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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
-------------------

(MARK ONE)

/X/ FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

/ / FOR THE TRANSITION PERIOD FROM TO .

COMMISSION FILE NUMBER 1-11463

PROMUS HOTEL CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE I.R.S. NO. 62-1596939
(State of Incorporation) (I.R.S. Employer Identification No.)

755 CROSSOVER LANE
MEMPHIS, TENNESSEE 38117
(Address of principal executive offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (901) 374-5000

850 RIDGE LAKE BLVD., SUITE 400
MEMPHIS, TENNESSEE 38120
(Former address of Registrant)

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

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NAME OF EACH EXCHANGE ON WHICH REGISTERED
TITLE OF EACH CLASS -----------------------------------------
- ------------------- NEW YORK STOCK EXCHANGE
Common Capital Stock, CHICAGO STOCK EXCHANGE
Par Value $0.10 per share* PACIFIC STOCK EXCHANGE
PHILADELPHIA STOCK EXCHANGE

- ------------
* Common Capital Stock also has special stock purchase rights listed on each of
the same exchanges

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X. No / /.

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

The aggregate market value of the voting stock held by non-affiliates of the
registrant based upon the closing price of $26.00 for the Common Stock as
reported on the New York Stock Exchange Composite Tape on March 1, 1996, is
$1,309,186,736.

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of March 1, 1996.

Common Capital Stock ..................................... 51,380,405 Shares

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1995, are incorporated by reference into Parts I and II
hereof and portions of the definitive Proxy Statement for the 1996 Annual
Meeting of Stockholders are incorporated by reference into Part III hereof.

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DOCUMENTS INCORPORATED BY REFERENCE

Material from the Annual Report to Stockholders for the fiscal year ended
December 31, 1995 (the "Annual Report") of Promus Hotel Corporation (referred to
herein, together with its subsidiaries where the context requires, as the
"Company" or "Promus") is incorporated by reference in Parts I and II hereof
where referred to herein. Material from the Company's Proxy Statement, prepared
and mailed to stockholders in accordance with Section 14 of the Securities
Exchange Act of 1934 (the "Exchange Act") and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder, for the Annual
Meeting of Stockholders of the Company to be held on April 24, 1996 (the "Proxy
Statement") is incorporated by reference in Part III hereof where referred to
therein.

PART I

ITEMS 1 AND 2. BUSINESS AND PROPERTIES.

Promus Hotel Corporation is one of the leading hotel companies in the United
States. The Company operates the Embassy Suites, Hampton Inn, Hampton Inn &
Suites and Homewood Suites hotel brands.

Promus was incorporated on March 2, 1995 under Delaware law and conducts its
business through its wholly-owned subsidiary, Promus Hotels, Inc. ("PHI"), and
PHI's subsidiaries. The principal asset of Promus is the stock of PHI, which
holds, directly or indirectly through subsidiaries, substantially all of the
assets of the Company's businesses. The principal executive offices of Promus
are currently located at 755 Crossover Lane, Memphis, Tennessee 38117, telephone
(901) 374-5000.

Operating data for the three most recent fiscal years, together with
interest expense, interest and other income, and extraordinary items, is set
forth on pages 31 and 37 of the Annual Report. Information as to assets is set
forth on the inside front cover of the Annual Report and pages 36, 40, 41, and
46 through 48 of the Annual Report. All of the foregoing pages of the Annual
Report are incorporated herein by reference.

For information on operating results and a discussion of those results, see
"Financial and Statistical Highlights" on the inside front cover and
"Performance Statistics" on pages 28 and 29 of the Annual Report, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 30 through 35 and page 37 of the Annual Report, which pages are
incorporated herein by reference.

GENERAL

On June 30, 1995, The Promus Companies Incorporated ("PCI") split into two
independent public corporations, one for conducting its casino entertainment
business and one for conducting its hotel business. The stockholders of PCI
retained their shares of PCI (now known as Harrah's Entertainment, Inc.) and
received one share of Promus Hotel Corporation for each two shares of PCI they
owned prior to the split.

The Company operates, owns and licenses hotels bearing the Embassy Suites,
Hampton Inn, Hampton Inn & Suites and Homewood Suites names. Each brand is
targeted to a specific market segment.

Embassy Suites hotels, of which there were 114 hotels in operation on
December 31, 1995, appeal to the traveler who has a need or desire for greater
space and more focused services than are available in traditional upscale
hotels. Embassy Suites hotels compose the largest all-suite upscale hotel system
in the United States by number of suites and system revenues.

Hampton Inn hotels are moderately priced hotels designed to attract the
business and leisure traveler desiring quality accommodations at affordable
prices. Since 1984, when the brand was introduced, the system has grown to 520
hotels in operation as of December 31, 1995.

Homewood Suites hotels, of which there were 30 in operation on December 31,
1995, represent the Company's entry in the extended stay market and target the
traveler who stays five or more consecutive nights, as well as the traditional
business and leisure traveler.

Announced in December, 1993 the Company's newest brand, Hampton Inn & Suites
hotels incorporate the best features of the Hampton Inn and Homewood Suites
brands, offering both traditional hotel room accommodations and apartment-style
suites within one property. There were five Hampton Inn & Suites hotels in
operation as of December 31, 1995.

As of December 31, 1995, the Company's hotel brands included 564 properties
licensed by the Company, 73 properties licensed and managed by the Company, and
32 properties owned and operated by the Company. These properties contained
88,117 rooms and suites.

All of the Company's hotel brands are managed by a single senior management
team. The Company pursues a strategy of growing its hotel brands by minimizing
its ownership of hotel real estate and concentrating on obtaining new franchise
or management contracts. As part of this strategy, the Company seeks to sell
owned hotels to realize the value of the underlying assets and to increase its
return on investment. Following such sales, the hotels typically are operated
either by the Company under management contracts or by the purchasers directly.
In both cases such hotels typically receive franchise licenses from the Company.

Each of the Company's hotel brands uses a business system that includes
centralized reservations and marketing systems, as well as local property
management and revenue management systems. This sophisticated business system is
fully integrated and linked to the Promus hotels network, a communications
network which connects all Promus hotels to the Company's central reservation
office and more than 300,000 travel agents worldwide. The Embassy Suites,
Hampton Inn, Hampton Inn & Suites and Homewood Suites business systems'
reservation modules receive reservation requests entered on terminals located at
all of their respective hotels and reservation centers, major domestic and
international airlines via their global distribution systems, and direct from
consumers via computer access to each brand's Internet site. The systems
immediately confirm reservations or indicate accommodations available at
alternate Promus hotels. Reservations are transmitted automatically to the hotel
for which the reservation is made. The Company's data centers that house all of
the satellite and reservation, marketing and revenue management computers are
located in Memphis, Tennessee. A second central reservation office is scheduled
to open in Tampa, Florida by January 1997. See page 36 of the Annual Report,
which page is incorporated herein by reference, for "Investment in Franchise
System."

A major element of the Company's business strategy is an unconditional 100%
guarantee of service satisfaction. All of the Company's hotel brands offer
suites/rooms exclusively for non-smoking guests.

