PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 18, 1997)
 
                               1,000,033 SHARES
                              PAIRED COMMON STOCK
 
                                                                           LOGO
 
                      PATRIOT AMERICAN HOSPITALITY, INC.
 
                PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY
 
                               ----------------
 
  Patriot American Hospitality, Inc. (the "Corporation") is a self-
administered real estate investment trust ("REIT") which owns interests in a
portfolio of hotels. The hotels are diversified by franchise or brand
affiliation and serve primarily major U.S. business centers. In addition to
hotels catering primarily to business travelers, the Corporation's portfolio
includes world-class resort hotels and prominent hotels in major tourist
destinations.
 
  Shares of common stock, $.01 par value, of the Corporation (the "REIT Common
Stock") are paired and trade as a unit with shares of common stock, $.01 par
value, of Patriot American Hospitality Operating Company (the "Operating
Company Common Stock" and, as paired, the "Paired Common Stock"). All shares
of Paired Common Stock offered hereby (the "Offering") are being sold by the
Corporation and Patriot American Hospitality Operating Company (the "Operating
Company" and, together with the Corporation, the "Companies") to PaineWebber
Incorporated (the "Underwriter"), at a price of $27.6875 per paired share, for
an aggregate purchase price of approximately $27.69 million.
 
  The Paired Common Stock is listed on the New York Stock Exchange (the
"NYSE") under the symbol "PAH." On November 12, 1997, the last reported sale
price of the Paired Common Stock on the NYSE was $29.50 per share.
 
  SEE "RISK FACTORS" BEGINNING ON PAGE S-1 FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE PAIRED COMMON STOCK.
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
  The shares of Common Stock may be offered by the Underwriter from time to
time in one or more transactions (which may involve block transactions) on the
New York Stock Exchange, or on other national securities exchanges on which
the Common Stock is traded, in the over-the-counter market, through negotiated
transactions or otherwise at market prices prevailing at the time of the sale
or at prices otherwise negotiated, subject to prior sale, when, as and if
delivered to and accepted by the Underwriter. See "Underwriting."
 
  The shares of Paired Common Stock are offered by the Underwriter, subject to
prior sale, when, as and if delivered to and accepted by the Underwriter, and
subject to their right to reject orders in whole or in part, or to withdraw,
cancel or modify the offer without notice. It is expected that delivery of the
Paired Common Stock will be made through the facilities of the Depository
Trust Company on or about November 13, 1997.
 
                               ----------------
 
                           PAINEWEBBER INCORPORATED
 
                               ----------------
 
         THE DATE OF THIS PROSPECTUS SUPPLEMENT IS NOVEMBER 13, 1997.

 
                                 RISK FACTORS
 
  Prospective investors should carefully consider the following information in
conjunction with the other information contained in this Prospectus Supplement
and the accompanying Prospectus before purchasing Paired Common Stock in the
Offering.
 
REIT TAX RISKS
 
 Dependence on Qualification as a REIT
 
  The Corporation will operate in a manner designed to permit it to qualify as
a REIT for federal income tax purposes, but no assurance can be given that the
Corporation will be able to continue to operate in a manner so as to qualify
or remain so qualified. Qualification as a REIT involves the application of
highly technical and complex provisions of the Internal Revenue Code of 1986,
as amended (the "Code") for which there are only limited judicial or
administrative interpretations. The complexity of these provisions is greater
in the case of a REIT that owns hotels and leases them to an operating company
with which its stock is paired. Qualification as a REIT also involves the
determination of various factual matters and circumstances not entirely within
the Corporation's control. In addition, the Corporation's ability to qualify
as a REIT is dependent upon its continued exemption from the anti-pairing
rules of Section 269B(a)(3) of the Code. Section 269B(a)(3) of the Code would
ordinarily prevent a corporation from qualifying as a REIT if its stock is
paired with the stock of a corporation whose activities are inconsistent with
REIT status, such as the Operating Company. The "grandfathering" rules
governing Section 269B generally provide, however, that Section 269B(a)(3)
does not apply to a paired REIT if the REIT and its paired operating company
were paired on June 30, 1983. There are, however, no judicial or
administrative authorities interpreting this "grandfathering" rule. Moreover,
if for any reason the Corporation had failed to qualify as a REIT in 1983, the
benefit of the "grandfathering" rule would not be available to it, in which
case the Corporation would not qualify as a REIT for any taxable year. On
November 5, 1997, Representative William Archer, Chairman of the Ways and
Means Committee of the House of Representatives, publicly announced that he
plans to review this "grandfathering" rule. While Representative Archer stated
he does not plan to eliminate the grandfathering rule, no assurance can be
given that new legislation, new regulations or administrative interpretations
with respect to the "grandfathering rules" of Section 269B will not be
adopted. The adoption of any such legislation, regulations or administrative
interpretations could have a material adverse effect on the results of
operations and financial condition of the Companies.
 
  If the Corporation fails to qualify as a REIT, the Corporation will be
subject to federal income tax (including any applicable alternative minimum
tax) on its taxable income at corporate rates. In addition, unless entitled to
relief under certain statutory provisions and subject to the discussion above
regarding the impact if the Corporation failed to qualify as a REIT in 1983,
the Corporation also will be disqualified from re-electing REIT status for the
four taxable years following the year during which qualification is lost.
Failure to qualify as a REIT would reduce the net earnings of the Corporation
available for distribution to stockholders because of the additional tax
liability to the Corporation for the year or years involved. In addition,
distributions would no longer be required to be made. To the extent that
distributions to stockholders would have been made in anticipation of the
Corporation's qualifying as a REIT, the Corporation might be required to
borrow funds or to liquidate certain of its investments to pay the applicable
tax. The failure to qualify as a REIT would also constitute a default under
certain debt obligations of the Corporation.
 
 Adverse Effects of REIT Minimum Distribution Requirements
 
  In order to qualify as a REIT, the Corporation will be generally required
each year to distribute to its stockholders at least 95% of its taxable income
(excluding any net capital gain). The Corporation generally is subject to a 4%
nondeductible excise tax on the amount, if any, by which certain distributions
paid by it with respect to any calendar year are less than the sum of (i) 85%
of its ordinary income for that year, (ii) 95% of its capital gain net income
for that year, and (iii) 100% of its undistributed income from prior years.
 
