obligated to
contribute up

F-8
<PAGE>

to $45 million to satisfy amounts due, if any. In addition, with
respect to the eleven hotel properties contributed by Mr. Hammons
concurrent with the public equity offering (Note 8), Mr. Hammons is
obligated to contribute up to $50 million in the event proceeds from
the sale of these hotel properties are insufficient to satisfy amounts
due on the then outstanding mortgage indebtedness related to these
properties.

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

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

(2) Summary of Major Accounting Policies-

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

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

(b) Marketable Securities--Marketable securities consist of available-for-
---------------------
sale commercial paper and government agency obligations which mature or
will be available for use in operations in 1997. These securities are
valued at current market value, which approximates cost. Realized gains
and losses in 1996 and 1995, determined using the specific
identification method, were nominal.

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

F-9
<PAGE>

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

Costs directly related to commencing a hotel's operations are deferred
until the hotel has opened. These preopening expenses are amortized
over one year using the straight-line method. Unamortized preopening
costs were approximately $1,239 and $2,113 as of fiscal year-end 1996
and 1995, respectively.

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

<TABLE>
<CAPTION>
FISCAL YEAR-END
-----------------
1996 1995
------- -------
<S> <C> <C>
Deferred financing costs $20,956 $19,523
Franchise fees 4,877 4,192
Less- Accumulated amortization (7,212) (5,135)
------- -------
18,621 18,580
Restricted cash deposit, interest
bearing, maintained with an insurance 4,934 5,256
carrier
Deposits 5,986 3,082
Preopening expenses and other 1,570 2,415
------- -------
$31,111 $29,333
======= =======
</TABLE>

(e) Property and Equipment--Property and equipment are stated at cost
----------------------
(including interest, real estate taxes and certain other costs incurred
during development and construction) less accumulated depreciation and
amortization. Buildings and improvements are depreciated using the
straight-line method while all other property is depreciated using both
straight-line and accelerated methods. The estimated useful lives of
the assets are summarized as follows:

LIVES IN YEARS
--------------
<S> <C>
Land improvements 5-25
New buildings and improvements 5-40
Purchased buildings 25
Furniture, fixtures and equipment 5-10
</TABLE>

F-10
<PAGE>

Construction in progress includes primarily land, development and
construction costs of certain hotel developments. Costs associated with
hotel development construction in progress approximated $120 million in
1996 and $25 million in 1995, with the remainder representing
refurbishments of operating hotels.

Interest costs, construction overhead and certain other carrying costs
are capitalized during the period hotel properties are under
construction. Interest costs capitalized were $7,162, 5,270, and $950
for the fiscal years ended 1996, 1995 and 1994, respectively.
Construction in progress is recorded at the lower of cost or market.
Costs incurred for prospective hotel projects ultimately abandoned are
charged to operations in the period such plans are finalized. Costs of
significant improvements are capitalized, while costs of normal
recurring repairs and maintenance are charged to expense as incurred.

The accompanying 1996 consolidated financial statements include the
land costs for thirty-three of the operating hotel properties. Land for
the remaining six operating hotel properties is leased by the
Partnership from unrelated parties over long-term leases. Rent expense
for land leases was $450, $288, and $245 for the fiscal years ended
1996, 1995 and 1994, respectively.

(f) Hotel Investments--The equity interest in a hotel contributed to the
-----------------
Partnership by Mr. Hammons in 1994 consisted of a 50% interest in an
Iowa limited liability company. The hotel commenced operations in 1995
and is included in the accompanying consolidated financial statements.
The Partnership has the option to purchase the remaining 50% interest
for not less than $3,100 through December 31, 2000. The Partnership
managed the construction, opening and continuing operations of the
hotel and is responsible for arranging capital to maintain operations.
Accordingly, 100% of the operations of the hotel in 1996 and 1995 have
been reflected in the consolidated statements of income and the $3,100
obligation is included in other obligations and deferred revenue in the
accompanying consolidated balance sheets.

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

(h) Advertising--The Partnership expenses the cost of advertising
-----------
associated with operating hotels as incurred. Advertising costs
incurred for a hotel prior to its opening are deferred and charged to
expense in the period the hotel commences operations.

F-11
<PAGE>

Advertising expense for 1996 and 1995 was approximately $17,373 and
$16,206, respectively, of which approximately $291 and $1,038,
respectively, pertained to preopening advertising expenses of the
hotels which opened in these respective years. Advertising expense
incurred in 1994 was approximately $13,168, none of which related to
preopening advertising expense.

(i) Pensions and Other Benefits--The Partnership contractually provides
---------------------------
retirement benefits for certain union employees at two of its hotel
properties under a union sponsored defined benefit plan and a defined
contribution plan. Contributions to these plans, based upon the
provisions of the respective union contracts, approximated $54, $52,
and $53 for the fiscal years ended 1996, 1995 and 1994, respectively.

Effective January 1996, the Partnership implemented an employee savings
plan (a 401(k) plan). The Partnership matches a percentage of an
employee's contribution. The Partnership's matching contributions are
funded currently. The cost of the matching program and administrative
costs charged to income was approximately $293 in 1996. The Partnership
does not offer any other post-employment or post-retirement benefits to
its employees.

(j) Self-Insurance--The Partnership is self-insured for certain levels of
--------------
general liability and workers' compensation coverage. Estimated costs
of these self-insurance programs are accrued based on known claims and
projected settlements of unasserted claims. Subsequent changes in,
among others, assumed claims, claim costs, claim frequency, as well as
changes in actual experience, could cause these estimates to change.

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

As described in Note 1, the Partnership and its general partner, as
applicable, completed public offerings of first mortgage notes and
equity securities. Prior to the consummation of these offerings, the S
Corporation status of the catering companies was terminated, and,
accordingly, the Partnership is subject to federal and state income
taxes on taxable income, if any, earned by the catering companies after
the effective date of the securities registrations. There were nominal,
if any, earnings attributable to the catering companies

F-12
<PAGE>

after the applicable public offerings and there were no undistributed
earnings of the S Corporations at the time of termination.

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

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

(n) Fiscal Year--The Partnership's fiscal year ends on the Friday nearest
-----------
December 31 which includes 53 weeks in 1996 and 52 weeks in 1995 and
1994.

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

<TABLE>
<CAPTION>
YEAR FISCAL YEAR-END
---------- -------------------
<S> <C>

1996 January 3, 1997
1995 December 29, 1995
1994 December 30, 1994
</TABLE>

(o) Reclassifications--Certain reclassifications have been reflected in
-----------------
1995 and 1994 to conform with the current period presentation.

(p) New Accounting Pronouncements--In March 1995, the Financial Accounting
-----------------------------
Standards Board issued Statement No. 121 (SFAS No. 121), "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of", which requires impairment losses to be recorded on long-
lived assets used in operations when indicators of impairment are
present. This statement also addresses the accounting for long-lived
assets that are expected to be disposed of in the future. The Company
has adopted this standard with no material impact on the consolidated
financial statements.

F-13
<PAGE>

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

(a) Hotel Management Fees--In addition to managing the hotel properties
---------------------
included in the accompanying consolidated financial statements, the
Partnership provides similar services for other hotel properties owned
or controlled by Mr. Hammons. A management fee of approximately 3% of
gross revenues (as defined) is paid to the Partnership by these hotels
which aggregated approximately $717, $694, and $782 for the fiscal
years ended 1996, 1995 and 1994, respectively.

(b) Accounting and Administrative Services--The hotels have contracted for
--------------------------------------
accounting and other administrative services with Winegardner &
Hammons, Inc. (WHI), a company related by common ownership. The
accounting and administrative charges expensed by the hotel properties,
included in administrative expenses, were approximately $1,228, $1,181,
and $1,082 for the fiscal years ended 1996, 1995 and 1994,
respectively.

In 1995, Mr. Hammons negotiated a new contract with WHI to continue to
provide accounting and administrative services through June 1999.
Charges for these services provided by WHI will approximate $32 per
year for each hotel property for the duration of the agreement.

(c) Insurance Coverage--Umbrella, property, auto, commercial liability and
------------------
workers' compensation insurance are provided to the hotel properties
under a blanket commercial policy purchased by John Q. Hammons Hotels,
Inc. or WHI, covering hotel properties owned by the Partnership, Mr.
Hammons, or managed by WHI. Generally, premiums allocated to each hotel
property are based upon factors similar to those used by the insurance
provider to compute the aggregate group policy premium. Insurance
expense for the properties included in operating expenses was
approximately $6,265, $5,764, and $5,472 for the fiscal years ended
1996, 1995 and 1994, respectively.

(d) Deferred Revenue--Certain of the hotel properties included in the
----------------
accompanying statements, as well as certain other properties owned or
controlled by Mr. Hammons, were party to a phone service agreement with
an unrelated party that expires in May 1999. In conjunction with this
agreement, certain advances were received for prospective revenues.
This deferred revenue is being amortized to telephone revenues.

(e) Allocation of Common Costs--The Partnership incurs certain hotel
--------------------------
management expenses incidental to the operations of all hotels
beneficially owned or controlled by Mr. Hammons. These costs
principally include the compensation and related benefits of certain
senior hotel executives. These costs are allocated by the Company to
hotels not included in the accompanying statements, based on the
respective number of rooms of all

F-14
<PAGE>

hotels owned or controlled by Mr. Hammons. These costs approximated
$150, $180, and $238 for the fiscal years ended 1996, 1995 and 1994,
respectively. Management considers these allocations to be reasonable.

(f) Transactions with Partners and Directors--At January 3, 1997, there
----------------------------------------
were certain prepayments to a partner associated with the Partnership's
estimated 1996 and 1997 taxable income, which approximated $315.

The Partnership reimburses JQH for any development costs incurred on
behalf of the Partnership, at cost. These costs amounted to
approximately $4,621 and $2,851 in 1996 and 1995, respectively.

During 1996, the Partnership entered into an agreement with a director
relating to certain financial advisory services. The Partnership has
recognized approximately $188 in expense in 1996 under this agreement.

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

<TABLE>
<CAPTION>
FISCAL YEAR-END
-------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Expenses included within general,
administrative, sales and management
service expenses:
Accounting and administrative $1,228 $1,181 $1,082
Rental expenses (Note 6) 520 420 409
Financial advisory services from a
director 188 - -
------ ------ ------
$1,936 $1,601 $1,491
====== ====== ======
Interest expense associated with
obligations due Mr. Hammons $ - $ - $ 426
====== ====== ======

Allocated insurance expense from the
pooled coverage included within
various operating categories $6,265 $5,764 $5,472
====== ====== ======
</TABLE>

F-15
<PAGE>

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

As of year end 1996 and 1995, thirty-six of the thirty-nine and thirty-four
of the thirty-seven, respectively, operating hotel properties included in
the accompanying consolidated balance sheets have franchise agreements with
a national hotel chain which require each hotel to remit to the franchisor
monthly fees equal to approximately four percent of gross room revenue, as
defined. Franchise fees expensed under these contracts were $6,250, $5,534,
and $5,061 for the fiscal years ended 1996, 1995 and 1994, respectively.

As part of the franchise agreement, each hotel also pays additional
advertising, reservation and maintenance fees to the franchisor which range
from 1.0% to 3.5% of room revenues, as defined. The amount of expense
related to these fees included in the consolidated statements of income as
a component of sales expenses was approximately $5,493, $4,666, and $4,087
for the fiscal years ended 1996, 1995 and 1994, respectively.

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

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

<TABLE>
<CAPTION>
FISCAL YEAR-END
-------------------
1996 1995
-------- --------
<S> <C> <C>
First mortgage notes, interest at 8.875%, interest only
payable February 15 and August 15, principal due
February 15, 2004, secured by a first mortgage lien on
twenty hotel properties and additional capital
contributions of up to $150 million by Mr. Hammons
and an entity under his control. (Note 1(b)) $300,000 $300,000

First mortgage notes, interest at 9.75%, interest only
payable April 1 and October 1, principal due October 1,
2005, secured by a first mortgage lien on six hotel
properties and a second mortgage lien on two hotel
properties and additional capital contributions of up to
$45 million by Mr. Hammons. (Note 1 (b)) 90,000 90,000
</TABLE>

F-16
<PAGE>

<TABLE>
<CAPTION>
FISCAL YEAR-END
-------------------
1996 1995
-------- --------
<S> <C> <C>
Development Bonds, variable interest rate
approximating 85% of the bond equivalent yield of
thirteen week U.S. Treasury bills (not to exceed 12%)
and fixed rates ranging from 7.125% to 9.00%, payable
in scheduled installments through April, 2024, certain of
the obligations are subject to optional prepayments by
the bondholders, secured by certain hotel facilities,
fixtures, assignment of rents, a letter of credit and, with
respect to approximately $16,247 of development bonds,
a personal guarantee of Mr. Hammons. 36,873 37,625

Mortgage notes payable to banks, insurance companies
and a state retirement plan, variable interest rates at
prime plus 1% and fixed rated ranging from 8% to
10.5%, payable in schedules installments through June,
2024, secured by certain hotel facilities, fixtures,
assignment of rents and certain other real property
controlled by Mr. Hammons and, with respect to
approximately $36,340 of mortgage notes, a personal
guarantee of Mr. Hammons. 93,874 27,024

Other notes payable, various variable interest rates and
fixed rates ranging from 6.5% to 12%, payable in
scheduled installments through July, 2002, secured by
certain hotel improvements, furniture, fixtures and
related equipment and, with respect to approximately
$1,475 of notes, a personal guarantee of Mr. Hammons. 10,396 3,445
-------- --------
531,143 458,094

Less- current portion (12,444) (7,981)
-------- --------
$518,699 $450,113
======== ========
</TABLE>

The indenture agreements relating to the 1994 and 1995 notes include certain
covenants which, among others, limit the ability of the Partnership and its
restricted subsidiaries (as defined) to make distributions, incur debt and
issue preferred equity interests, engage in certain transactions with its
partners, stockholders or affiliates, incur certain liens, engage in mergers
or consolidations and achieve certain interest coverage ratios, as defined.
In addition, certain of the other credit agreements include subjective
acceleration clauses and limit, among others, the incurrence of certain liens
and additional indebtedness.

F-17
<PAGE>

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

YEAR-END
YEAR ENDING 1996
------------- ----------
<S> <C>
1997 (A) $ 12,444
1998 20,466
1999 32,397
2000 3,500
2001 8,704
Thereafter 453,632
----------
$531,143
==========
</TABLE>

(A) Maturities of long-term debt of approximately $5.3 million in 1997 are
scheduled to be amortized over periods extending subsequent to 2001.

(6) Commitments and Contingencies-

(a) Operating Leases--The hotel properties lease certain equipment and land
----------------
from unrelated parties under various lease arrangements. In addition,
the Partnership leases certain parking spaces at one hotel for the use
of its patrons and is billed by the lessor based on actual usage. Rent
expense for these leases was approximately $1,629, $1,076, and $827 for
the fiscal years ended 1996, 1995 and 1994, respectively, which has
been included in general and management service expenses.

Included in the accompanying consolidated financial statements are the
operating results of trade centers located in Billings, Montana;
Joplin, Missouri and Portland, Oregon. Each of the trade centers are
owned by Mr. Hammons. The lease agreements for the Billings and Joplin
trade centers stipulate nominal rentals for each of the fiscal years
ended 1996, 1995, 1994 and for each ensuing year through 2014. The
lease agreement for the Portland facility extends through 2004 and
requires minimum annual rents of $300 to Mr. Hammons. In addition, the
Partnership leases office space in Springfield, Missouri from a
partnership (of which Mr. Hammons is a partner) under two leases, one
of which provides for annual payments of $36 beginning in January 1994
while the other lease provides for an annual payment of $84 for a three
year period. Upon expiration of these two leases, the Partnership
entered into several new leases with the same partnership. These leases
commence in January 1997 and provide for annual payments of
approximately $231 through December 1998. During 1996, the Partnership
entered into two land leases with Mr. Hammons relating to hotels
currently under development. Subject to the Company exercising purchase
options provided under these agreements, these leases extent through
2036 and 2045, respectively, and require aggregate minimum annual
payments of

F-18
<PAGE>

approximately $270. Rent expense for the Portland and Springfield
locations was approximately $520, $420, and $409 for the fiscal years
ended 1996, 1995 and 1994, respectively.

The minimum annual rental commitments for these noncancelable operating
leases at January 3, 1997 are as follows:

FISCAL YEAR
ENDING MR. HAMMONS OTHER TOTAL
------------ ----------- -------- -------
<S> <C> <C> <C>
1997 $ 746 $ 970 $ 1,716
1998 791 861 1,652
1999 570 763 1,333
2000 570 697 1,267
2001 570 535 1,105
Thereafter 11,815 41,119 52,934
------- ------- -------
$15,062 $44,945 $60,007
======= ======= =======
</TABLE>

(b) Hotel Development--In 1997 and early 1998, the Company plans to
-----------------
complete construction and open eight new hotels. The total estimated
aggregate development and construction costs for these hotels are
expected to exceed $250 million.

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

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

The fair values of marketable securities, and long-term debt approximate
their historical carrying amounts except with respect to the 1994 and 1995
notes issues for which fair market value was approximately $387 million and
$380 million at 1996 and 1995, respectively. The fair value of the first
mortgage note issues is estimated by obtaining quotes from brokers.

F-19
<PAGE>

(8) Public Offerings-
----------------

In addition to the completion of the sale of equity securities as more
fully described in Note 1, the Partnership completed the sale of $300
million of first mortgage notes in 1994 and in 1995 completed the sale of
$90 million of first mortgage notes. Proceeds of the offerings were
primarily used for retirement of then existing mortgage debt, permitted
distributions to the then existing partners, transaction costs associated
with the debt offerings and to provide funding for new hotel development.

In conjunction with the retirement or refinancing of its then existing
mortgage debt, the Partnership incurred approximately $0.3 million and $3.3
million ($3.0 million in conjunction with the 1994 debt offering and $0.3
million in conjunction with the 1994 equity offering) of prepayment charges
in 1995 and 1994, respectively. These prepayment charges have been
reflected in the accompanying 1995 and 1994 consolidated statements of
income as an extraordinary item.

F-20
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrants have duly caused this report to be signed
on their behalf by the undersigned, thereunto duly authorized, in the City of
Springfield, Missouri on the 28th day of March, 1997.

JOHN Q. HAMMONS HOTELS, L.P.

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

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

JOHN Q. HAMMONS HOTELS FINANCE
CORPORATION

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

JOHN Q. HAMMONS HOTELS FINANCE
CORPORATION II

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

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
in the capacities at John Q. Hammons Hotels, Inc., as general partner of John Q.
Hammons, L.P., John Q. Hammons Hotels Finance Corporation, and John Q. Hammons
Hotels Finance Corporation II on March 28, 1997.

Signatures Title

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

/s/ David B. Jones
- ------------------
David B. Jones Director, President of John Q. Hammons Hotels,
Inc., John Q. Hammons Hotels Finance
Corporation and John Q. Hammons Hotels Finance
Corporation II
<PAGE>

/s/ Mel J. Volmert
- ------------------
Mel J. Volmert Director, Executive Vice President, Finance,
Treasurer and Chief Financial Officer of John
Q. Hammons Hotels, Inc., John Q. Hammons Hotels
Finance Corporation and John Q. Hammons Hotels
Finance Corporation II (Principal Financial
Officer and Principal Accounting Officer)

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

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

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

/s/ Robert T. Jones, Jr.
- ------------------------
Robert T. Jones, Jr. Director of John Q. Hammons Hotels, Inc.

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

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

INDEX TO EXHIBITS
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
------- ----------- -------------
*3.1 Second Amended and Restated Agreement of Limited
Partnership of the Company (the "Partnership
Agreement")
***3.2 Amendment No. 1 to the Partnership Agreement
(incorporated herein by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 30, 1994)
***3.3 Amendment No. 2 to the Partnership Agreement
***3.4 Certificate of Limited Partnership of the Company, as
amended
*3.5 Restated Certificate of Incorporation of the General
Partner
***3.6 Certificate of Incorporation of John Q. Hammons Hotels
Finance Corporation II
**10.1 1994 Note Indenture
**10.2 1995 Note Indenture
**10.3 Embassy Suites License Agreement
**10.4 Option Purchase Agreement
*10.5 Collective Bargaining Agreement between East Bay
Hospitality Industry Association, Inc. and Service
Employees' International Union
10.6a Collective Bargaining Agreement for 06/01/92 to
5/31/95
*10.7 Letter Agreement re: Hotel Financial Services for
Certain Hotels Owned and Operated by John Q. Hammons
or JQH Controlled Companies
10.9a John Q. Hammons Building Lease Agreement
10.9b John Q. Hammons Building Lease Agreement
10.9c John Q. Hammons Building Lease Agreement
10.9d John Q. Hammons Building Lease Agreement
*10.10 Triple Net Lease
*10.11 Lease Agreement between John Q. Hammons and John Q.
Hammons Hotels, L.P.
*10.13 Employment Agreement between John Q. Hammons Hotels,
Inc. and Mel J. Volmert
10.14a Amendment No. 1 to the Employment Agreement between
John Q. Hammons Hotels, Inc. and Mel J. Volmert
10.14b Amended and restated Employment Agreement between
John Q. Hammons Hotels, Inc. and David B. Jones
10.15a Ground lease between John Q. Hammons and John Q.
Hammons-Branson L.P.
10.15b Ground lease between John Q. Hammons and John Q.
Hammons Hotels, Two L.P.
*10.16 Operating Agreement of RiverCenter Plaza Development
Co., L.C., an Iowa limited liability company
***10.17 Agreement of Limited Partnership of John Q. Hammons
Hotels, L.P. Two
***10.18 Agreement of Limited Partnership of John Q. Hammons
Hotels - Montgomery L.P.
12.1 Computations of Ratio of Earnings to Fixed Charges
of the Company
***21 Subsidiaries of the Company
* Incorporated herein by reference to the General Partner's
Registration Statement (Registration No. 33-84570)
previously filed with the Commission.

** Incorporated herein by reference to the Company's
Registration Statement (Registration No. 33-73340)
previously filed with the Commission.

*** Incorporated herein by reference to the Company's
Registration Statement (Registration No. 33-99614)
previously filed with the Commission.

<PAGE>

Exhibit 10.6a

Capitol Plaza Holiday Inn H.E.R.E. Local 49
300 J Street 1824 Tribute Road, Suite D
Sacramento, CA 95814 Sacramento
446-0100 564-4949 or 1-800-HOTEL-49
Medical & Dental: 921-3388
or 1-800-562-9383

June 1, 1995 through May 31, 1998
INDEX

Section 1. Recognition
Section 2. Union Representative's Activities/Shop Stewards
Section 3. Types of Employees
Section 4. Reporting Pay
Section 5. Work Schedules
Section 6. Discrimination and Equal Pay
Section 7. Meals and Rest Periods
Section 8. Work Day, Week, and Overtime
Section 9. Vacation and Leaves of Absence
Section 10. Holidays and Well Days
Section 11. Bereavement & Jury Duty Leave
Section 12. Medical and Dental Plans
Section 13. Pension
Section 14. Contributions and Collections
Section 15. Superior Workers and Premium Pay
Section 16. Combination Jobs
Section 17. Single Shift
Section 18. Disciplinary Actions, Suspensions and Terminations
Section 19. No Strike and No Lockout
Section 20. House Cards and Union Buttons
Section 21. Union Security
Section 22. Employer's Operation
Section 23. Grievance Procedures
Section 24. Arbitration
Section 25. Dues, Reinstatement and Initiation Fees Check-off
Section 26. Worker's Compensation
Section 27. Management Rights Reserved
Section 28. Seniority
Section 29. Terms, Terminations, and Amendments
Section 30. Craft Rules, Regulations, and Working Conditions of All Crafts
Section 31. Wages Scales
Section 32. Signatures

Note: Wherever a masculine pronoun occurs in this document, it shall be
understood to include the feminine pronoun.

<PAGE>

COLLECTIVE BARGAINING AGREEMENT 6-1-95 to 5-31-98

THIS AGREEMENT, hereinafter called the contract, entered into this 6th day
of September 1995, at Sacramento, California, by and between the Hotel Employees
and Restaurant Employees Union Local 49, AFL-CIO, hereinafter known as the
Union, and Holiday Inn Sacramento - Capitol Plaza, hereinafter designated as
Employer.

In the event any portion of this contract is invalidated by the passage of
legislation by the rendition of a decision by a court of last resort, such
invalidation shall apply only to those portions thus invalidated; and the
remaining portions of this contract shall remain in full force and effect. If
this occurs both parties shall meet within fifteen (15) calendar days for the
purpose of renegotiating different provisions relative to the subject matter
invalidated.

Section 1. RECOGNITION:
The Union shall be recognized as the sole bargaining agent for the purpose
of collective bargaining for all employees coming under the jurisdiction of the
Union, except employees excluded under any applicable Federal law.

Section 2. UNION REPRESENTATIVE'S ACTIVITIES/SHOP STEWARDS:
(a) Properly authorized representatives of the Union shall be permitted
to investigate the standing of all employees and to investigate conditions to
see that the contract is being enforced, provided that no interview shall be
held during the rush hours, or unreasonably interrupt the duties of any
employee. Authorized Union representatives shall inform the Employer or
department head of their presence at the Hotel before interviewing employees.
(b) Shop Stewards
(1) The maximum number of Shop Stewards shall be three (3) Shop
Stewards. It is understood that no more than one(1) Shop Steward be involved in
the handling of any one particular grievance.
If any problems arise with the implementation of a Shop Steward system at
the hotel, the parties agree to meet upon request of either party and work out
mutually agreeable solutions to the problem.
(2) The Employer agrees to recognize Shop Stewards. Shop Stewards shall
assist in the handling and/or investigation of grievances and may participate in
all steps of the grievance procedure.
It is understood that during work time, if an employee requests the
presence of a Shop Steward at a meeting where discipline may occur, the Shop
Steward shall be allowed to leave his assigned job to attend such meeting. Shop
Stewards may discharge their responsibilities at other times during their
working hours only if prior approval is obtained from their immediate supervisor
and there is no disruption in work. The Employer reserves the right to schedule
grievance meetings during non-working hours of the Shop Steward. It is
understood that Shop Stewards may cross departmental lines.
(3) Shop Stewards shall receive training from the Union concerning their
duties and responsibilities. In order to recognize Shop Stewards, the Union
shall notify the Employer of the names of the trained and certified Shop
Stewards.

<PAGE>

(4) Election of Shop Stewards may be conducted on the Employer's
premises. It is understood that balloting will be conducted on the employee's
own time and shall not cause disruption of the Hotel operations.

Section 3. TYPES OF EMPLOYEES:
(a) Full-time Employee: Any combination of shifts totaling (30) hours or
more in a five (5) day period (work week).
(b) Steady Part-time Employee: Any combination of shifts totaling less
than thirty (30) hours in a five (5) day period (work week).
(c) Tipped Employee: Food and beverage servers, bus persons,
bellpersons, and bartenders.
(d) Non-tipped Employee: All others not mentioned in Sub-Section (c)
above.

Section 4. REPORTING PAY:
(a) When an Employer or his representative orders an employee to report
for work or fails to notify an employee not to report for work for any reason
and said employee is not allowed to work, the Employer shall pay the employee
for one-half (1/2) of shift called for but not less than four (4) hours minimum.
This shall not apply to an employee under the influence of liquor or drugs.
(b) Employees who are to be terminated must be notified at the of their
shift. If this is not done and they report for work the next regular work day
and are not placed at work, they shall receive one-half (1/2) of their scheduled
shift or four (4) hours minimum pay for so reporting.

Section 5. WORK SCHEDULES:
(a) The Employer shall post in a conspicuous place or places in each
department, a job record specifying names and classifications, days off, and
starting and finishing time, which must be corrected weekly, if need be.
(b) Regularly scheduled employees shall have a fixed starting time, which
time shall not be changed by the Employer without giving a twenty-four (24) hour
notice to the employee affected, except in case of need or emergency and by
mutual consent of both parties.
(c) The minimum shift for all classifications will be for four (4) hours,
except the Banquet Department which has a three (3) hour minimum shift.
(d) Split Shifts: Six (6) to eight (8) hours work within a spread of
twelve (12) consecutive hours with only one (1) split shall constitute a split
shift. Split shifts will be paid one (1) hour at current minimum wage in
addition to wages earned, in accordance with current I.W.C. regulations.