LICENSING AND MANAGEMENT CONTRACT OPERATIONS

LICENSING

The Company's revenues from licensing operations for all Embassy Suites,
Hampton Inn, Hampton Inn & Suites and Homewood Suites hotels consist of initial
license application fees and continuing royalties. Effective April 1, 1996, the
initial license application fee for an Embassy Suites hotel is $500 per room,
with a minimum of $100,000, and $450 per room, with a minimum of $45,000, for
each Hampton Inn, Hampton Inn & Suites and Homewood Suites hotel. The license
agreements provide for a four percent royalty based upon gross rooms/suites
revenues and also provide for a separate marketing and reservation contribution.

In screening applicants for license agreements, the Company evaluates the
character, operations ability, experience and financial responsibility of each
applicant or its principals; the Company's prior business dealings, if any, with
the applicant; suitability of the proposed hotel location and other factors. The
license agreement establishes requirements for service and quality of
accommodations. The Company provides certain training for licensee management
and makes regular inspections of licensed hotels.

License agreements for new hotels generally have a 20-year term. The Company
may terminate a license agreement if the licensee fails to cure a breach of the
license agreement in a timely manner. In

certain instances, a license agreement may be terminated by the licensee, but
such termination generally requires a payment to the Company.

MANAGEMENT CONTRACTS

The Company's revenues from management contracts consist primarily of
management fees which are up to five percent of adjusted gross revenues of the
hotel. The contract terms governing management fees vary depending on the size
and location of the hotel and other factors relative to the property.

Under the Company's management contracts, the Company, as the manager,
operates or supervises all aspects of the hotel's operations. The hotel owner is
generally responsible for all costs, expenses and liabilities incurred in
connection with operating the hotel, including the expenses and salaries of all
hotel employees. The hotel owner also enters into a license agreement with the
Company and pays the royalty and marketing/reservation contribution as provided
in the license agreement. In addition, the hotel owner is often required to set
aside a certain percentage of hotel revenues for capital replacement. The
Company's management contracts typically have a term of ten years and most give
the Company specified renewal rights. The management contract may be terminated
by either party due to an uncured default by the other party.

See "Franchise and Management Fees" on page 37 of the Annual Report, which
page is incorporated herein by reference, for revenues from licensing and
management contract operations.

EMBASSY SUITES HOTELS

The following table sets forth information regarding all Embassy Suites
hotels, including company owned hotels, hotels operated by the Company under
management contracts or joint venture arrangements and hotels operated by
licensees:

MANAGEMENT
CONTRACTS/
LICENSED OWNED JOINT VENTURES
--------------- --------------- ------------------
NUMBER NUMBER NUMBER NUMBER NUMBER NUMBER
OF OF OF OF OF OF
HOTELS SUITES HOTELS SUITES HOTELS SUITES
------ ------ ------ ------ ------ ------

Fiscal Year-End 1992......................... 45 10,712 15 3,450 43 11,228
1993 Activity:
Additions.................................. 5 938 - - - (3)
Conversions, net(a)........................ 3 900 (6) (1,423) 3 523
Sales/Terminations......................... (1) (196) - - - -
---- ------ ---- ------ ---- ------
Fiscal Year-End 1993......................... 52 12,354 9 2,027 46 11,748
1994 Activity:
Additions.................................. 1 177 - - 2 410
Conversions, net(a)........................ - (15) - (2) - 15
Sales/Terminations......................... (2) (760) - - (1) (239)
---- ------ ---- ------ ---- ------
Fiscal Year-End 1994......................... 51 11,756 9 2,025 47 11,934
1995 Activity:
Additions.................................. 6 1,052 - - 2 191
Conversions, net(a)........................ (1) (56) - - 1 56
Sales/Terminations......................... (1) (223) - - - -
---- ------ ---- ------ ---- ------
Fiscal Year-End 1995......................... 55 12,529 9(b) 2,025 50(c) 12,181
==== ====== ==== ====== ==== ======

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

(a) Conversions consist of transfers of properties among the licensed, managed
and owned categories.

(b) Includes one property in which the Company owns more than a 50% interest.
(This property is under a license agreement to a third party and is managed
by Promus.)

(c) Includes 48 hotels that are also licensed to third parties. Excludes four
Crown Sterling Suites properties with 1,076 suites being managed by Promus,
but not yet converted to the Embassy Suites brand as of December 31, 1995.

On December 31, 1995, 23 Embassy Suites hotels were under construction or
conversion, four of which will be licensee operated, 19 of which will be company
managed.

Embassy Suites hotels are located in 34 states, the District of Columbia,
Canada and Colombia. One hotel is under construction in each of: Thailand,
Chile, Puerto Rico and Mexico. Embassy Suites hotels have an average of 235
suites per hotel. Each guest suite has a separate living room and dining/work
area, with a console television, refrigerator and wet bar, as well as a
traditional bedroom (with a king size bed or two double beds). Most Embassy
Suites hotels are built around a landscaped atrium. All hotels offer a free,
cooked-to-order breakfast and, where local law allows, complimentary evening
cocktails.

In May 1995, PCI entered into a Subscription Agreement, assumed by Promus on
June 30, 1995, with FelCor Suite Hotels, Inc. and FelCor Suites Limited
Partnership ("FelCor") whereby Promus agreed to purchase up to $25 million in
FelCor limited partnership interests to help fund the partnership's acquisition
of all-suite upscale hotels to be converted to the Embassy Suites brand.

In September 1995, Promus entered into a second agreement with FelCor in
connection with FelCor's Agreement to acquire the Crown Sterling Suites hotel
chain. FelCor plans to convert up to 16 of the Crown Sterling Suites hotels to
the Embassy Suites brand. In consideration, Promus agreed to make up to
$50 million available to FelCor for the conversions through investments in
FelCor common stock. Hotels converted to the Embassy Suites brand under
either of these agreements will operate under 20-year license agreements and
10-year management contracts will be awarded to Promus. As of December 31,
1995, closings on four hotels had occurred. All remaining closings are
expected to occur in 1996.

Subject to some restrictions, the limited partnership interests may be
converted to shares of FelCor common stock on a one-for-one basis, and the
common stock interests may be sold on the open market.

As of December 31, 1995, Promus had funded approximately $30 million of the
total $75 million commitment and had loaned an additional $7.5 million to
FelCor, representing one-half of the deposit required for the Crown Sterling
Suites acquisition. The total commitment will be reduced by the amount of such
loans outstanding.

In connection with these agreements, Promus will guarantee a third party
loan to FelCor, not to exceed $25 million. As of December 31, 1995, that
facility was not yet in place, and therefore no amounts had been drawn.

The following table sets forth information concerning system occupancy,
average daily rate per occupied suite and revenue per available suite for all
Embassy Suites hotels:

AVERAGE DAILY
OCCUPANCY RATE PER REVENUE PER
FISCAL YEAR RATE OCCUPIED SUITE AVAILABLE SUITE
- -------------------------------------- --------- -------------- ---------------

1995.................................. 74.2% $ 101.90 $ 75.61
1994.................................. 74.9% $ 97.28 $ 72.86
1993.................................. 73.0% $ 93.91 $ 68.58

The Company also licenses time sharing resorts in Orlando, Florida and
Kauai, Hawaii under the name "Embassy Vacation Resort" and will consider other
such developments as opportunities arise in the future. The Company manages the
Orlando, Florida resort.