                                      S-1

 
  The Corporation intends to make distributions to its stockholders to comply
with the 95% distribution requirement and to avoid the nondeductible excise
tax. The Corporation's income will consist primarily of its share of the
income of Patriot American Hospitality Partnership, L.P. (the "Realty
Partnership"), and the Corporation's cash available for distribution will
consist primarily of its share of cash distributions from the Realty
Partnership. Differences in timing between the recognition of taxable income
and the receipt of cash available for distribution and the seasonality of the
hotel industry could require the Corporation to borrow funds on a short-term
basis to meet the 95% distribution requirement and to avoid the nondeductible
excise tax.
 
  Distributions by the Companies are determined by their respective Board of
Directors and depend on a number of factors, including the amount of cash
available for distribution and the financial condition of the Companies, any
decision by either Board of Directors to reinvest funds rather than to
distribute such funds, capital expenditures, the annual distribution
requirements under the REIT provisions of the Code (in the case of the
Corporation) and such other factors as either Board of Directors deems
relevant. For federal income tax purposes, distributions paid to stockholders
may consist of ordinary income, capital gains (in the case of the
Corporation), nontaxable return of capital, or a combination thereof. The
Companies will provide stockholders with annual statements as to the
taxability of distributions.
 
FAILURE TO MANAGE RAPID GROWTH AND INTEGRATE OPERATIONS
 
  The Corporation is currently experiencing a period of rapid growth. The
integration of departments, systems and procedures presents a significant
management challenge, and the failure to integrate new acquisitions into
existing management and operating structures could have a material adverse
effect on the results of operations and financial condition of the Companies.
 
SUBSTANTIAL DEBT OBLIGATIONS; NO LIMITS ON INDEBTEDNESS; VARIABLE RATE DEBT
 
  As of November 3, 1997, the Companies' combined debt was approximately
$826.7 million and the Companies' ratio of combined debt to total market
capitalization was approximately 24.1%. The Companies also may borrow
additional amounts from the same or other lenders in the future, may assume
debt in connection with acquisitions, or may issue corporate debt securities
in public or private offerings. The Companies' organizational documents do not
limit the amount of indebtedness the Companies may incur. Further,
substantially all of the Companies' combined debt bears interest at a variable
rate. Economic conditions could result in higher interest rates, which could
increase debt service requirements on variable rate debt and could adversely
affect the Companies' ability to make distributions.
 
  There can be no assurance that the Companies will be able to meet their debt
service obligations and, to the extent that they cannot, the Companies risk
the loss of some or all of their assets, including the hotels. Adverse
economic conditions could cause the terms on which borrowings become available
to be unfavorable. In such circumstances, if the Corporation or the Operating
Company is in need of funds to repay indebtedness in accordance with its terms
or otherwise, it could be required to liquidate one or more investments in
properties at times which may not permit realization of the maximum return on
such investments.
 
  The foregoing risks associated with debt obligations of the Companies may
inhibit the ability of the Companies to raise capital in both the public and
private markets.
 
LACK OF EXPERIENCE IN HOTEL MANAGEMENT BUSINESS
 
  The Corporation leases certain existing hotels and intends to lease other
existing hotels and a significant portion of its newly-acquired hotels to the
Operating Company. Although certain executives of the Corporation have hotel
management experience, the Operating Company has no prior experience in the
hotel management business. The future success of the Operating Company and its
ability to operate hotels as well as manage future growth depend in large part
on its ability to attract and retain key executive officers and other highly
qualified personnel, especially in the area of hotel operations. There can be
no assurance that the Operating Company will
 
                                      S-2

 
be able to attract and retain qualified personnel and the inability to do so
could have a material adverse effect on the results of operations and
financial condition of the Companies.
 
POTENTIAL CONFLICTS OF INTEREST BETWEEN THE CORPORATION AND THE OPERATING
COMPANY
 
  The Corporation and the Operating Company are separate corporate entities
with separate Boards of Directors. A majority of the directors of each of the
Corporation and the Operating Company do not serve as directors or officers of
the other company. In addition, the Corporation and the Operating Company
generally have different employees, separate creditors and are subject to
different state law licensing and regulatory requirements. As a result, the
interests of the Board of Directors of each company may conflict and such
conflicts may possibly rise to disputes between the companies. No assurance
can be given that conflicts will not arise between the companies or that such
conflicts will not have a material adverse effect on the results of operations
and financial condition of the Corporation and the Operating Company. The
Corporation and the Operating Company have the same Chief Executive Officer
and Chief Financial Officer as well as two of the same directors. The
Companies believe this overlap in management will help decrease the
possibility of disagreements between the two companies. No assurance can be
given, however, that these individuals' interests as officers and/or directors
of one company will not conflict with their interests as officers and/or
directors of the other company or that their actions as officers and/or
directors of one company will not adversely affect the interests of the other
company.
 
DEPENDENCE ON LESSEES AND PAYMENTS UNDER THE PARTICIPATING LEASES
 
  The Corporation leases each of its existing hotels, except the Crowne Plaza
Ravinia Hotel, the Marriott WindWatch Hotel and the hotels leased to the
Operating Company, to lessees (the "Lessees") pursuant to separate
participating leases (the "Participating Leases"). The Corporation's ability
to make distributions to stockholders depends primarily upon the ability of
the Lessees to make rent payments under the Participating Leases (which is
dependent primarily on the Lessees' ability to generate sufficient revenues
from those hotels which are leased to them). A failure or delay to make such
payments may be caused by reductions in revenue from such hotels or in the net
operating income of the Lessees or otherwise. Any failure or delay by the
Lessees in making rent payments may adversely affect the Corporation's ability
to make distributions to stockholders.
 
LACK OF CONTROL OVER OPERATIONS OF THE CERTAIN HOTELS LEASED OR MANAGED BY
THIRD PARTIES
 
  The Corporation is dependent on the ability of the Lessees and the hotel
management entities that manage the hotels (the "Operators") to manage the
operations of hotels that are leased or operated by them. Under the terms of
the Participating Leases, the Corporation has the authority to review annual
budgets for the hotels which are leased to the Lessees and to approve certain
items. However, the Corporation is unable to directly implement strategic
business decisions with respect to the setting of room rates, repositioning of
a franchise, redevelopment of food and beverage operations and certain similar
decisions with respect to such hotels.
 