Section 6. DISCRIMINATION AND EQUAL PAY:
(a) There shall be no discrimination against any employee in accordance
with all applicable State and Federal laws.
(b) The Union and the Employer agree the Employer shall be permitted
to take all actions necessary to comply with the Americans With Disabilities
Act. However, the Employer agrees that any accommodation made for an employee
which conflicts with any term or provision of this contract shall first be
discussed with the Union prior to its implementation. In any event, the

Capital Plaza Holiday Inn 2 6/1/95 - 5/31/98
<PAGE>

only issue under this provision that may be subject to the grievance procedure
is pursuant to Section 28 - Seniority.

Section 7. MEALS AND REST PERIODS:
(a) All meals furnished under this contract will be above and beyond the
wage scales set forth in this contract and at no cost to the employee, except
for any applicable State or Federal tax liability.
(b) Any employee working four (4) hours or more per day shall receive
one (1) hot or one (1) cold meal of comparable quality of that served to the
customer excluding gourmet items.
(c) Any employee working a full shift shall be given an opportunity to
eat a meal within not less than two (2) or more than five (5) hours from the
commencement of the shift. This may be waived by mutual consent of both
parities, but in no case will an employee be allowed to work more than five (5)
hours without a meal break.
(d) In the event that employees are not permitted to eat in the dining
room of their establishment, they shall be provided with clean and sanitary
facilities therefor, and be responsible for removing their own dishes,
silverware, glassware, etc., to a proper station.
(e) Where one (1) or more hot or cold meals are required to be furnished,
pursuant to this Section, and the employer fails to furnish such meal or meals,
he/she shall pay the employee one dollar and fifty cents ($1.50) for each meal
not furnished. Employees who voluntarily do not eat meals furnished by the
Employer shall have no claim on the Employer for cash in lieu of meals.
(f) All employees shall be entitled to a ten (10) minute rest period for
every four (4) hours worked or major portion thereof.

Section 8. WORKDAY, WEEK, AND OVERTIME:
(a) Seven and one-half (71/2) hours within eight (8) shall constitute an
eight (8) hour shift and a day's work, except for bartenders, security, night
auditors and graveyard housekeeping personnel. All of these employees shall be
paid for all eight (8) hours of their (8) hour shift (includes their thirty (30)
minute meal break).
(b) Any work performed in excess of an eight (8) hour shift be
compensated at time and one-half (1-1/2) of the regular rate of pay for each
major portion of each quarter (1/4) hour worked.
(c) Five (5) days in seven (7) consecutive days shall constitute a work
week. Any work performed on the sixth (6th) or seventh (7) day of any seven (7)
consecutive days shall be at time and one-half (1-1/2) of the regular rate of
pay.

Section 9. VACATION AND LEAVES OF ABSENCE:
(a) Vacation with pay are hereby established for all employees. The
period of service for the purpose of earning a vacation shall begin with the
date of employment with the particular Employer and be calculated as follows:
After twelve (12) consecutive months he/she shall be entitled to one
(1) week's vacation with pay.
After twenty-four (24) consecutive months he/she shall be entitled
to two (2) weeks vacation with pay.

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<PAGE>
After nine (9) consecutive years and thereafter, he/she shall be
entitled to three (3) weeks vacation with pay.
After eighteen (18) consecutive years and thereafter, he/she shall be
entitled to four (4) weeks vacation pay.
Vacations shall not be cumulative; i.e., they may not be accumulated from
one twelve (12) month period (commencing with the anniversary date) to the next.
Pay for unused vacation time shall be paid out on the employee's anniversary.
(b) Vacation pay shall be computed by the formula which follows. The
earnings upon which the computation is made shall be the total sum earned during
this period with the exception of banquet service charges, employee's declared
tips, meals, premium holiday pay, and bonuses.

Vacation Pay Computation

1st year - 2% of wages earned.
2nd through 8th year - 4% of wages earned.
9th through 17th year - 6% of wages earned.
18th completed year and thereafter - 8% of wages earned.

(c) For the purpose of pro-rating vacations for all employees, who quit or
are terminated and who have served more than six (6) months shall on termination
of employment be compensated in lieu of vacation as follows:

Vacation Pay Upon Termination

6 months and up to 12 months - 2% of wages earned.
13 months through 8th year - 4% of wages earned.
9th year through 17th year - 6% of wages earned.
18th completed year and thereafter - 8% of wages earned.

(d) Temporary layoffs or leaves of absence, not exceeding the following
schedule, shall not interrupt continuity of employment for the purpose of
vacation eligibility:
1. During the first year of employment - 30 days.
2. During the second and subsequent years of employment - 45 days.
3. Those employees with three or more years of seniority shall be
entitled to a leave of absence of up to six (6) months for medical
reasons, provided they supply a doctor's certificate at the end of the
first ninety (90) days and every thirty (30) days thereafter, or else
the employee shall be considered terminated.
These time periods shall not be cumulative.
The Employer shall grant eligible employees family care leaves as required
by the Federal Family and Medical Leave Act and California Family Care Act. The
Union and the Employer agree that this contract shall be interpreted to be
consistent with these State and Federal Laws.
(e) During each November, sign up sheets will be posted for vacation
selection. During that month, employees will have the option of choosing a
vacation period in the following calendar year. If two (2) or more employees
request the same time period for vacation, and all

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<PAGE>

cannot be granted that period, seniority shall determine who will get that time
period. If at the end of November, an employee fails to schedule a vacation time
period, the Employer shall have the right to schedule that employee for vacation
time off. Any employee, who has been given a confirmed vacation time period and
later requests a variance in that scheduling, will be accommodated at the
Employer's discretion. Black-out periods, where no vacation will be granted, are
at the sole discretion of the Employer. However, if business allows, the
Employer has the option of releasing any of that time for vacations.

(f) Employees shall be entitled to one (1) additional week without pay to
follow consecutively after their paid vacation. The employee must request this
additional time off at the same time as they request their vacation pay; 45
calendar days in advance of the start of their vacation.

(g) The employee will be paid their vacation pay within thirty (30)
calendar days prior to the start of their vacation by means of the regular
payroll period. However, employees must fill out a vacation pay request forty-
five (45) calendar days prior to the start of their vacation for this to be
guaranteed. If after so doing this, Employer fails to have the vacation pay
included in the regular pay period check, a separate check will be issued for
that vacation pay prior to the start of the vacation.

(h) The Employer will pay Medical, Dental and Pension payments for said
vacation time on the same hours as if the employee actually worked. This will
not apply to terminated employees.

Section 10. HOLIDAYS AND WELL DAYS:
(a) The following days shall be observed as holidays:
New Year's Day (January 1)
President's Day (3rd Monday in February)
Memorial Day (last Monday in May)
Independence Day (July 4th)
Labor Day (1st Monday in September)
Thanksgiving Day (4th Thursday in November)
Christmas Day (December 25th)

Any work performed on such days shall be paid for at time and one half (1 1/2)
the regular rate of pay.

(b) Any non-tipped employee working on a holiday which is also their sixth
(6th) or seventh (7th) consecutive day of work will be compensated at two (2)
times the regular rate of pay.
(c) If an employee does not work on a holiday, said employee is not
entitled to pay.
(d) After one (1) year continued employment (including approved medical
leave of absence and vacation time) any employee who has also qualified for
medical, dental, and pension benefits will be entitled to paid well days in
accordance with the following schedule:

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<PAGE>

<TABLE>
<CAPTION>
Effective: 6-1-95 6-1-96 6-1-97
------ ------ ------
Employment # of Days Employment # of Days Employment # of Days
---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1 Year 1 1 Year 1 1 Year 1
2 Years 2 2 Years 2 2 Years 2
3 Years 3 3 Years 4 3 Years 5
4 Years 4 4 Years 5 4 Years 6
</TABLE>

(e) Well days may be used to cover a day off for illness or injury, and
the Employer cannot demand a doctor's report unless that day is a holiday, or
immediately prior to or after a holiday, the vacation period, or regularly
scheduled days off. Other than this type of medical emergency, one week's notice
must be given to the Employer to schedule a well day off. The Employer has the
option to waive this advance notice. Well days may be taken off consecutively
where applicable. Unused well days will be payable to the employee on their
anniversary date, and if not so paid, shall be cumulative.

Section 11. BEREAVEMENT & JURY DUTY LEAVE:
(a) In the event of a death in the immediate family of an employee who has
one (1) or more years of employment with his Employer, that employee shall be
granted a leave of absence with pay not to exceed three (3) days. This
provision does not apply if the death occurs during the employee's vacation,
or while on leave of absence, lay-off, or sick leave.
(b) The immediate family shall mean only a (step) father, (step) mother,
(step) brother, (step) sister, spouse, (step) child, (step) mother-in-law,
(step) father-in-law, or (step) grandparent.
(c) Funeral leave applies only when the employee must make arrangements
for the funeral and/or to attend the funeral. It is not applicable for other
purposes, such as settling the estate, etc.
(d) The Employer may demand verification of the death and the
relationship. The employee must notify his immediate shift supervisor as soon as
possible of the death and his necessary absence from work.
(e) Funeral leave hours shall count toward Medical, Dental and Pension
benefits calculations.
(f) Employees serving on jury duty shall retain their seniority, and the
Employer will continue to make contributions for them to continue their Medical,
Dental and Pension benefits on the same basis as their scheduled hours before
that jury duty.

Section 12. MEDICAL AND DENTAL PLANS:
(a) The Sacramento Independent Hotel, Restaurant and Tavern Employees
Welfare Plan is hereby established. The details of the Trust Fund and
the Declaration of Trust dated the 1st day of April 1954 and the 1st day of
August 1954, as executed by the parties hereto is hereby made a part of this
contract. The Fund shall be administered by the Employers and the Union through
a Board of Trustees established under said Trust Agreement.

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<PAGE>

(b) Eligibility Requirements: In all cases, for an employee to be eligible
for coverage he must work a minimum number of hours per calendar month
commencing with the calendar month immediately following the calendar month of
the date of hire as follows:

All Employees ........ 60 hours or more per calendar month.

For all purposes under this contract, the above are known as the "minimum
required number of hours per calendar month." They must be worked for a single
contributing Employer under this contract.

(c) Contributions: For each eligible employee the Employer shall
contribute during the term of this contract the following sums per calendar
month:

<TABLE>
<CAPTION>
6-1-95 6-1-96* 6-1-97**
------ ------ ------
<S> <C> <C> <C>
MEDICAL:
All Employees, 60 hours or more .......... $100.00 $104.00 $109.00

DENTAL:
All Employees, 60 hours or more .......... $ 10.00 $ 11.00 $ 12.00
</TABLE>

It is the desire and intent of the contracting parties to seek to preserve
a sound financial reserve in the Trust Fund to adequately meet the needs of the
participants of the Fund.

*The parties agree that during the period between June 1, 1996, and May 31,
1997, that if during any consecutive three (3) month period the Medical Plan's
employees' paid claims loss ratio averages one hundred twelve percent (112%) of
Employers' contributions, an additional one dollar ($1) per month per employee
for whom a health and welfare contribution is made, will be made to the Plan.

**During the period June 1, 1997, through May 31, 1998, ((the third (3rd) year
of the contract)) an additional one dollar ($1) contribution will be triggered
if the Medical Plan's paid claims divided by the same three (3) months
Employer's contributions equal a paid claims loss ratio of one hundred twelve
percent (112%). This will be in addition to the potential one dollar ($1)
described above for the June 1, 1996-May 31, 1997 period.

The review will be done each month beginning with the Employer's regular
contribution and claims for June-August 1996. The second review will include
contributions and claims for July-September 1996, etc. This review will be
repeated for the last two (2) years on the contract.

If the one hundred twelve percent (112%) loss ratio is reached in one (1) or
both contract years, the one dollar ($1) will apply to hours worked beginning
the first (1st) of the month after the loss has been calculated by the Trust
Fund Consultant.

Should depletions of the reserves occur in excess of what can be recovered, then
the Trustee will modify benefits temporarily until such time as financially
corrective measures can be taken.

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<PAGE>

(d) Contributions to the Fund for work performed shall be paid not later
than the tenth (10th) day of the month following that in which such work is
performed. Contributions to be made to the Administrator of the Fund on forms
furnished to the Employer by the Fund showing name of the employee, social
security account number of new employees, number of hours worked, the amount of
contributions due, and such other information as required by the Trustees.
(e) It is hereby agreed that the Employer shall permit a confidential
audit of payroll records by an authorized representative of the Medical Trust
Fund to verify hours worked only.
(f) The Trustees of the Sacramento Independent Hotel, Restaurant and
Tavern Employees Welfare Plan shall not be obligated to, and are not authorized
to accept any contributions from an Employer under this Section of the contract
unless the said Employer is currently a part to or bound by a current contract
with the Hotel Employees and Restaurant Employees Union Local 49.
(g) The Union agrees to maintain an up-to-date and complete file of the
current contracts between the Employers and the Union.
(h) The Employer agrees to pay up to two (2) months contribution per
calendar year for Medical and Dental for any qualified employee who is off
because of medical reasons. A qualified employee shall be deemed an employee who
has been qualified under Section 16 for twelve (12) months continuous service
for a single Employer. The Employer shall pay Medical and Dental benefits for
employees serving on juries for the hours they normally would otherwise be
scheduled and for when a contribution would have been made.
(i) The schedule of benefits to be provided for each eligible employee and
each covered dependent shall be determined by a majority of the Board of
Trustees of said Fund. Employees have to choose whether they want coverage
provided through (1) Foundation Plan with Prescription Card for themselves only,
fully paid by the Employer contribution (see (k)* below); or (2) the Indemnity
Plan with family coverage as provided under (k) below.
(j) The Employer agrees to participate in an employee co-payment program
for dependent coverage. The co-payment schedule is set by the Trust Fund, and
the benefits provided shall be determined by the Trust Fund. The co-payments
must be transmitted to the Trust Fund concurrent with the payments for the
employee's coverage in order to maintain coverage. All of the conditions and
penalties apply to co-payment coverage that apply to employee coverage as stated
in this Section and Section 18 Contributions and Collections, as well as the
decision of the Trustees of that Trust Fund.
(k) There will be an open enrollment period during the month of June.
Employees shall pay by payroll deduction, and the Employer shall remit to the
Fund each month its monthly contributions, the difference between the amount of
monthly contributions paid by the Employer, as shown above, and the actual costs
of providing the benefits of the Plans, as determined by the Trustees. For this
purpose, the Employer shall provide for automatic and continuing payroll
deduction. All employees participating in the Plan shall by This Agreement be
deemed to have granted the Employer authorization to withhold from their wages
the amounts necessary to maintain coverage.
These deductions will continue for one (1) full year for those originally
eligible. The deductions will be made only in months that the employee has 60
hours of work or pay and for which the Employer makes a contribution to the
Welfare Fund. In case of marriage, births, adoptions, etc., new dependents may
be added within 30 days.

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<PAGE>

New employees will begin to have the dependent contributions deducted, if
they chose such coverage, in the last month of Employer contributions which will
make the family eligible for benefits in the succeeding month.
Those employees who do not sign up their dependents when originally
eligible will have to provide evidence of insurability, at their own expense, if
they wish to enroll the dependent(s) at a subsequent annual open enrollment
period.
Each Employer will supply to the Trust Fund Administrative office a copy of
each payroll deduction form signed by an employee.

Section 13. PENSION:
(a) Sacramento Independent Hotel, Restaurant and Tavern Employees Pension
Plan is hereby established. The parties of this contract shall enter into a
Trust Agreement complying with the provisions of Section 302(c), of the Labor
Management Relations Act, 1947, as amended, under which the Pension Plan shall
be administered and under which a Board of Trustees upon which Union and
Employer have equal representation shall be created.
(b) Eligibility Requirements: In all cases, for an employee to be eligible
for coverage he must work a minimum number of hours per calendar month
commencing with the calendar month immediately following the calendar month of
the date of hire as follows:

All Employees ........ 60 hours or more per calendar month.

For all purposes under this contract, the above is known as the "minimum
required number of hours per calendar month." They must be worked for a single
contributing Employer under this contract.
(c) Contributions: For each eligible employee the Employer shall
contribute during the term of this contract the following sums per calendar
month;

<TABLE>
<CAPTION>
PENSION: 6-1-95 6-1-96 6-1-97
------ ------ ------
<S> <C> <C> <C>
All Employees, 60 hours or more .......... $17.75 $17.75 $17.75
</TABLE>

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<PAGE>

Section 14. CONTRIBUTIONS AND COLLECTIONS:
(a) Failure to pay contributions required under Sections 12 and 13 of
this contract when due may result in impairment of or loss of benefits to the
employees and result in additional costs in the administration of the Trust
Funds. It is impractical and extremely difficult to fix the actual damage
resulting from failure to pay the contributions in the manner and at the times
provided in Sections 12 and 13. The contributions are due on the tenth (10th) of
the month. Consequently, if the Employer fails to make such contributions by the
twentieth (20th) of the month in which such contributions are due, the Employer
shall pay an additional sum equal to ten percent (10%) of the contributions due
and payable in such month, or fifty dollars ($50.00), whichever is greater, as
liquidated damage for each such late payment. In addition the Employer shall pay
interest in the amount of one and one-half percent (1-1/2%) per month ((eighteen
percent (18%) annual interest) on the unpaid balance.
(b) In the event the Employer willfully fails to report and pay the
contributions as required by Sections 12 and 13, or in the event the Employer so
negligently keeps and maintains his books and records that the amount of the
contributions reported and paid are ten percent (10%) less than the total
contributions found to be due under Sections 12 and 13, he shall pay the cost of
the audit, but in no event more than one thousand dollars ($1,000).
(c) In the event the Trustees are required to file suit to collect
contributions due under Sections 12 and 13, the Employer agrees to pay such sums
as the court shall fix as attorneys' fees and court costs.
(d) The parties hereto hereby authorize the Trustees of the Sacramento
Independent Hotel, Restaurant and Tavern Employees Welfare Plan Trust, and the
Trustees of the Sacramento Independent Hotel, Restaurant and Tavern Employees
Pension Trust to waive or compromise the liquidated damages, cost of audit,
and/or attorneys' fees provided above when in their judgment such waived or
compromise is deemed just and proper.
(e) We agree to abide by any and all action taken by the Trustees of
the Health and Welfare Plan and the Pension Plan or a successor Trust designated
by the Union between this date and May 31, 1998.

Section 15. SUPERIOR WORKERS AND PREMIUM PAY:
(a) The scale of wages in this contract are minimum scales and do not
prohibit a superior worker from receiving a higher salary.
(b) Employees receiving premium pay above the minimum contract shall be
red circled and shall be given the same increase as the contract rate receives.
(c) No employee shall as a result of the signing of this contract
suffer a reduction in his or her wages or fringe benefits.
(d) If the State Minimum Wage is established at a figure in excess of
the minimum established in this contract, then the minimum wages established by
the State shall take effect immediately in this contract in lieu of wages
previously established.

Section 16. COMBINATION JOBS:
When an employee occupies a position combining two (2) or more
classifications in any day, said employee shall be paid for time worked each
classification at contract rate of pay for that

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<PAGE>

classification. This shall not apply to relief for meal period or rest period
not to employees for whom combination scales are fixed in this contract.

Section 17. SINGLE SHIFT:
(a) No employee shall be allowed to work more than one (1) shift in any
one (1) calendar day. This shall not prohibit the performance of overtime work
consecutive with the shift completed.
(b) Eight (8) hours must elapse between any two (2) regular scheduled
shifts. Should a period of eight (8) hours not elapse between the end of any one
(1) regular scheduled shift and the beginning of the next regular scheduled
shift, then overtime wages of one and one-half (1-1/2) of the regular rate of
pay shall prevail. This shall not apply in case of emergency and with the mutual
consent of both parties. This shall not apply to split shifts as defined under
Section 5.

Section 18. DISCIPLINARY ACTIONS, SUSPENSIONS AND TERMINATIONS:
(a) The Union shall not be held to notify any members of termination.
That shall be done by the Employer.
(b) The Employer may only discipline, suspend or terminate for reasons
of just cause. The Employer shall have the right to establish reasonable rules,
policies and regulations to maintain a safe and efficient operation.
(c) Written disciplinary notices (written warnings, suspensions and
terminations) issued to employees must specify the events or actions for which
the notice is issued. Written disciplinary notices shall be issued to employees
within five (5) calendar days excluding Saturdays, Sundays and holidays, after
the Employer first became aware of the event or action for which the
disciplinary notice has been issued. Employees shall be provided with a copy of
the notice and a copy shall be mailed to the Union.
(d) The Union shall have the right to challenge the propriety of any
discipline and/or termination pursuant to the requirements of Section 23.
Grievance Procedure.
(e) It is understood that except in cases which are considered serious
enough for immediate termination, discipline shall be progressive and corrective
in nature. Warning notices, including suspensions, shall be considered null and
void after a period of twelve (12) months.
(f) Probationary Period. An employee may be terminated or disciplined
for any reason during the first ninety (90) calendar days of employment (the
probationary period) and such termination or discipline shall not be subject to
the grievance or arbitration procedures of this contract.
(g) An employee may not be terminated while:
1. On vacation.
2. On written leave of absence.
3. On medical leave not exceeding four (4) months if employee
furnishes Employer with monthly progress reports of doctor and
full release from doctor upon returning to work.
Section 19. NO STRIKE AND NO LOCKOUT:
Both the Union and the Employer recognize the service nature of the
hotel business and the duty of the Employer to render continued and hospitable
service to the public by supplying food,

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<PAGE>

lodging, and other hotel accommodations. Therefore, neither the Union or any of
the employees will call, engage in, participate in, or sanction any strike,
sympathy strike, slow-down, stoppage of work, picketing, or boycott during the
life of this contract.

Section 20. HOUSE CARDS AND UNION BUTTONS:
(a) All establishments covered by this contract may display the
International House Card, and it shall at all times remain the property of the
Union, and may be removed from any establishment failing to comply with this
contract.
(b) Union employees while on the job may wear their Union Buttons.

Section 21. UNION SECURITY:
(a) The Employer shall notify the Union of all job openings within the
bargaining unit covered by this contract. The Union may refer qualified
applicants for such openings. In interviewing and hiring for such job openings,
the Employer shall not discriminate against any applicant referred by the Union.
(b) Only members in good standing in the Union shall be retained in
employment. For the purpose of this Section "member in good standing" shall be
defined to mean employee members in the Union who tender the dues and initiation
fees uniformly required as a condition of acquiring or maintaining membership in
such Union. Non-members of the Union hired by the Employer must complete
membership affiliation on or before the thirty-first (31st) calendar day of
employment, and the Union agrees to accept such non-members into membership on
the same terms and conditions generally applicable to other members.
(c) The Employer shall be the judged of the qualifications of his
employees, but shall give full consideration, without prejudice, to the members
of the Union, provided that they have the necessary qualifications.
(d) To promote better contractual understanding the Employer agrees the
Union may post on the Employer's premises a notice showing Union membership
requirements, benefits of Union membership, or other information agreed to by
the contracting parties.
(e) Upon written notice from the Union of failure on the part of any
individual or employee to complete or maintain membership in the Union as above
required, the Employer shall within seven (7) calendar days of such notice,
discharge such employee.
(f) No employee shall be allowed to enter into any individual contract
or agreement with the Employer concerning conditions of employment or wages
which are less than the conditions of employment or wages contained herein for
hours worked, or without permission of this Local Union.
(g) If a salaried supervisorial employee works at the trade he must
maintain his membership in the Union in good standing; providing, however, this
Section shall not be applicable to work at the trade in emergencies, fill-in
work during vacation periods, and under other circumstances mutually agreed to
by the Employer and the Union.
(h) When an employee is hired, the Employer will notify the employee of
this contract.

Section 22. EMPLOYER'S OPERATION:
All provisions of this contract shall be equally effective under any
sub-contract or concession covering work performed in or outside of the
establishment of the Employer within the

Capitol Plaza Holiday Inn 12 6/1/95 - 5/31/98

<PAGE>

classification of work as set forth in the terms of this contract. (The status
of the gift shop is governed by Addendum A of this contract.)
In the event business conditions necessitate the subcontracting of any
one or all services performed in any bargaining unit classification, the
Employer agrees to give the Union sixty (60) days notice of its intention to
subcontract and will agree to meet and discuss the issue with the Union should
there be any adverse impact upon any bargaining unit member. The Employer
further agrees to inform the subcontractor of the existence of the contract, and
in good faith make their best effort to ensure the subcontractor retains the
current employees.

Section 23. GRIEVANCE PROCEDURES:
For purposes of this contract, a grievance shall be defined as a
dispute, or difference of opinion, between the Union and the Employer involving
the meaning, interpretation, or application of this contract, or the alleged
violation of any provision of this contract.
Both parties having mutually agreed to the benefits of speedy
resolutions of grievances, especially disciplinary action for alleged violations
of house rules, procedures or terms and conditions of this contract. All such
disputes shall be processed in the following time and manner. Time limits at any
step in the procedure may be waived by mutual agreement of the parties.
Step 1. The employee may discuss the matter with his supervisor on an
------
informal basis to settle the matter promptly. The employee may have a Union Shop
Steward or Union representative assist him in Step 1. if he so desires.
Step 2.
------
(a) If the grievance is not resolved at Step 1., the Union
Representative shall meet with the Employer, or his authorized representative,
for the purpose of attempting to resolve the dispute.
(b) The employee or the Union Representative must submit all
disciplinary grievances in writing to the Employer within ten (10) calendar days
after the disputed discipline occurred, or it will be deemed waived by the
grieving party, as well as both the Union and the Employer.
(c) All non-disciplinary grievances must be submitted in writing
to the other party within twenty (20) calendar days of first knowledge of said
grievance or it will be deemed waived by the parties.
(d) If a settlement of the grievance is not reached during Step
2., then the Union may file for a Board of Adjustment (Step 3.). In any event,
the Union must file for a Board of Adjustment within ten (10) calendar days of
the date that the grievance was filed in writing with the Union. Failure to
request an Adjustment Board in the prescribed time frame shall disallow any
further action on the grievance unless the time period is waived by the Union
and the Employer.
Step 3.
------
The Adjustment Board shall meet within seven (7) calendar days
of a request for a hearing. The Adjustment Board shall consist of two (2)
representatives from each contracting party. The Adjustment Board shall be
empowered to hear and resolve, by simple majority, all grievances properly
brought before them. Any decisions of the Adjustment Board shall be final and
binding. If the Adjustment Board cannot agree on any matter before it, the
grieving party may request arbitration. Said request must be done within seven
(7) calendar days of the deadlocked decision of that Adjustment Board, or that
grievance shall be deemed waived by both parties.

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<PAGE>

Section 24. ARBITRATION:
(a) If arbitration is resorted to, the decision of the arbitrator shall be
final and binding upon both of the parties. The time limits contained herein may
be waived by mutual agreement of the parties.
(b) Within ten (10) calendar days of the request to arbitrate, the parties
shall choose an arbitrator from the established panel. This panel shall consist
of five (5) arbitrators named in this contract who will be chosen by the parties
within thirty (30) days following the signing of this contract.
Arbitrators shall be selected in rotation order; however, due consideration
shall be given to the arbitrator who is available to hear the case on the
earliest mutually agreeable date. The rotation order will be established by the
parties when the panel is chosen.
(c) Expedited arbitrations shall commence within twenty-eight (28)
calendar days of the request for arbitration in all disciplinary grievances.
(d) All non-disciplinary grievances shall proceed at the earliest possible
date, and the arbitrator chosen must be instructed by the parties to render his
written decision within thirty (30) calendar days of the arbitration, unless a
bench decision has been mutually requested by the parties.
(e) Arbitration hearings shall be conducted in accordance with the
following procedures:
1. Continuances may be granted by the Arbitrator, but any cost shall be
paid by the requesting party.
2. There shall be no formal rules of evidence.
3. Hearings shall normally be completed within one (1) day.
4. The Arbitrator shall have sole authority to rule on all motions and to
decide the case.
5. Bench decisions shall be the rule in all disciplinary cases, unless
otherwise agreed to beforehand by the parties.
(f) Each party shall bear their own cost of the arbitration excluding the
Arbitrator's fee and his related costs which shall be equally divided between
the parties.
(g) The Arbitrator shall not have the power to add to, or to modify any of
the terms, conditions, sections or subsections of this contract. The
arbitrator's decision shall not go beyond what is necessary for the
interpretation and application of this contract in the case of the specific
grievance at issue.