HAMPTON INN HOTELS

The following table sets forth information regarding all Hampton Inn and
Hampton Inn & Suites hotels, including company owned hotels, hotels operated
under management contracts or joint venture arrangements and hotels operated by
licensees:

MANAGEMENT
CONTRACTS/
LICENSED OWNED JOINT VENTURES
----------------- ---------------- ----------------
NUMBER NUMBER NUMBER NUMBER NUMBER NUMBER
OF OF OF OF OF OF
HOTELS ROOMS HOTELS ROOMS HOTELS ROOMS
------ ------- ------ ------ ------ ------

Fiscal Year-End 1992...................... 289 35,242 15 2,048 23 2,910
1993 Activity:
Additions............................... 46 4,147 - - 1 51
Sales/Terminations...................... (2) (236) - - - -
------ ------- ---- ------ ------ ------
Fiscal Year-End 1993...................... 333 39,153 15 2,048 24 2,961
1994 Activity:
Additions............................... 67 6,149 - - - -
Sales/Terminations...................... (1) (118) - (1) (1) (121)
------ ------- ---- ------ ------ ------
Fiscal Year-End 1994...................... 399 45,184 15 2,047 23 2,840
1995 Activity:
Additions............................... 92(a) 8,760(b) - - - -
Conversions, net (c).................... 1 131 (1) (131) - -
Sales/Terminations...................... (4) (544) - - - -
------ ------- ---- ------ ------ ------
Fiscal Year-End 1995...................... 488(d) 53,531 14 1,916 23(e) 2,840
====== ====== ==== ====== ====== ======

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(a) Includes five Hampton Inn & Suites hotels.
(b) Includes 573 suites/rooms from Hampton Inn & Suites hotels.
(c) Conversions consist of transfers of properties among the licensed, managed and owned
categories.
(d) Includes one property open only on a seasonal basis.
(e) These hotels are also licensed to third parties.

On December 31, 1995, 80 Hampton Inn hotels, including 10 Hampton Inn &
Suites hotels, were under construction. Seventy-nine of these hotels will be
licensee operated. One Hampton Inn & Suites hotel will be managed by the
Company.

Hampton Inn hotels are currently located in 45 states, as well as Canada,
Costa Rica and Mexico. One additional hotel is under construction in Thailand.
An average Hampton Inn hotel has 111 rooms. The Hampton Inn hotel's standardized
concept provides for a guest room featuring a color television, free in-room
movies, free local telephone calls and complimentary continental breakfast.
Unlike full-service hotels, Hampton Inn hotels do not feature restaurants,
lounges or large public spaces.

Hampton Inns also uses a modified lodging property in communities supporting
hotels of fewer than 90 rooms. The building design for these smaller communities
has the same features as a standard Hampton Inn hotel, but with fewer rooms and
a smaller lobby. Over 130 of these modified design hotels are open and 42 are
currently under construction.

The following table sets forth information concerning system occupancy,
average daily rate per occupied room and revenue per available room for all
Hampton Inn hotels (excluding Hampton Inn & Suites):

AVERAGE DAILY
OCCUPANCY RATE PER REVENUE PER
FISCAL YEAR RATE OCCUPIED ROOM AVAILABLE ROOM
- ----------- --------- ------------- --------------
1995 73.7% $ 56.97 $42.01
1994 74.3% $ 53.46 $39.74
1993 73.0% $ 50.81 $37.10

In December 1993, the Company announced the Hampton Inn & Suites hotel
concept, which combines standard guest rooms with a significant block of
two-room suites in a single property. Development of this product is targeted
for commercial and suburban markets, as well as destination and resort markets.
Each property contains a centrally located, expanded lobby and complimentary
services area and includes an exercise room, convenience shop,
meeting/hospitality room and coin-laundry. An expanded complimentary continental
breakfast buffet is offered. The first Hampton Inn & Suites hotel opened June 6,
1995. The Hampton Inn & Suites system occupancy was 59.4% and average daily rate
per occupied room was $70.13 for a 1995 revenue per available room/suite of
$41.65.

HOMEWOOD SUITES HOTELS

The following table sets forth information regarding all Homewood Suites
hotels, including company owned hotels and hotels operated by licensees:

LICENSED OWNED
---------------- ----------------
NUMBER NUMBER NUMBER NUMBER
OF OF OF OF
HOTELS SUITES HOTELS SUITES
------ ------ ------ ------

Fiscal Year-End 1992....................................... 16 1,754 8 932
1993 Activity:
Additions................................................ - 40 - -
---- ------ ---- ------
Fiscal Year-End 1993....................................... 16 1,794 8 932
1994 Activity:
Additions................................................ 2 155 - -
---- ------ ---- ------
Fiscal Year-End 1994....................................... 18 1,949 8 932
1995 Activity:
Additions................................................ 4 266 1 92
Sales/Terminations....................................... (1) (144) - -
---- ------ ---- ------
Fiscal Year-End 1995....................................... 21 2,071 9 1,024
==== ====== ==== ======

On December 31, 1995, eight Homewood Suites hotels were under construction,
six of which will be licensee operated, and two of which will be company owned.
Promus currently plans to spend approximately $110 million to expand the
Homewood Suites hotel brand by developing as many as 14 additional company owned
properties over the next three to five years. During 1995, the Company acquired
land and incurred construction costs of $16.2 million to develop new Homewood
Suites hotels. The Company anticipates spending an additional $70 million in
1996 for identified and approved projects.

Homewood Suites hotels which have an average of 103 suites are currently
located in 18 states. Homewood Suites hotels feature residential-style
accommodations, which include a living room area (some with fireplaces),
separate bedroom (with a king size bed or two double beds) and a separate
bathroom, and a fully-equipped kitchen. The hotel is centered around a central
community building,

called the Lodge, which affords guests a high level of social interaction.
Amenities include a complimentary breakfast and an evening social hour, a
convenience store, shopping service, business center, outdoor pool, exercise
center and limited meeting facilities.

The following table sets forth information concerning system occupancy,
average daily rate per occupied suite and revenue per available suite for all
Homewood Suites hotels:

AVERAGE DAILY
OCCUPANCY RATE PER REVENUE PER
FISCAL YEAR RATE OCCUPIED SUITE AVAILABLE SUITE
- ------------ --------- -------------- ---------------
1995 76.9% $82.42 $63.37
1994 78.1% $76.38 $59.67
1993 75.8% $72.47 $54.91

OTHER

AUDUBON WOODS BUSINESS CAMPUS

In January 1995, the Company acquired property in Memphis, Tennessee, known
as Audubon Woods Business Campus, in order to establish its corporate
headquarters for a purchase price of $21.7 million. This office complex consists
of four office buildings containing approximately 360,000 square feet of office
space and is located on 31 acres of land. The Company will occupy 50% of the
office space while leasing the remaining space, spending approximately
$9.4 million for renovations. Remodeling of the new headquarters has begun
and is expected to be completed during 1996.

TRADEMARKS

The following trademarks used herein are owned by the Company: Promus(R);
Embassy Suites(R); Embassy Vacation Resort(R); Hampton Inn(R); Hampton Inn &
Suites(R) and Homewood Suites(R). The names "Embassy Suites," "Embassy Vacation
Resort," "Hampton Inn," "Hampton Inn & Suites," and "Homewood Suites" are
registered as service marks in the United States and in certain foreign
countries. The Company considers all of these marks, and the associated name
recognition, to be valuable to its business.