RISK OF INVESTMENT IN SUBSIDIARIES CONTROLLED BY OTHER PARTIES
 
  The Crowne Plaza Ravinia Hotel, the Marriott WindWatch Hotel and certain
non-leaseable assets related to the Carefree resorts are each owned through a
special purpose entity, specifically PAH Ravinia, Inc. and PAH WindWatch, LLC,
respectively (the "Non-Controlled Subsidiaries"). The equity securities of
each of the Non-Controlled Subsidiaries are divided into two classes: voting
securities and non-voting securities. The Realty Partnership owns all of the
non-voting securities in each of the Non-Controlled Subsidiaries. With respect
to PAH Ravinia, Inc. ("PAH Ravinia") and PAH WindWatch, LLC ("PAH WindWatch"),
the Realty Partnership also owns, indirectly, 4% of the voting securities.
Certain executive officers and/or directors of the Companies own, directly or
indirectly, the remaining 96% of the voting securities of PAH Ravinia and PAH
WindWatch. Although the ownership interests of the Realty Partnership
represent an approximately 99% economic interest in each of the Non-Controlled
Subsidiaries, the Realty Partnership is not able to elect directors or
managers. As a result, the Non-Controlled Subsidiaries may implement business
policy decisions that would not have been
 
                                      S-3

 
implemented by the Corporation and that are adverse to the interests of the
Corporation or that lead to adverse financial results. The Corporation intends
to restructure the Non-Controlled Subsidiaries so that the Crowne Plaza
Ravinia Hotel and the Marriott WindWatch Hotel may be leased to the Operating
Company. To effect such restructurings, the Corporation will be required to
obtain, along with any other third-party consents which may be required, the
approval of those executive officers and/or directors of the Companies who
have voting control over such Non-Controlled Subsidiaries. No assurances can
be made that the executive officers will consent to such restructurings.
 
HOTEL INDUSTRY RISKS
 
 Operating Risks
 
  The primary businesses of the Companies are buying, selling, leasing and
managing hotels, which are subject to operating risks common to the hotel
industry. These risks include, among other things, (i) competition for guests
from other hotels, a number of which may have greater marketing and financial
resources and experience than the Companies and the Lessees, (ii) increases in
operating costs due to inflation and other factors, which increases may not
have been offset in past years, and may not be offset in future years by
increased room rates, (iii) dependence on business and commercial travelers
and tourism, which business may fluctuate and be seasonal, (iv) increases in
energy costs and other expenses of travel, which may deter travelers and (v)
adverse effects of general and local economic conditions. These factors could
adversely affect the ability of the Lessees and the Operating Company to
generate revenues and to make lease payments and therefore the Corporation's
ability to make distributions to stockholders.
 
  The Companies are also subject to the risk that in connection with the
acquisition of hotels and hotel operating companies it may not be possible to
transfer certain operating licenses, such as food and beverage licenses, to
the Lessees, the Operators or the Operating Company, or to obtain new licenses
in a timely manner in the event such licenses cannot be transferred. Although
hotels can provide alcoholic beverages under interim licenses or licenses
obtained prior to the acquisition of these hotels, there can be no assurance
that these licenses will remain in effect until the Corporation or the
Operating Company obtains new licenses or that new licenses will be obtained.
The failure to have alcoholic beverages licenses or other operating licenses
could adversely affect the ability of the affected Lessees, Operators or the
Operating Company to generate revenues and make lease payments to the
Corporation.
 
 Operating Costs and Capital Expenditures; Hotel Renovation
 
  Hotels, in general, have an ongoing need for renovations and other capital
improvements, particularly in older structures, including periodic replacement
or refurbishment of furniture, fixtures and equipment ("F, F & E"). Under the
terms of the Participating Leases, the Corporation is obligated to establish a
reserve to pay the cost of certain capital expenditures at its hotels and pay
for periodic replacement or refurbishment of F, F & E. If capital expenditures
exceed the Corporation's expectations, the additional cost could have an
adverse effect on the Corporation's cash available for distribution. In
addition, the Corporation may acquire hotels where significant renovation is
either required or desirable. Renovation of hotels involves certain risks,
including the possibility of environmental problems, construction cost
overruns and delays, uncertainties as to market demand or deterioration in
market demand after commencement of renovation and the emergence of
unanticipated competition from other hotels.
 
 Competition for Hotel Acquisition Opportunities
 
  The Companies may be competing for investment opportunities with entities
that have substantially greater financial resources. These entities may
generally be able to accept more risk than the Companies can prudently
 
                                      S-4

 
manage, including risks with respect to the creditworthiness of a hotel
operator or the geographic proximity of its investments. Competition may
generally reduce the number of suitable investment opportunities offered to
the Companies and increase the bargaining power of property owners seeking to
sell.
 
  Additionally, the Corporation's ability to acquire additional hotels could
be negatively impacted by the paired share ownership structure because hotel
management companies, franchisees and others who historically approached the
Corporation's predecessor ("Patriot") with acquisition opportunities in hopes
of establishing lessee or management relationships may not do so in the future
out of concern that the Corporation will rely on the Operating Company to
lease and/or manage the acquired properties. Such persons may instead provide
such acquisition opportunities to hotel companies that will allow them to
manage the properties following the sale. This could have a negative impact on
the Corporation's acquisition activities in the future.
 
 Seasonality
 
  The hotel industry is seasonal in nature. Revenues at certain hotels are
greater in the first and second quarters of a calendar year and at other
hotels in the second and third quarters of a calendar year. Seasonal
variations in revenue at hotels may cause quarterly fluctuations in the
operating revenues of the Operating Company and the lease revenues of the
Corporation.
 
REAL ESTATE INVESTMENT RISKS
 
 General Risks
 
  The Corporation's investments will be subject to varying degrees of risk
generally incident to the ownership of real property. The underlying value of
the Corporation's real estate investments and the Corporation's income and
ability to make distributions to its stockholders will be dependent upon the
ability of the Lessees, the Operators and the Operating Company to operate the
Corporation's hotels in a manner sufficient to maintain or increase revenues
and to generate sufficient income in excess of operating expenses to make rent
payments under their leases with the Corporation. Income from the
Corporation's hotels may be adversely affected by changes in national economic
conditions, changes in local market conditions due to changes in general or
local economic conditions and neighborhood characteristics, changes in
interest rates and in the availability, cost and terms of mortgage funds, the
impact of present or future environmental legislation and compliance with
environmental laws, the ongoing need for capital improvements, particularly in
older structures, changes in real estate tax rates and other operating
expenses, adverse changes in governmental rules and fiscal policies, adverse
changes in zoning laws, civil unrest, acts of God, including earthquakes and
other natural disasters (which may result in uninsured losses), acts of war
and other factors which are beyond the control of the Companies.
 