Section 25. DUES, REINSTATEMENT AND INITIATION FEE CHECK-OFF:
(a) The Employer will deduct from their wages and turn over to the duly
designated officer of the Union the membership dues, initiation fees, and
reinstatement fees of such members of the Union as individually and voluntarily
certify in writing on and after the date of this contract that they authorized
such deductions. Such written authorizations shall be irrevocable for a period
of one (1) year or until the termination or renewal of this contract, whichever
occurs sooner, and such written authorizations shall be automatically renewed
and shall be irrevocable for successive periods of one (1) year or until the
termination or renewal of this contract, whichever occurs sooner, and such
written authorizations shall be automatically renewed and shall be irrevocable
for successive periods of one (1) year each, or for the period of such
succeeding contracts between the Employer and the Union, whichever shall be
shorter, unless written notice of

Capitol Plaza Holiday Inn 14 6/1/95 - 5/31/98

<PAGE>

revocation is given to the Employer and a copy sent to the Union not more than
fifteen (15) calendar days before the expiration of each period of one (1) year,
or each succeeding contract between the Employer and the Union, whichever occurs
sooner.
(b) The form of such written authorization shall be on a form supplied by
the Union and approved by the Employer, which form shall be attached hereto and
made a part of this contract and marked Exhibit "A."
(c) Deductions for Union membership dues pursuant to this Section shall be
made from the second (2nd) pay check of the employee after receipt of the
authorization and monthly thereafter on the first (1st) payday of each month for
such time as the authorization remains in effect.
(d) The provisions of this Section are intended solely as an accommodation
to the Union. It is expressly agreed and clearly understood by the parties that
no agency, bailment, or any other relationship is created, intended, or shall be
implied between the Company and the Union, or between the Company and any
employee or group of employees. Further, the Union specifically agrees to hold
the Company harmless from any and all losses, damages, or injury of every nature
whatever, including but not limited to the expenditure of all attorneys' fees
and all court cost incurred by the Company by reason of the provisions of this
Section.

Section 26. WORKER'S COMPENSATION:
(a) The Employer has secured worker's compensation insurance coverage and
will make every reasonable effort to see that injured employees receive prompt,
adequate medical attention. Any employee sustaining a work related injury must
immediately report said injury to his supervisor and if necessary request
medical attention from that supervisor.
(b) Prior to hiring or within thirty (30) calendar days of hiring an
employee or prior to returning to work from an injury, the Employer may require
that the employee take a physical examination at no cost to the employee. The
intention here is to avoid having employees on jobs which might jeopardize their
health or the safety and health of others. Should the medical examination
disclose such conditions, the Employer will make every effort to assign the
employee to other work in his classification and within his capability. When
such other work is not available, the employee may be removed from the payroll
and the case taken up with a representative of the Union.
(c) All employees will observe all safety rules set up by the Employer.

Section 27. MANAGEMENT RIGHTS RESERVED:
The Employer shall have the right to determine the extent of its operations
and to determine when any operation shall function, or shall be halted, and when
services shall be increased and decreased. The authority to hire employees, to
direct, retire, promote, transfer, train, layoff, or dismiss any employee for
just cause, to maintain discipline, to make reasonable rules, to determine work
schedules, and the number of hours an employee may work per day or per week,
shall be vested in the Employer, subject to the provisions of this contract.

Capitol Plaza Holiday Inn 15 6/1/95 - 5/31/98
<PAGE>

Section 28. SENIORITY:
The Employer and the Union agree that the purpose of seniority is to accord
consideration to senior employees in recognition of their length of service to
their Employer. Seniority is further intended to provide maximum work
opportunity to senior employees.
(a) Definition:
----------
1. Hotel seniority is an employee's length of continuous service in years,
months and days from his most recent date of hire into the bargaining unit.
2. Classification seniority is an employee's length of continuous service
in years, months and days from his most recent date of hire, promotion or
transfer into his present classification. If two or more employees are employed
within the same classification on the same day, their seniority shall be
determined by whoever is born on the earliest day of the year.
(b) Layoff and Recall:
-----------------
When it is necessary to lay off employees, those with the least amount of
seniority in the job classification shall be laid off first. When the workforce
is increased within the classification, employees on layoff shall be recalled in
order of their job classification seniority. All employees on layoff shall be
recalled before the hiring of any new employees.
(c) Scheduling:
----------
1. Preference for shifts and days off shall be based on classification
seniority.
2. Preference for vacation schedules shall be based on hotel seniority.
(d) Probationary Period:
-------------------
A newly hired employee shall be considered a probationary period employee
until he has completed ninety (90) calendar days of employment. Once the
probation period has been completed his seniority shall date back to his date of
hire. A probationary employee may be laid off or terminated without recourse to
the grievance procedure.
(e) Promotions and Transfers:
------------------------
1. In filling job vacancies which may exist within the bargaining unit, the
Hotel subscribes to the philosophy of promotion from within. Among employees who
are qualified for said job vacancy, in the judgment of the Employer, house
seniority shall be the final determining factor in making such selection.
In the event of a dispute as to the qualifications of an employee for a
promotion, the Union may file a grievance that the Employer has made its
determination arbitrarily or capriciously.
Nothing herein shall preclude the Employer from hiring an applicant from
outside the Hotel or bargaining unit once all internal candidates have been
considered.
2. In the event that an employee who, within sixty (60) calendar days of
his promotion or transfer, desires to return to his former position or is deemed
not qualified to hold the new position, he shall be returned to his former
classification without loss of seniority. This provision shall apply to
promotions or transfers to positions both inside the bargaining unit and outside
the bargaining unit. It is further understood that while an employee is training
for an upgraded position, he shall retain all seniority rights in his base
classification.
3. Employees who have been promoted into a new classification and as a
result of that promotion are not able to achieve the same amount of hours as
they were previously working pursuant to their seniority, shall retain the right
to work in their previous classification to supplement their hours under the
following terms and conditions:

Capitol Plaza Holiday Inn 16 6/1/95 - 5/31/98
<PAGE>

(a) The new classification shall be the primary job and therefore shifts
must be satisfied there first, prior to working in the previous classification;
(b) No overtime will be incurred unless agreed to by the Employer;
(c) At the time of promotion, on a form to be provided by the Employer, the
employee shall choose whether or not he wants additional hours in his previous
position in the event he loses hours in his new position due to his promotion.
(d) Such protections shall be valid for six (6) months beginning the first
date of employment in the new position.
In completing and filling out his weekly schedules with work from the
previous classification, the promoted employee shall exercise his seniority in
that classification in a manner which minimizes the disruption of the schedules
in that classification, i.e., bumping the least senior person in the
classification which will allow him to make up hours equivalent to his previous
schedule.
(f) Termination of Seniority:
------------------------
An employee's seniority shall be terminated by:
1. Discharge for cause
2. Voluntary quit
3. Failure to return to work at the end of a leave of absence
4. Absence from work for three (3) consecutive days without notifying and
providing a satisfactory excuse to the Employer.
5. Failure to report for work after layoff within three (3) calendar days
after having been recalled by a notice sent to the employee's last known address
by certified mail.
6. A layoff of three continuous months except where the property has been
temporarily closed, in whole or in part, for purposes of remodeling or
reconstruction. In such a case, the "closed time" shall not be counted toward
the three (3) month period of layoff.
(g) Seniority Lists:
---------------
Upon request the Employer shall furnish the Union with a current seniority
list every six months. The Employer shall also post an updated seniority list
within 10 calendar days of the signing of this contract. Employees shall have
ten (10) calendar days from the date of posting to notify the Employer or the
Union of any errors in the list.
(h) It shall be the responsibility of the employee to keep the Employer and
the Union informed of his current address and telephone number at all times.

Section 29. TERMS, TERMINATIONS, AND AMENDMENTS:
(a) This contract shall be in effect from June 1, 1995, to and including
May 31, 1998, and shall remain in full force and effect from year to year
thereafter unless either party shall serve written notice upon the other of a
desire to amend said contract no later than February 1, 1998, or any subsequent
February 1st thereafter.
(b) Any wage adjustments reached subsequent to the anniversary date shall
be retroactive to the anniversary date.

Capitol Plaza Holiday Inn 17 6/1/95 - 5/31/98
<PAGE>

Section 30. CRAFT RULES, REGULATIONS, AND WORKING CONDITIONS OF ALL CRAFTS:

(a) LINEN, LAUNDRY AND UNIFORM: The Employer shall furnish linen and
uniforms and launder same without expense to the employee. The Employer
reserves the right to select the style of type of special uniform required in
his establishment. Any special uniform that is considered wash and war will be
laundered by the employee at no expense to the Employer. The ordinary black or
white food servers garment which garment which may be worn in other
establishments shall not be considered as a special uniform.
A cook's uniform shall consist of pants, cap, apron, and jacket, shirt,
or dress. When the Employer does not furnish and launder cooks uniforms, he
shall pay one dollar ($1) per day in lieu thereof. This shall not apply when an
employee refuses to wear the uniform furnished by the Employer, provided such
uniforms are wearable and are those customarily worn in the Employer's
establishment.
Any Employer electing to pay wages in excess of those called in Section
31 shall not be relieved of this provision. Any Employer electing to reimburse
the employee in lieu of uniforms and laundry shall designate such reimbursement
on the payroll check stub.

(b) BREAKAGE, CASH SHORTAGE, CONTRIBUTIONS AND DEDUCTIONS:
No employee shall be required to contribute to a captain, head food
server, bartender, or anyone in charge.
Unavoidable or accidental breakage or spillage of merchandise or
equipment shall not be charged against an employee
No Employer shall make any deductions from the wage or require any
refund of an employee for any cash shortage, breakage, or loss of equipment
unless it can be proved that the shortage, breakage, or loss is caused by a
dishonest or willful act, or by the gross negligence of the employee.
No employee shall be held responsible for walkouts or when guests refuse
to pay check. No employee shall be held to pay the house any part of an
undercharge.
Cash Shortages: No employee shall be held liable for any cash shortages
if more than one (1) employee has access to the employee's cash drawer. In the
event of an excessive cash shortage, the employee must notify the Employer or
his authorized representative for verification, or be held liable for such
shortage.

(c) CLEANING:
1. No food or beverage server shall be required to wash or wipe
glasses, silverware, creamers, tea or coffee pots, or other utensils as part of
their regular duties, except employees in sandwich shops may be permitted to
wash glassware and silverware used exclusively for fountain service. This
Section will not be applied to bartenders and bar helpers.
2. Food and beverage servers and counter persons shall not be required
or permitted to do any work designated as "porter" work, including sweeping,
scrubbing floors or walls, defrosting or cleaning the inside of ice cream
cabinets or refrigerators and similar work; except the cleaning of back bars and
counter may be required as part of food server's work.

Capitol Plaza Holiday Inn 18 6/1/95 - 5/31/98
<PAGE>

3. Any employee who spills any material or causes an accident of like
nature, shall be required to clean it up.

(d) PAYMENT OF GRATUITIES:
1. Any house accepting charge accounts or credit cards on which a
gratuity or service charge is specified for the food or beverage server shall
pay the same to said employee upon the completion of the shift. An Employer may
require a refund of any gratuities or service charges made on a credit card
which the employee has received and for which payment is later disallowed or
refused. This does not apply to house charge accounts.
2. All banquet and catering gratuities and service charges will be
distributed in the following manner:
a. Eighty percent (80%) of the customary 15% gratuity and/or
service charge shall be distributed to the employees working the
affair, and
b. Twenty percent (20%) may be distributed to the banquet manager,
catering manager and others.
c. Where more than the customary 15% gratuity and/or service charge
is charged for the affair, the distribution of the excess
portion shall be at the discretion of the Employer.
The Employer shall be responsible for and guarantee the distribution of said
gratuities or service charges and all banquet and catering gratuities received
in accordance with this rule. Said service charge or gratuity will be in
addition to the wages set forth in this contract.
The distribution formula may be deviated from where the success of the
affair is substantially due to the particular skills and/or labor of employees
other than regular banquet personnel, in which case the gratuity or service
charge will be distributed in a fair and equitable manner to all employees
concerned.
3. Representatives of the Union shall have the right to inspect all
records in connection with any gratuities or service charges and disposition of
same on behalf of employees working a particular function on request.

(e) BANQUET RULES:
1. All banquets served on Sunday after 11:00 a.m. shall receive the
dinner scale. If banquet servers, after completing their parties, are
transferred to ala carte service, they shall,after three (3) hours be paid the
appropriate ala carte rate per hour. No banquet server will work ala carte
without the employee's consent.
2. Dinner dances where food servers collect all checks, shall be paid
the ala carte scale. Non-collecting dinner dances shall be paid at the banquet
rate per hour with a minimum of three (3) hours.
3. Steady help are not allowed to work on banquets unless extra help
is not available; provided this shall not apply where the use of extra banquet
servers will result in closing stations. Steady help working on banquets of
twenty-five (25) or more shall receive banquet scale regardless of number of
guests served. Steady help may be employed on parties of twenty-four (24) or
less at regular rate for steady employment. The scale for breakfast applies only
to employees called at 5:00 a.m. or later.

Capitol Plaza Holiday Inn 19 6/1/95 - 5/31/98
<PAGE>

4. No food server shall be to wait on more than thirty (30) guests. It
is mutually understood that the Employer will estimate one (1) food server to
every thirty (30) guests. In case of overflow or any other emergency and the
food server waits on more than the allowed thirty (30) guests, they will be paid
forty cents ($.40) for each additional person.
5. Buffets: No employee shall be required to serve more than fifty
(50) guests on a service buffet; on semi-service buffets, they may serve sixty
(60) guests; on hors d'oeuvres and receptions one (1) food server for every
eighty-five (85) guests.
6. All banquet scales will be for a three (3) hour minimum. Setting up
and overtime will be at the same hourly rate as the actual banquet. Where travel
is involved employees will be paid the same hourly rate for time of travel.
Employees who are requested to use their own car to transport other employees to
and from the job shall receive an additional twenty cents ($.20) per mile for
their car expense. This only applies to catered parties and banquets held over
ten (10) miles from place of employment.
7. All banquet workers shall be called through the union except house
steady banquet employees. All banquet gratuities and/or service charges are to
be paid on the next payroll after the party has been paid for. Head banquet
servers shall not receive less than fifty cents ($.50) per hour over the banquet
scale.
8. All extra banquet employees will be paid on the next regular payroll
of the Employer.
9. All banquet shifts will be individual shifts and paid for by the
individual banquet scale for same; however, where two (2) or more banquets are
worked in one (1) day in any one (1) house, the total pay cannot be below the
State Minimum Wage including overtime and split shifts.

(f) GUEST ROOM ATTENDANTS AND HOUSE PERSONS DUTIES:
1. A guest room attendant will be required to change all linen daily,
clean the bath, vacuum, dust, clean the windows and fixtures, replace light
bulbs in lamps and anything else that is required to maintain the everyday
cleanliness of a room,
2. A house person shall assist the guest room attendant by picking up
trash and soiled linen from the attendant's cart, stock and maintain the linen
closets, move furniture, vacuum and maintain halls or sidewalks, shampoo rugs
and repair or replace items in a room, i.e., lamp shades, drapes, overhead light
bulbs, stopped up drains, etc.
3. A guest room attendant shall not be required to do more than
fifteen (15) rooms in one (1) day. If suites or apartments consist of more than
one (1) room, each room in the suite or apartment shall be considered as a room
for the total number of rooms for a day. Any additional rooms in excess of those
called for in the above schedule, the employee shall be compensated at the rate
of two dollars ($2.00) per room. If any dispute arises on the subject, the
Employer agrees to discuss the matter with the Union in an effort an amicable
disposition of the complaint.

(g) MAINTENANCE EMPLOYEES:
Maintenance Worker I (Assistant Chief)
- --------------------------------------
In addition to performing all duties described under the other
classifications of this department, the Maintenance Worker I may supervise a
crew, assign them to their duties, and

Capitol Plaza Holiday Inn 20 6/1/95 - 5/31/98
<PAGE>

devise the shift schedule. He also must manage and be responsible for a
preventative maintenance program.
Refrigeration: Charges with refrigerant gas.

Maintenance Worker II:
- ----------------------
Generally, under the direction of either Chief Engineer or the Maintenance
Worker I, the Maintenance Worker II performs the duties itemized below, but
is not limited to those duties. This outline is only a summary of the job
responsibilities and is not considered a restrictive job description.
Electrical: Repairs, replaces and maintains motors, controls switched,
relays wiring.
Changes ceiling light bulbs. Locates problems an diagnoses malfunction.
Refrigeration/Air Conditioning: Repairs, replaces and maintains systems,
cleans oils, flushes liquid condensers, adjusts temperature and pressure
controls, replaces and cleans filters, replaces certain components - usually
short of major overhaul.
Plumbing: Repairs, replaces and maintains all plumbing fixtures including
faucets, flushometers, drains, toilets, sinks, showers, minor pipe failures,
evaporative coolers, sprinklers, valves and pumps.
Carpentry: Builds shelves, racks, partitions, platform, including
remodeling. Constructs various items as required by Employer.
Locks: Changes and repairs locks, make keys, install new locks.
Roofing: Locates leaks or damage and repairs. Maintains all roofing mounted
equipment.
Floors: Repairs and replaces tiles, linoleum and/or carpet. Repairs or
resurfaces floors.
Walls: Patch and plaster, paint or vinyl, or otherwise repair walls and
partitions including wall tile. Mount such items as mirrors, pictures, lamps,
headboards and shelves.
Heating: Maintains boiler components, gas and electrical, water heater,
piping, valves and control systems.
Furniture: Repairs any and all guest room and public area furnishings.
Emergency Life Safety Systems: Bi-monthly testing and preventative
maintenance, including repairs of fire sprinkler pumps and emergency lighting
generator. Tests and replaces emergency lighting batteries.
Parts and Supplies: He may order and purchase parts and supplies, call in
contractors when necessary and keep management advised of his department's
activities. He also coordinates maintenance work with other departments.

Maintenance Worker III (Helper/Utility Worker)
- ----------------------------------------------
Under the supervision of either the Chief Engineer or the Maintenance
Worker I or II, the Utility worker performs the duties itemized below, but is
not limited to those duties. This outline is only a summary of the job
responsibilities and is not considered a restrictive job description.
Electrical: Repairs, replaces switches, lamp cords and sockets, light
fixtures, changes light bulbs.
Air Conditioning/Heating: Cleans and replaces filters, cleans coils, adjust
temperature controls, replaces faulty room units.
Plumbing: Repairs, replaces and maintains all plumbing fixtures including
flushometers, drains, toilets, sinks, showers, minor pipe failures. Maintains
and back flushes swimming pools.

Capitol Plaza Holiday Inn 21 6/1/95 - 5/31/98
<PAGE>

Carpentry: Assists with building of shelves and racks. Constructs various
items as required by the Employer.
Roofing: Assists with roof leak repairs.
Floors: Repair or replacement of tiles, linoleum and/or carpet.
Walls: Patching, plastering, painting or vinyling of walls, including other
repairs. Mount such items as mirrors, pictures, headboards and shelves.
Furniture: Repair of any and all guest room and public area furnishings.

(h) COMBINATION LAUNDRY WORKER/UNIFORM ROOM ATTENDANT:
Duties: 1. Maintains employee uniforms
2. Makes minor alterations of uniforms and linen
3. Laundry work.

Section 31. WAGE SCALES:

SENIORITY INCENTIVE:
Amount Beginning on hire date
------ ----------------------
10 cents per hour 1st Anniversary
20 cents per hour 3rd Anniversary
30 cents per hour 5th Anniversary
40 cents per hour 10th Anniversary
The above increases will be due on the individual's anniversary date. The
above amounts will be paid over the contract wage scale according to the
individual's job classification and are not cumulative.

TIPPED EMPLOYEES
----------------
<TABLE>
<CAPTION>
12-1-95* 6-1-96 12-1-96** 6-1-97
-------- ------ --------- ------
<S> <C> <C> <C> <C>
BARTENDERS
- ----------
Service and/or combination ....... Bonus(.25) .. $6.97 ... Bonus(.25) .. $7.12
Regular .......................... Bonus(.25) ....6.78 ... Bonus(.25) ....6.93
Banquets:
Six hour guarantee ............. Bonus(.25) ....8.60 ... Bonus(.25) ....8.75
Three hour guarantee ........... Bonus(.25) ....9.10 ... Bonus(.25) ....9.25

FOOD SERVERS AND BUSPERSONS
- ---------------------------
Food and Beverage Server ......... Bonus(.25) ....4.85 ... Bonus(.25) ....5.00
Bus Persons ...................... Bonus(.25) ....4.85 ... Bonus(.25) ....5.00
Head Food Server ................. Bonus(.25) ....5.80 ... Bonus(.25) ....5.95
Banquet Captain .................. Bonus(.25) ....5.90 ... Bonus(.25) ....6.05

Dinners and Banquets (Food and Beverage Servers and Bus Persons)
Breakfast, Lunch or Tea .......... Bonus(.25) ....5.20 ... Bonus(.25) ....5.35
Dinners .......................... Bonus(.25) ....5.65 ... Bonus(.25) ....5.80
Dinners, commencing after
9:00 pm ........................ Bonus(.25) ....5.80 ... Bonus(.25) ....5.95
</TABLE>

Capitol Plaza Holiday Inn 22 6/1/95 - 5/31/98
<PAGE>

<TABLE>
<S>
BELLPERSONS
- -----------
<S> <C> <C> <C> <C>
Bell Captain ..................... Bonus(.25) ....5.65 ... Bonus(.25) ....5.80
Bell Person ...................... Bonus(.25) ....4.75 ... Bonus(.25) ....4.90
</TABLE>

*The 25 cents per hour bonus shall be paid out in December 1995 based on all
hours worked or paid for between June 1, 1995, and November 30, 1995.

**The 25 cents per hour bonus shall be paid out in December 1996 based on all
hours worked or paid for between December 1, 1995, and November 30, 1996. If
there should be an increase in the Minimum Wage under State or Federal Law which
raises the base wage rates higher than the contract rates of pay, then the bonus
shall be converted to 15 cents per hour worked or paid for.

NON-TIPPED EMPLOYEES
--------------------
<TABLE>
<CAPTION>
6-1-95 6-1-96 6-1-97 1-1-98
------ ------ ------ ------
<S> <C> <C> <C> <C>
DINING ROOM/BANQUETS
- --------------------
Host Person, Cashier ............... $ 5.65 ... $ 5.90 ...... $6.10 ... $ 6.25
Banquet Set Up (after 5:00 p.m.) .......5.60 ......5.85 ........6.05 ......6.20

KITCHEN
- -------
Lead Cook ..............................8.35 ......8.60 ........8.80 ......8.95
Dinner, Second or Broiler Cook .........7.14 ......7.39 ........7.59 ......7.74
Fry Cook ...............................6.94 ......7.19 ........7.39 ......7.54
Pantry .................................6.32 ......6.57 ........6.77 ......6.92
Kitchen Worker, Porter, Dishwasher .....5.62 ......5.87 ........6.07 ......6.22

FRONT DESK AND CLERICAL
- -----------------------
Front Desk Shift Lead ..................8.45 ......8.70 ........8.90 ......9.05

Front Desk (In Hire) ...................6.23 ......6.48 ........6.68 ......6.83
Front Desk (After 6 months) ............6.50 ......6.75 ........6.95 ......7.10

Concierge (In Hire) ....................6.23 ......6.48 ........6.68 ......6.83
Concierge (After 6 months) .............6.50 ......6.75 ........6.95 ......7.10

Reservation (In Hire) ..................6.23 ......6.48 ........6.68 ......6.83
Reservation (After 6 months) ...........6.50 ......6.75 ........6.95 ......7.10

Lead Night Auditor .....................8.60 ......8.85 ........9.05 ......9.20
Night Auditor ..........................8.00 ......8.25 ........8.45 ......8.60
PBX ....................................6.00 ......6.25 ........6.45 ......6.60
Store Room Clerk .......................5.86 ......6.11 ........6.31 ......6.46
</TABLE>

Capitol Plaza Holiday Inn 23 6/1/95 - 5/31/98

<PAGE>

<TABLE>
<CAPTION>
6-1-95 6-1-96 6-1-97 1-1-98
------ ------ ------ ------
<S> <C> <C> <C> <C>
HOUSEKEEPING
- ------------
Guest Room Attendant ................ $ 5.62 ... $ 5.87 ...... $6.07 ... $ 6.22
Room Inspector .........................5.72 ......5.97 ........6.17 ......6.32
Laundry Worker .........................5.88 ......6.13 ........6.33 ......6.48
Head Houseperson .......................8.28 ......8.53 ........8.73 ......8.88
Houseperson/Lobby ......................5.72 ......5.97 ........6.17 ......6.32
Houseperson/Shampooer ..................8.08 ......8.33 ........8.53 ......8.68
Linen Room Attendant ...................5.62 ......5.87 ........6.07 ......6.22
Combination Laundry Worker/Uniform/
Seamstress ...........................5.88 ......6.13 ........6.33 ......6.48

MAINTENANCE
- -----------
Maintenance I (Assistant Chief) .......13.25 .....13.60 .......14.00
Maintenance II .........................9.25 ......9.50 .......10.00
Maintenance III ........................7.60 ......7.90 ........8.10

SECURITY
- --------
Security Guards ........................6.50 ......6.75 ........6.95 ......7.10
</TABLE>

Section 32. SIGNATURES:

IN WITNESS WHEREOF, the parties hereto have set their hands and seals this
____ day of __________, 1995.

FOR THE UNION: FOR THE EMPLOYER:

Hotel Employees and Holiday Inn Sacramento -
Restaurant Employees Capitol Plaza
Union Local 49

by: by: /s/ [Signature appears here]
Ted T. Hansen
President-Business Manager

by: by: /s/ [Signature appears here]
Joseph A. McLaughlin
Secretary-Treasurer

/s/ [Signature appears here]
Business Rep
Local 49

Capitol Plaza Holiday Inn 24 6/1/95 - 5/31/98
<PAGE>

(EXHIBIT "A")

Hotel Employees and Restaurant Employees International Union, AFL-CIO

- --------------------------------------------------
(Print name of employer)

- -------------------------------------------------- --------------
(Print name of employee) (Date)

I hereby request and accept membership in the Hotel Employees and Restaurant
Employees International Union, Local _________ AFL-CIO, and designate and
authorize it and any subordinate body of the International Union with which it
is affiliated, to represent me in collective bargaining in all matters relating
to my wages, hours and conditions of employment, and to negotiate and execute
agreements covering same. In making this request and in accepting membership,
I hereby agree to be bound by the Constitution, laws, rules, policies and/or
regulations of the above International Union, the local union, and Joint Board
with which the local union is affiliated, if any, and any other affiliated local
union and/or Joint Board to which I may hereafter transfer or become a member
of.
* * * * * *

I hereby authorize and direct any above-mentioned employer to deduct from my
wages, each and every month, dues, initiation fees, or reinstatement fees (not
exceeding initiation fees) which I am required to pay as a condition of
maintaining membership in good standing of said union, which I assign to said
union, and I direct that same be forwarded each month to said union. This
authorization and direction shall be irrevocable for a period of one (1) year or
until the termination of the collective bargaining agreement between my employer
and said union, whichever occurs sooner, and I agree and direct that this
authorization and direction shall be automatically renewed, and shall be
irrevocable for the successive periods of one (1) year each or for the period of
each succeeding applicable collective bargaining agreement between my employer
and said union whichever shall be shorter, unless written notice is given by me
to the employer and said local not more than twenty (20) days and not less than
ten (10) days prior to the expiration of each period of one (1) year, or the
expiration of each applicable agreement between my employer and said union,
whichever occurs sooner.

If you do not wish the above to apply, but prefer to pay your dues and
initiation fees and other charges, if any, referred to above to the office of
the local union every month, initial here. _______

*SEE IMPORTANT INFORMATION ON REVERSE SIDE

---------------------------------------
(Signature of Employee)

- ------------------------------------- ----------------------------------
(Telephone Number) (Address)

- ------------------------------------- ----------------------------------
(Type of Work) (Social Security No.)