COMPETITION

The Company encounters strong competition as a hotel owner, manager and
franchisor with other lodging related companies. As of December 31, 1995, there
were more than 150 hotel brands (chains with more than one hotel). Although most
of these companies are privately owned firms, several large national chains own
and operate their own hotels and also franchise their brands. There is no single
competitor which is dominant in the industry.

Affiliation with a national or regional brand is a major trend in the U.S.
lodging industry. In 1995 66% of U.S. hotel rooms were brand-affiliated,
compared to 62% in 1989. Most of the branded properties are franchised, under
which the operator pays the franchisor a fee for use of its system
identification and reservation system.

The Company believes that its brands are attractive to hotel owners seeking
a management company or franchise affiliation because its hotels typically
generate higher occupancies and revenue per available room (RevPAR) than direct
competitors in most market areas. The Company attributes this performance
premium to its success in achieving and maintaining strong customer preference.
Repeat guest business is enhanced by the Company's unconditional service
guarantee. Customer preference for the Company's brands means the Company does
not have to rely on frequent stay programs.

The lodging industry in general, including the Company's brands, may be
adversely affected by national and regional economic conditions. The demand for
accommodations at a particular hotel may

be adversely affected by many factors including changes in travel patterns,
local and regional economic conditions and the degree of competition with other
hotels in the area.

GOVERNMENTAL REGULATION

HOTEL LICENSING

A number of states regulate the licensing of hotels and restaurants and the
granting of liquor licenses by requiring registration, disclosure statements and
compliance with specific standards of conduct. In addition, various federal and
state regulations mandate certain disclosures and other practices with respect
to the sales of license agreements and the licensor/licensee relationship. The
Company's operations have not been materially affected by such legislation and
regulations, but the Company cannot predict the effect of future legislation.

EMPLOYEE RELATIONS

Promus, through its subsidiaries, has approximately 8,100 employees, of
which 1,250 are based in Memphis, Tennessee. Promus' subsidiaries have
collective bargaining agreements covering fewer than 100 employees. The Company
considers its relations with employees to be very good.

ITEM 3. LEGAL PROCEEDINGS.

Actions for negligence or other tort claims occur routinely as ordinary
incident to the Company's business. Several lawsuits are pending against the
Company which have arisen in the ordinary course of business, but none of these
proceedings involves a claim for damages (in excess of applicable excess
umbrella insurance coverages) involving more than 10% of current assets of the
Company. The Company does not anticipate any amounts which it may be required to
pay as a result of an adverse determination of such legal proceedings,
individually or in the aggregate, or any other relief granted by reason thereof,
will have a material adverse effect on the Company's financial position or
results of operation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

POSITIONS AND OFFICES HELD AND PRINCIPAL
NAME AND AGE OCCUPATIONS OR EMPLOYMENT DURING PAST 5 YEARS
- ----------------------------- ------------------------------------------------------------

Michael D. Rose (54)......... Chairman of the Board of Promus since April 1995. Chairman
of the Board (1989-1995) of PCI. Chief Executive Officer
(1989-1994) and President (1989-1991) of PCI. Mr. Rose
also is Chairman of the Board of Harrah's Entertainment,
Inc. and is a director of Ashland, Inc., Darden
Restaurants, Inc., First Tennessee National Corporation
and General Mills, Inc.

Raymond E. Schultz (62)...... Director, President and Chief Executive Officer of Promus
since April 1995. President and Chief Executive Officer of
the Hotel Division of PCI (1993-1995). President and Chief
Executive Officer of Hampton Inn/Homewood Suites Hotel
Division of PCI (1991-1993). President and Chief Executive
Officer of Hampton Inn Hotel Division of PCI (1983-1991).

David C. Sullivan (56)....... Director, Executive Vice President and Chief Operating
Officer of Promus since April 1995. Executive Vice President
and Chief Operating Officer of the Hotel Division of PCI
(1993-1995). Senior Vice President of Development and
Operations of Hampton Inn/Homewood Suites Hotel Division
of PCI (1991-1993). Vice President of Development, Hampton
Inn Hotel Division of PCI (1990-1991).

Donald H. Dempsey (51)....... Senior Vice President and Chief Financial Officer of Promus
since April 1995. Senior Vice President of Finance &
Administration of the Hotel Division of PCI (1993-1995).
Vice President, Finance of Hampton Inn/Homewood Suites
Hotel Division of PCI (1991-1993). Vice President, Finance
of Hampton Inn Hotel Division of PCI (1990-1991).

Ralph B. Lake (51)........... Senior Vice President, General Counsel and Secretary of
Promus since April 1995. Vice President and General Counsel
of Gaming Development of PCI (1992-1995). Associate
General Counsel-International of PCI (1991-1992). Vice
President and General Counsel of Homewood Suites Hotel
Division of PCI (1988-1991).

Thomas L. Keltner (49)....... Senior Vice President, Development of Promus since April
1995. Senior Vice President, Development of the Hotel
Division of PCI (1993-1995). President, Golf Training
Systems, Inc., (1991-1993). Senior Vice President and
Chief Operating Officer, Franchise Division of Holiday Inn
Worldwide (1990). President and Managing Director, Holiday
Inns International (1988-1990).

Mark C. Wells (46)........... Senior Vice President, Marketing of Promus since April 1995.
Senior Vice President, Marketing of the Hotel Division of
PCI (1993-1995). Senior Vice President, Marketing of
Hampton Inn/Homewood Suites Hotel Division of PCI (July
1993-October 1993). Senior Vice President, Marketing of
Embassy Suites Hotel Division of PCI (1991-1993). Vice
President, Marketing of Hampton Inn Hotel Division of PCI
(1986-1991).

PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

The Company's Common Stock is listed on the New York Stock
Exchange and traded under the ticker symbol "PRH". The stock is also listed on
the Chicago Stock Exchange, the Pacific Stock Exchange and the Philadelphia
Stock Exchange.

The following table sets forth the high and low price per share of the
Company's Common Stock for 1995:

1995 High Low
---- ---- ---
First Quarter. . . . . . N/A N/A
Second Quarter . . . . . $26.375* $21.00*
Third Quarter. . . . . . $25.00 $20.375
Fourth Quarter . . . . . $24.125 $20.75

*Trading on a "when issued" basis

The approximate number of holders of record of the Company's Common Stock
as of March 1, 1996 is as follows:

Approximate Number
Title of Class of Holders or Record
-------------- ---------------------

Common Stock, Par Value $.10 per share 12,975

The Company does not presently intend to declare cash dividends. The terms
of the Company's existing bank credit facility limit the Company's ability to
pay cash dividends on Common Stock. See "Management's Discussion and
Analysis--Liquidity and Capital Resources" on pages 33 and 34 of the Annual
Report and Note 4 to the financial statements on pages 41 through 43 of the
Annual Report. When permitted under the terms of the existing credit facility,
the declaration and payment of dividends is at the discretion of the Board of
Directors of the Company. The Board of Directors of the Company intends to
reevaluate its dividend policy in the future in light of the Company's results
of operations, financial condition, cash requirements, future prospects and
other factors deemed relevant by the Board of Directors. All of the foregoing
pages of the Annual Report are incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA.