 Value and Illiquidity of Real Estate
 
  Real estate investments are relatively illiquid. The ability of the
Corporation to vary its portfolio in response to changes in economic and other
conditions will therefore be limited. If the Corporation must sell an
investment, there can be no assurance that the Corporation will be able to
dispose of it in the time period it desires or that the sales price of any
investment will recoup or exceed the amount of the Corporation's investment.
 
 Property Taxes
 
  The Companies' hotels and racing facilities are subject to real property
taxes. The real property taxes on properties in which the Corporation invests
may increase or decrease as property tax rates change and as the value of the
properties are assessed or reassessed by taxing authorities. If property taxes
increase, the Companies' ability to make distributions to its stockholders
could be adversely affected.
 
 Consents of Ground Lessor Required for Sale of Certain Hotels
 
  Certain of the Corporation's hotels and the Bay Meadows Racecourse (the
"Racecourse") are subject to ground leases with third party lessors. In
addition, the Corporation may acquire hotels in the future that are
 
                                      S-5

 
subject to ground leases. Any proposed sale of a property that is subject to a
ground lease by the Corporation or any proposed assignment of the
Corporation's leasehold interest in the ground lease may require the consent
of third party lessors. As a result, the Corporation may not be able to sell,
assign, transfer or convey its interest in any such property in the future
absent the consent of such third parties, even if such transaction may be in
the best interests of the stockholders.
 
 Environmental Matters
 
  The operating costs of the Companies may be affected by the obligation to
pay for the cost of complying with existing environmental laws, ordinances and
regulations, as well as the cost of complying with future legislation. Under
various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic
substances on, under, or in such property. Such laws often impose liability
whether or not the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In addition, the presence of
hazardous or toxic substances, or the failure to remediate such property
properly, may adversely affect the owner's ability to borrow by using such
real property as collateral. Persons who arrange for the transportation,
disposal or treatment of hazardous or toxic substances may also be liable for
the costs of removal or remediation of such substances at the disposal or
treatment facility, whether or not such facility is or ever was owned or
operated by such person. Certain environmental laws and common law principles
could be used to impose liability for releases of hazardous materials,
including asbestos-containing materials ("ACMs"), into the environment, and
third parties may seek recovery from owners or operators of real properties
for personal injury associated with exposure to released ACMs or other
hazardous materials. Environmental laws may also impose restrictions on the
manner in which a property may be used or transferred or in which businesses
may be operated, and these restrictions may require expenditures. In
connection with the ownership and operation of any of the Corporation's
hotels, the Companies, the Lessees or the Operators may be potentially liable
for any such costs. The cost of defending against claims of liability or
remediating contaminated property and the cost of complying with environmental
laws could materially adversely affect the Corporation's results of operations
and financial condition. Phase I environmental site assessments ("ESAs") have
been conducted at all of the Corporation's hotels and the Racecourse by
qualified independent environmental engineers. The purpose of Phase I ESAs is
to identify potential sources of contamination for which any of the
Corporation's hotels or the Racecourse may be responsible and to assess the
status of environmental regulatory compliance. The ESAs have not revealed any
environmental liability or compliance concerns that the Corporation believes
would have a material adverse effect on its business, assets, results of
operations or liquidity, nor is the Corporation aware of any such liability or
concerns. Nevertheless, it is possible that these ESAs did not reveal all
environmental liabilities or compliance concerns or that material
environmental liabilities or compliance concerns exist of which the
Corporation is currently unaware. The Corporation has not been notified by any
governmental authority, and has no other knowledge of, any material
noncompliance, liability or claim relating to hazardous or toxic substances or
other environmental substances in connection with any of the hotels or the
Racecourse.
 
 Uninsured and Underinsured Losses
 
  Each of the Participating Leases specifies comprehensive insurance to be
maintained on each of the applicable leased hotels, including liability, fire
and extended coverage. The Corporation believes such specified coverage is of
the type and amount customarily obtained for or by an owner of hotels. Leases
for subsequently acquired hotels (including those leased to the Operating
Company) will contain similar provisions. However, there are certain types of
losses, generally of a catastrophic nature, such as earthquakes and floods,
that may be uninsurable or not economically insurable. The Board of Directors
and management of each of the Companies will use their discretion in
determining amounts, coverage limits and deductibility provisions of
insurance, with a view to maintaining appropriate insurance coverage on the
investments of the Corporation or the Operating Company, as the case may be,
at a reasonable cost and on suitable terms. This may result in insurance
coverage that, in the event of a substantial loss, would not be sufficient to
pay the full current market value or current replacement cost of the lost
investment of the Corporation or the Operating Company, as the case may be.
 
                                      S-6

 
Inflation, changes in building codes and ordinances, environmental
considerations, and other factors also might make it infeasible to use
insurance proceeds to replace the property after such property has been
damaged or destroyed. Under such circumstances, the insurance proceeds
received by the Corporation or the Operating Company might not be adequate to
restore its economic position with respect to such property.
 
 Acquisition and Development Risks
 
  The Companies currently intend to pursue acquisitions of additional hotels
and hotel operating companies and, under appropriate circumstances, may pursue
development opportunities. Acquisitions entail risks that such acquired hotels
or hotel operating companies will fail to perform in accordance with
expectations and that estimates of the cost of improvements necessary to
market, acquire and operate properties will prove inaccurate as well as
general risks associated with any new real estate or operating company
acquisition. In addition, hotel development is subject to numerous risks,
including risks of construction delays or cost overruns that may increase
project costs, new project commencement risks such as receipt of zoning,
occupancy and other required governmental approvals and permits and the
incurrence of development costs in connection with projects that are not
pursued to completion. The fact that the Corporation generally must distribute
95% of its ordinary taxable income in order to maintain its qualification as a
REIT may limit the Corporation's ability to rely upon lease income from its
hotels or subsequently acquired properties to finance acquisitions or new
developments. As a result, if debt or equity financing were not available on
acceptable terms, further acquisitions or development activities might be
curtailed or the Corporation's cash available for distribution might be
adversely affected.
 