Hotel Employees and Restaurant Employees International Union, AFL-CIO

- --------------------------------------------------
(Print name of employer)

- -------------------------------------------------- --------------
(Print name of employee) (Date)

If you do not wish the above to apply, but prefer to pay your dues and
initiation fees and other charges, if any, referred to above to the office of
the local union every month, initial here. _______

*SEE IMPORTANT INFORMATION ON REVERSE SIDE

---------------------------------------
(Signature of Employee)

- ------------------------------------- ----------------------------------
(Telephone Number) (Address)

- ------------------------------------- ----------------------------------
(Type of Work) (Social Security No.)
<PAGE>

[Letterhead of Hotel Employees and Restaurant Employees
Local No. 49 appears here]

ADDENDUM "A"
------------

It is hereby agreed between the Capitol Plaza Holiday Inn and Hotel
Employees and Restaurant Employees Union Local 49 that the Gift Shop be
suspended from the Collective Bargaining Agreement until such time as the Gift
Shop returns under the business operation of the Capitol Plaza Holiday Inn, or
there is a change in management from that which is in the contract at the time
this contract is signed.

IN WITNESS WHEREOF, the parties hereto have set their hands and seals this
27th day of June, 1992.

FOR THE UNION: FOR THE EMPLOYER:

Hotel Employees and
Restaurant Employees
Union Local 49 CAPITOL PLAZA HOLIDAY INN

by: /s/ Ted T. Hansen by: /s/ [Signature appears here]
Ted T. Hansen
President-Business Manager

by: /s/ Joseph A. McLaughlin by:
Joseph A. McLaughlin
Secretary-Treasurer
<PAGE>

ADDENDUM TO MASTER CONTRACT

This Addendum, when signed, will become part of the Contract between the
Capitol Plaza Holiday Inn and Hotel Employees & Restaurant Employees Union
Local 49.

Section 19 is changed to read as follows:

Section 19. NO STRIKE AND NO LOCKOUT:
Both the Union and the Employer recognize the service nature of the Hotel
business and the duty of the Employer to render continued and hospitable service
to the public by supplying food, lodging and other hotel accommodations.
Therefore, neither the Union nor any of the employees will call, engage in,
participate in or sanction any strike, sympathy strike, slow-down, stoppage of
work, picketing or boycott during the life of this Contract. The Employer will
not lockout its employees during the life of this Contract.

IN WITNESS WHEREOF, the parties hereto have set their hands and seals this
23rd day of January, 1997.

FOR THE UNION: FOR THE EMPLOYER:
Hotel Employees and Restaurant
Employees Union Local 49 CAPITOL PLAZA HOLIDAY INN

by: /s/ Ted T. Hansen by: /s/ [Signature appears here]
Ted T. Hansen
President-Business Manager

by: /s/ Joseph A. McLaughlin by: /s/ [Signature appears here]
Joseph A. McLaughlin
Secretary-Treasurer

<PAGE>

Exhibit 10.9a

JOHN Q. HAMMONS BUILDING

LEASE AGREEMENT

THE STATE OF MISSOURI )
)
COUNTY OF GREENE )

This Lease Agreement (Hereinafter called the "Agreement"), entered into as
of this 28TH day of OCTOBER, 1996, by and between Lessor and Lessee hereinafter
named.

SECTION 1: DEFINITIONS AND BASIC TERMS. The following definitions and
basic provisions shall apply in this Lease Agreement:

A) "Lessor": The Plaza Associates, a Missouri General Partnership

B) "Lessee": JOHN Q. HAMMONS HOTELS, INC.
----------------------------

C) "Leased Premises": 6,000 square feet of net rentable area in JOHN Q.
HAMMONS BUILDING, (hereinafter called the "Building") located at 300 John Q.
Hammons Parkway, Suite #900, Springfield, Greene County, Missouri, as outlined
on the floor plan of the Building attached hereto as Addendum "A" together with
any area used for special stairs or electrical, mechanical or telephone closets
and which are for the exclusive use of Lessee. Although there may have occurred
minor variations in construction of the Building and completion of the Leased
Premises, for the purpose of this Agreement, Lessee acknowledges that the net
rentable area for the Leased Premises is as stated above. The term "net
rentable area", as used herein, shall include any structural columns or
projections which are an integral part of the Building and which are located
within the Leased Premises, but shall not include areas used for Building
stairs, fire towers, elevator shafts, flues, vents, stacks, pipe shafts or
vertical ducts.

D) "Lessee Proportionate Share": The 10.37% % being the relationship of
the net rentable area of the Leased Premises to the net rentable area of the
Building (57,840 square feet).

E) "Lease Term": A period of TWO (2) years beginning on the 1ST day of
JANUARY, 1997, and terminating on DECEMBER 31, 1998, or such date as Lessee
shall occupy the Leased Premises, whichever occurs first. Lessee agrees to
enter into a Supplemental Lease Agreement with Lessor, setting forth the lease
commencement date.

F) "Base Rental": The total sum of $ 168,000.00 payable to Lessor at 901
St. Louis Street, Suite 106, Springfield, Missouri 65806, or such other place as
may be designated to Lessee by Lessor in writing, shall be due and payable in
equal monthly installments of $7,000.00 in advance and without demand or offset
on the first day of each calendar month during the Lease Term or any renewal
period hereof; the first of such installments shall be paid on the date hereof.
If Lessee's occupancy under this Agreement commences on any day other than the
first day of a calendar month, then a prorata portion of the Base Rental
applicable to the partial first month of occupancy shall be paid on or before
the first day of occupancy and shall be in addition to the total Base Rental set
forth above.

G) "Security Deposit": Shall be the sum of $ _____ and paid to Lessor on
the date hereof. Lessor and Lessee mutually agree that the Security Deposit
shall be deposited in management company's property management account, then
disbursed to and held by Lessor.

SECTION 2: DEMISE OF LEASED PREMISES. In consideration of the mutual
covenants and agreements herein contained and subject to the same, Lessor hereby
demises, leases and rents to Lessee and Lessee hereby takes and accepts from
Lessor the Leased Premises for the term specified herein all upon the terms and
conditions as set forth in this Agreement.

- 1 -
<PAGE>

SECTION 3: SERVICES BY LESSOR. During the Standard Building Hours, Lessor
shall furnish Lessee the following services: hot, cold and refrigerated water
at those points provided for general use of all tenants; electrical service for
ordinary office machines and uses excluding any business machine or other
equipment of high electrical consumption characteristic (any special electrical
service shall be at Lessee's expense); heated and refrigerated air conditioning
in season, at such time as Lessor normally furnishes these services to all
tenants in the Building and at such temperatures and amounts as are considered
by Lessor to be standard, such service on Sundays and holidays are to be
optional on the part of the Lessor; elevator service in common with other
tenants in the Building; janitorial cleaning services as may, in the judgement
of Lessor, be reasonably required. Such services shall be on a five-day-week
basis; and Lessor may provide such security service as may, in the sole
judgement and discretion of Lessor, be reasonably required. Lessor shall not be
liable in damages or otherwise for failure, stoppage or interruption of any such
service described or contemplated herein, nor shall the same be construed as an
eviction of Lessee, work an abatement of rental or relieve Lessee from any
covenant or agreement set forth herein. In the event of any failure, stoppage
or interruption of such service, Lessor shall use reasonable diligence to resume
service promptly.

Standard Building Hours shall be from 7:00 A.M. until 7:00 P.M., Monday through
Friday, excluding Holidays, and from 8:00 A.M. until 1:00 P.M. on Saturdays.

SECTION 4: PAYMENT OF INCREASED BUILDING COSTS. The Base Rental provided
for herein includes a stipulated allowance in the amount of THE 1996 ACTUAL
COSTS per square foot of rentable area for repairing, maintaining and operating
the Building, Parking Area and other land area surrounding the Building (the
Building, the Parking Area and other land area herein collectively termed the
"Property") during the first calendar year of the Lease Term. "BASIC COSTS", AS
THAT TERM IS HEREINAFTER DEFINED, SHALL BE CALCULATED PER SQUARE FOOT BASED ON
THE NET RENTABLE AREA OF THE LEASED PREMISES. The term "Basic Costs" as used
herein shall mean all expenses, costs and disbursements of every kind and nature
which Lessor shall pay or become obligated to pay because of, or in connection
with the ownership, operation, repairs and maintenance of the Property, computed
on an accrual basis and in accordance with generally accepted accounting
principals and consistently applied including but not limited to the following:
i. wages and salaries to be allocable to the Property of all employees
directly engaged in the operation and maintenance of the Property, including
taxes, insurance and all other benefits related thereto;
ii. management fees related to the management of the Property;
iii. all costs of supplies and materials used in the operation, repair and
maintenance of the Property;
iv. costs of all utilities for the Property (excluding utilities
separately metered to and actually paid directly by other Tenants);
v. the cost of maintenance, repair and services to the Property including
security services, window cleaning, elevator maintenance, janitorial service,
pest control, landscaping and waste removal;
vi. cost of all casualty and liability insurance applicable to the
Property and any personal property used in connection with the operation, repair
or maintenance of the Property;
vii. all taxes, assessments or other governmental charges from any
federal, state, county, municipal or other taxing authority now or hereafter
imposing any taxes or fees on the Property;
viii. the cost of repairs and general maintenance of the Property;
ix. a reasonable amortization charge (exclusive of any finance charges) on
account of any capital expenditure incurred in reduction of the Basic Costs or
incurred to comply with any requirements of any in force governmental
regulations by authorities having jurisdiction over the Property or necessary
for the health or satisfaction of the tenants of the Building.

At least thirty (30) days prior to the commencement of each calendar year
during the term of this Agreement, Lessor shall prepare an estimate of

- 2 -
<PAGE>

the Basic Costs for such calendar year and if Lessor, in its reasonable
judgement, determines that the aggregate of the Basic Costs for such calendar
year (calculated on a per square foot basis using the rentable area of the
Building as set forth in Section 1 of this Agreement) will exceed THE 1996
ACTUAL COSTS, Lessor shall give written notice to Lessee of the estimated Basic
Costs, expressed in terms of dollars per square foot, the amount the Basic Costs
will exceed THE 1996 ACTUAL COSTS per square foot and the monthly amount of
additional rental payable by Lessee with respect to the increase in Basic Costs.
Commencing with the first monthly payment in the calendar year, the Lessee shall
pay to Lessor in addition to the Base Rental, an amount equal to 1/12th of
Lessor's estimated increase in the Basic Costs (expressed in terms of dollars
per square foot calculated as aforesaid) multiplied by the rentable area of the
Leased Premises as set forth in Section 1 of this Agreement. Within a reasonable
time after each calendar year, Lessor shall perform such computations that are
necessary to determine the actual amount of the Basic Costs and the prorata
portion payable by Lessee under this paragraph for such calendar year whereupon,
if the Lessee shall have overpaid, Lessor shall within thirty (30) days after
such determination refund to Lessee the amount of such excess. But if the Lessee
shall have underpaid, the Lessor shall invoice Lessee for the amount of the
underpayment, such underpayment shall be due and payable following the receipt
by Lessee of invoice.

SECTION 5: PAYMENT OF RENTAL. Lessee hereby covenants and agrees to pay
promptly when due all Base Rental and Adjusted Base Rental, all additional
rental and any other charges payable by Lessee under the provisions of this
Agreement and Lessee further covenants and agrees that all such rental or other
charges due and unpaid as of the date of termination of this Agreement shall be
deemed due and payable on such termination date. Lessee especially agrees that
the covenants recited in this Section shall survive the expiration of the term
of the Agreement.

SECTION 6: MAINTENANCE AND REPAIRS BY LESSOR. Lessor, without extra
charge except as provided herein, shall provide for the cleaning and maintenance
of the public portions of the Building, including painting and landscaping
surrounding the Building, keeping with the usual standard for first class office
buildings in Springfield, Missouri. Unless otherwise expressly stipulated
herein, Lessor shall not be required to make any improvements or repairs of any
character on the Leased Premises during the term hereof, except such repairs as
may be required by normal maintenance operations, which shall include repairs to
the exterior of walls, corridors, floors, windows, roof and other structural
elements and equipment of the Building, and other such additional maintenance as
may be necessary because of damage by persons other than Lessee, its agents,
employees, licensees, invitees or visitors.

SECTION 7: PARKING AND SERVICE AREAS. Lessor shall have the right as it
deems necessary to designate and mark certain parking spaces within the parking
area of the Property as visitor parking. Lessor shall have control and
enforcement of the movement and parking of Lessee's employee automobiles and all
other vehicles in the parking area and upon all drives and service areas
appurtenant to the Building. Lessor may from time to time adopt and change
rules and regulations relating thereto. Lessor shall not be liable for any
losses sustained by Lessee or its employees from the theft of, or for any damage
to, any vehicle or other equipment (including any contents thereof) while
located on the parking area or upon the drives and service areas appurtenant to
the Building.

SECTION 8: REPAIR AND MAINTENANCE BY LESSEE. Lessee shall at its own cost
and expense maintain and keep the Leased Premises in good repair and condition.
Lessee agrees not to commit or allow any waste or damage to be committed on any
portion of the Leased Premises; Lessee shall at its own cost and expense repair
or replace any damage or injury done to the Leased Premises, the Building or any
part thereof, caused by Lessee, its agents, employees, licensees or visitors.
Upon the expiration or termination of this Agreement (by lapse of time or
otherwise), Lessee agrees to deliver up the Leased Premises to Lessor in as good
condition as on the date the Leased Premises were first occupied by Lessee,
except for ordinary wear and tear. Should Lessee fail to make such repairs or
replacements promptly, Lessor may, at its option and among other remedies, enter
the Leased Premises without such entering causing or constituting an
interference with the possession of

- 3 -
<PAGE>

the Leased Premises by Lessee, make such repairs or replacements and Lessee
shall pay the cost thereof to Lessor on demand. Lessee shall maintain the Leased
Premises in full compliance with all federal, state and/or local laws, codes and
regulations applicable to the Leased Premises.

SECTION 9: USE AND VIOLATION OF INSURANCE COVERAGE. The Leased Premises
are to be used by Lessee solely for office purposes and no other purpose; Lessee
shall not use, occupy, or permit the use or occupancy of the Leased Premises for
any purpose which is, directly or indirectly, in violation of any federal, state
and/or local law, ordinance or governmental regulation, code or order; or permit
the maintenance of any public or private nuisance; or do or permit any act or
thing which may disturb the quiet enjoyment of any other tenant of the Building;
or keep any substance or carry on or permit any operation which might emit
offensive odors or conditions into other portions of the Building; or permit
anything to be done or fail to do anything which would increase the fire and
extended coverage insurance rate on the Building or contents, and if there is
any increase in insurance rates by reason of acts of Lessee, Lessee shall pay
such increase promptly upon demand therefor by Lessor. Lessee shall not
obstruct the sidewalks, entries, passages, vestibules, halls, elevators or
stairways of the Building and shall not use the same for any purpose other than
ingress and egress to and from the Leased Premises.

SECTION 10: ALTERATIONS. Lessee agrees that it will not make or allow to
be made any alterations, physical additions or improvements in or to the Leased
Premises without first obtaining the written consent of the Lessor. In any
instance where Lessor grants such consent, Lessor may, among other things, grant
such consent upon the condition that Lessee's contractors, laborers and
materialmen must work in harmony with and not interfere with any other work
being conducted on behalf of Lessor or any other tenant of the Building.

SECTION 11: FURNITURE, FIXTURES AND PERSONAL PROPERTY OF LESSEE. Lessee
may remove its trade fixtures, office supplies and personal property not
attached to the Building, provided: (a) such removal is made prior to the
expiration or termination of this Agreement; (b) Lessee is not in default of any
obligation or covenant of this Agreement at the time of such removal; and (c)
Lessee promptly repairs all damage caused by such removal at Lessee's expense.
All other property within the Leased Premises and any alterations or additions
to the Leased Premises (including wall-to-wall carpeting, paneling or other wall
covering) and any other article attached or affixed to the floor, wall or
ceiling of the Leased Premises shall become the property of the Lessor upon the
expiration or termination of this Agreement and shall remain upon and be
surrendered with the Leased Premises as a part thereof at the expiration or
termination of this Agreement by lapse of time or otherwise. If, however,
Lessor so requests in writing, Lessee will, prior to vacating the Leased
Premises, remove any and all alterations, additions, equipment and personal
property placed or installed by it in the Leased Premises and will repair any
damage caused by such removal at Lessee's expense.

SECTION 12: ASSIGNMENT AND SUBLEASE. Lessee shall not sell, convey,
transfer or assign this Agreement or any part thereof, or any rights created
hereby, or mortgage or pledge the same through a change in ownership of Lessee
or otherwise, or sublet the Leased Premises, or any part thereof, or allow it to
be assigned by operation of law or otherwise, or subject to any lien of any type
or nature including, but not limited to, mechanic's liens, without the prior
written consent of Lessor. Provided, further, any assignment or sublease shall
not release Lessee from any obligation or liability hereunder.

SECTION 13: SUBORDINATION TO MORTGAGE. This Agreement is and shall always
be subject and subordinate to the lien of any mortgages, deeds of trust or other
security instrument which are now or shall at any future time be placed by
Lessor upon the Property, the Building, the Leased Premises or Lessor's rights
hereunder and to any and all renewals, extensions, rearrangements, modifications
or consolidations thereof; provided that, in the event of a foreclosure under
any such security instrument, the holder thereof shall forthwith notify Lessee
of such holder's election to either (1) ratify and adopt this Agreement, in
which case Lessee shall attorn to such holder and/or to such holder's successor,
or (2) terminate this Agreement effective six (6)

- 4 -
<PAGE>

months following such notice. Such subordination shall be self-operative and no
further instrument of subordination need be required by any security holder. In
confirmation of such subordination, Lessee agrees to execute promptly any
instrument deemed necessary by Lessor to further effect the subordination of
this Agreement to any such security interest.

SECTION 14: FIRE AND OTHER CASUALTY. In the event the Leased Premises is
partially or totally destroyed or damaged by fire or other casualty, Lessor may,
at its option, terminate this Agreement, and in such event, the Base Rental
hereunder shall be prorated for such month during which Lessor's termination
occurs and shall not be due thereafter. In the event the Lessor does not so
terminate this Agreement, then, subject to the following provisions of this
Section 14, Lessor may proceed as soon as is reasonably practicable, at its sole
cost and expense to the extent of Lessor's insurance proceeds available, if any,
to repair and restore the Leased Premises to substantially the same condition as
that before the damage occurred; provided, further, the Base Rental due from
Lessee hereunder shall be abated during the period of restoration to the extent
of the unusable portion of the Leased Premises. In the event Lessor does not
complete such repair and restoration within six (6) months from the date of
damage or destruction, Lessee may terminate this Agreement. In the event the
damage or destruction to the Leased Premises through fire or other casualty is
directly or indirectly attributable to any act of fault or negligence on the
part of Lessee, and/or its agents, employees, licensees, or invitees, then (i)
such damage or destruction to the Leased Premises, the Building, and/or the
Property shall be promptly repaired by Lessee, at its sole cost and expense;
(ii) the Base Rental shall not abate during such period of restoration and
refurbishment; (iii) Lessee shall not be entitled to terminate this Agreement;
and (iv) Lessee shall fully reimburse Lessor for all costs and expenses,
including responsible attorneys' fees, incurred by Lessor on behalf of Lessee in
connection with undertaking the obligations of Lessee hereunder.

SECTION 15: INSURANCE. During the term of the Agreement, Lessee shall
obtain and maintain at the Lessee's sole cost and expense (i) fire and extended
coverage insurance covering the Leased Premises and improvements thereon and
contents thereof, on a full replacement cost basis, insuring against all risks
or direct physical loss and damage, excluding unusual perils like earth
movement, flood and war; and (ii) comprehensive public liability insurance for
death, injury and property loss and damage, with a combined single limit
coverage of not less than $1,000,000. The Lessee shall list the Lessor as an
additional insured on all of the policies and shall, upon written request of
Lessor, provide Lessor with proof of payment within thirty (30) days after the
due date of such premiums. Such policies of insurance shall also provide that
the same may not be cancelled in whole or in part by the insurer without such
insurer giving thirty (30) days' written notice to Lessor of its intention to
cancel the policies.

SECTION 16: LIABILITY AND INDEMNITY. Lessee agrees to indemnify and save
Lessor harmless from all claims for injury to persons (including death) or for
damage to property arising from or out of Lessee's use and occupancy of the
Leased Premises or from an act or omission of invitees, or of any other third
party (including costs and expenses of defending against such claims) from or by
whomsoever caused.

Lessee agrees to use and occupy the Leased Premises and other facilities of
the Building, the Parking Area and all drives and other areas appurtenant
thereto, at its own risk and hereby releases Lessor, its agents and employees,
from all claims for any damage or injury to persons (including death) or
property to the full extent permitted by law.

Lessee agrees that Lessor shall not be responsible or liable to Lessee, its
agents, employees, customers or invitees, for damage or injury to persons
(including death) or property occasioned by the acts or omission of any other
tenant or such tenant's agents, employees, customers or invitees within the
Leased Premises, the Building, the Parking Area and all drives and other areas
appurtenant thereto, from or by whomsoever caused.

SECTION 17: DEFAULT BY LESSEE. Lessee covenants and agrees that if Lessee
shall make default in the payment of any Base Rental, Adjusted Base Rental or
other charges required to be made by it to Lessor hereunder, or in the faithful
performance of any other covenant to be performed by it

- 5 -
<PAGE>

hereunder, then Lessor may exercise any and all remedies available at law or in
equity, including, but not limited to, declare this Agreement terminated and
without additional notice to Lessee the Lessor or any of its agents may reenter
the Leased Premises and remove all persons and property therefrom, with or
without legal process and without prejudice to any of Lessor's other legal
rights hereunder and/or, Lessor may take possession of the Leased Premises and
re-let the same for the remainder of the term hereof for the account of Lessee,
it being understood that under any of said options, Lessee shall remain liable
for all rental and other sums payable under the provisions hereof. In the event
of any reentry by Lessor, Lessee hereby expressly waives all claims for damages
by reason hereof, as well as all claims for damages by reason of any eviction
proceedings or proceedings by way of sequestration or any other legal
proceedings which Lessor may employ to recover any sums due hereunder or
possession of the Leased Premises.

SECTION 18: LIEN FOR RENT. To secure the payment of rental and other
charges required to be made by Lessee hereunder, and the faithful performance of
all other covenants of this Agreement required to be performed by Lessee, Lessee
hereby gives to Lessor security interest in and to all property which may be
placed in or upon the Leased Premises and the proceeds of any insurance which
may accrue to Lessee by reason of damage to or destruction of any such property.
All exemption laws are hereby waived by Lessee. This security interest is given
in addition to the Lessor's statutory lien(s) and shall be cumulative thereto.
This security interest may be foreclosed with or without Court proceedings, by
public or private sale, with or without notice, and Lessor shall have the right
to become purchaser upon being the highest bidder at such sale. Upon request of
Lessor, Lessee agrees to execute Uniform Commercial Code financing statements
relating to the aforesaid security interest.

SECTION 19: TRANSFER BY LESSOR. Lessor may pledge, hypothecate, transfer
or assign all or any part of this Agreement. Upon the transfer or conveyance of
all or any portion of the Property, without further agreement of the parties,
Lessor shall be relieved of and from any liability with respect to the
obligations and covenants of Lessor contained in this Agreement arising out of
any act or occurrence after the date of such transfer and the purchaser at such
sale or any subsequent sale shall be deemed, without further agreement of the
parties, to have assumed and agreed to carry out the Lessor's covenants under
this Agreement.

SECTION 20: ATTORNEY'S FEES. In the event Lessor or Lessee defaults in
the performance of any of the terms, covenants, agreements or conditions
contained in this Agreement and the other party hereto places the enforcement of
this Agreement, or any part thereof, or the collection of any rent or any other
charges due, or to become due hereunder, or recovery of the possession of the
Leased Premises in the hands of any attorney, or files suit upon the same, it is
agreed that the defaulting party shall pay the reasonable attorney's fees
incurred by the party not in default.

SECTION 21: NON-WAIVER. Neither acceptance of rent by Lessor nor failure
by Lessor to complain of any action, non-action, or default of Lessee, whether
singular or repetitive, shall constitute a waiver of any of Lessor's rights
hereunder. Waiver by Lessor of any rights for any default of Lessee shall not
constitute a waiver of any right for either a subsequent default of the same
obligation or any other default. No act or thing done by Lessor or its agents
shall be deemed to be an acceptance of surrender of the Leased Premises, and no
agreement to accept a surrender of the Leased Premises shall be valid unless it
is in writing and signed by a duly authorized officer or agent of Lessor.

SECTION 22: RULES AND REGULATIONS. Lessee agrees to comply with all such
rules and regulations of the Building which are attached as Addendum B, and any
amendments thereto. Lessor shall have the right at all times to change the
rules and regulations or to amend them in any reasonable manner as may be deemed
advisable by Lessor, all of which changes and amendments will be sent by Lessor
to Lessee in writing and shall be thereafter carried out and observed by Lessee.

SECTION 23: ACCESS BY LESSOR. Notwithstanding any provision hereof to the
contrary, Lessor, its agents and employees, shall have access to and the right
to enter upon the Leased Premises at any reasonable time to examine the

- 6 -
<PAGE>

condition thereof, to clean, repair or make alterations required or deemed
necessary or desirable to be made by Lessor, to show the Leased Premises to
prospective purchasers or tenants, and for any other purpose deemed reasonable
by Lessor.

SECTION 24: BANKRUPTCY BY LESSEE. In the event of any of the following:
the filing or execution or occurrence of a petition in bankruptcy or other
insolvency proceedings by or against Lessee; or petition or answer seeking
relief under any provision of the Bankruptcy Act; or any assignment for the
benefit of creditors or composition; or a petition or other proceeding by or
against Lessee for the appointment of a trustee, receiver or liquidator of
Lessee or any of Lessee's property; or a proceeding by any governmental
authority for the dissolution or liquidation of this Agreement; this Agreement
may, at the option of Lessor, be terminated immediately by the mailing of notice
to Lessee.

SECTION 25: HOLDING OVER. Upon the expiration and/or termination of this
Agreement for any reason, Lessor shall have the right to reenter and resume
possession of the Leased Premises. If Lessee should remain in possession of the
Leased Premises after expiration and/or termination of this Agreement without
the execution by Lessor and Lessee of a new lease agreement, then Lessee shall
be deemed to be occupying the Leased Premises as a tenant-at-sufferance subject
to all the covenants of this Agreement except the amount of Base Rent, and the
Base Rent for any such holdover period shall be 200% of the Base Rent being paid
by Lessee immediately prior to the expiration and/or termination date, and
Lessee shall indemnify Lessor and hold Lessor harmless from any claims which may
be asserted by any third party who is unable to enter or occupy the Leased
Premises because of Lessee's holdover occupancy thereof, from or by whomsoever
caused.

SECTION 26: CONDEMNATION. If all or any portion of the Property is
condemned during the term of this Agreement, the Lessor shall have the right to
all proceeds resulting from the condemnation. In the event of a total
condemnation of the Property during the term hereof, this Agreement and the
tenancy conveyed herein shall terminate as of the date of such taking, and the
Base Rental due hereunder shall be prorated for the month during which the
taking occurs with none being due after such taking. In the event of a partial
or less than total condemnation of the Property, the Lessee shall have the right
to terminate this Agreement if such taking results in the violation of any
applicable federal, state, or municipal law or ordinance by virtue of Lessee
conducting its then-existing business thereon, but Lessee shall not have the
right of termination if no such violation results. If the Agreement is not
terminated as a result of such partial taking, the Lessor shall reduce the
rental of the Leased Premises in direct proportion to that part of the Leased
Premises taken as a result of the condemnation.

SECTION 27: SIGNS. Lessee shall not place any signs, letters, symbols, or
other identifying marks anywhere upon, about or within the Building and its
Parking Areas, or upon the exterior of the doors, walls, windows, or other
visible areas of the Leased Premises, without the prior written approval of
Lessor.

SECTION 28: SEVERABILITY. This Agreement shall be construed in accordance
with the laws of the State of Missouri. If any clause or provision hereof is
held to be illegal, invalid or unenforceable, under present or future laws
effective during the term hereof, then it is the intention of the parties hereto
that the remainder of this Agreement shall not be affected thereby and shall be
construed as if such provision had not been contained herein.