See the information for the years 1991 through 1995 set forth under
"Selected Financial Data" in the Annual Report on page 50, which page is
incorporated herein by reference.

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

See the information set forth in the Annual Report on pages 30 through 35,
which pages are incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See the information set forth in the Annual Report on pages 36 through 50,
which pages are incorporated herein by reference.

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

Not Applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

DIRECTORS

See the information regarding the names, ages, positions and prior business
experience of the directors of the Company set forth on pages 4 through 6 of the
Proxy Statement, which pages are incorporated herein by reference.

EXECUTIVE OFFICERS OF THE REGISTRANT

See "Executive Officers of the Registrant" on page 9 in Part I hereof.

ITEM 11. EXECUTIVE COMPENSATION.

See the information set forth in the Proxy Statement on page 7 thereof
entitled "Compensation of Directors" and the information on pages 14 through 18
thereof. The information on page 7 of the Proxy Statement entitled "Compensation
of Directors" and the information on pages 14 through 18 of the Proxy Statement
entitled "Summary Compensation Table," "Options Granted in the Last Fiscal
Year," "Aggregated Option Exercises in 1995 and December 31, 1995, Option
Values," and "Certain Employment Arrangements" are incorporated herein by
reference.

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

See the information set forth in the Proxy Statement on pages 2 and 3
thereof entitled "Ownership of the Capital Stock of the Company" which
information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

See the information set forth in the Proxy Statement entitled "Certain
Transactions" on pages 18 and 19 thereof, which information is incorporated
herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) 1. Financial Statements (including related notes to consolidated financial
statements) filed as part of this report are listed below:

Report of Independent Public Accountants.

Consolidated Balance Sheets as of December 31, 1995 and December 31,
1994.

Consolidated Statements of Income for the Years Ended December 31,
1995, December 31, 1994 and December 31, 1993.

Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1995, December 31, 1994, and December 31, 1993.

Consolidated Statements of Cash Flows for the Years Ended December 31,
1995, December 31, 1994, and December 31, 1993.

(a) 2. Financial Statement Schedules for the years ended December 31, 1995,
December 31, 1994, and December 31, 1993, are as follows:

NO.
----
I Condensed financial information of registrant.
II Valuation and qualifying accounts.
Schedules III, IV, and V are not applicable and have therefore
been omitted.

(a) 3. Exhibits (footnotes appear on page 14):

NO.
- ---------

*10(1) Form of Indemnification Agreement entered into by Promus Hotel Corporation
and each of its directors and executive officers.
+10(2) Promus Hotel Corporation 1995 Stock Option Plan. (5)
+10(3) Promus Hotel Corporation 1995 Restricted Stock Plan. (6)
+10(4) Promus Hotel Corporation Savings and Retirement Plan. (13)
*+10(5) Form of Amendment to Promus Hotel Corporation Savings and Retirement
Plan effective as of June 30, 1995.
*+10(6) Form of Amendment to the Promus Hotel Corporation Savings and
Retirement Plan dated November 15, 1995.
+10(7) Promus Hotel Corporation Non-Management Directors Stock Incentive Plan.
(8)
+10(8) Promus Hotel Corporation Key Executive Officer Annual Incentive Plan. (7)
+10(9) Promus Hotel Corporation Executive Deferred Compensation Plan. (9)
+10(10) Promus Hotel Corporation Deferred Compensation Plan. (9)
+10(11) Promus Hotel Corporation Savings and Retirement Plan Trust Agreement,
dated as of May 26, 1995, among Promus Hotel Corporation and Robert S.
Davis, Donald H. Dempsey, Patricia R. Ferguson, Jeffery M. Jarvis, Kelly
R. Jenkins, Frederick G. Schultz and Mark C. Wells, as trustees. (9)
+10(12) Form of Severance Agreement, dated as of June 30, 1995, entered into with
Donald H. Dempsey, Thomas L. Keltner, Ralph B. Lake, David C. Sullivan,
Mark C. Wells, Vincent C. Ciaramitaro, Patricia R. Ferguson and James T.
Harvey. (10)
+10(13) Form of Severance Agreement, dated June 30, 1995, entered into with
Michael D. Rose and Raymond E. Schultz. (10)
+10(14) Employment Agreement, dated as of June 30, 1995, between Michael D. Rose
and Promus Hotel Corporation. (10)
+10(15) Employment Agreement, dated as of July 1, 1995, between Raymond E. Schultz
and Promus Hotel Corporation. (11)
*+10(16) Form of Letter of Amendment, dated February 22, 1996, to the Employment
Agreement between Raymond E. Schultz and Promus Hotel Corporation.
+10(17) Financial Counseling Plan of The Promus Companies Incorporated, as amended
February 25, 1993, as adopted by Promus Hotel Corporation on April 5,
1995. (2)
+10(18) Summary Plan Description of Executive Term Life Insurance Plan adopted by
Promus Hotel Corporation on April 5, 1995. (4)
+10(19) Administrative Regulations, Long Term Compensation Plan (Restricted Stock
Plan and Stock Option Plan), dated as of January 1, 1992, adopted by
Promus Hotel Corporation on April 5, 1995. (3)
10(20) Plan of Reorganization and Distribution Agreement, dated as of June 30,
1995, between The Promus Companies Incorporated and Promus Hotel
Corporation. (10)
10(21) Tranche A Credit Agreement, dated as of June 7, 1995, among Embassy
Suites, Inc., as Initial Borrower, Promus Hotels, Inc., as the
Subsequent Borrower, certain subsidiaries and related parties from time
to time party thereto, as Guarantors, the several lenders from time to
time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (9)
10(22) First Amendment to Tranche A Credit Agreement, dated as of June 30, 1995,
by and among Embassy Suites, Inc., Promus Hotels, Inc., The Promus
Companies Incorporated, Promus Hotel Corporation and NationsBank, N.A.
(Carolinas). (10)
10(23) Tranche A Assignment and Assumption Agreement, dated as of June 30, 1995,
among Embassy Suites, Inc., Promus Hotels, Inc., The Promus Companies
Incorporated and NationsBank, N.A. (Carolinas). (10)