RISKS OF OPERATING HOTELS UNDER FRANCHISE OR BRAND AFFILIATIONS
 
  Certain of the Corporation's hotels are operated under franchise or brand
affiliations. In addition, hotels in which the Corporation subsequently
invests may be operated pursuant to franchise or brand affiliations. The
continuation of the franchise licenses relating to the franchised hotels (the
"Franchise Licenses") is subject to specified operating standards and other
terms and conditions. The continued use of a brand is generally contingent
upon the continuation of the management agreement related to that hotel with
the branded Operator. Franchisors typically inspect licensed properties
periodically to confirm adherence to operating standards. Action on the part
of any of the Companies, the Lessees or the Operators could result in a breach
of such standards or other terms and conditions of the Franchise Licenses and
could result in the loss or cancellation of a Franchise License. It is
possible that a franchisor could condition the continuation of a Franchise
License on the completion of capital improvements which the Corporation's
Board of Directors determines are too expensive or otherwise unwarranted in
light of general economic conditions or the operating results or prospects of
the affected hotel. In that event, the Corporation's Board of Directors may
elect to allow the Franchise License to lapse which could under certain
circumstance result in the Corporation incurring significant costs for
terminating such Franchise License. In any case, if a franchise or brand
affiliation is terminated, the Corporation and the Lessee may seek to obtain a
suitable replacement franchise or brand affiliation, or to operate the hotel
independent of a franchise or brand affiliation. The loss of a franchise or
brand affiliation could have a material adverse effect upon the operations or
the underlying value of the hotel covered by the franchise or brand
affiliation because of the loss of associated name recognition, marketing
support and centralized reservation systems provided by the franchisor or
brand owner.
 
HORSE RACING INDUSTRY RISKS
 
  The Operating Company's pari-mutuel wagering operations are contingent upon
the continued governmental acceptance of such operations as forms of legalized
gambling. As a form of gambling, pari-mutuel wagering is subject to extensive
licensing and regulatory control by the California Horse Racing Board (the
"CHRB") and other California authorities. These regulatory authorities have
broad powers with respect to the licensing of gaming operations, and may
revoke, suspend, condition or limit the gaming operations of the Operating
Company. Any such change in regulations may have a material adverse effect on
the Operating Company's financial condition and results of operations. The
CHRB also has the discretion to limit the number of days and dates on which
the Operating Company may conduct live horse racing. No assurance can be given
as to how
 
                                      S-7

 
many, or which, horse racing days the CHRB will allocate to the Operating
Company in the future, nor can there be any assurance that an issued license
will not be modified or revoked. Any change in the CHRB regulations or how
many, or which, horse racing days are allocated to the Operating Company could
have a material adverse effect on the Operating Company's financial condition
and results of operations.
 
  The Operating Company manages the Racecourse's horse racing operations, an
area in which Patriot has no experience prior to the merger with California
Jockey Club. Although the Operating Company has retained certain members of
Bay Meadows Operating Company's former management and personnel to continue to
manage these horse racing operations, there can be no assurance that the
Operating Company will be able to continue to employ said management and
personnel. Failure to retain such management and personnel could have a
material adverse effect on the results of operations and financial condition
of the Operating Company.
 
                                      S-8

 
                                 THE COMPANIES
 
  On July 1, 1997, the Corporation, a Delaware corporation formerly known as
California Jockey Club ("Cal Jockey"), merged (the "Merger") with Patriot
American Hospitality, Inc., a Virginia corporation (collectively with its
subsidiaries, "Patriot") with the Corporation as the surviving company. In
connection with the Merger, Cal Jockey changed its name to "Patriot American
Hospitality, Inc." and the Operating Company (formerly known as Bay Meadows
Operating Company ("Bay Meadows")) changed its name to "Patriot American
Hospitality Operating Company." Each share of REIT Common Stock is "paired"
and trades as a unit with one share of Operating Company Common Stock. Unless
the context otherwise requires, historical information contained herein with
respect to the Corporation refers to the operations of Patriot prior to the
Merger.
 
  As a result of the Merger, the Corporation became one of two hotel REITs
with the paired share ownership structure. This paired share ownership
structure permits the Corporation to lease certain of its existing hotels, as
well as newly-acquired hotels, to the Operating Company, thereby retaining for
the Companies' stockholders the economic benefits of both the lease payments
received by the Corporation and the operating profits realized by the
Operating Company, while maintaining the tax benefits of the Corporation's
status as a REIT under the Code. The paired share ownership structure also
facilitates the Companies' acquisition and development of hotel management and
franchise businesses, operations which the Corporation would have difficulty
pursuing within a traditional REIT structure.
 
THE CORPORATION
 
  The Corporation is a self-administered REIT which owns interests in a
portfolio of hotels. The Corporation's hotels are diversified by franchise or
brand affiliation and serve primarily major U.S. business centers. In addition
to hotels catering primarily to business travelers, the Corporation's
portfolio includes world-class resort hotels and prominent hotels in major
tourist destinations. Certain of the hotels are operated under franchise or
brand affiliations with nationally recognized hotel companies. Pursuant to its
alliance with Doubletree Hotels Corporation, the Corporation owns eleven of
its hotels through joint venture arrangements under which the Corporation
holds a 90% ownership interest with regard to five of such hotels and an 85%
ownership interest with regard to six of such hotels. Pursuant to its alliance
with the Snavely Group, the Corporation owns four of its hotels through joint
venture arrangements under which the Corporation holds a 90% ownership
interest.
 
  Through its wholly-owned subsidiaries, PAH LP, Inc. and PAH GP, Inc., the
Corporation holds an approximate 82.6% limited partnership interest and the
sole 1% general partner interest in the Realty Partnership. The Realty
Partnership owns, directly or through subsidiaries, the Corporation's
interests in each of its hotels. Subject to certain limitations contained in
the agreement of limited partnership of the Realty Partnership, partners in
the Realty Partnership (other than PAH LP, Inc.) may redeem their units of
limited partnership interest ("Units") in the Realty Partnership, along with
an equivalent number of Units in the Operating Partnership, for cash. At their
election, the Companies may acquire Units offered for redemption for shares of
Paired Common Stock on a one-for-one basis. In the future, the Companies may
issue additional Units in connection with acquisitions.
 