SECTION 29: SECURITY DEPOSIT. Upon the occurrence of any default by
Lessee, Lessor, may from time to time, without prejudice to any other remedy,
use the security deposit paid to Lessor by Lessee herein provided to the extent
necessary to make good any arrearage of Base Rent or any other damage, injury or
expense or liability cause to Lessor by such event of default and the remaining
balance of such security deposit to be returned by Lessor to Lessee upon the
termination of this Agreement. Such security deposit shall not be considered as
an advance payment of rent or a measure of Lessor's damages in case of default
by Lessee.

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<PAGE>

SECTION 30: RELOCATION OF LESSEE. Lessor reserves the option and right to
require Lessee to relinquish the Leased Premises and to relocate in another area
of comparable size in the Building designated by Lessor. Lessor shall be
responsible for all expenses with respect to any required location and all
repairs necessary to the designated area to conform with Lessee's requirements
under this Agreement. If the Lessor elects to relocate the Lessee, the area to
which the Lessee is relocated shall be deemed the Leased Premises for all
purposes and this Agreement shall continue in full force and effect for the
remainder of the term.

SECTION 31: NOTICES. Whenever in this Agreement it shall be required or
permitted that the notice or demand be given or served by any party hereto to or
upon another, such notice or demand shall be given or served (and shall not be
deemed to have been given or served unless) in writing and delivered personally
or forwarded by Certified or Registered Mail, postage prepaid, addressed to the
appropriate party at the address shown at the signature line. Such addresses
may be changed from time to time by any party by serving notice as above
provided.

SECTION 32: OBLIGATIONS OF SUCCESSORS. It is mutually agreed that all the
provisions hereof are to be construed as covenants and agreements as though the
words imparting such covenants were used in each separate paragraph hereof, and
that, except as restricted by the provisions of Section 12 hereof entitled
"Assignment and Sublease" all the provisions hereof shall bind and inure to the
benefit of the parties hereto, their respective heirs, legal representatives,
successors and assigns.

SECTION 33: ENTIRE AGREEMENT. This instrument and any attached Addendums
A and B, collectively constitute the entire agreement between the Lessor and
Lessee, and no other promises or representations shall be binding unless made in
writing and signed by Lessor and Lessee. The appendices attached to this
Agreement are made a part hereof by this reference.

SECTION 34: PARAGRAPH CAPTIONS. Paragraph captions herein are for
Lessor's and Lessee's convenience only and neither limit nor amplify the
provisions of this Agreement.

SECTION 35: FORCE MAJEURE. In the event that Lessor shall be delayed,
hindered or prevented from the performance of any acts required hereunder by
reason of acts of God, riots, fire, strike or the unavailability of materials,
then performance of such acts shall be excused for the period of the delay, and
the period for the performance of any such acts shall be extended for a period
equivalent to the period of such delay.

IN WITNESS WHEREOF, the Lessor and Lessee, acting herein by duly authorized
individuals, have caused these presents to be executed in multiple counterparts,
each of which shall have the force and effect of an original, as of the day and
year first written above.

"LESSEE" "LESSOR"
------ ------

JOHN Q. HAMMONS HOTELS, INC. The Plaza Associates

by: by:
------------------------------ ----------------------------
John Q. Hammons John Q. Hammons

Address: 300 JOHN Q. HAMMONS PKWY. 901 ST. LOUIS STREET
SUITE #900 SUITE #106
SPRINGFIELD, MO 65806 SPRINGFIELD, MO 65806

- 8 -
<PAGE>

ADDENDUM A

LEASED PREMISES

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<PAGE>

ADDENDUM B

RULES AND REGULATIONS

1. Lessee shall not paint, display, inscribe, maintain or affix any sign,
picture, advertisement, notice, lettering or direction on any part of the
outside or inside of the Building, or on any part of the inside of the Leased
Premises which can be seen from the outside of the Leased Premises, except on
hallway doors of the Leased Premises, and then only such name or names or matter
and in such color, size, style, character and material as may be first approved
by Lessor in writing. Lessor reserves the right to remove at Lessee's expense
all matter other than the above provided for without notice to Lessee.

2. In advertising or other publicity, without Lessor's prior written
consent, Lessee shall not use the name of the Building except as the address of
its business and shall not use pictures of the Building in advertising or
publicity.

3. Lessee shall not obstruct sidewalks, entrances, passages, courts,
corridors, vestibules, halls, elevators and stairways in and about the Building.
Lessee shall not place objects against glass partitions or doors or windows
which would be unsightly from the Building corridor.

4. Lessee shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Lessor to assure the most effective operation of
the Building's heating and air conditioning, and shall refrain from attempting
to adjust any controls. Lessee shall keep corridor doors closed. Lessor shall
not permit any objects to be placed on or dropped into any grills or devices in
the Leased Premises utilized for heating or air conditioning.

5. Lessee assumes responsibility for protecting its space from theft,
robbery and pilferage which includes keeping doors locked and other means of
entry to the Leased Premises closed.

6. If Lessee requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with, Lessor's instructions in their
installation.

7. The Lessor may require that all persons who enter or leave the
Building at any time, if determined by Lessor from time to time to be necessary
for the protection of the Building, must identify themselves to watchmen, by
registration or otherwise.

8. The bringing into the Building, taking therefrom, or removal therein
of furniture, fixtures or supplies, when of large weight or bulk, shall be done
at such times as the custodian of the Building shall arrange therefor. All
damage to the Building caused by taking in, putting out or moving the same
during the time it is in or on the Leased Premises shall be repaired at the
expense of the Lessee owning or using same.

9. Lessee will permit access to the Leased Premises to Lessor at all
reasonable times for inspection and cleaning and for such repairs, alterations,
additions, installations and removals, including among others, pipes, wires and
other apparatus, as Lessor may deem proper or useful for serving the Leased
Premises or other part of the Building.

10. The maximum weight per square foot in each room shall not exceed
seventy-five (75) pounds, without prior written approval of Lessor.

11. Lessee shall comply with all federal, state and municipal laws,
ordinances and regulations and shall not directly or indirectly make any use of
the Leased Premises which may be prohibited by any laws, ordinances or
regulations thereof or which shall be dangerous to person or property.

12. Lessee shall be responsible for the observance of all of the foregoing
by Lessee's employees, agents, clients, customers, invitees and guests.

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<PAGE>

13. Lessee shall not at any time permit its employees to park in any areas
of the Parking Area designated as "visitor parking".

14. Lessee will not (i) install or operate any internal combustion engine,
boiler, machinery, refrigerator, heating or air conditioning apparatus in or
about the Leased Premises, (ii) carry on any mechanical business in or about the
Leased Premises without written permission of Lessor, (iii) exhibit, sell, or
offer for sale, use, rent or exchange in the Leased Premises or building any
article, thing or service except those ordinarily embraced within the permitted
use of the Leased Premises specified in the Lease Agreement, (iv) use the Leased
Premises for housing, lodging or sleeping purposes, (v) permit preparation of or
warming of food in the Leased Premises or permit food to be brought into the
Leased Premises for consumption therein (warming of coffee and individual
lunches of employees excepted) except by express permission of Lessor, (vi)
place any radio or television antennae on the roof or on or in any part of the
inside or outside of the Building other than the inside of the Leased Premises,
(vii) operate or permit to be operated any musical or sound producing instrument
or device inside or outside the Leased Premises which may be heard outside the
Leased Premises, (viii) operate any electrical device from which may emanate
electrical waves which may interfere with or impair radio or television
broadcasting or reception from or in the Building or elsewhere, (ix) bring or
permit to be in the Building any bicycle or other vehicle or dog (except in the
company of a blind person) or other animal or bird, (x) make or permit any
objectionable noise or odor to emanate from the Leased Premises, (xi) disturb,
solicit or canvass any occupant of the Building, (xii) or do anything in or
about the Leased Premises tending to create or maintain a nuisance or do any act
tending to injure the reputation of the Building.

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<PAGE>

Exhibit 10.9b

JOHN Q. HAMMONS BUILDING

LEASE AGREEMENT

THE STATE OF MISSOURI )
)
COUNTY OF GREENE )

This Lease Agreement (Hereinafter called the "Agreement"), entered into as
of this 28TH day of OCTOBER, 1996, by and between Lessor and Lessee hereinafter
named.

SECTION 1: DEFINITIONS AND BASIC TERMS. The following definitions and basic
provisions shall apply in this Lease Agreement:

A) "Lessor": The Plaza Associates, a Missouri General Partnership

B) "Lessee": JOHN Q. HAMMONS HOTELS, INC.

C) "Leased Premises": 2,775 square feet of net rentable area in JOHN Q.
HAMMONS BUILDING, (hereinafter called the "Building") located at 300 John Q.
Hammons Parkway, Suite #700, Springfield, Greene County, Missouri, as outlined
on the floor plan of the Building attached hereto as Addendum "A" together with
any area used for special stairs or electrical, mechanical or telephone closets
and which are for the exclusive use of Lessee. Although there may have occurred
minor variations in construction of the Building and completion of the Leased
Premises, for the purpose of this Agreement, Lessee acknowledges that the net
rentable area for the Leased Premises is as stated above. The term "net rentable
area", as used herein, shall include any structural columns or projections which
are an integral part of the Building and which are located within the Leased
Premises, but shall not include areas used for Building stairs, fire towers,
elevator shafts, flues, vents, stacks, pipe shafts or vertical ducts.

D) "Lessee Proportionate Share": The 4.8% being the relationship of the
net rentable area of the Leased Premises to the net rentable area of the
Building (57,840 square feet).

E) "Lease Term": A period of TWO (2) years beginning on the 1ST day of
JANUARY, 1997, and terminating on DECEMBER 31, 1998, or such date as Lessee
shall occupy the Leased Premises, whichever occurs first. Lessee agrees to enter
into a Supplemental Lease Agreement with Lessor, setting forth the lease
commencement date.

F) "Base Rental": The total sum of $ 74,925.12 payable to Lessor at 901
St. Louis Street, Suite 106, Springfield, Missouri 65806, or such other place as
may be designated to Lessee by Lessor in writing, shall be due and payable in
equal monthly installments of $ 3,121.88 in advance and without demand or offset
on the first day of each calendar month during the Lease Term or any renewal
period hereof; the first of such installments shall be paid on the date hereof.
If Lessee's occupancy under this Agreement commences on any day other than the
first day of a calendar month, then a prorata portion of the Base Rental
applicable to the partial first month of occupancy shall be paid on or before
the first day of occupancy and shall be in addition to the total Base Rental set
forth above.

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<PAGE>

SECTION 3: SERVICES BY LESSOR. During the Standard Building Hours, Lessor
shall furnish Lessee the following services: hot, cold and refrigerated water at
those points provided for general use of all tenants; electrical service for
ordinary office machines and uses excluding any business machine or other
equipment of high electrical consumption characteristic (any special electrical
service shall be at Lessee's expense); heated and refrigerated air conditioning
in season, at such time as Lessor normally furnishes these services to all
tenants in the Building and at such temperatures and amounts as are considered
by Lessor to be standard, such service on Sundays and holidays are to be
optional on the part of the Lessor; elevator service in common with other
tenants in the Building; janitorial cleaning services as may, in the judgement
of Lessor, be reasonably required. Such services shall be on a five-day-week
basis; and Lessor may provide such security service as may, in the sole
judgement and discretion of Lessor, be reasonably required. Lessor shall not be
liable in damages or otherwise for failure, stoppage or interruption of any such
service described or contemplated herein, nor shall the same be construed as an
eviction of Lessee, work an abatement of rental or relieve Lessee from any
covenant or agreement set forth herein. In the event of any failure, stoppage or
interruption of such service, Lessor shall use reasonable diligence to resume
service promptly.

Standard Building Hours shall be from 7:00 A.M. until 7:00 P.M., Monday through
Friday, excluding Holidays, and from 8:00 A.M. until 1:00 P.M. on Saturdays.

i. wages and salaries to be allocable to the Property of all employees
directly engaged in the operation and maintenance of the Property,
including taxes, insurance and all other benefits related thereto;
ii. management fees related to the management of the Property;
iii. all costs of supplies and materials used in the operation, repair
and maintenance of the Property;
iv. costs of all utilities for the Property (excluding utilities
separately metered to and actually paid directly by other Tenants);
v. the cost of maintenance, repair and services to the Property
including security services, window cleaning, elevator maintenance,
janitorial service, pest control, landscaping and waste removal;
vi. cost of all casualty and liability insurance applicable to the
Property and any personal property used in connection with the operation,
repair or maintenance of the Property;
vii. all taxes, assessments or other governmental charges from any
federal, state, county, municipal or other taxing authority now or
hereafter imposing any taxes or fees on the Property;
viii. the cost of repairs and general maintenance of the Property;
ix. a reasonable amortization charge (exclusive of any finance charges)
on account of any capital expenditure incurred in reduction of the Basic
Costs or incurred to comply with any requirements of any in force
governmental regulations by authorities having jurisdiction over the
Property or necessary for the health or satisfaction of the tenants of the
Building.

At least thirty (30) days prior to the commencement of each calendar year
during the term of this Agreement, Lessor shall prepare an estimate of

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<PAGE>

SECTION 7: PARKING AND SERVICE AREAS. Lessor shall have the right as it
deems necessary to designate and mark certain parking spaces within the parking
area of the Property as visitor parking. Lessor shall have control and
enforcement of the movement and parking of Lessee's employee automobiles and all
other vehicles in the parking area and upon all drives and service areas
appurtenant to the Building. Lessor may from time to time adopt and change rules
and regulations relating thereto. Lessor shall not be liable for any losses
sustained by Lessee or its employees from the theft of, or for any damage to,
any vehicle or other equipment (including any contents thereof) while located on
the parking area or upon the drives and service areas appurtenant to the
Building.

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<PAGE>

SECTION 9: USE AND VIOLATION OF INSURANCE COVERAGE. The Leased Premises
are to be used by Lessee solely for office purposes and no other purpose; Lessee
shall not use, occupy, or permit the use or occupancy of the Leased Premises for
any purpose which is, directly or indirectly, in violation of any federal, state
and/or local law, ordinance or governmental regulation, code or order; or permit
the maintenance of any public or private nuisance; or do or permit any act or
thing which may disturb the quiet enjoyment of any other tenant of the Building;
or keep any substance or carry on or permit any operation which might emit
offensive odors or conditions into other portions of the Building; or permit
anything to be done or fail to do anything which would increase the fire and
extended coverage insurance rate on the Building or contents, and if there is
any increase in insurance rates by reason of acts of Lessee, Lessee shall pay
such increase promptly upon demand therefor by Lessor. Lessee shall not obstruct
the sidewalks, entries, passages, vestibules, halls, elevators or stairways of
the Building and shall not use the same for any purpose other than ingress and
egress to and from the Leased Premises.

SECTION 11: FURNITURE, FIXTURES AND PERSONAL PROPERTY OF LESSEE. Lessee
may remove its trade fixtures, office supplies and personal property not
attached to the Building, provided: (a) such removal is made prior to the
expiration or termination of this Agreement; (b) Lessee is not in default of any
obligation or covenant of this Agreement at the time of such removal; and (c)
Lessee promptly repairs all damage caused by such removal at Lessee's expense.
All other property within the Leased Premises and any alterations or additions
to the Leased Premises (including wall-to-wall carpeting, paneling or other wall
covering) and any other article attached or affixed to the floor, wall or
ceiling of the Leased Premises shall become the property of the Lessor upon the
expiration or termination of this Agreement and shall remain upon and be
surrendered with the Leased Premises as a part thereof at the expiration or
termination of this Agreement by lapse of time or otherwise. If, however, Lessor
so requests in writing, Lessee will, prior to vacating the Leased Premises,
remove any and all alterations, additions, equipment and personal property
placed or installed by it in the Leased Premises and will repair any damage
caused by such removal at Lessee's expense.

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<PAGE>

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<PAGE>

SECTION 22: RULES AND REGULATIONS. Lessee agrees to comply with all such
rules and regulations of the Building which are attached as Addendum B, and any
amendments thereto. Lessor shall have the right at all times to change the rules
and regulations or to amend them in any reasonable manner as may be deemed
advisable by Lessor, all of which changes and amendments will be sent by Lessor
to Lessee in writing and shall be thereafter carried out and observed by Lessee.

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<PAGE>

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<PAGE>

SECTION 31: NOTICES. Whenever in this Agreement it shall be required or
permitted that the notice or demand be given or served by any party hereto to or
upon another, such notice or demand shall be given or served (and shall not be
deemed to have been given or served unless) in writing and delivered personally
or forwarded by Certified or Registered Mail, postage prepaid, addressed to the
appropriate party at the address shown at the signature line. Such addresses may
be changed from time to time by any party by serving notice as above provided.

SECTION 33: ENTIRE AGREEMENT. This instrument and any attached Addendums A
AND B, collectively constitute the entire agreement between the Lessor and
Lessee, and no other promises or representations shall be binding unless made in
writing and signed by Lessor and Lessee. The appendices attached to this
Agreement are made a part hereof by this reference.

SECTION 34 PARAGRAPH CAPTIONS. Paragraph captions herein are for Lessor's
and Lessee's convenience only and neither limit nor amplify the provisions of
this Agreement.

"LESSEE" "LESSOR"
------ ------

JOHN Q. HAMMONS HOTELS, INC. The Plaza Associates

by: ______________________________ by: ________________________
John Q. Hammons John Q. Hammons

Address: 300 JOHN Q. HAMMONS PKWY 901 ST. LOUIS STREET
SUITE #900 SUITE # 106
SPRINGFIELD, MO 6806 SPRINGFIELD, MO 65806

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<PAGE>

ADDENDUM A

LEASED PREMISES

-9-
<PAGE>

ADDENDUM B

RULES AND REGULATIONS

5. Lessee assumes responsibility for protecting its space from theft,
robbery and pilferage which includes keeping doors locked and other means of
entry to the Leased Premises closed.

6. If Lessee requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with, Lessor's instructions in their
installation.

10. The maximum weight per square foot in each room shall not exceed
seventy-five (75) pounds, without prior written approval of Lessor.

12. Lessee shall be responsible for the observance of all of the foregoing
by Lessee's employees, agents, clients, customers, invitees and guests.

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<PAGE>

13. Lessee shall not at any time permit its employees to park in any areas
of the Parking Area designated as "visitor parking".

-11-

<PAGE>

Exhibit 10.9c

JOHN Q. HAMMONS BUILDING

LEASE AGREEMENT

THE STATE OF MISSOURI )
)
COUNTY OF GREENE )

This Lease Agreement (Hereinafter called the "Agreement"), entered into as
of this 28TH day of OCTOBER, 1996, by and between Lessor and Lessee hereinafter
named.

SECTION 1: DEFINITIONS AND BASIC TERMS. The following definitions and
basic provisions shall apply in this Lease Agreement:

A) "Lessor": The Plaza Associates, a Missouri General Partnership

B) "Lessee": JOHN Q. HAMMONS HOTELS, INC.

C) "Leased Premises": 2,116 square feet of net rentable area in JOHN Q.
HAMMONS BUILDING, (hereinafter called the "Building") located at 300 John Q.
Hammons Parkway, Suite #703, Springfield, Greene County, Missouri, as outlined
on the floor plan of the Building attached hereto as Addendum "A" together with
any area used for special stairs or electrical, mechanical or telephone closets
and which are for the exclusive use of Lessee. Although there may have occurred
minor variations in construction of the Building and completion of the Leased
Premises, for the purpose of this Agreement, Lessee acknowledges that the net
rentable area for the Leased Premises is as stated above. The term "net
rentable area", as used herein, shall include any structural columns or
projections which are an integral part of the Building and which are located
within the Leased Premises, but shall not include areas used for Building
stairs, fire towers, elevator shafts, flues, vents, stacks, pipe shafts or
vertical ducts.

D) "Lessee Proportionate Share": The 3.66% being the relationship of the
net rentable area of the Leased Premises to the net rentable area of the
Building (57,840 square feet).

F) "Base Rental": The total sum of $ 57,132.00 payable to Lessor at 901
St. Louis Street, Suite 106, Springfield, Missouri 65806, or such other place as
may be designated to Lessee by Lessor in writing, shall be due and payable in
equal monthly installments of $ 2,380.50 in advance and without demand or offset
on the first day of each calendar month during the Lease Term or any renewal
period hereof; the first of such installments shall be paid on the date hereof.
If Lessee's occupancy under this Agreement commences on any day other than the
first day of a calendar month, then a prorata portion of the Base Rental
applicable to the partial first month of occupancy shall be paid on or before
the first day of occupancy and shall be in addition to the total Base Rental set
forth above.

-1-
<PAGE>

Standard Building Hours shall be from 7:00 A.M. until 7:00 P.M., Monday through
Friday, excluding Holidays, and from 8:00 A.M. until 1:00 P.M. on Saturdays.

ii. management fees related to the management of the Property;

iii. all costs of supplies and materials used in the operation, repair and
maintenance of the Property;

iv. costs of all utilities for the Property (excluding utilities
separately metered to and actually paid directly by other Tenants);

v. the cost of maintenance, repair and services to the Property including
security services, window cleaning, elevator maintenance, janitorial service,
pest control, landscaping and waste removal;

vi. cost of all casualty and liability insurance applicable to the
Property and any personal property used in connection with the operation, repair
or maintenance of the Property;

vii. all taxes, assessments or other governmental charges from any
federal, state, county, municipal or other taxing authority now or hereafter
imposing any taxes or fees on the Property;

viii. the cost of repairs and general maintenance of the Property;

ix. a reasonable amortization charge (exclusive of any finance charges) on
account of any capital expenditure incurred in reduction of the Basic Costs or
incurred to comply with any requirements of any in force governmental
regulations by authorities having jurisdiction over the Property or necessary
for the health or satisfaction of the tenants of the Building.

At least thirty (30) days prior to the commencement of each calendar year
during the term of this Agreement, Lessor shall prepare an estimate of

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<PAGE>

the Basic Costs for such calendar year and if Lessor, in its reasonable
judgement, determines that the aggregate of the Basic Costs for such calendar
year (calculated on a per square foot basis using the rentable area of the
Building as set forth in Section 1 of this Agreement) will exceed THE 1996
ACTUAL COSTS Lessor shall give written notice to Lessee of the estimated Basic
Costs, expressed in terms of dollars per square foot, the amount the Basic Costs
will exceed THE 1996 ACTUAL COSTS per square foot and the monthly amount of
additional rental payable by Lessee with respect to the increase in Basic Costs.
Commencing with the first monthly payment in the calendar year, the Lessee shall
pay to Lessor in addition to the Base Rental, an amount equal to 1/12th of
Lessor's estimated increase in the Basic Costs (expressed in terms of dollars
per square foot calculated as aforesaid) multiplied by the rentable area of the
Leased Premises as set forth in Section 1 of this Agreement. Within a
reasonable time after each calendar year, Lessor shall perform such computations
that are necessary to determine the actual amount of the Basic Costs and the
prorata portion payable by Lessee under this paragraph for such calendar year
whereupon, if the Lessee shall have overpaid, Lessor shall within thirty (30)
days after such determination refund to Lessee the amount of such excess. But
if the Lessee shall have underpaid, the Lessor shall invoice Lessee for the
amount of the underpayment, such underpayment shall be due and payable following
the receipt by Lessee of invoice.

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<PAGE>

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<PAGE>

effective six (6) months following such notice. Such subordination shall be
self-operative and no further instrument of subordination need be required by
any security holder. In confirmation of such subordination, Lessee agrees to
execute promptly any instrument deemed necessary by Lessor to further effect the
subordination of this Agreement to any such security interest.

-5-
<PAGE>

-6-
<PAGE>

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<PAGE>

SECTION 33: ENTIRE AGREEMENT. This instrument and any attached Addendums
A and B collectively constitute the entire agreement between the Lessor and
Lessee, and no other promises or representations shall be binding unless made in
writing and signed by Lessor and Lessee. The appendices attached to this
Agreement are made a part hereof by this reference.

SECTION 34: PARAGRAPH CAPTIONS. Paragraph captions herein are for
Lessor's and Lessee's convenience only and neither limit nor amplify the
provisions of this Agreement.

"LESSEE" "LESSOR"
------ ------

JOHN Q. HAMMONS HOTELS, INC. The Plaza Associates

by: /s/ John Q. Hammons by: /s/ John Q. Hammons
--------------------------- -------------------------
John Q. Hammons John Q. Hammons

Address: 300 JOHN Q. HAMMONS PKWY. 901 ST. LOUIS STREET
SUITE #900 SUITE #106
SPRINGFIELD, MO 65806 SPRINGFIELD, MO 65806

-8-
<PAGE>

ADDENDUM A

LEASED PREMISES

-9-
<PAGE>

ADDENDUM B

RULES AND REGULATIONS

5. Lessee assumes responsibility for protecting its space from theft,
robbery and pilferage which includes keeping doors locked and other means of
entry to the Leased Premises closed.

6. If Lessee requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with, Lessor's instructions in their
installation.

10. The maximum weight per square foot in each room shall not exceed
seventy-five (75) pounds, without prior written approval of Lessor.

12. Lessee shall be responsible for the observance of all of the foregoing
by Lessee's employees, agents, clients, customers, invitees and guests.

-10-
<PAGE>

13. Lessee shall not at any time permit its employees to park in any areas
of the Parking Area designated as "visitor parking".

-11-

<PAGE>

Exhibit 10.9d

JOHN Q. HAMMONS BUILDING

LEASE AGREEMENT

THE STATE OF MISSOURI )
)
COUNTY OF GREENE )

This Lease Agreement (Hereinafter called the "Agreement"), entered into as
of this 28TH day of OCTOBER, 1996, by and between Lessor and Lessee hereinafter
named.

SECTION 1: DEFINITIONS AND BASIC TERMS. The following definitions and basic
provisions shall apply in this Lease Agreement:

A) "Lessor": The Plaza Associates, a Missouri General Partnership

B) "Lessee": JOHN Q. HAMMONS HOTELS, INC.

C) "Leased Premises": 6,000 square feet of net rentable area in JOHN Q.
HAMMONS BUILDING, (hereinafter called the "Building") located at 300 John Q.
Hammons Parkway, Suite #800 Springfield, Greene County, Missouri, as outlined on
the floor plan of the Building attached hereto as Addendum "A" together with any
area used for special stairs or electrical, mechanical or telephone closets and
which are for the exclusive use of Lessee. Although there may have occurred
minor variations in construction of the Building and completion of the Leased
Premises, for the purpose of this Agreement, Lessee acknowledges that the net
rentable area for the Leased Premises is as stated above. The term "net rentable
area", as used herein, shall include any structural columns or projections which
are an integral part of the Building and which are located within the Leased
Premises, but shall not include areas used for Building stairs, fire towers,
elevator shafts, flues, vents, stacks, pipe shafts or vertical ducts.

D) "Lessee Proportionate Share": The 10.37% being the relationship of the
net rentable area of the Leased Premises to the net rentable area of the
Building (57,840 square feet).

E) "Lease Term": A period of TWO (2) years beginning on the 1ST day of
JANUARY, 1997, and terminating on DECEMBER 31, 1998, or such date as Lessee
shall occupy the Leased Premises, whichever occurs first. Lessee agrees to enter
into a Supplemental Lease Agreement with Lessor, setting forth the lease
commencement date.

F) "Base Rental": The total sum of $162,000.00 payable to Lessor at 901 St.
Louis Street, Suite 106, Springfield, Missouri 65806, or such other place as may
be designated to Lessee by Lessor in writing, shall be due and payable in equal
monthly installments of $ 6,750.00 in advance and without demand or offset on
the first day of each calendar month during the Lease Term or any renewal period
hereof; the first of such installments shall be paid on the date hereof. If
Lessee's occupancy under this Agreement commences on any day other than the
first day of a calendar month, then a prorata portion of the Base Rental
applicable to the partial first month of occupancy shall be paid on or before
the first day of occupancy and shall be in addition to the total Base Rental set
forth above.

G) "Security Deposit": [Shall be the sum of $ _____ and paid to Lessor on
the date hereof. Lessor and Lessee mutually agree that the Security Deposit
shall be deposited in management company's property management account, then
disbursed to and held by Lessor.]