NO.
- ---------

10(24) Tranche B Credit Agreement, dated as of June 7, 1995, among Embassy
Suites, Inc., as Initial Borrower, Promus Hotels, Inc., as the
Subsequent Borrower, certain subsidiaries and related parties from time
to time party thereto, as Guarantors, the several lenders from time to
time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (9)
10(25) First Amendment to Tranche B Credit Agreement, dated as of June 30, 1995,
by and among Embassy Suites, Inc., Promus Hotels, Inc., The Promus
Companies Incorporated, Promus Hotel Corporation and NationsBank, N.A.
(Carolinas). (10)
10(26) Tranche B Assignment and Assumption Agreement, dated as of June 30, 1995,
by and among Embassy Suites, Inc., Promus Hotels, Inc., The Promus
Companies Incorporated and Nations Bank, N.A. (Carolinas). (10)
10(27) Pledge Agreement, dated as of June 30, 1995, by and among Promus Hotel
Corporation, Promus Hotels, Inc., certain subsidiaries which may now be
owners of Credit Parties and NationsBank, N.A. (Carolinas). (10)
10(28) Escrow Agreement, dated as of June 30, 1995, among Promus Hotel
Corporation, Promus Hotels, Inc. and NationsBank. (9)
10(29) Employee Benefits and Other Employment Matters Allocation Agreement, dated
as of June 30, 1995, between The Promus Companies Incorporated and
Promus Hotel Corporation. (10)
10(30) Risk Management Allocation Agreement, dated as of June 30, 1995, between
The Promus Companies Incorporated and Promus Hotel Corporation. (10)
10(31) Tax Sharing Agreement, dated as of June 30, 1995, between The Promus
Companies Incorporated and Promus Hotel Corporation. (10)
10(32) International Swap Dealers Association, Inc. Master Agreement, dated as of
June 30, 1995, among Promus Hotels, Inc. and NationsBank, N.A.
(Carolinas). (10)
10(33) Transfer Agreement, dated as of June 30, 1995, among Embassy Suites, Inc.,
Promus Hotels, Inc., and NationsBank, N.A. (Carolinas). (10)
10(34) Subscription Agreement, dated as of October 17, 1995, by and among Promus
Hotels, Inc. and FelCor Suites Hotels, Inc. and FelCor Suites Limited
Partnership. (11)
10(35) Management Agreement, dated as of December 17, 1986, between Hampton Inns,
Inc. and Hampton/GHI Associates No. 1. (1)
10(36) Form of Management Agreement between Embassy Suites, Inc. and affiliates
of General Electric Pension Trust. (1)
*10(37) Form of Assignment and Assumption of Manager's Interest in Management
Agreement (General Electric Pension Trust), dated June 30, 1995, between
Embassy Suites, Inc. and Promus Hotels, Inc.
*10(38) Form of Aircraft Agreement, dated August 4, 1995, between Promus Hotels,
Inc., and Harrah's Operating Company, Inc.
*10(39) Form of Interest Swap Confirmations, between NationsBank, N.A. and Promus
Hotels, Inc., dated December 11, 1995.
*10(40) Form of Interest Swap Confirmation between NationsBank, N.A. and Promus
Hotels, Inc., dated January 24, 1995, as amended on December 6, 1995.
*11(1) Computation of per share earnings.
*12(1) Computations of ratios.
*13(1) Portions of Annual Report to Stockholders for the fiscal year ended
December 31, 1995.
*21(1) List of subsidiaries of Promus Hotel Corporation.
*23(1) Consent of Arthur Andersen LLP.
*27(1) Financial Data Schedule.

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

* Included herewith.

+ Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this form pursuant to Item 14(a)(3) of Form 10-K

(Footnotes on following page)

(Footnotes for preceding page)

Footnotes

(1) Incorporated by reference from Holiday Corporation's Annual Report on Form
10-K for the fiscal year ended January 2, 1987, filed March 27, 1987, File
No. 1-8900.

(2) Incorporated by reference from PCI's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993, filed May 13, 1993, File No. 1-10410.

(3) Incorporated by reference from PCI's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1992, filed May 13, 1992, File No. 1-10410.

(4) Incorporated by reference from PCI's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992, filed March 17, 1993, File No.
1-10410.

(5) Incorporated by reference from PCI's Proxy Statement, Annex III-A, dated
April 25, 1995, File No. 1-11463.

(6) Incorporated by reference from PCI's Proxy Statement, Annex III-B, dated
April 25, 1995, File No. 1-11463.

(7) Incorporated by reference from PCI's Proxy Statement, Annex VII, dated
April 25, 1995, File No. 1-11463.

(8) Incorporated by reference from PCI's Proxy Statement, Annex VIII, dated
April 25, 1995, File No. 1-11463.

(9) Incorporated by reference from the Company's Current Report on Form 8-K,
filed June 14, 1995, File No. 1-11463.

(10) Incorporated by reference from the Company's Quarterly Report on Form 10-Q,
for the quarter ended June 30, 1995, filed August 11, 1995, File No.
1-11463.

(11) Incorporated by reference from the Company's Quarterly Report on Form 10-Q,
for the quarter ended September 30, 1995, filed November 13, 1995, File No.
1-11463.

(12) Incorporated by reference from the Company's Form 8-A, filed June 6, 1995,
File No. 1-11463.

(13) Incorporated by reference from the Company's Registration Statement No.
33-59997 on Form S-8 for the Promus Hotel Corporation Savings & Retirement
Plan, filed June 6, 1995.

(14) Incorporated by reference from PCI's Proxy Statement, Annex II-A, dated
April 25, 1995, File No. 1-11463.

(b) No Reports on Form 8-K were filed during the fourth quarter of 1995 and
thereafter through March 1, 1996.

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

PROMUS HOTEL CORPORATION

DATED: MARCH 12, 1996 By: /s/ MICHAEL D. ROSE
..................................

(Michael D. Rose, Chairman)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------------- ---------------

/s/ U. BERTRAM ELLIS, JR. Director March 12, 1996
........................................
(U. Bertram Ellis, Jr.)

/s/ DEBRA J. FIELDS Director March 12, 1996
........................................
(Debra J. Fields)

/s/ CHRISTOPHER W. HART Director March 12, 1996
........................................
(Christopher W. Hart)

/s/ C. WARREN NEEL Director March 12, 1996
........................................
(C. Warren Neel)

/s/ BEN C. PETERNELL Director March 12, 1996
........................................
(Ben C. Peternell)

/s/ MICHAEL D. ROSE Director and Chairman March 12, 1996
........................................
(Michael D. Rose)

/s/ MICHAEL I. ROTH Director March 12, 1996
........................................
(Michael I. Roth)

/s/ RAYMOND E. SCHULTZ Director, President and March 12, 1996
........................................ Chief Executive Officer
(Raymond E. Schultz)

/s/ JAY STEIN Director March 12, 1996
........................................
(Jay Stein)

/s/ DAVID C. SULLIVAN Director March 12, 1996
........................................
(David C. Sullivan)

/s/ RONALD TERRY Director March 12, 1996
........................................
(Ronald Terry)

/s/ DONALD H. DEMPSEY Chief Financial Officer March 12, 1996
........................................
(Donald H. Dempsey)

/s/ JEFFERY M. JARVIS Controller and Chief March 12, 1996
........................................ Accounting Officer
(Jeffery M. Jarvis)

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Promus Hotel Corporation:

We have audited in accordance with generally accepted auditing standards the
financial statements included in the Promus Hotel Corporation annual report to
stockholders, incorporated by reference in this Form 10-K, and have issued our
report thereon dated February 6, 1996. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The schedules listed
under Item 14(a)2 on page 11 are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements, and in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP

Memphis, Tennessee
March 8, 1996.

SCHEDULE I

PROMUS HOTEL CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEET
AS OF DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

ASSETS
Cash and cash equivalents........................................... $ -
Deferred income taxes............................................... 180
Investments in and advances to subsidiaries (eliminated in
consolidation).................................................... 166,412
Organizational costs................................................ 775
--------
$167,367
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Commitments and contingencies (Note 4)
Stockholders' equity
Common stock, $0.10 par value, 360,000,000 shares authorized,
51,371,152 shares outstanding, net of 2,626 shares held
in treasury..................................................... $ 5,137
Capital surplus................................................... 136,057
Retained earnings................................................. 25,349
Unrealized gain on marketable equity securities of affiliates,
net of related deferred tax liability of $1,165................. 1,822
Deferred compensation related to restricted stock................. (998)
--------
167,367
--------
$167,367
========

The accompanying notes are an integral part of this balance sheet.