  Since 1983, shares of REIT Common Stock have been paired and traded together
with the shares of Operating Company Common Stock as a single unit pursuant to
the terms of a pairing agreement, dated as of February 17, 1983, as amended
(the "Pairing Agreement").
 
THE OPERATING COMPANY
 
  The Operating Company currently leases from the Corporation 42 hotels, 24 of
which were purchased by the Corporation subsequent to the Merger. The
Operating Company anticipates acquiring the leases for an additional two of
the Corporation's existing hotels in the near future. Additionally, the
Corporation expects that a significant portion of its future acquisitions will
be leased to the Operating Company. In 1997, the Operating
 
                                      S-9

 
Company acquired the management operations of the Grand Heritage hotels and
Carefree resorts. In addition, the Operating Company provides management
services to the Grand Heritage and Carefree hotels and resorts that it leases
from the Corporation. In addition to leasing and managing hotels, the
Operating Company is also engaged in the business of conducting and offering
pari-mutuel wagering on thoroughbred horse racing at the Racecourse.
 
  The Operating Company holds an approximate 81.1% limited partnership
interest and the sole 1% general partner interest in Patriot American
Hospitality Operating Partnership, L.P. (the "Operating Partnership"). The
Operating Partnership owns, directly or through subsidiaries, the Operating
Company's assets. Subject to certain limitations contained in the agreement of
limited partnership of the Operating Partnership, partners in the Operating
Partnership may redeem their Units in the Operating Partnership, along with an
equivalent number of Units in the Realty Partnership, for cash. At their
election, the Companies may acquire Units offered for redemption for shares of
Paired Common Stock on a one-for-one basis. In the future, the Companies may
issue additional Units in connection with acquisitions.
 
  As described above, shares of the Operating Company Common Stock are paired
and trade together with the shares of REIT Common Stock as a single unit
pursuant to the Pairing Agreement.
 
                                     S-10

 
                   CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
 
  The following summary of certain federal income tax considerations is based
on current law, is for general information only, and is not tax advice. This
discussion does not purport to deal with all aspects of taxation that may be
relevant to particular stockholders in light of their personal investment or
tax circumstances, or to certain types of stockholders (including insurance
companies, tax exempt organizations, financial institutions or broker dealers,
foreign corporations and persons who are not citizens or residents of the
United States) subject to special treatment under the federal income tax laws.
Further, the following summary assumes that the Paired Common Stock (also
referred to herein as "Paired Shares") is held as a capital asset and is not
purchased as part of a straddle, hedging or integrated transaction. In
addition, this section does not discuss foreign, state or local taxation.
 
  This discussion does not address the taxation of the Corporation or the
impact on the Corporation of its election to be taxed as a REIT. Such matters
are discussed in the accompanying Prospectus under "Federal Income Tax
Considerations." Prospective investors should consult, and must depend on,
their own tax advisors regarding the state, local, foreign and other tax
consequences of holding and disposing of Paired Common Stock.
 
SEPARATE TAXATION
 
  Notwithstanding that Paired Shares may only be transferred as a unit,
holders of Paired Shares will be treated for U.S. federal income tax purposes
as holding equal numbers of shares of Corporation Common Stock and of
Operating Company Common Stock. The tax treatment of distributions to
stockholders and of any gain or loss upon sale or other disposition of the
Paired Shares (as well as the amount of gain or loss) must therefore be
determined separately with respect to each share of Corporation Common Stock
and each share of Operating Company Common Stock contained within each Paired
Share. The tax basis and holding period for each share of Corporation Common
Stock and each share of Operating Company Common Stock also must be determined
separately. See "--Tax Consequences of Redemption." Upon a taxable sale of a
Paired Share, the amount realized should be allocated between the Corporation
Common Stock and the Operating Company Common Stock based on their then
relative values.
 
TAXATION OF TAXABLE U.S. STOCKHOLDERS
 
  As used herein, the term "U.S. Stockholder" means a holder of Paired Shares
that for United States federal income tax purposes is (i) a citizen or
resident of the United States, (ii) a corporation, partnership, or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, (iii) an estate, the income of which is subject
to United States federal income taxation regardless of its source or (iv) a
trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust
and (v) is not an entity that has a special status under the Code (such as a
tax-exempt organization or a dealer in securities).
 
  As long as the Corporation qualifies as a REIT, distributions made to the
Corporation's taxable U.S. Stockholders out of current or accumulated earnings
and profits (and not designated as capital gain dividends) will be taken into
account by such U.S. Stockholders as ordinary income and will not be eligible
for the dividends received deduction generally available to corporations. For
purposes of determining whether distributions on Corporation Common Stock are
out of earnings and profits, earnings and profits will be allocated first to
any outstanding preferred stock of the Corporation and then allocated to its
Common Stock. Subject to the discussion below regarding changes to the capital
gains tax rates, distributions that are designated as capital gain dividends
will be taxed as capital gains (to the extent they do not exceed the
Corporation's actual net capital gain for the taxable year) without regard to
the period for which the stockholder has held his Corporation Common Stock.
However, corporate stockholders may be required to treat up to 20% of certain
capital gain dividends as ordinary income. Distributions in excess of current
and accumulated earnings and profits will not be taxable to a stockholder to
the extent that they do not exceed the adjusted basis of the stockholder's
Corporation Common Stock, but rather will reduce the adjusted basis of such
stock. To the extent that such distributions in excess of
 
                                     S-11

 
current and accumulated earnings and profits exceed the adjusted basis of a
stockholder's Corporation Common Stock, such distributions will be included in
income as long-term capital gain (or, in the case of individuals, trusts and
estates, mid-term capital gain if the Corporation Common Stock has been held
for more than 12 months but not more than 18 months or in the case of all tax
payers short-term capital gain if the Corporation Common Stock has been held
for one year or less) assuming shares are a capital asset in the hands of the
stockholder. In addition, any distribution declared by the Corporation in
October, November or December of any year and payable to a stockholder of
record on a specified date in any such month shall be treated as both paid by
the Corporation and received by the stockholder on December 31 of such year,
provided that the distribution is actually paid by the Corporation during
January of the following calendar year.
 