-1-
<PAGE>

SECTION 3: SERVICES BY LESSOR. During the Standard Building Hours, Lessor
shall furnish Lessee the following services: hot, cold and refrigerated water at
those points provided for general use of all tenants; electrical service for
ordinary office machines and uses excluding any business machine or other
equipment of high electrical consumption characteristic (any special electrical
service shall be at Lessee's expense); heated and refrigerated air conditioning
in season, at such time as Lessor normally furnishes these services to all
tenants in the Building and at such temperatures and amounts as are considered
by Lessor to be standard, such service on Sundays and holidays are to be
optional on the part of the Lessor; elevator service in common with other
tenants in the Building; janitorial cleaning services as may, in the judgement
of Lessor, be reasonably required. Such services shall be on a five-day-week
basis; and Lessor may provide such security service as may, in the sole
judgement and discretion of Lessor, be reasonably required. Lessor shall not be
liable in damages or otherwise for failure, stoppage or interruption of any such
service described or contemplated herein, nor shall the same be construed as an
eviction of Lessee, work an abatement of rental or relieve Lessee from any
covenant or agreement set forth herein. In the event of any failure, stoppage or
interruption of such service, Lessor shall use reasonable diligence to resume
service promptly.

Standard Building Hours shall be from 7:00 A.M. until 7:00 P.M., Monday through
Friday, excluding Holidays, and from 8:00 A.M. until 1:00 P.M. on Saturdays.

At least thirty (30) days prior to the commencement of each calendar year
during the term of this Agreement, Lessor shall prepare an estimate of

-2-
<PAGE>

SECTION 6: MAINTENANCE AND REPAIRS BY LESSOR. Lessor, without extra charge
except as provided herein, shall provide for the cleaning and maintenance of the
public portions of the Building, including painting and landscaping surrounding
the Building, keeping with the usual standard for first class office buildings
in Springfield, Missouri. Unless otherwise expressly stipulated herein, Lessor
shall not be required to make any improvements or repairs of any character on
the Leased Premises during the term hereof, except such repairs as may be
required by normal maintenance operations, which shall include repairs to the
exterior of walls, corridors, floors, windows, roof and other structural
elements and equipment of the Building, and other such additional maintenance as
may be necessary because of damage by persons other than Lessee, its agents,
employees, licensees, invitees or visitors.

SECTION 7: PARKING AND SERVICE AREAS. Lessor shall have the right as it
deems necessary to designate and mark certain parking spaces within the parking
area of the Property as visitor parking. Lessor shall have control and
enforcement of the movement and parking of Lessee's employee automobiles and all
other vehicles in the parking area and upon all drives and service areas
appurtenant to the Building. Lessor may from time to time adopt and change rules
and regulations relating thereto. Lessor shall not be liable for any losses
sustained by Lessee or its employees from the theft of, or for any damage to,
any vehicle or other equipment (including any contents thereof) while located on
the parking area or upon the drives and service areas appurtenant to the
Building.

-3-
<PAGE>

SECTION 9: USE AND VIOLATION OF INSURANCE COVERAGE. The Leased Premises are
to be used by Lessee solely for office purposes and no other purpose; Lessee
shall not use, occupy, or permit the use or occupancy of the Leased Premises for
any purpose which is, directly or indirectly, in violation of any federal, state
and/or local law, ordinance or governmental regulation, code or order; or permit
the maintenance of any public or private nuisance; or do or permit any act or
thing which may disturb the quiet enjoyment of any other tenant of the Building;
or keep any substance or carry on or permit any operation which might emit
offensive odors or conditions into other portions of the Building; or permit
anything to be done or fail to do anything which would increase the fire and
extended coverage insurance rate on the Building or contents, and if there is
any increase in insurance rates by reason of acts of Lessee, Lessee shall pay
such increase promptly upon demand therefor by Lessor. Lessee shall not obstruct
the sidewalks, entries, passages, vestibules, halls, elevators or stairways of
the Building and shall not use the same for any purpose other than ingress and
egress to and from the Leased Premises.

SECTION 10: ALTERATIONS. Lessee agrees that it will not make or allow to be
made any alterations, physical additions or improvements in or to the Leased
Premises without first obtaining the written consent of the Lessor. In any
instance where Lessor grants such consent, Lessor may, among other things, grant
such consent upon the condition that Lessee's contractors, laborers and
materialmen must work in harmony with and not interfere with any other work
being conducted on behalf of Lessor or any other tenant of the Building.

SECTION 11: FURNITURE, FIXTURES AND PERSONAL PROPERTY OF LESSEE. Lessee may
remove its trade fixtures, office supplies and personal property not attached to
the Building, provided: (a) such removal is made prior to the expiration or
termination of this Agreement; (b) Lessee is not in default of any obligation or
covenant of this Agreement at the time of such removal; and (c) Lessee promptly
repairs all damage caused by such removal at Lessee's expense. All other
property within the Leased Premises and any alterations or additions to the
Leased Premises (including wall-to-wall carpeting, paneling or other wall
covering) and any other article attached or affixed to the floor, wall or
ceiling of the Leased Premises shall become the property of the Lessor upon the
expiration or termination of this Agreement and shall remain upon and be
surrendered with the Leased Premises as a part thereof at the expiration or
termination of this Agreement by lapse of time or otherwise. If, however, Lessor
so requests in writing, Lessee will, prior to vacating the Leased Premises,
remove any and all alterations, additions, equipment and personal property
placed or installed by it in the Leased Premises and will repair any damage
caused by such removal at Lessee's expense.

-4-
<PAGE>

-5-
<PAGE>

SECTION 19: TRANSFER BY LESSOR. Lessor may pledge, hypothecate, transfer or
assign all or any part of this Agreement. Upon the transfer or conveyance of all
or any portion of the Property, without further agreement of the parties, Lessor
shall be relieved of and from any liability with respect to the obligations and
covenants of Lessor contained in this Agreement arising out of any act or
occurrence after the date of such transfer and the purchaser at such sale or any
subsequent sale shall be deemed, without further agreement of the parties, to
have assumed and agreed to carry out the Lessor's covenants under this
Agreement.

SECTION 20: ATTORNEY'S FEES. In the event Lessor or Lessee defaults in the
performance of any of the terms, covenants, agreements or conditions contained
in this Agreement and the other party hereto places the enforcement of this
Agreement, or any part thereof, or the collection of any rent or any other
charges due, or to become due hereunder, or recovery of the possession of the
Leased Premises in the hands of any attorney, or files suit upon the same, it is
agreed that the defaulting party shall pay the reasonable attorney's fees
incurred by the party not in default.

SECTION 21: NON-WAIVER. Neither acceptance of rent by Lessor nor failure by
Lessor to complain of any action, non-action, or default of Lessee, whether
singular or repetitive, shall constitute a waiver of any of Lessor's rights
hereunder. Waiver by Lessor of any rights for any default of Lessee shall not
constitute a waiver of any right for either a subsequent default of the same
obligation or any other default. No act or thing done by Lessor or its agents
shall be deemed to be an acceptance of surrender of the Leased Premises, and no
agreement to accept a surrender of the Leased Premises shall be valid unless it
is in writing and signed by a duly authorized officer or agent of Lessor.

SECTION 22: RULES AND REGULATIONS. Lessee agrees to comply with all such
rules and regulations of the Building which are attached as Addendum B, and any
amendments thereto. Lessor shall have the right at all times to change the rules
and regulations or to amend them in any reasonable manner as may be deemed
advisable by Lessor, all of which changes and amendments will be sent by Lessor
to Lessee in writing and shall be thereafter carried out and observed by Lessee.

-6-
<PAGE>

SECTION 24: BANKRUPTCY BY LESSEE. In the event of any of the following: the
filing or execution or occurrence of a petition in bankruptcy or other
insolvency proceedings by or against Lessee; or petition or answer seeking
relief under any provision of the Bankruptcy Act; or any assignment for the
benefit of creditors or composition; or a petition or other proceeding by or
against Lessee for the appointment of a trustee, receiver or liquidator of
Lessee or any of Lessee's property; or a proceeding by any governmental
authority for the dissolution or liquidation of this Agreement; this Agreement
may, at the option of Lessor, be terminated immediately by the mailing of notice
to Lessee.

SECTION 29: SECURITY DEPOSIT. Upon the occurrence of any default by Lessee,
Lessor, may from time to time, without prejudice to any other remedy, use the
security deposit paid to Lessor by Lessee herein provided to the extent
necessary to make good any arrearage of Base Rent or any other damage, injury or
expense or liability cause to Lessor by such event of default and the remaining
balance of such security deposit to be returned by Lessor to Lessee upon the
termination of this Agreement. Such security deposit shall not be considered as
an advance payment of rent or a measure of Lessor's damages in case of default
by Lessee.

-7-
<PAGE>

SECTION 31: NOTICES. Whenever in this Agreement it shall be required or
permitted that the notice or demand be given or served by any party hereto to or
upon another, such notice or demand shall be given or served (and shall not be
deemed to have been given or served unless) in writing and delivered personally
or forwarded by Certified or Registered Mail, postage prepaid, addressed to the
appropriate party at the address shown at the signature line. Such addresses may
be changed from time to time by any party by serving notice as above provided.

SECTION 34: PARAGRAPH CAPTIONS. Paragraph captions herein are for Lessor's
and Lessee's convenience only and neither limit nor amplify the provisions of
this Agreement.

"LESSEE" "LESSOR"
------ ------

JOHN Q. HAMMONS HOTELS, INC. The Plaza Associates

by: ___________________________ by: _________________________
John Q. Hammons John Q. Hammons

Address: 300 JOHN Q. HAMMONS PKWY. 901 ST. LOUIS STREET
SUITE #900 SUITE #106
SPRINGFIELD, MO 65806 SPRINGFIELD, MO 65806

-8-
<PAGE>

ADDENDUM A

LEASED PREMISES

-9-
<PAGE>

ADDENDUM B

RULES AND REGULATIONS

5. Lessee assumes responsibility for protecting its space from theft,
robbery and pilferage which includes keeping doors locked and other means of
entry to the Leased Premises closed.

6. If Lessee requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain and comply with, Lessor's instructions in their
installation.

10. The maximum weight per square foot in each room shall not exceed
seventy-five (75) pounds, without prior written approval of Lessor.

12. Lessee shall be responsible for the observance of all of the foregoing
by Lessee's employees, agents, clients, customers, invitees and guests.

-10-
<PAGE>

13. Lessee shall not at any time permit its employees to park in any areas
of the Parking Area designated as "visitor parking".

-11-
<PAGE>

ADDENDUM C

GUARANTY

In consideration of the Lessor entering into the Lease Agreement dated the
_____ day of ________, 19___, between __________, Lessor,and __________, Lessee,
referring to __________ and to be occupied by the Lessee for a lease term of
_______ (_______) years at a rental rate of _______ Dollars ($_______) per
month, all as more specifically provided in said Agreement.

The undersigned do hereby expressly guarantee to the Lessor, its successors
and assigns, the prompt payment by the Lessee of the rent and faithful
performance by the Lessee of each and all of the terms, covenants and
conditions of said Agreement required to be performed by Lessee.

The undersigned expressly hereby waive notice of nonperformance or default
by or on behalf of said, Lessee, and further expressly hereby waive any legal
obligation or necessity for Lessor to proceed first against said Lessee or to
exhaust any remedy Lessor may have against said Lessee, it being understood that
in the event of default or failure of performance in any respect by said Lessee,
Lessor may proceed and have right of action solely against either the
undersigned or said Lessee, or jointly against the undersigned and said Lessee.

The undersigned agree that any modification, waiver, change or extension of
any terms, covenants or conditions of said Agreement, which Lessee and Lessor
may hereinafter elect to make, shall not in any way affect or impair guarantors'
unconditional liability to Lessor. This guaranty shall continue during the term
of the Agreement and any extension thereof and until the surrender of the Leased
Premises to the Lessor in the manner provided for in said Agreement. This
guaranty shall not be diminished by any payment of rent or performance of the
terms and conditions of the Agreement by the guarantors, until each and all of
Lessee's lease obligations have been fully discharged.

In the event suit or action be brought upon this guaranty, the undersigned
do hereby agree to pay reasonable attorneys fees and all court costs incurred by
Lessor (if plaintiff is the prevailing party in such action).

This guaranty shall be binding upon the heirs, legal representatives,
successors and assigns of the undersigned and shall inure to the benefit of the
successors and assigns of the Lessor.

The obligations of the undersigned hereunder be joint and several.

Dated this _____ day of ________, 19 ___.

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

- 12 -
<PAGE>

EXHIBIT "D"

LIST OF EXCLUSIVE BUSINESSES PROTECTED FROM
COMPETITION BY OTHER TENANTS

- 13 -

<PAGE>

Exhibit 10.14a

AMENDMENT TO EMPLOYMENT AGREEMENT
---------------------------------

THIS AMENDMENT TO EMPLOYMENT AGREEMENT, by and between JOHN Q. HAMMONS
HOTELS, INC., a Delaware Corporation (the "Company"), and MEL J. VOLMERT (the
"Executive"), dated as of the 28th day of July, 1996.

W I T N E S S E T H T H A T:

WHEREAS, Executive and Company entered into an Employment Agreement dated
January 28, 1994, which expires on January 27, 1997, unless renewed by Executive
and Company (the "Employment Agreement"), and

WHEREAS, Executive and Company wish to amend certain terms of the
Employment Agreement beginning on January 28, 1997, for a one (1) year term
rather than renew the Employment Agreement on its current terms and conditions.

NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby amend the Employment Agreement as of January 28, 1997, as follows:

1. Paragraph 1 of the Employment Agreement, entitled Offer and Acceptance
--------------------
of Employment is hereby amended in its entirety to read as follows:
- -------------

"Commencing on January 28, 1997, (the "Effective Date"), the Company
agrees to and hereby does, employ Executive as its Executive Vice
President-Finance and Chief Financial Officer. Executive hereby
accepts employment in that capacity and agrees to discharge
faithfully, diligently, and to the best of his ability the
responsibilities of that position commencing on Effective Date for a
period of one (1) year (the "Employment Term") and continuing
thereafter from year to year (a "Renewal Term") provided that either
the Company or Executive may terminate that employment at the end of
the Employment Term or any
<PAGE>

Renewal Term by giving the other not less than six (6) months prior
written notice of that termination."

2. Paragraph 3 of the Employment Agreement, entitled Compensation is
------------
hereby amended in its entirety to read as follows:

"The following provisions apply during the time the Executive is
employed by the Company:

(a) Base Salary. During the Employment Term, the Executive shall
-----------
receive a base salary equal to Two Hundred Thousand Dollars
($200,000.00) (the "Base Salary") payable in accordance with the
Company's normal payroll practices for salaried employees. The Base
Salary shall be reviewed annually and may be increased (but not
decreased) in the course of each such review. Under no circumstances
shall any increase in the Base Salary (i) limit or reduce any other
obligation to the Executive under this Agreement or (ii) be later
reduced or eliminated, once effective.

(b) Annual Bonus. Executive may receive an additional Annual Bonus
------------
in an amount not to exceed Seventy-Five Thousand Dollars ($75,000.00)
as determined by the Compensation Committee of the Company in accord
with criteria to be agreed upon between the Compensation Committee and
Executive unless a performance based bonus plan has been adopted for
all of the officers of the Company, in which event the criteria of
that plan shall be followed by the Compensation Committee. Each Annual
Bonus shall be determined and accrued as of the end of the fiscal year
for which the Annual Bonus is awarded and paid no later than April 1
of the following year, unless the Executive shall otherwise timely
elect to defer the receipt of the Annual Bonus under any deferred
compensation plan of the Company then in effect.

(c) Savings and Retirement Plans. In addition to the Base Salary and
----------------------------
Annual Bonus payable as hereinabove provided, the Executive shall be
entitled to participate, during the Employment Term and any Renewal
Term, in all savings and retirement plans or programs applicable to
other key executives of the Company.

(d) Welfare Benefit Plans. During the Employment Term and any
---------------------
Renewal Term, the Executive, and the Executive's dependents as to
medical and dental benefits, shall be eligible to participate in and
shall receive all benefits under each welfare benefit plan of the
Company, including, without limitation, all medical, dental,
disability (at least
<PAGE>

$250,000), group life (at least $250,000), accidental death and travel
accident (at least $250,000) insurance plans and programs of the
Company.

(e) Expenses. During the Employment Term and any Renewal Term, the
--------
Executive shall be entitled, upon submission of proper substantiation,
to receive reimbursement for all reasonable business-related expenses
actually paid or incurred by the Executive in connection with the
discharge of his duties hereunder and in the promotion of the business
of the Company.

(f) Fringe Benefits. During the Employment Term and any Renewal
---------------
Term the Executive shall be entitled to fringe benefits in accordance
with the policies of the Company.

(g) Vacation. During the Employment Term and any Renewal Term, the
--------
Executive shall be entitled to paid vacation in accordance with the
policies of the Company with respect to other key executives of the
Company."

3. Paragraph 6 (d) of the Employment Agreement, entitled Obligations of
--------------
the Company Upon Termination; Termination or Failure to Renew Without Cause is
- ---------------------------------------------------------------------------
hereby amended in its entirety to read as follows:

"If the Company shall give notice of non-renewal under Section 1,
which shall include proposing changes in compensation and terms which
are unacceptable to Executive, or terminate the Executive's employment
with the Company without cause:

(i) The Company shall pay to the Executive at the time of
termination, the balance of the Employment Terms' salary which has not
been paid and an amount equal to Two Hundred Seventy-Five Thousand
Dollars ($275,000.00); and

(ii) The Company shall, promptly upon submission by the Executive of
supporting documentation, pay or reimburse, or cause to be paid or
reimbursed, to the Executive any business related costs and expenses
paid or incurred by the Executive on or before the date of termination
which would have been payable under Section 3(f) if the Executive's
employment had not terminated; and

(iii) Until the six-month anniversary of the Executive's termination,
the Company shall continue benefits (or equivalent coverage) to the
Executive and/or the Executive's family at least equal to those which
would have been
<PAGE>

provided to them in accordance with the plans, programs and policies
described in Sections 3(c) and 3(d) of this Agreement if the
Executive's employment had not been terminated."

4. Paragraph 7 of the Employment Agreement, entitled Non-Competition is
hereby deleted in its entirety.

5. Each and every other term and provision of the Employment Agreement,
except those that have been specifically amended by this Amendment, are hereby
reaffirmed and ratified and will continue to be effective, along with the
amendments contained herein, on and after January 28, 1997.

IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company
has caused these presents to be executed in its name and on its behalf, all as
of the day and year first above written.

JOHN Q. HAMMONS HOTELS, INC.

________________________________ By _________________________________
MEL J. VOLMERT Its: Chairman of the Board

<PAGE>

Exhibit 10.14b

AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT by and between John Q.
Hammons Hotels, Inc., a Delaware corporation (the "Company"), and David B. Jones
(the "Executive"), dated as of the 28th day of July, 1996.

W I T N E S S E T H T H A T:

WHEREAS, Executive and Company entered into an Employment Agreement dated
January 1, 1994, which expires on December 31, 1996, unless renewed by Executive
and Company (the "Employment Agreement"); and

WHEREAS, Executive and Company do not wish to renew the Employment
Agreement on its current terms and conditions, but rather to amend and restate
the terms of the Employment Agreement to be effective on January 1, 1997, for a
one (1) year term.

NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby amend and restate the Employment Agreement in its entirety, to be
effective as of January 1, 1997, as follows:

1. OFFER AND ACCEPTANCE OF EMPLOYMENT. Commencing on January 1, 1997,
----------------------------------
(the "Effective Date"), the Company agrees to and hereby does, employ Executive
as its President. Executive hereby accepts employment in that capacity and
agrees to discharge faithfully, diligently, and to the best of his ability the
responsibilities of that position commencing on the Effective Date for a period
of one (1) year (the "Employment Term") and continuing thereafter from year to
year (a "Renewal Term") provided that either the Company or Executive may
terminate his employment upon forty-five (45) days written notice to the other.
<PAGE>

2. DUTIES AND RESPONSIBILITIES.
---------------------------

(a) During the Employment Term, the Executive (i) shall be in charge
of the operations and management of the Company, (ii) shall report to the
Chairman and (iii) shall assume and perform such further reasonable
responsibilities and duties assigned to him by the Chairman of the Board of
Directors. If elected or appointed, the Executive shall serve as a director
of the Company without any additional compensation.

(b) Excluding periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote the whole of his
working time and energy to the business and affairs of the Company and to
use his best efforts to perform the responsibilities assigned to him
hereunder faithfully and efficiently.

3. COMPENSATION. The following provisions apply during the time the
------------
Executive is employed by the Company:

(a) Base Salary. During the Employment Term, the Executive shall
-----------
receive a base salary of Three Hundred Thousand Dollars ($300,000) (the
"Base Salary") payable in accordance with the Company's normal payroll
practices for salaried employees. The Base Salary shall be reviewed at the
beginning of each Renewal Term and may be increased (but not decreased) in
the course of each review. Under no circumstances shall any increase in the
Base Salary (i) limit or reduce any other obligation to the Executive under
this Agreement or (ii) be later reduced or eliminated, once effective.

(b) Annual Bonus. Executive may receive an annual bonus ("Annual
------------
Bonus") of an amount up to One Hundred Thousand Dollars ($100,000.00) as
determined by the Compensation Committee of the Company in accord with
criteria to be agreed upon
<PAGE>

between the Compensation Committee and Executive unless a performance based
bonus plan has been adopted for all of the officers of the Company, in
which event the criteria of that plan shall be followed by the Compensation
Committee. Each Annual Bonus shall be determined and accrued as of the end
of the fiscal year for which the Annual Bonus is awarded and paid no later
than April 1 of the following year, unless the Executive shall otherwise
timely elect to defer the receipt of the Annual Bonus under any deferred
compensation plan of the Company then in effect.

(c) Savings and Retirement Plans. In addition to the Base Salary and
----------------------------
Annual Bonus payable as hereinabove provided, the Executive shall be
entitled to participate, during the Employment Term and any Renewal Term,
in all savings and retirement plans or programs applicable to other key
executives of the Company.

(d) Welfare Benefit Plans. During the Employment Term and any
---------------------
Renewal Term, the Executive, and the Executive's dependents as to medical
and dental benefits, shall be eligible to participate in and shall receive
all benefits under each welfare benefit plan of the Company, including,
without limitation, all medical, dental, disability (at least $250,000),
group life (at least $250,000), accidental death and travel accident (at
least $250,000) insurance plans and programs of the Company.

(e) Expenses. During the Employment Term and any Renewal Term, the
--------
Executive shall be entitled, upon submission of proper substantiation, to
receive reimbursement for all reasonable business-related expenses actually
paid or incurred by the Executive in connection with the discharge of his
duties hereunder and in the promotion of the business of the Company.
<PAGE>

(f) Fringe Benefits. During the Employment Term and any Renewal
---------------
Term, the Executive shall be entitled to fringe benefits in accordance with
the policies of the Company.

4. TERMINATION. The following provisions relate solely to termination of
-----------
the Executive's employment during the Employment Term or any Renewal Term:

(a) Death or Disability.
-------------------

(i) Subject to Section 6 below, this Agreement shall terminate
automatically upon the Executive's death.

(ii) Subject to Section 6 below, the Company shall at all times
have the right to terminate the Executive's employment hereunder at
any time after the Employee shall be absent from his employment, for
whatever cause, including but not limited to mental or physical
incapacity, illness or disability, (collectively "Disability") for a
continuous period of more than twenty-six (26) weeks.

(b) Cause. The Company may terminate the Executive's employment for
-----
"Cause" by a majority vote of the Company's Board of Directors at a meeting
where the Executive has had an opportunity to be present and express his
response. For purposes of this Agreement, "Cause" means (i) any act or acts
of dishonesty, moral turpitude or willful misconduct, or (ii) the
continuing failure of the Executive to perform his
<PAGE>

obligations under Section 2 of this Agreement thirty (30) days after having
received a written notice specifying the manner in which he is failing to
perform those obligations.

(c) Without Cause. In accord with the provisions of Paragraph 1, the
-------------
Company may terminate the Executive's employment at any time without cause
upon forty-five (45) days written notice.

(d) Resignation. In accord with the provisions of Paragraph 1, the
-----------
Executive may resign his employment with the Company at any time upon
forty-five (45) days written notice.

5. NOTICE OF TERMINATION OR RESIGNATION. Any termination by the Company
------------------------------------
or resignation by the Executive shall be communicated in writing to the other in
accordance with Section 13(b) of this Agreement and the notice shall specify the
termination or resignation date.

6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. The following provisions
-------------------------------------------
apply only in the event the Executive is terminated during the Employment Term
or any Renewal Term:

(a) Death. If the Executive's employment is terminated by reason of
-----
the Executive's death, this Agreement shall terminate without further
obligation to the Executive's legal representatives under this Agreement
other than those payment amounts accrued and payable hereunder at the date
of the Executive's death. Anything in this Agreement to the contrary
notwithstanding, the Executive's family shall be entitled to receive
benefits at least equal to those provided by the Company generally to
surviving families of key executives of the Company under its plans,
programs and policies relating to family death benefits, if any.
<PAGE>

(b) Disability. If the Executive's employment is terminated by reason
----------
of the Executive's Disability, the Executive shall be entitled to receive
the amount specified in Section 6(d)(i) and (ii) hereof and to receive
disability and other benefits at least equal to those provided by the
Company to disabled employees and/or their families in accordance with such
plans, programs, and policies relating to disability, if any.

(c) Cause. If the Executive's employment is terminated for Cause, the
-----
Company shall pay the Executive his Base Salary through the date of
termination at the rate in effect at the time notice of termination is
given and shall have no further obligation to the Executive under this
Agreement except as to vested employee benefits.

(d) Termination or Failure to Renew Without Cause. If the Company
---------------------------------------------
shall terminate or fail to renew the Executive's employment with the
Company without cause:

(i) the Company shall pay to the Executive Three Hundred Fifty
Thousand Dollars ($350,000.00), payable in not more than twelve (12)
monthly installments at the discretion of the Executive; and, in the
case of vested compensation previously deferred by the Executive, all
amounts of such compensation previously deferred and not yet paid by
the Company;

(ii) the Company shall, promptly upon submission by the Executive
of supporting documentation, pay or reimburse, or cause to be paid or
reimbursed, to the Executive any business related costs and expenses
paid or incurred by the Executive on or before the date of termination
which would have been payable under Section 3(f) if the Executive's
employment had not terminated; and
<PAGE>

(iii) until the six-month or the twelve-month in the event of
medical benefits, anniversary of the Executive's termination, the
Company shall continue benefits (or equivalent coverage) to the
Executive and/or the Executive's family at least equal to those which
would have been provided to them in accordance with the plans,
programs and policies described in Sections 3(c), and 3(d) of this
Agreement if the Executive's employment had not been terminated.

(e) Resignation. If the Executive resigns his employment, the Company shall
-----------
pay the Executive his Base Salary through the date of his resignation at
the rate in effect at the time the resignation notice is given and shall
have no further obligations to the Executive under this Agreement except as
to vested employee benefits.

7. NON-COMPETITION. At all times during Executive's employment with the
---------------
Company and for a period of one (1) year after Executive is no longer employed
by the Company, unless the Executive resigns his employment, the Executive shall
not, within those hotel/convention center markets in which the Company is
operating or plans to operate within the next one (1) year, directly or
indirectly, engage in any business, enterprise or employment whether as owner,
operator, shareholder, director, partner, financial backer, creditor,
consultant, agent, executive or any capacity whatsoever that is directly or
indirectly competitive with the business of the Company; provided, however, that
the foregoing shall not be deemed to prohibit the Executive from acquiring,
solely as an investment and through market purchases, securities of any issuer
that are registered under Section 12(b) or 12(g) of the Securities Exchange Act
of 1934, as amended, and that are listed or admitted for trading on any United
States national securities exchange or that are quoted on the NASDAQ National
Market System or any similar system of automated
<PAGE>

dissemination of quotations of securities prices in common use, so long as the
Executive is not a member of any control group (within the meaning of the rules
and regulations of the Securities and Exchange Commission) of any such issuer.

8. NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. The Executive shall not
-------------------------------------------
at any time during his employment hereunder and for a period of one (1) year
after the date his employment is terminated, or he resigns, directly or
indirectly, for himself or for any other person, firm, corporation, partnership,
association or other entity, (i) attempt to employ, employ or enter into any
contractual arrangement with any employee or former employee of the Company, its
affiliates, or predecessors-in-interest, unless such employee or former employee
has not been employed by the Company, its affiliates, or predecessors-in-
interest for a period in excess of six (6) months; and/or (ii) call on or
solicit any of the actual or targeted prospective customers or suppliers of the
Company with respect to any matters, related to or competitive with the business
of the Company, nor shall the Executive make known the names or addresses of
such customers or suppliers or any information relating in any manner to the
Company's trade or business relationships with such customers or suppliers.

9. NON-DISCLOSURE. Except as expressly permitted by the Company, or in
--------------
connection with the performance of his duties hereunder, the Executive shall not
at any time during or subsequent to his employment by the Company, disclose,
directly or indirectly, to any person, firm, corporation, partnership,
association or other entity any proprietary or confidential information relating
to the Company or any information concerning the Company's financial condition
or prospects, the Company's customers or suppliers, the Company's sources of
leads and methods of obtaining new business, the design, development, or
construction of the
<PAGE>

Company's properties or the Company's methods of doing and operating its
business (collectively, "Confidential Information"). Confidential Information
shall not include information which, at the time of disclosure, is known or
available to the general public by publication or otherwise through no act or
failure to act on the part of the Executive. The Executive acknowledges and
agrees that the Confidential Information is a valuable, special and unique asset
of the Company's business.

10. BOOKS AND RECORDS. All books, records and accounts relating in any
-----------------
manner to the Company's customers, suppliers, or methods of conducting business
whether prepared by the Executive or otherwise coming into the Executive's
possession, and all copies thereof in the Executive's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company upon termination of the Executive's employment hereunder or upon the
Company's request at any time.

11. INJUNCTION. Executive acknowledges that if he were to breach any of
----------
the provisions of Sections 7, 8, 9 or 10, it would result in immediate and
irreparable injury to the Company which cannot be adequately or reasonably
compensated at law. Therefore, Executive agrees that the Company shall be
entitled, if any such breach shall occur or be threatened or attempted, if it so
elects, to a decree of specific performance and to a temporary and permanent
injunction, without being required to post a bond, enjoining and restraining a
breach by the Executive, his associates, his partners or agents, either directly
or indirectly, and that right to injunction shall be cumulative to whatever
remedies or actual damages the Company may possess.

12. SUCCESSORS.
----------

(a) This Agreement is personal to the Executive and without the prior
written consent of the Company the benefits accrued and payable hereunder
shall not be assignable
<PAGE>

by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.

(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors.

(c) In the event that another corporation or unincorporated entity
becomes a Successor (as such term is defined below) of the Company, then
the Successor shall, by an agreement in form and substance reasonably
satisfactory to the Executive, expressly assume and agree to perform this
Agreement in the same manner and to the same extent as the Company be
required to perform if there had been no Successor. As used herein, the
term "Successor" means another corporation or unincorporated entity or
group of corporations or unincorporated entities which (i) acquires all or
substantially all of the assets of the Company, or (ii) is the surviving
entity as a result of the merger of the Company into that entity.

13. MISCELLANEOUS.

(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Missouri. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successor and
legal representatives.

(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
<PAGE>

If to the Executive: David B. Jones
-------------------
John Q. Hammons Hotels, Inc.
300 John Q. Hammons Parkway
Springfield, Missouri 65802

If to the Company: John Q. Hammons Hotels, Inc.
-----------------
300 John Q. Hammons Parkway
Springfield, Missouri 65802
Attention: John Q. Hammons

with a copy to: William J. Hart
--------------
Farrington & Curtis, P.C.
750 No. Jefferson
Springfield, Missouri 65802

or to such other address as either party shall have furnished to the other
in writing on accordance herewith. Notice and communications shall be
effective when actually received by the addressee.

(c) If any term or provision of the Agreement or the application
hereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of that
term or provision to persons or circumstances other than those to which it
is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. Moreover, if a court of competent
jurisdiction deems any provisions hereof to be too broad in time, scope or
area, it is expressly agreed that provision shall be enforced to a less
degree which the court of competent jurisdiction would find enforceable.
<PAGE>

(d) The Company may withhold from any amounts payable under this
Agreement such federal, state and local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

(e) This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof.

(f) Any waiver of any breach of this Agreement shall not be construed
to be a continuing waiver of consent to any subsequent breach by either
party hereto.

(g) In the event that either party hereto brings suit for the
collection of any damages resulting from, or the injunction of any action
constituting, a breach of any of the terms or provisions of this Agreement,
then the party found to be at fault shall pay all reasonable court costs
and attorneys' fees of the other.

(h) The Executive shall not delegate the employment obligations
pursuant to this Agreement to any other person.

IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name on its behalf, all
as of the day and year first above written.

JOHN Q. HAMMONS HOTELS, INC.

________________________________ By _________________________________
DAVID B. JONES Its: Chairman of the Board

<PAGE>

Exhibit 10.15a

GROUND LEASE
------------

This Ground Lease Agreement is made as of the 27th day of February, 1996
("Agreement"), by and between JOHN Q. HAMMONS, trustee of John Q. Hammons
Revocable Trust dated December 28, 1986 (hereinafter referred to as "Lessor"),
and JOHN Q. HAMMONS-BRANSON, L.P., a Missouri limited partnership (hereinafter
referred to as "Lessee").

W I T N E S S E T H:

WHEREAS, Lessor owns certain unimproved real property located in Taney
County, Missouri; and

WHEREAS, Lessor wishes to lease to Lessee, and Lessee wishes to lease the
property from Lessor, for the purpose of constructing a full service hotel and
convention center thereon.

NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree as follows:

1. PROPERTY. For and in consideration of the rent to be paid and the
--------
covenants to be performed by Lessee hereunder, Lessor hereby leases to Lessee
the real property described in Exhibit "A" attached hereto and made a part
hereof (the "Property").

2. LEASE TERM. The term of this Lease shall be for a period of fifty
----------
(50) years (the "Lease Term"), commencing as of August 1, 1995 (the
"Commencement Date") and terminating on July 31, 2045, both dates inclusive.
<PAGE>

(a) Extended Term. Lessee shall be entitled to extend the term of
-------------
the Lease for ten (10) years, provided that Lessee is not in default under
the terms of this Agreement. Lessee shall give written notice of the intent
to extend at least ninety (90) days prior to the expiration of the Lease.
The terms of this Agreement shall remain except the Base Rent (as defined
herein).

3. RENT.
----

(a) Rent. Commencing upon the earlier of Lessee's receipt of a
----
certificate of occupancy from Taney County or the commencement of business
operations on the Property, Lessee agrees to pay to Lessor annual rent as
follows: Year 1 - $80,000.00

Year 2 - $120,000

Year 3 and thereafter - The greater of One Hundred Fifty Thousand and
No/100 Dollars ($150,000.00), or the sum of two percent (2%) of the
first Twelve Million Dollars ($12,000,000.00) of Lessee's adjusted
gross revenues derived from room sales ("AGRS") on the Leased
Premises; one and one-half percent (1.5%) of the next Six Million
Dollars ($6,000,000.00) and one percent (1%) of the AGRS in excess of
Eighteen Million and No/100 Dollars ($18,000,000.00), and one percent
(1%) of the first Six Million Dollars ($6,000,000.00) of the adjusted
gross revenues derived from food and beverage sales ("AGFB") and one-
half percent (.5%) of Lessee's AGFB thereafter. Adjusted gross
revenues for room

2
<PAGE>

sales and food and beverage sales (including revenues from banquet
room rentals) shall be defined as gross revenues less all concessions,
adjustments and taxes. The rent shall commence on March 1, 1997.

(c) Payment of Rent. The Rent shall be payable in annual
---------------
installments on the first day of each year. Rent for any partial year
shall be prorated.

Unless and until Lessee is otherwise notified in writing by Lessor,
Lessee shall pay all rent and other amounts payable to Lessor under this
Agreement by check or draft made payable to Lessor and either hand
delivered or mailed by Lessee to Lessor's address shown in Section 20
herein.

4. LESSOR'S REPRESENTATIONS, WARRANTIES, AND COVENANTS. Lessor hereby
---------------------------------------------------
represents, warrants, and covenants the following to Lessee:

(a) Suitability. Lessor knows of no circumstances or conditions
-----------
which would render the Property inappropriate for the construction and
operation of hotel and restaurant facilities.

(b) Title. Lessee has good and marketable fee simple title to the
-----
Property.

(c) Contracts. It is understood by the parties hereto that Lessee
---------
intends to use the Property for the construction and operation of a hotel
and accompanying restaurant facilities. There are no licenses, contracts,
or leases to which Lessor is a party and which materially and adversely
affect the ownership or management of the Property, as set forth herein.

3
<PAGE>

(d) Zoning. Under the zoning and ordinances applicable to the
------
Property, the anticipated use of the Property as a hotel with accompanying
restaurant facilities is proper and does not violate those laws or
ordinances.

(e) Availability. There are no adverse or other parties in
------------
possession of the Property, or of any part thereof. No party has been
granted any license, lease, or other right relating to the use of a
possession of the Property or any party thereof.

(f) Adverse Actions. There is no pending or threatened litigation or
---------------
governmental action which would adversely affect the value of the Property
or Lessee's right to lease the Property for Lessor. Lessor has received no
notice from any governmental authority of violations with respect to the
Property which have not been heretofore corrected, and there is no planned
or commenced public improvement which may result in special assessments or
otherwise materially affect the Property, or any government agency or court
order requiring repair, alteration, or correction of any existing with
respect to the Property.

(g) Disputes. Lessor is not aware of any boundary, survey, or title
--------
questions or disputes with respect to the Property.

(h) Hazardous Materials.
-------------------
(i) Definitions. The term "Hazardous Materials" shall mean any
substance, (1) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation,
ordinance or policy; or

4
<PAGE>

(2) which is defined as a "hazardous waste" or "hazardous substance"
under any federal, state or local statute, regulation or ordinance; or
(3) which is toxic, explosive, corrosive, infectious, carcinogenic or
otherwise hazardous; or (4) without limitation, contains asbestos,
polychlorinated biphenyls (PCB's), oil, petroleum, petroleum products
or fractions thereof, volatile organic compounds, semi-volatile
organic compounds, or heavy metals. The term "Adverse Environmental
Condition" shall mean any condition which has already caused, or can
reasonably be expected to cause, a serious diminution in the quality
or quantity of the air, water, land (including soil and subsurface),
and wildlife located on, above or below the Property.

(ii) Warranty and Covenant. Lessor warrants that the Property
has not been contaminated or polluted by, or used for the storage or
disposal of any Hazardous Material, and Lessor has received no notice
from any governmental authority concerning the presence or removal of
any Hazardous Material on or adjacent to the Property. Lessor
covenants that it will notify Lessee immediately in the event that
evidence of an adverse environmental condition is discovered during
the term of this Lease, or an event occurs which may result in an
adverse environmental condition, including, but not limited to,
release, emission or spill of hazardous substances.

5
<PAGE>

(iii) Correction of Adverse Condition. Upon the discovery of
evidence of an adverse environmental condition, Lessor shall
immediately undertake an investigation to determine whether an adverse
environmental condition does exist and, if so, the nature and extent
thereof. Lessor shall engage such experts as may reasonably be
required to perform its obligations hereunder. Lessor shall provide to
Lessee copies of all information and reports which it receives in
connection with the investigation. Lessor shall then formulate a plan
of remediation (the "Plan"). Lessee shall be provided with a copy of
the Plan. The Plan shall comply, in all respects, with all applicable
federal, state and local laws, regulations and policies, and shall
have the approval, if required, of all applicable governmental
authorities possessing jurisdiction.

(iv) Indemnification. Lessor agrees to fully indemnify,
protect, defend and hold Lessee, its successors and assigns, harmless
from and against any and all claims for damage, loss or liability,
including reasonable attorney fees, as a result of any discovery of
Hazardous Materials on the Property or other Adverse Environment
Condition unless Lessee contributed to the presence of the Hazardous
Materials or caused the Adverse Environmental Condition. Nothing
contained herein shall be deemed to prohibit Lessor from collecting
some or all of the costs of remediation from other, potentially
responsible parties.

6
<PAGE>

(i) Prior Uses. The Lessor knows of no prior uses of the
----------
Property which would diminish the Property's value. For example, such
prior uses might include the Property's use as a cemetery, a site for
chemical testing or manufacture, or as a dumping ground for refuse.

(j) Continuing Suitability. From and after the date of this
----------------------
Agreement, Lessor shall keep the Property free and clear of all
easements, liens or encumbrances.

(k) Authority. Lessor warrants and represents to Lessee that
---------
Lessor has full right and lawful authority to enter, execute and
deliver this Agreement to Lessee.

(l) Non-Competition. Lessor shall not permit or suffer to be
---------------
constructed or operated on property owned by Lessor or a related
entity under the control of Lessor within five (5) miles of the
Property as a hotel or motel business (including any business which
customarily rents rooms, suites or apartments for periods of less than
thirty (30) days) for a period of ten (10) years. Lessor shall record
a declaration or covenant restricting the use of the property affected
by this section.

6. CONDITIONS PRECEDENT. The obligations of Lessor and Lessee hereunder
--------------------
shall be subject to the satisfaction of the following conditions precedent:

(a) That all representations and warranties made by the parties
herein shall be true and correct as of the Commencement Date.

7
<PAGE>

(b) Lessee receives all necessary federal, state, and local
government approval for use of the Property and the improvements to be
constructed upon thereon as a hotel.

In the event that Lessee shall not receive approval as specified
in this Section 6(b), Lessee shall be discharged of all obligations
hereunder and relieved from any liabilities to Lessor.

7. CONSTRUCTION OF HOTEL BY LESSEE.
-------------------------------
(a) Construction Documents. On or before January 1, 1996, Lessee
----------------------
shall submit to Lessor for its approval, which shall not be unreasonably
delayed or withheld, plans and specifications for the construction of a
hotel on the Leased Property.

(b) Construction. On or before March 1, 1996, the Lessee shall
------------
commence construction of the hotel and parking facilities on the Leased
Property. The Lessee shall diligently pursue the work to completion, and
the hotel shall be fully ready to open for business not later than March 1,
1998, except as such date may be extended by the number of working days
lost by reason of strikes, fire, acts of God, or other events beyond the
Lessee's control.

(c) Easements for Utilities. Lessee shall have the right to enter
-----------------------
into agreements with and grant easements and licenses over and across the
Property to suppliers of utility services including, without limitation,
gas, electricity, telephone, water and sewer, to the extent necessary to
service the improvements,

8
<PAGE>

and Lessor agrees to consent thereto and execute any documents, agreements
and instruments reasonably required in connection therewith.

(d) Completion Documents. Upon the completion of the hotel, the
--------------------
Lessee shall deliver to the Lessor each of the following:

(i) A certificate of completion by the architect who
supervised the construction, which will state that all work has been
completed in accordance with the approved plans and specifications.

(ii) A certificate of occupancy, or any equivalent permit or
certificate from Taney County, Missouri, indicating the hotel is
complete and ready for occupancy by the general public.

(iii) A survey of the Leased Property, showing the completed
hotel and parking facilities, indicating that there are no
encroachments by either on any adjoining premises.

(e) Certificate of Title. Within thirty (30) days after the
--------------------
completion of the hotel, the Lessee shall deliver to the Lessor a
certificate from a title company doing business in Taney County, Missouri,
currently dated, that the time for the filing of mechanic's, materialman's,
and similar liens has expired, or, if such is not the case, that a search
of the record shows that no such liens then encumber the Leased Property.
If the latter information is furnished by the title company, within one
hundred eighty days (180) days thereafter, the Lessee shall deliver a
further

9
<PAGE>

certificate of the title company indicating that no such liens then
encumber the Leased Property.

8. RIGHT OF FIRST REFUSAL. In the event that the Lessor receives from
----------------------
any third party, during the Lease term, or any extension thereof, an acceptable
bona fide offer to purchase the Property, or any portion thereof, the parties
agree that Lessor may not sell or transfer the Property (or portion thereof) to
such third party without transmitting an offer (the "Offer") to Lessee with
respect to the Property (or portion thereof) that Lessor proposes to transfer.
The Offer transmitted to Lessee shall specify all of the following:

(a) Lessor's intention to transfer the Property, or portion thereof;

(b) The name and address of the proposed transferee or transferees
(the "Transferee"); and

(c) The price that the transferee proposes to pay the Lessor for the
Property (or portion thereof) and all other terms and conditions of the
proposed transfer.

Within thirty (30) days after receipt of the Offer from Lessor, the
Lessee may elect to purchase the Property (or portion thereof) at the
purchase price and on the terms and conditions as specified in the Offer,
by so notifying the Lessor, and the sale to Lessee shall be closed by the
parties within thirty (30) days after Lessor's receipt of such notice from
Lessee. If the Lessee fails to elect to purchase the Property (or portion
thereof) within the thirty (30) day period, then Lessor may transfer the
Property (or portion thereof) to the Transferee; provided, however,

10
<PAGE>

that the Lessor may not offer to sell the Property (or portion thereof) to
the Transferee or to any other party at a price and on terms more favorable
than those offered to the Lessee unless the Lessee is first given an offer
to purchase at such favorable price and terms, as provided herein.

9. INSURANCE. At all times during the Lease Term, Lessee shall maintain
---------
in force and effect, at its own cost and expense, a policy or policies of Public
Liability Insurance for the protection, indemnification and defense of Lessee
against claims, demands and causes of action arising out of or in connection
with the use, maintenance, operation and occupancy of the Property, which policy
or policies shall have limits of not less than One Million Dollars
($1,000,000.00) combined limits coverage per occurrence for bodily injury
liability and property damage liability. At Lessor's request, Lessee shall name
Lessor's mortgagee as an additional insured under any policy of liability
insurance. All insurance required to be maintained under the provisions of this
Lease shall be written by insurer(s) which Lessor shall reasonably approve as to
financial ability, and authorized to write insurance in the state where the
Property is located. Upon request of Lessor, Lessee shall cause the insurer(s)
to furnish Lessor certificate(s) evidencing the insurance required to be
maintained hereunder naming the Lessor as additional insured.

11
<PAGE>

from all costs, liabilities, suits, penalties, claims and demands resulting
therefrom. lessor and Lessee agree that Lessee shall have the right to contest
any lien filed against the Property or the improvements thereon.

11. TAXES.
-----

(a) Lessee to Pay Taxes. Lessee agrees to pay all "Taxes" ( as that
-------------------
term is hereinafter defined) against the Property becoming due or payable
during the term of this Lease, and a pro-rata portion of the installment of
Taxes becoming due and payable during the years that this Agreement
commences and expires, said pro-rata share to be determined as of the
Commencement Date and expiration date of this Agreement and in the
customary method of prorating real estate taxes in Taney County, Missouri.
Lessee shall not be obligated to pay any installment of any special
assessment which may be assessed, levied or conformed during the Lease
Term, but which does not fall due and is not required to be paid until
after the expiration of this Agreement, except for a pro-rata share of the
installment becoming payable next following the expiration of this
Agreement.

(b) Taxes Defined. As used herein, the term "Taxes" shall mean all
-------------
taxes, assessments and levies, whether general or special, ordinary or
extraordinary, of every nature and kind whatsoever, which may be taxed,
charged, assessed, levied or imposed at any time or from time to time
during the Lease Term by any governmental authority upon or against the
Property or the possession or use thereof. The term "Taxes" shall not
include (and Lessee shall not be

12
<PAGE>

required to pay) any franchise, estate, inheritance, transfer, income or
similar tax of Lessor, including, but not limited to, any income tax
imposed with respect to Lessor's income from the Property.

(c) Payment of Taxes. The Taxes above provided to be paid by Lessee
----------------
shall be paid before any delinquency can occur therein or in any part or
installment thereof, and proof of payment shall be delivered at the request
of Lessor. In the event Lessee fails to pay such Taxes, Lessor may, but
shall not be required to, pay the same for the Lessee's account, and such
payment shall constitute and be collectible as additional rent.

(d) Tax Notices. Lessor will promptly deliver to Lessee any and all
-----------
tax notices or assessments which Lessor may receive relating to the
Property.

12. UTILITIES. Lessee, at its sole cost and expense, shall obtain and
---------
promptly pay for all utility services required for the operation of or
furnished to or consumed on the Property, including, without limitation,
electricity, gas, water, sewer, heat, telephone, garbage collection, and all
charges for any of the foregoing.

13. DESTRUCTION BY FIRE OR OTHER CASUALTY. In the event that the
-------------------------------------
improvements to be constructed on the Property by Lessee shall be totally
destroyed by fire or other casualty, Lessee shall not be required to rebuild.
Instead, Lessee may elect, within ninety (90) days after the date of loss to
terminate this Agreement. If the improvements constructed upon the Property by
Lessee are only partially destroyed, Lessee shall promptly reconstruct the
improvements to its condition immediately prior to the fire or other casualty.

13
<PAGE>

In the event of a complete loss and termination of this Agreement, the
rent shall cease to be payable as of the date of loss. In the event of a
partial loss, the rent shall be reduced the same percentage as the percentage of
the building which is unusable.

14. ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease in
-------------------------
whole or in part, or sublet all or any part of the Property, except as provided
herein, without obtaining the prior written consent of Lessor, which consent
shall not be unreasonably withheld. Lessee may sublet or assign this Lease to
an affiliated company. An affiliated company is any business entity in which
John Q. Hammons Hotels, Inc. or John Q. Hammons Hotels Two, L.P., together or
separately, hold a beneficial or equitable interest in greater than one-third
(1/3) of the company's assets.

15. INDEMNIFICATION OF LESSOR. Lessee shall defend, indemnify and hold
-------------------------
Lessor harmless from and against any claim, loss, expense or damage to any
person or property in or upon the Property or any area allocated to or used
exclusively by Lessee or their customers, agents, employees or invitees arising
out of Lessee's use or occupancy of the Property, or on adjoining sidewalks,
streets or ways, or any act or neglect of Lessee or Lessee's invitees,
employees, contractors, customers, or agents, except claims for damages or
injuries (including death) caused in whole or in part by the willful or
negligent act(s) of Lessor or the agents, servants, or employees of Lessor.

14
<PAGE>

with proposed architectural and engineering plans as soon as practical after the
execution of this Agreement. Lessor shall have the right to review the proposed
plans for improvements of the Property and to approve the plans provided,
however, Lessor may not unreasonably withhold their approval. All alterations,
additions and improvements constructed on the Property shall remain on the
Property at the expiration of the Lease Term.

Outside signage will be allowed to identify and advertise activities
located on the Property. Lessee shall provide Lessor with proposed outside
signage plans prior to signage being erected. Lessor shall have the right to
review and approve proposed plans, and Lessor agrees that its approval will not
be unreasonably withheld.

17. CONDEMNATION. If, during the Lease Term, any part of the Property
------------
is condemned or taken by eminent domain, or if any street or entrance providing
access to the Property is permanently closed or blocked, and the Property is
thereby rendered unsuitable or inadequate for the continuation of Lessee's
normal, full-scale business operations thereon as reasonably determined by
Lessee, then, at Lessee's option, Lessee may terminate this Lease as of the date
of such occurrence. If this Lease is so terminated, the entire award
attributable to the Property made by the condemning authority shall be paid to
Lessor, without, however, limiting the right of Lessee to assert a claim in the
condemnation proceeding for the value of its leasehold improvements and
goodwill. If such occurrence does not render the Property unsuitable or
inadequate for such purposes, this Lease shall remain in full force and effect;
and the entire award attributable to the Property made by the condemning
authority shall be paid to Lessor, although

15
<PAGE>

Lessee may assert a claim in the condemnation proceeding for its business
interruption or diminution loss.

18. DEFAULT. If Lessee should default in the performance of any
-------
covenant or condition of this Lease (except for default in the payment of any
rent or other amount due to Lessor hereunder, which Lessee must cure within
thirty (30) days after service of written notice thereof upon Lessee and such
default is not cured or removed within ninety (90) days after service of written
notice of default upon Lessee and/or Lessee fails to make a reasonable effort to
cure the default within the ninety (90) day period set forth above, Lessor shall
have the right to sublet the premises for the benefit of Lessor and Lessee or
terminate this Lease, in which event Lessor shall pay to Lessee eighty percent
(80%) of the fair market value of the improvements constructed on the Property.
The fair market value of the improvements shall be determined as of the date of
the termination of this Agreement by independent appraisal and arbitration as
follows: One appraiser shall be selected by Lessor, one by the Lessee, and a
third by the first two appraisers chosen. The decision of a majority of the
appraisers shall be binding on Lessor and Lessee. In the event of arbitration as
set forth herein, closing shall occur no later than thirty (30) days following
the decision by the appraisers.

19. COVENANT OF QUIET ENJOYMENT. Upon payment by the Lessee of the rent
---------------------------
herein provided, and upon the observance and performance of all covenants, terms
and conditions on Lessee's part to be observed and performed by Lessee, Lessee
shall peaceably and quietly hold and enjoy the Property for the term hereby
demised without hindrance or interruption

16
<PAGE>

by Lessor or any other person or persons lawfully or equitably claiming by,
through, or under the Lessor subject, nevertheless, to the terms and conditions
of this Lease.

20. LESSEE'S RIGHT OF FINANCING.
---------------------------

(a) Encumbrance of Leasehold Interest. Lessee is given and has the
---------------------------------
absolute right, without Lessor's consent, to encumber its interest in this
Lease so long as it is not in default hereunder and except that no such
deed of trust, mortgage or assignment shall extend to or affect the fee
simple interest of the Lessor. The holder of any deed of trust, mortgage or
assignment of this Lease or of Lessee's interest hereunder, and any one
claiming by, through, or under any such holder, shall not acquire any
greater rights hereunder than Lessee has (except the right to cure or
remedy Lessee's defaults), and shall not become entitled to a new Lease if
this Lease is terminated or Lessee fails to exercise any outstanding option
to extend this Lease. No mortgage, deed of trust or assignment of this
Lease or of Lessee's interest hereunder by Lessee or its successors and
assigns shall be valid unless this Lease is in full force and effect when
such mortgage, deed of trust or assignment is created and the mortgage,
deed of trust or assignment is subject to all the agreements, terms,
covenants and conditions of this Lease.

(b) Lessor to Subordinate. Lessor shall, within ten (10) days after
---------------------
request by Lessee or Lessee's lender, execute and deliver a written
agreement subordinating this Agreement to any real estate mortgage
hereafter placed upon the Property and the improvements to be constructed
thereon.

17
<PAGE>

(c) Notice of Lease Default. If, before any default occurs in this
-----------------------
Lease, the holder of any mortgage, deed of trust or assignment, gives
Lessor a written notice containing the holder's name and office address,
Lessor shall give the holder a copy of each notice of default by Lessee at
the same time that Lessor gives that notice to Lessee. Each copy of the
notice shall be deemed duly given to the holder when mailed to the holder
at its last post office address furnished to Lessor.

(d) Cure of Default. Lessor shall accept performance by the holder
---------------
of any mortgage, deed of trust, or assignment of any obligation of this
Lease that Lessee is required to perform, with the same force and effect as
if performed by Lessee, provided that at the time of that performance,
Lessor is furnished with satisfactory evidence that the person, firm, or
corporation tendering that performance or payment has the claimed interest
in the Leased Property. The holder of a mortgage, deed of trust or
assignment shall have ten (10) days after receipt of any notice of default
within which to cure any default in the payment of rent or additional rent
under this Lease, and a reasonable time (not less than thirty (30) days)
within which to cure any other default.

21. NOTICES. Any notices or inquires regarding this Agreement shall be
-------
delivered to Lessor at 300 John Q. Hammons Parkway, Suite 900, Springfield,
Missouri 65806, and to Lessee at 300 John Q. Hammons Parkway, Suite 900,
Springfield, Missouri 65806, or to such other address as the parties may
designate in writing.

18
<PAGE>

All notices shall be deemed received on the earlier of (1) actual receipt,
or (2) three (3) days (excluding Sundays and federal holidays) after delivery to
the United States Post Office. Any address to which notices are sent hereunder
may be changed by notice to the parties hereto in the manner hereinabove
provided.