S-1

SCHEDULE I (CONTINUED)

PROMUS HOTEL CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF INCOME
FOR THE PERIOD FROM JUNE 30, 1995 (DATE OF REGISTRATION)
THROUGH DECEMBER 31, 1995
(IN THOUSANDS)

Revenues............................................................. $ -
Costs and expenses................................................... 547
-------
Loss before income taxes and equity in subsidiaries' earnings........ (547)
Income tax benefit................................................... 231
-------
Loss before equity in subsidiaries' earnings......................... (316)
Equity in subsidiaries' earnings before extraordinary items.......... 22,846
-------
Income before extraordinary items.................................... 22,530
Extraordinary items, net of income tax expense of $1,635............. 2,819
-------
Net income........................................................... $25,349
=======

The accompanying notes are an integral part of this financial statement.

S-2

SCHEDULE I (CONTINUED)

PROMUS HOTEL CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JUNE 30, 1995 (DATE OF REGISTRATION)
THROUGH DECEMBER 31, 1995
(IN THOUSANDS)

Cash flows from operating activities
Net income........................................................ $ 25,349
Adjustments to reconcile net income to cash flows from
operating activities
Extraordinary items........................................... (2,819)
Amortization.................................................. 547
Equity in earnings of subsidiary.............................. (22,846)
Other......................................................... (231)
--------
Cash flows provided by operating activities................. -
--------
Net change in cash and cash equivalents............................. -
Cash and cash equivalents, beginning of period...................... -
--------
Cash and cash equivalents, end of period............................ $ -
========

The accompanying notes are an integral part of this financial statement.

S-3

SCHEDULE I (CONTINUED)

PROMUS HOTEL CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

NOTE 1--BASIS OF ORGANIZATION

Promus Hotel Corporation, a Delaware corporation, is a holding company, the
principal assets of which are capital stock in a subsidiary, Promus Hotels,
Inc., (PHI). These condensed financial statements should be read in conjunction
with the consolidated financial statements of Promus and subsidiaries.

On June 30, 1995, The Promus Companies Incorporated (Parent) completed the
transfer of the operations, assets and liabilities of its hotel business (the
Hotel Business) composed of three hotel brands targeted at specific market
segments: Embassy Suites, Hampton Inn and Homewood Suites, to a new publicly
traded entity, Promus Hotel Corporation (Promus or the Company). As approved by
Parent's Board of Directors and stockholders on May 26, 1995, this entity was
spun-off (the Spin-Off) from the Parent and its stock was distributed to
Parent's stockholders on a one-for-two basis effective June 30, 1995 (the
Distribution). Concurrent with the Distribution, Parent changed its name to
Harrah's Entertainment, Inc.

NOTE 2--ORGANIZATIONAL COSTS

Organizational costs are being amortized on a straight-line basis over a
five year period.

NOTE 3--LONG-TERM DEBT

Promus has no long-term debt obligations, but has guaranteed certain
long-term obligations of PHI.

NOTE 4--COMMITMENTS AND CONTINGENCIES

The Company is a party to various inquiries, administrative proceedings and
litigation relating to contracts, sales of property and other matters arising in
the normal course of business. While any proceeding or litigation has an element
of uncertainty, management believes that the final outcome of these matters will
not have a materially adverse effect upon Promus' consolidated financial
position or its results of operations.

NOTE 5--STOCKHOLDERS' EQUITY

In addition to its common stock, the Company has the following classes of
stock authorized but unissued:

Preferred stock, $100 par value, 150,000 shares authorized
Special stock--Series A, $1.125 par value, 5,000,000 shares authorized

One special right is attached to each outstanding share of common stock.
These rights entitle the holders to purchase, under certain conditions, units
consisting of fractional shares of Special stock-Series A at a purchase price of
$120 per unit, subject to adjustment. The rights also, under certain conditions,
entitle certain holders to purchase $240 worth of common stock for $120. These
rights expire

S-4

SCHEDULE I (CONTINUED)

PROMUS HOTEL CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 5--STOCKHOLDERS' EQUITY--(CONTINUED)
on May 1, 2005, unless Promus decides to redeem them earlier at $0.01 per right
or upon the occurrence of certain other events.

NOTE 6--INCOME TAXES

Promus files a consolidated tax return with its subsidiaries.

NOTE 7--EXTRAORDINARY ITEMS

Promus' equity in PHI's net extraordinary items relates to the early payoff
and forgiveness of a portion of existing debt attributable to two of PHI's
equity investments.

NOTE 8--SUPPLEMENTAL CASH FLOW INFORMATION

Concurrent with the Spin-Off, the historical assets of the Hotel Business
were transferred to Promus by Parent, and the issuance of Promus common stock
was completed in connection with the Distribution. This noncash transaction has
been excluded from the statement of cash flows.

S-5

SCHEDULE II

PROMUS HOTEL CORPORATION
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ----------------------------------------- ---------- ----------------------- ---------- ---------
ADDITIONS
----------------------- BALANCE
BALANCE AT CHARGED TO CHARGED TO AT END
BEGINNING COSTS AND OTHER OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ----------------------------------------- ---------- ---------- ---------- ---------- --------

Fiscal Year Ended December 31, 1995
Allowance for doubtful accounts
Current.............................. $ 855 $ - $ 349(b) $ 32(a) $1,172
====== ====== ====== ====== ======
Self-insurance reserves................ $ - $6,206 $8,674(b)(c) $5,946 $8,934
====== ====== ====== ====== ======
Fiscal Year Ended December 31, 1994
Allowance for doubtful accounts
Current.............................. $1,089 $ 28 $ - $ 262(a) $ 855
====== ====== ====== ====== ======
Long-term............................ $ 644 $ - $ - $ 644 $ -
====== ====== ====== ====== ======
Fiscal Year Ended December 31, 1993
Allowance for doubtful accounts
Current.............................. $1,362 $1,246 $ - $1,519(a) $1,089
====== ====== ====== ====== ======
Long-term............................ $ 644 $ - $ - $ - $ 644
====== ====== ====== ====== ======
Allowance for losses on property
dispositions......................... $2,681 $ - $ - $2,681(a) $ -
====== ====== ====== ====== ======

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

(a) Includes uncollectible accounts written off, net of amounts recovered, and balances
transferred to other accounts.
(b) Includes balances received from Parent in connection with the Spin-Off that had not
been previously allocated.
(c) Includes employee contributions to insurance programs.