  Distributions from the Operating Company up to the amount of the Operating
Company's current or accumulated earnings and profits (less any earnings and
profits allocable to distributions on any preferred stock of the Operating
Company) will be taken into account by U.S. Stockholders as ordinary income
and generally will be eligible for the dividends-received deduction for
corporations (subject to certain limitations). Distributions in excess of the
Operating Company's current and accumulated earnings and profits will not be
taxable to a holder to the extent that they do not exceed the adjusted basis
of the holder's Operating Company Common Stock, but rather will reduce the
adjusted basis of such Operating Company Common Stock. To the extent that such
distributions exceed the adjusted basis of a holder's Operating Company Common
Stock they will be included in income as long-term capital gain (or, in the
case of individuals, trusts and estates, mid-term capital gain if the
Operating Company Common Stock has been held for more than 12 months but not
more than 18 months or in the case of all tax payers short-term capital gain
if the Operating Company Common Stock has been held for one year or less)
assuming the shares are a capital asset in the hands of the stockholder.
 
  The Corporation may elect to retain and pay income tax on net long-term
capital gains recognized during the taxable year. For taxable years beginning
after December 31, 1997, if the Corporation so elects for a taxable year, its
stockholders would include in income as capital gain their proportionate share
of such portion of the Corporation's long-term capital gains as the
Corporation may designate. A stockholder would be deemed to have paid its
share of the tax paid by the Corporation, which would be credited or refunded
to the stockholder. The stockholder's basis in its shares of Corporation
Common Stock would be increased by the amount of undistributed capital gains
(less the capital gains tax paid by the Corporation) included in the
stockholder's capital gains.
 
  Taxable distributions from the Corporation or the Operating Company and gain
or loss from the disposition of shares of Corporation Common Stock and
Operating Company Common Stock will not be treated as passive activity income
and, therefore, stockholders generally will not be able to apply any passive
activity losses (such as losses from certain types of limited partnerships in
which the stockholder is a limited partner) against such income. In addition,
taxable distributions from the Corporation or the Operating Company generally
will be treated as investment income for purposes of the investment interest
deduction limitations. Capital gain dividends, and capital gains (other than
short-term capital gains) from the disposition of Paired Shares and actual or
deemed distributions from either company treated as such, including capital
gains (other than short-term capital gains) recognized an account of non-
taxable distributions in excess of a stockholder's basis and any deemed
capital gain dividends by a Corporation stockholder on account of any retained
capital gains of the Corporation, will be treated as investment income for
purposes of the investment interest deduction limitations only if and to the
extent the stockholder so elects, in which case such capital gain dividends
and gains will be taxed at ordinary income rates to the extent of the
election. The Corporation and the Operating Company will notify stockholders
after the close of their taxable years as to the portions of the distributions
attributable to that year that constitute ordinary income, return of capital,
and (in the case of the Corporation) capital gain. Stockholders may not
include in their individual income tax returns any net operating losses or
capital losses of the Corporation or of the Operating Company.
 
  The Taxpayer Relief Act of 1997 (the "Relief Act") alters the taxation of
capital gain income. Under the Relief Act, individuals, trusts and estates
that hold certain investments for more than 18 months may be taxed at
 
                                     S-12

 
a maximum long-term capital gain rate of 20% on the sale or exchange of those
investments. Individuals, trusts and estates that hold certain assets for more
than 12 months but not more than 18 months may be taxed at a maximum mid-term
capital gain rate of 28% on the sale or exchange of those investments. The
Relief Act also provides a maximum rate of 25% for "unrecaptured section 1250
gain" for individuals, trusts and estates, special rules for "qualified 5-year
gain," as well as other changes to prior law. The Relief Act allows the
Internal Revenue Service (the "IRS") to prescribe regulations on how the
Relief Act's new capital gain rates will apply to sales of assets by, and
sales of interests in, "pass-thru entities," which include REITs such as the
Corporation. To date regulations have not yet been prescribed, and it remains
unclear how the Relief Act's new rates will apply to capital gain dividends or
undistributed capital gains from the Corporation will be taxed to individuals,
trusts and estates at the new rates for mid-term capital gains and unrealized
section 1250 recapture, rather than the long-term capital gain rates.
Investors are urged to consult their own tax advisors with respect to the new
rules contained in the Relief Act.
 
TAXATION OF STOCKHOLDERS ON THE DISPOSITION OF PAIRED SHARES
 
  In general, and assuming the taxpayer has the same holding period for the
Corporation Common Stock and the Operating Company Common Stock, any gain or
loss realized upon a taxable disposition of Paired Shares by a stockholder who
is not a dealer in securities will be treated as long-term capital gain or
loss if the Paired Shares have been held for more than 12 months, (or, in the
case of individuals, trusts and estates, mid-term capital gain or loss if the
Paired Shares have been held for more than 12 months but not more than 18
months, and long-term capital gain or loss if the Paired Shares have been held
for more than 18 months) and otherwise as short-term capital gain or loss. In
addition, any loss upon a sale or exchange of Corporation Common Stock by a
stockholder who has held such stock for six months or less (after applying
certain holding period rules), will be treated as a long-term capital loss to
the extent of distributions from the Corporation or undistributed capital
gains required to be treated by such stockholder as long-term capital gain.
All or a portion of any loss realized upon a taxable disposition of Paired
Shares may be disallowed if other Paired Shares are purchased within 30 days
before or after the disposition.
 
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
 
  The Corporation and the Operating Company will each report to their U.S.
Stockholders and the IRS the amount of distributions paid during each calendar
year, and the amount of tax withheld, if any. Under the backup withholding
rules, a stockholder may be subject to backup withholding at the rate of 31%
with respect to distributions paid unless such holder (i) is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact or (ii) provides a taxpayer identification number, certifies as to
no loss of exemption from backup withholding and otherwise complies with the
applicable requirements of the backup withholding rules. A stockholder who
does not provide the Corporation and the Operating Company with his, her or
its correct taxpayer identification number also may be subject to penalties
imposed by the IRS. Any amount paid as backup withholding will be creditable
against the stockholder's income tax liability. In addition, the Corporation
may be required to withhold a portion of capital gain distributions to any
stockholders who fail to certify their non-foreign status to the Corporation.
 