22. PURCHASE OPTION: After March 1, 2118, but prior to the expiration of
---------------
the Lease Term or at the time Mr. Hammons no longer acts as trustee for his
revocable trust, Lessee is hereby given the option to purchase the Leased
Premises on the terms and conditions as set forth in this Section 22. To
exercise its option to purchase, the Lessee shall give written notice of such
exercise to Lessor. Within forty-five (45) days thereafter, Lessee and Lessor
shall enter into an agreement for the purchase and sale of the Leased Premises,
which agreement shall contain such terms and conditions as are customary in such
agreements, and which shall provide at the closing of such purchase and sale no
later than fifteen (15) days after the date thereof. At such closing, the Lessee
shall pay to Lessor an amount equal to the greater of Three Million and No/100
Dollars ($3,000,000.00) or the current appraisal value of the Leased Premises,
as determined by a current appraisal by an appraisal firm of national standing
(the "Option Price"), and Lessor shall convey the Leased Premises to the Lessee
pursuant to the terms of such agreement. The Lessee shall select subject to
Lessor's approval such appraiser and pay the appraisal fee.

23. MEMORANDUM OF LEASE. The parties shall execute a Memorandum of Lease
-------------------
for purposes of recording the same in the office of the Recorder of Deeds for
Taney County, Missouri, and the form as attached hereto as Exhibit "C".

19
<PAGE>

24. EXECUTION. This Agreement is executed in multiple originals and
---------
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, successors, assigns and legal representatives. The
rights of Lessor hereunder may be assigned in whole or in part. If Lessee herein
shall be more than one party, then the obligations of such parties herein shall
be joint and several. The paragraph captions used herein are for convenience
only and shall not be deemed to have been included for any other purpose.

25. NO ORAL AGREEMENTS. It is expressly agreed between the Lessor and
------------------
the Lessee that there are no verbal understandings or agreements which in any
way change the terms, covenants and conditions herein set forth, and that no
modification of this Agreement and no waiver of any of its terms and conditions
shall be effective unless made in writing and approved and accepted by both
parties to this Agreement.

26. INVALID OR INAPPLICABLE CLAUSE. Should any covenant or condition of
------------------------------
this Agreement, to any extent, be held invalid or unenforceable by a final
judgment of a court of competent jurisdiction, the remaining terms and
conditions shall remain in full force and effect and shall be enforceable to the
full extent of the law.

20
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

JOHN Q. HAMMONS HOTELS-BRANSON, L.P.
BY ITS GENERAL PARTNER
JOHN Q. HAMMONS HOTELS, INC.

BY:
----------------------------------------
DAVID B. JONES, President and
Chief Operating Officer

"LESSEE"

---------------------------------------
JOHN Q. HAMMONS, Trustee of
John Q. Hammons Revocable Trust
Dated December 28, 1986

"LESSOR"

<PAGE>

Exhibit 10.15b

GROUND LEASE WITH OPTION
------------------------

This Ground Lease Agreement is made as of the 1st day of June, 1996
("Agreement"), by and between JOHN Q. HAMMONS, trustee of John Q. Hammons
Revocable Trust dated December 28, 1989 (hereinafter referred to as "Lessor"),
and JOHN Q. HAMMONS HOTELS TWO, L.P., a Delaware limited partnership
(hereinafter referred to as "Lessee").

W I T N E S S E T H:

WHEREAS, Lessor owns certain unimproved real property located in
Pulaski County, Arkansas; and

WHEREAS, Lessor wishes to lease to Lessee, and Lessee wishes to lease
the property from Lessor, for the purpose of constructing a full service hotel
and convention center thereon.

NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree as follows:

2. LEASE TERM. The term of this Lease shall be for a period of forty
----------
(40) years (the "Lease Term"), commencing as of May 15, 1996 (the "Commencement
Date") and terminating on May 14, 2036, both dates inclusive.
<PAGE>

3. RENT.

(a) Rent. Commencing upon the earlier of Lessee's receipt of a
----
certificate of occupancy from Pulaski County or the commencement of
business operations on the Property, Lessee agrees to pay to Lessor
rent (the "Rent") as follows:

Year 1 - $80,000 annually
Year 2 - $100,000 annually
Year 3 - $120,000 annually
Year 4 - $120,000 annually
Year 5 - $120,000 annually

For each successive lease year provided for in this Lease, the rental
amount will be increased to an amount equal to the product of the increase in
the Consumer Price Index ("CPI") comparing the CPI at the commencement date with
the starting date of the renewal term and multiplying the percentage increase by
the $120,000 annual rent, provided, however, that in no event shall the rent be
less than $120,000 per year.

If at any time required for the determination of the additional rent
the Index is no longer published or issued, the parties shall use such other
Index as is then generally recognized and accepted for similar determinations of
purchasing power.

(b) Payment of Rent. The Rent shall be payable in quarterly
---------------
installments on the first day of January, April, July and October of
each year during the Lease Term.

Unless and until Lessee is otherwise notified in writing by
Lessor, Lessee shall pay all rent and other amounts payable to Lessor
under this Agreement by

2
<PAGE>

check or draft made payable to Lessor and either hand delivered or
mailed by Lessee to Lessor's address shown in Section 20 herein.

4. LESSOR'S REPRESENTATIONS, WARRANTIES, AND COVENANTS. Lessor
---------------------------------------------------
hereby represents, warrants, and covenants the following to Lessee:

(a) Suitability. Lessor knows of no circumstances or conditions
-----------
which would render the Property inappropriate for the construction and
operation of hotel and restaurant facilities.

(b) Title. Lessee has good and marketable fee simple title to the
-----
Property.

(c) Contracts. It is understood by the parties hereto that Lessee
---------
intends to use the Property for the construction and operation of a
hotel and accompanying restaurant facilities. There are no licenses,
contracts, or leases to which Lessor is a party and which materially
and adversely affect the ownership or management of the Property, as
set forth herein.

(d) Zoning. Under the zoning and ordinances applicable to the
------
Property, the anticipated use of the Property as a hotel with
accompanying restaurant facilities is proper and does not violate
those laws or ordinances.

3
<PAGE>

(f) Adverse Actions. There is no pending or threatened litigation
---------------
or governmental action which would adversely affect the value of the
Property or Lessee's right to lease the Property for Lessor. Lessor
has received no notice from any governmental authority of violations
with respect to the Property which have not been heretofore corrected,
and there is no planned or commenced public improvement which may
result in special assessments or otherwise materially affect the
Property, or any government agency or court order requiring repair,
alteration, or correction of any existing with respect to the
Property.

(g) Disputes. Lessor is not aware of any boundary, survey, or
--------
title questions or disputes with respect to the Property.

(h) Hazardous Materials.
-------------------

(i) Definitions. The term "Hazardous Materials" shall mean
any substance, (1) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation,
ordinance or policy; or (2) which is defined as a "hazardous
waste" or "hazardous substance" under any federal, state or local
statute, regulation or ordinance; or (3) which is toxic,
explosive, corrosive, infectious, carcinogenic or otherwise
hazardous; or (4) without limitation, contains asbestos,
polychlorinated biphenyls (PCB's), oil, petroleum, petroleum
products or fractions thereof, volatile organic compounds, semi-
volatile organic compounds, or heavy metals. The term "Adverse
Environmental Condition" shall mean any

4
<PAGE>

condition which has already caused, or can reasonably be expected
to cause, a serious diminution in the quality or quantity of the
air, water, land (including soil and subsurface), and wildlife
located on, above or below the Property.

(ii) Warranty and Covenant. Lessor warrants that the Property
has not been contaminated or polluted by, or used for the storage
or disposal of any Hazardous Material, and Lessor has received no
notice from any governmental authority concerning the presence or
removal of any Hazardous Material on or adjacent to the Property.
Lessor covenants that it will notify Lessee immediately in the
event that evidence of an adverse environmental condition is
discovered during the term of this Lease, or an event occurs which
may result in an adverse environmental condition, including, but
not limited to, release, emission or spill of hazardous
substances.

5
<PAGE>

investigation. Lessor shall then formulate a plan of remediation
(the "Plan"). Lessee shall be provided with a copy of the Plan.
The Plan shall comply, in all respects, with all applicable
federal, state and local laws, regulations and policies, and shall
have the approval, if required, of all applicable governmental
authorities possessing jurisdiction.

(iv) Indemnification. Lessor agrees to fully indemnify,
protect, defend and hold Lessee, its successors and assigns,
harmless from and against any and all claims for damage, loss or
liability, including reasonable attorney fees, as a result of any
discovery of Hazardous Materials on the Property or other Adverse
Environment Condition unless Lessee contributed to the presence of
the Hazardous Materials or caused the Adverse Environmental
Condition. Nothing contained herein shall be deemed to prohibit
Lessor from collecting some or all of the costs of remediation
from other, potentially responsible parties.

(i) Prior Uses. The Lessor knows of no prior uses of the
----------
Property which would diminish the Property's value. For example,
such prior uses might include the Property's use as a cemetery, a
site for chemical testing or manufacture, or as a dumping ground
for refuse.

(j) Continuing Suitability. From and after the date of this
----------------------
Agreement, Lessor shall keep the Property free and clear of all
easements, liens or encumbrances.

6
<PAGE>

(k) Authority. Lessor warrants and represents to Lessee that
---------
Lessor has full right and lawful authority to enter, execute and
deliver this Agreement to Lessee.

(l) Non-Competition. Lessor shall not permit or suffer to be
---------------
constructed or operated on property owned by Lessor or a related
entity under the control of Lessor within five (5) miles of the
Property as a hotel or motel business (including any business
which customarily rents rooms, suites or apartments for periods of
less than thirty (30) days) for a period of ten (10) years. Lessor
shall record a declaration or covenant restricting the use of the
property affected by this section.

6. CONDITIONS PRECEDENT. The obligations of Lessor and Lessee
--------------------
hereunder shall be subject to the satisfaction of the following conditions
precedent:

(a) That all representations and warranties made by the parties
herein shall be true and correct as of the Commencement Date.

(b) Lessee receives all necessary federal, state, and local
government approval for use of the Property and the improvements to be
constructed upon thereon as a hotel.

In the event that Lessee shall not receive approval as
specified in this Section 6(b), Lessee shall be discharged of all
obligations hereunder and relieved from any liabilities to Lessor.

7
<PAGE>

7. CONSTRUCTION OF HOTEL BY LESSEE.
-------------------------------

(a) Construction Documents. Lessee has submitted to Lessor for
----------------------
its approval and Lessor has approved the plans and specifications for
the construction of a hotel on the Leased Property.

(b) Construction. The Lessee shall commence construction of the
------------
hotel and parking facilities on the Leased Property. The Lessee shall
diligently pursue the work to completion, and the hotel shall be fully
ready to open for business not later than September 1, 1997 except as
such date may be extended by the number of working days lost by reason
of strikes, fire, acts of God, or other events beyond the Lessee's
control.

(c) Easements for Utilities. Lessee shall have the right to enter
-----------------------
into agreements with and grant easements and licenses over and across
the Property to suppliers of utility services including, without
limitation, gas, electricity, telephone, water and sewer, to the
extent necessary to service the improvements, and Lessor agrees to
consent thereto and execute any documents, agreements and instruments
reasonably required in connection therewith.

(d) Completion Documents. Upon the completion of the hotel, the
--------------------
Lessee shall deliver to the Lessor each of the following:

(i) A certificate of completion by the architect who
supervised the construction, which will state that all work has
been completed in accordance with the approved plans and
specifications.

8
<PAGE>

(ii) A certificate of occupancy, or any equivalent permit or
certificate from Pulaski County, Arkansas indicating the hotel is
complete and ready for occupancy by the general public.

(iii) A survey of the Leased Property, showing the completed
hotel and parking facilities, indicating that there are no
encroachments by either on any adjoining premises.

(e) Certificate of Title. Within thirty (30) days after the
--------------------
completion of the hotel, the Lessee shall deliver to the Lessor a
certificate from a title company doing business in Pulaski County,
Arkansas currently dated, that the time for the filing of mechanic's,
materialman's, and similar liens has expired, or, if such is not the
case, that a search of the record shows that no such liens then
encumber the Leased Property. If the latter information is furnished
by the title company, within one hundred eighty days (180) days
thereafter, the Lessee shall deliver a further certificate of the
title company indicating that no such liens then encumber the Leased
Property.

8. LESSEE'S OPTION TO PURCHASE. At any time during the first ten
---------------------------
(10) years of the lease term from May 15, 1996 through May 14, 2006, both dates
inclusive, Lessee is hereby given the option to purchase the Property on the
terms and conditions as set forth in this Section 8. The option to purchase the
property must be exercised by Lessee no later than the 14th day of May, 2006.
Lessee shall exercise the option by notifying Lessor in writing sent by
registered or certified mail, return receipt requested, or by personal delivery
of its intention to

9
<PAGE>

exercise the option. The date on which said notice is received by Lessor shall
be considered the day on which the option is exercised. Receipt of such notice
by Lessor shall constitute a binding contract between Lessor and Lessee to
purchase the Property. The option to purchase under this Section 8 may only be
exercised by Lessee if the Lessee is not in default of any of its obligations or
covenants under this lease at the time the option is exercised. Lessee may
assign this option to purchase to any of its affiliated companies as defined
elsewhere in this agreement. In the event of exercise by Lessee of its option
to purchase the property, the following terms and conditions shall be applicable
to such sale:

(a) The purchase price for the Property shall be One Million Nine
Hundred Thousand and No/100 Dollars ($1,900,000.00) or the appraised
value, whichever is greater.

(b) The purchase price as set forth in Section 8(a) shall be paid
at closing (as hereinafter defined) with cash or certified funds.

(c) Lessee's rent obligation to Lessor shall cease as of the
closing date. No portion of rent paid or payable for any period prior
to the closing date shall be applied to the purchase price.

(d) Within ten (10) days following the date on which Lessee
exercises its option, Lessor shall provide at his expense, a title
insurance commitment from a company authorized to insure titles in the
state of Arkansas, showing merchantable title in Lessor in accordance
with the title examination standards of the Arkansas Bar, free and
clear of all liens and encumbrances except recorded

10
<PAGE>

restrictions and easements now or hereafter. At Lessee's option,
Lessee shall have the title insurance commitment examined within ten
(10) days after receipt thereof and any title requirements shall be
communicated to Lessor and a reasonable time will be allowed for
Lessor to comply with such requirements. The Lessor shall pay the
search charge only for the title commitment and Lessee shall pay the
owner's policy fee. Lessor shall warrant at closing that there are no
unpaid bills for improvements within six months prior to closing
except for such improvements as made or caused to be made by Lessee
and that Lessor has no knowledge of any proposed sidewalk, street or
sewer improvements or any proceedings to result in special tax bills
or assessments against the Property.

(e) The closing date shall be within thirty (30) days after
receipt by Lessor of a notice form Lessee exercising its option to
purchase the property. Possession of the Property shall be given to
Lessee at closing.

(f) Lessor shall convey the property by General Warranty Deed.

(g) All rent, taxes, insurance and other ordinary expenses or
assessments shall be prorated as of the closing date. If taxes for the
year in which the option is exercised cannot be determined, proration
shall be based on the proceeding year's taxes.

(h) In the event a closing service is used by the parties to close
the transaction, the cost of such closing service shall be shared
equally by the parties.

11
<PAGE>

9. INSURANCE. At all times during the Lease Term, Lessee shall
---------
maintain in force and effect, at its own cost and expense, a policy or policies
of Public Liability Insurance for the protection, indemnification and defense of
Lessee against claims, demands and causes of action arising out of or in
connection with the use, maintenance, operation and occupancy of the Property,
which policy or policies shall have limits of not less than One Million Dollars
($1,000,000.00) combined limits coverage per occurrence for bodily injury
liability and property damage liability. At Lessor's request, Lessee shall name
Lessor's mortgagee as an additional insured under any policy of liability
insurance. All insurance required to be maintained under the provisions of this
Lease shall be written by insurer(s) which Lessor shall reasonably approve as to
financial ability, and authorized to write insurance in the state where the
Property is located. Upon request of Lessor, Lessee shall cause the insurer(s)
to furnish Lessor certificate(s) evidencing the insurance required to be
maintained hereunder naming the Lessor as additional insured.

10. COVENANTS AGAINST LIENS. If, because of any act or omission of
-----------------------
Lessee, any mechanic's lien or other lien, charge or order for the payment of
money shall be filed against Lessor or against the Property or improvements,
Lessee shall, at its own cost and expense, cause the same to be discharged; and
Lessee shall indemnify and hold harmless Lessor against and from all costs,
liabilities, suits, penalties, claims and demands resulting therefrom. lessor
and Lessee agree that Lessee shall have the right to contest any lien filed
against the Property or the improvements thereon.

12
<PAGE>

11. TAXES.
-----

(a) Lessee to Pay Taxes. Lessee agrees to pay all "Taxes" ( as
-------------------
that term is hereinafter defined) against the Property becoming due or
payable during the term of this Lease, and a pro-rata portion of the
installment of Taxes becoming due and payable during the years that
this Agreement commences and expires, said pro-rata share to be
determined as of the Commencement Date and expiration date of this
Agreement and in the customary method of prorating real estate taxes
in Pulaski County, Arkansas. Lessee shall not be obligated to pay any
installment of any special assessment which may be assessed, levied or
conformed during the Lease Term, but which does not fall due and is
not required to be paid until after the expiration of this Agreement,
except for a pro-rata share of the installment becoming payable next
following the expiration of this Agreement.

(b) Taxes Defined. As used herein, the term "Taxes" shall mean
-------------
all taxes, assessments and levies, whether general or special,
ordinary or extraordinary, of every nature and kind whatsoever, which
may be taxed, charged, assessed, levied or imposed at any time or from
time to time during the Lease Term by any governmental authority upon
or against the Property or the possession or use thereof. The term
"Taxes" shall not include (and Lessee shall not be required to pay)
any franchise, estate, inheritance, transfer, income or similar tax of
Lessor, including, but not limited to, any income tax imposed with
respect to Lessor's income from the Property.

13
<PAGE>

(c) Payment of Taxes. The Taxes above provided to be paid by
----------------
Lessee shall be paid before any delinquency can occur therein or in
any part or installment thereof, and proof of payment shall be
delivered at the request of Lessor. In the event Lessee fails to pay
such Taxes, Lessor may, but shall not be required to, pay the same for
the Lessee's account, and such payment shall constitute and be
collectible as additional rent.

(d) Tax Notices. Lessor will promptly deliver to Lessee any and
-----------
all tax notices or assessments which Lessor may receive relating to
the Property.

12. UTILITIES. Lessee, at its sole cost and expense, shall obtain
---------
and promptly pay for all utility services required for the operation of or
furnished to or consumed on the Property, including, without limitation,
electricity, gas, water, sewer, heat, telephone, garbage collection, and all
charges for any of the foregoing.

14
<PAGE>

15. INDEMNIFICATION OF LESSOR. Lessee shall defend, indemnify and
-------------------------
hold Lessor harmless from and against any claim, loss, expense or damage to any
person or property in or upon the Property or any area allocated to or used
exclusively by Lessee or their customers, agents, employees or invitees arising
out of Lessee's use or occupancy of the Property, or on adjoining sidewalks,
streets or ways, or any act or neglect of Lessee or Lessee's invitees,
employees, contractors, customers, or agents, except claims for damages or
injuries (including death) cause din whole or in part by the willful or
negligent act(s) of Lessor or the agents, servants, or employees of Lessor.

16. ADDITIONS AND IMPROVEMENTS BY LESSEE. At Lessee's sole expense,
------------------------------------
Lessee may construct a hotel and accompanying facilities on the Property and may
make other alterations, additions or improvements in or to the Property. Lessee
shall provide Lessor with proposed architectural and engineering plans as soon
as practical after the execution of this Agreement. Lessor shall have the right
to review the proposed plans for improvements of the Property and to approve the
plans provided, however, Lessor may not unreasonably withhold their

15
<PAGE>

approval. All alterations, additions and improvements constructed on the
Property shall remain on the Property at the expiration of the Lease Term.

17. CONDEMNATION. If, during the Lease Term, any part of the
------------
Property is condemned or taken by eminent domain, or if any street or entrance
providing access to the Property is permanently closed or blocked, and the
Property is thereby rendered unsuitable or inadequate for the continuation of
Lessee's normal, full-scale business operations thereon as reasonably determined
by Lessee, then, at Lessee's option, Lessee may terminate this Lease as of the
date of such occurrence. If this Lease is so terminated, the entire award
attributable to the Property made by the condemning authority shall be paid to
Lessor, without, however, limiting the right of Lessee to assert a claim in the
condemnation proceeding for the value of its leasehold improvements and
goodwill. If such occurrence does not render the Property unsuitable or
inadequate for such purposes, this Lease shall remain in full force and effect;
and the entire award attributable to the Property made by the condemning
authority shall be paid to Lessor, although Lessee may assert a claim in the
condemnation proceeding for its business interruption or diminution loss.

18. DEFAULT. If Lessee should default in the performance of any
-------
covenant or condition of this Lease (except for default in the payment of any
rent or other amount due to

16
<PAGE>

Lessor hereunder, which Lessee must cure within thirty (30) days after service
of written notice thereof upon Lessee and such default is not cured or removed
within ninety (90) days after service of written notice of default upon Lessee
and/or Lessee fails to make a reasonable effort to cure the default within the
ninety (90) day period set forth above, Lessor shall have the right to sublet
the premises for the benefit of Lessor and Lessee or terminate this Lease, in
which event Lessor shall pay to Lessee eighty percent (80%) of the fair market
value of the improvements constructed on the Property. The fair market value of
the improvements shall be determined as of the date of the termination of this
Agreement by independent appraisal and arbitration as follows: One appraiser
shall be selected by Lessor, one by the Lessee, and a third by the first two
appraisers chosen. The decision of a majority of the appraisers shall be
binding on Lessor and Lessee. In the event of arbitration as set forth herein,
closing shall occur no later than thirty (30) days following the decision by the
appraisers.

19. COVENANT OF QUIET ENJOYMENT. Upon payment by the Lessee of the
---------------------------
rent herein provided, and upon the observance and performance of all covenants,
terms and conditions on Lessee's part to be observed and performed by Lessee,
Lessee shall peaceably and quietly hold and enjoy the Property for the term
hereby demised without hindrance or interruption by Lessor or any other person
or persons lawfully or equitably claiming by, through, or under the Lessor
subject, nevertheless, to the terms and conditions of this Lease.

20. LESSEE'S RIGHT OF FINANCING.
---------------------------

(a) Encumbrance of Leasehold Interest. Lessee is given and has
the absolute right, without Lessor's consent, to encumber its interest
in this Lease so

17
<PAGE>

long as it is not in default hereunder and except that no such deed of
trust, mortgage or assignment shall extend to or affect the fee simple
interest of the Lessor. The holder of any deed of trust, mortgage or
assignment of this Lease or of Lessee's interest hereunder, and any
one claiming by, through, or under any such holder, shall not acquire
any greater rights hereunder than Lessee has (except the right to cure
or remedy Lessee's defaults), and shall not become entitled to a new
Lease if this Lease is terminated or Lessee fails to exercise any
outstanding option to extend this Lease. No mortgage, deed of trust or
assignment of this Lease or of Lessee's interest hereunder by Lessee
or its successors and assigns shall be valid unless this Lease is in
full force and effect when such mortgage, deed of trust or assignment
is created and the mortgage, deed of trust or assignment is subject to
all the agreements, terms, covenants and conditions of this Lease.

(b) Lessor to Subordinate. Lessor shall, within ten (10) days
---------------------
after request by Lessee or Lessee's lender, execute and deliver a
written agreement subordinating this Agreement to any real estate
mortgage hereafter placed upon the Property and the improvements to be
constructed thereon.

(c) Notice of Lease Default. If, before any default occurs in
-----------------------
this Lease, the holder of any mortgage, deed of trust or assignment,
gives Lessor a written notice containing the holder's name and office
address, Lessor shall give the holder a copy of each notice of default
by Lessee at the same time that Lessor gives that

18
<PAGE>

notice to Lessee. Each copy of the notice shall be deemed duly given
to the holder when mailed to the holder at its last post office
address furnished to Lessor.

(d) Cure of Default. Lessor shall accept performance by the
---------------
holder of any mortgage, deed of trust, or assignment of any obligation
of this Lease that Lessee is required to perform, with the same force
and effect as if performed by Lessee, provided that at the time of
that performance, Lessor is furnished with satisfactory evidence that
the person, firm, or corporation tendering that performance or payment
has the claimed interest in the Leased Property. The holder of a
mortgage, deed of trust or assignment shall have ten (10) days after
receipt of any notice of default within which to cure any default in
the payment of rent or additional rent under this Lease, and a
reasonable time (not less than thirty (30) days) within which to cure
any other default.

21. NOTICES. Any notices or inquires regarding this Agreement shall
-------
be delivered to Lessor at 300 John Q. Hammons Parkway, Suite 900, Springfield,
Missouri 65806, and to Lessee at 300 John Q. Hammons Parkway, Suite 900,
Springfield, Missouri 65806, or to such other address as the parties may
designate in writing.

All notices shall be deemed received on the earlier of (1) actual
receipt, or (2) three (3) days (excluding Sundays and federal holidays) after
delivery to the United States Post Office. Any address to which notices are
sent hereunder may be changed by notice to the parties hereto in the manner
hereinabove provided.

19
<PAGE>

22. MEMORANDUM OF LEASE. The parties shall execute a Memorandum of
-------------------
Lease for purposes of recording the same in the office of the Recorder of Deeds
for Taney County, Missouri, and the form as attached hereto as Exhibit "C".

23. EXECUTION. This Agreement is executed in multiple originals and
---------
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, successors, assigns and legal representatives. The
rights of Lessor hereunder may be assigned in whole or in part. If Lessee
herein shall be more than one party, then the obligations of such parties herein
shall be joint and several. The paragraph captions used herein are for
convenience only and shall not be deemed to have been included for any other
purpose.

24. NO ORAL AGREEMENTS. It is expressly agreed between the Lessor
------------------
and the Lessee that there are no verbal understandings or agreements which in
any way change the terms, covenants and conditions herein set forth, and that no
modification of this Agreement and no waiver of any of its terms and conditions
shall be effective unless made in writing and approved and accepted by both
parties to this Agreement.

25. INVALID OR INAPPLICABLE CLAUSE. Should any covenant or condition
------------------------------
of this Agreement, to any extent, be held invalid or unenforceable by a final
judgment of a court of competent jurisdiction, the remaining terms and
conditions shall remain in full force and effect and shall be enforceable to the
full extent of the law.

20
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

--------------------------------------
JOHN Q. HAMMONS, Trustee of
John Q. Hammons Revocable Trust
Dated December 28, 1989

"LESSOR"

JOHN Q. HAMMONS HOTELS TWO, L.P.
BY ITS GENERAL PARTNER
JOHN. Q. HAMMONS HOTELS, L.P.
BY ITS GENERAL PARTNER
JOHN Q. HAMMONS HOTELS, INC.

BY:
----------------------------------
DAVID B. JONES, President and
Chief Operating Officer

"LESSEE"

<PAGE>

Exhibit 12.1

JOHN Q. HAMMONS HOTELS, L.P.
HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES
(000's omitted)
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
HISTORICAL EARNINGS:
<S> <C> <C> <C> <C> <C>
Net income before extraordinary
item.................................................... $10,120 $15,390 $15,386 $18,729 $18,524
Add:
Interest, amortization of deferred
financing fees and other fixed
charges (excluding interest
capitalized)............................................ 30,570 27,839 33,308 28,904 36,337
------- ------- ------- ------- -------
Historical earnings..................................... $40,690 $43,229 $48,694 $47,633 $54,861
======= ======= ======= ======= =======

FIXED CHARGES:
Interest expense and
amortization of deferred
financing fees.......................................... $30,127 $27,412 $32,932 $28,447 $35,620
Interest capitalized...................................... - - 957 5,270 7,162
Interest element of rentals.................................. 443 427 376 457 717
------- ------- ------- ------- -------
Fixed charges........................................... $30,570 $27,839 $34,265 $34,174 $43,499
======= ======= ======= ======= =======

RATIO OF EARNINGS TO FIXED
CHARGES (A)............................................... 1.33 1.55 1.42 1.39 1.26
======= ======= ======= ======= =======

</TABLE>

(A) In computing the ratio of earnings to fixed charges, earnings have been
based on income from operations before income taxes and fixed charges (exclusive
of interest capitalized) and fixed charges consist of interest and amortization
of deferred financing fees (including amounts capitalized) and the estimated
interest portion of rents.