S-6

EXHIBIT INDEX

Exhibit No. Description Page
- ----------- ----------- ----

3(1) Amended and Restated Certificate of Incorporation of Promus Hotel
Corporation dated June 30, 1995. (14)
*3(2) Bylaws of Promus Hotel Corporation, as amended and restated dated May 26,
1995. 26
4(1) Form of Rights Agreement, dated as of June 30, 1995, between Promus Hotel
Corporation and Continental Stock Transfer & Trust Company. (12)
*10(1) Form of Indemnification Agreement entered into by Promus Hotel Corporation
and each of its directors and executive officers. 35
+10(2) Promus Hotel Corporation 1995 Stock Option Plan. (5)
+10(3) Promus Hotel Corporation 1995 Restricted Stock Plan. (6)
+10(4) Promus Hotel Corporation Savings and Retirement Plan. (13)
*+10(5) Amendment to Promus Hotel Corporation Savings and Retirement Plan
effective as of June 30, 1995. 42
*+10(6) Amendment to the Promus Hotel Corporation Savings and Retirement Plan
dated November 15, 1995. 46
+10(7) Promus Hotel Corporation Non-Management Directors Stock Incentive Plan.
(8)
+10(8) Promus Hotel Corporation Key Executive Officer Annual Incentive Plan. (7)
+10(9) Promus Hotel Corporation Executive Deferred Compensation Plan. (9)
+10(10) Promus Hotel Corporation Deferred Compensation Plan. (9)
+10(11) Promus Hotel Corporation Savings and Retirement Plan Trust Agreement,
dated as of May 26, 1995, among Promus Hotel Corporation and Robert S.
Davis, Donald H. Dempsey, Patricia R. Ferguson, Jeffery M. Jarvis, Kelly
R. Jenkins, Frederick G. Schultz and Mark C. Wells, as trustees. (9)
+10(12) Form of Severance Agreement, dated as of June 30, 1995, entered into with
Donald H. Dempsey, Thomas L. Keltner, Ralph B. Lake, David C. Sullivan,
Mark C. Wells, Vincent C. Ciaramitaro, Patricia R. Ferguson and James T.
Harvey. (10)
+10(13) Form of Severance Agreement, dated June 30, 1995, entered into with
Michael D. Rose and Raymond E. Schultz. (10)
+10(14) Employment Agreement, dated as of June 30, 1995, between Michael D. Rose
and Promus Hotel Corporation. (10)
+10(15) Employment Agreement, dated as of July 1, 1995, between Raymond E. Schultz
and Promus Hotel Corporation. (11)
*+10(16) Form of Letter of Amendment, dated February 22, 1996, to the Employment
Agreement between Raymond E. Schultz and Promus Hotel Corporation. 47
+10(17) Financial Counseling Plan of The Promus Companies Incorporated, as amended
February 25, 1993, as adopted by Promus Hotel Corporation on April 5,
1995. (2)
+10(18) Summary Plan Description of Executive Term Life Insurance Plan adopted by
Promus Hotel Corporation on April 5, 1995. (4)
+10(19) Administrative Regulations, Long Term Compensation Plan (Restricted Stock
Plan and Stock Option Plan), dated as of January 1, 1992, adopted by
Promus Hotel Corporation on April 5, 1995. (3)
10(20) Plan of Reorganization and Distribution Agreement, dated as of June 30,
1995, between The Promus Companies Incorporated and Promus Hotel
Corporation. (10)
10(21) Tranche A Credit Agreement, dated as of June 7, 1995, among Embassy
Suites, Inc., as Initial Borrower, Promus Hotels, Inc., as the
Subsequent Borrower, certain subsidiaries and related parties from time
to time party thereto, as Guarantors, the several lenders from time to
time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (9)
10(22) First Amendment to Tranche A Credit Agreement, dated as of June 30, 1995,
by and among Embassy Suites, Inc., Promus Hotels, Inc., The Promus
Companies Incorporated, Promus Hotel Corporation and NationsBank, N.A.
(Carolinas). (10)
10(23) Tranche A Assignment and Assumption Agreement, dated as of June 30, 1995,
among Embassy Suites, Inc., Promus Hotels, Inc., The Promus Companies
Incorporated and NationsBank, N.A. (Carolinas). (10)
10(24) Tranche B Credit Agreement, dated as of June 7, 1995, among Embassy
Suites, Inc., as Initial Borrower, Promus Hotels, Inc., as the
Subsequent Borrower, certain subsidiaries and related parties from time
to time party thereto, as Guarantors, the several lenders from time to
time party thereto, and NationsBank, N.A. (Carolinas), as Agent. (9)
10(25) First Amendment to Tranche B Credit Agreement, dated as of June 30, 1995,
by and among Embassy Suites, Inc., Promus Hotels, Inc., The Promus
Companies Incorporated, Promus Hotel Corporation and NationsBank, N.A.
(Carolinas). (10)
10(26) Tranche B Assignment and Assumption Agreement, dated as of June 30, 1995,
by and among Embassy Suites, Inc., Promus Hotels, Inc., The Promus
Companies Incorporated and Nations Bank, N.A. (Carolinas). (10)
10(27) Pledge Agreement, dated as of June 30, 1995, by and among Promus Hotel
Corporation, Promus Hotels, Inc., certain subsidiaries which may now be
owners of Credit Parties and NationsBank, N.A. (Carolinas). (10)
10(28) Escrow Agreement, dated as of June 30, 1995, among Promus Hotel
Corporation, Promus Hotels, Inc. and NationsBank. (9)
10(29) Employee Benefits and Other Employment Matters Allocation Agreement, dated
as of June 30, 1995, between The Promus Companies Incorporated and
Promus Hotel Corporation. (10)
10(30) Risk Management Allocation Agreement, dated as of June 30, 1995, between
The Promus Companies Incorporated and Promus Hotel Corporation. (10)

Exhibit No. Description Page
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10(31) Tax Sharing Agreement, dated as of June 30, 1995, between The Promus
Companies Incorporated and Promus Hotel Corporation. (10)
10(32) International Swap Dealers Association, Inc. Master Agreement, dated as of
June 30, 1995, among Promus Hotels, Inc. and NationsBank, N.A.
(Carolinas). (10)
10(33) Transfer Agreement, dated as of June 30, 1995, among Embassy Suites, Inc.,
Promus Hotels, Inc., and NationsBank, N.A. (Carolinas). (10)
10(34) Subscription Agreement, dated as of October 17, 1995, by and among Promus
Hotels, Inc. and FelCor Suites Hotels, Inc. and FelCor Suites Limited
Partnership. (11)
10(35) Management Agreement, dated as of December 17, 1986, between Hampton Inns,
Inc. and Hampton/GHI Associates No. 1. (1)
10(36) Form of Management Agreement between Embassy Suites, Inc. and affiliates
of General Electric Pension Trust. (1)
*10(37) Form of Assignment and Assumption of Manager's Interest in Management
Agreement (General Electric Pension Trust), dated June 30, 1995, between
Embassy Suites, Inc. and Promus Hotels, Inc. 48
*10(38) Form of Aircraft Agreement, dated August 4, 1995, between Promus Hotels,
Inc., and Harrah's Operating Company, Inc. 53
*10(39) Form of Interest Swap Confirmations, between NationsBank, N.A. and Promus
Hotels, Inc., dated December 11, 1995. 58
*10(40) Form of Interest Swap Confirmation between NationsBank, N.A. and Promus
Hotels, Inc., dated January 24, 1995, as amended on December 6, 1995. 64
*11(1) Computation of per share earnings. 66
*12(1) Computations of ratios. 67
*13(1) Portions of Annual Report to Stockholders for the fiscal year ended
December 31, 1995. 69
*21(1) List of subsidiaries of Promus Hotel Corporation. 97
*23(1) Consent of Arthur Andersen LLP. 98
*27(1) Financial Data Schedule. 99

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* Included herewith.