TAXATION OF TAX-EXEMPT STOCKHOLDERS
 
  Tax-exempt entitles, including qualified employee pension and profit sharing
trusts and individual retirement accounts ("Exempt Organizations"), generally
are exempt from federal income taxation. They are, however, subject to
taxation on their unrelated business taxable income ("UBTI"). While many
investments in real estate generate UBTI, amounts distributed by the
Corporation to Exempt Organizations generally should not constitute UBTI, nor
should dividends paid by the Operating Company generally constitute UBTI.
However, if an Exempt Organization finances its acquisition of Paired Shares
with debt, a portion of its income from the Corporation and the Operating
Company will constitute UBTI pursuant to the "debt-financed property" rules.
Furthermore, social clubs, voluntary employee benefit associations,
supplemental unemployment benefit trusts, and qualified group legal services
plans that are exempt from taxation under paragraphs (7), (9), (17), and (20),
respectively, or Code section 501(c) are subject to different UBTI rules,
which generally will require them to characterize distributions from the
Corporation and the Operating Company as UBTI.
 
                                     S-13

 
                                 UNDERWRITING
 
  Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Companies have agreed to sell to
PaineWebber Incorporated (the "Underwriter"), and the Underwriter has agreed
to purchase from the Companies, 1,000,033 shares of Paired Common Stock. In
the Underwriting Agreement, the Underwriter has agreed, subject to the terms
and conditions set forth therein, to purchase all of the Shares of Paired
Common Stock offered hereby if any are purchased.
 
  It is expected that all or a substantial portion of the shares of Paired
Common Stock offered hereby may be sold by the Underwriter to purchasers in
one or more transactions (which may involve block transactions) on the NYSE or
on other national securities exchanges on which the Paired Common Stock is
traded or otherwise. The distribution of the shares of Paired Common Stock may
also be effected from time to time in special offerings, exchange
distributions and/or secondary distributions pursuant to and in accordance
with the rules of the NYSE or such other exchanges, in the over-the-counter
market, in negotiated transactions through the writing of options on the
shares of Paired Common Stock (whether such options are listed on an options
exchange or otherwise), or in a combination of such methods at prevailing
market prices or at negotiated prices. The Underwriter may effect such
transactions by selling shares of Paired Common Stock to or through dealers,
and such dealers may receive compensation in the form of discounts,
concessions or commissions from the Underwriter and/or the purchasers of such
shares of Paired Common Stock for whom they may act as agents or to whom they
may sell as principal.
 
  In connection with the sale of the shares of Paired Common Stock, the
Underwriter may receive compensation from purchasers of the shares of Paired
Common Stock for whom it may act as agent or to whom it may sell as principal
in the form of commissions or discounts, in each case in amounts which will
not exceed those customary in the types of transactions involved. The
Underwriter and any dealers that participate in the distribution of the shares
of Paired Common Stock may be deemed to be underwriters, and any discounts
received by them from the Companies and any compensation received by them on
resale of the shares of Paired Common Stock by them may be deemed to be
discounts and commissions under the Securities Act.
 
  The Underwriter and its affiliates has provided investment banking and
financial advisory services to the Companies from time to time for which it
has received customary fees. Additionally, the Underwriter is acting as
financial advisor to the Companies in connection with their acquisition of
Wyndham Hotel Corporation and an affiliate of the Underwriter owns the land on
which the Bay Meadows Racecourse is situated, which it leases to the
Corporation. In addition, the Underwriter or its affiliates has provided and
may provide from time to time financing to the Companies or their affiliates.
 
  The Companies have agreed to indemnify the Underwriter against, or
contribute to payments that the Underwriter may be required to make in respect
of, certain liabilities, including liabilities under the Securities Act of
1933, as amended.
 
                                USE OF PROCEEDS
 
  The net cash proceeds to the Companies from the sale of the Paired Common
Stock offered hereby, after deduction of estimated expenses of the Offering,
are estimated to be approximately $27.6 million and will be used for general
working capital purposes, including, without limitation, the repurchase of
units of limited partnership interest in the Realty Partnership and the
Operating Partnership.
 
                                 LEGAL MATTERS
 
  Certain legal matters will be passed upon for the Companies by Goodwin,
Procter & Hoar llp, Boston, Massachusetts, a limited liability partnership
including professional corporations, as corporate, securities and tax counsel
to the Companies. Gilbert G. Menna, an officer of PAH GP, Inc. a wholly-owned
subsidiary of the Corporation, is the sole shareholder of Gilbert G. Menna,
P.C., which is a partner in Goodwin, Procter & Hoar llp. Joseph L. Johnson
III, Esq., an officer of PAH GP, Inc., is a partner in Goodwin, Procter & Hoar
llp. Kathryn I. Murtagh, an officer of the Corporation, the Operating Company
and PAH GP, Inc., is a partner in Goodwin, Procter & Hoar llp.
 
                                     S-14

 
                                 $475,000,000
 
                      PATRIOT AMERICAN HOSPITALITY, INC.
 
                                 COMMON STOCK
                                PREFERRED STOCK
 
                                  $25,000,000
 
                PATRIOT AMERICAN HOSPITALITY OPERATING COMPANY
 
                                 COMMON STOCK
                                PREFERRED STOCK
 
  Patriot American Hospitality, Inc. (the "REIT" or the "Corporation") and
Patriot American Hospitality Operating Company (the "Operating Company", and,
together with the REIT, the "Companies"), may offer from time to time (i)
shares of common stock, $.01 par value, of the REIT ("REIT Common Stock") and
shares of common stock, $.01 par value, of the Operating Company ("Operating
Company Common Stock") which are "paired" and trade as units consisting of one
share of REIT Common Stock and one share of Operating Company Common Stock
(the "Paired Common Stock"); and (ii) one or more series of shares of
preferred stock, $.01 par value, of the REIT ("REIT Preferred Stock") and
shares of preferred stock, $.01 par value, of the Operating Company
("Operating Company Preferred Stock," and collectively with REIT Preferred
Stock, the "Preferred Stock") which may be, but are not required to be
"paired." The Preferred Stock and the Paired Common Stock (collectively, the
"Securities") may be offered separately or together, in separate series, in
amounts, at prices and on terms, all to be set forth in one or more
supplements to this Prospectus (each, a "Prospectus Supplement"). Of the
$500,000,000 aggregate public offering price of Securities, up to $475,000,000
will be offered by the REIT and up to $25,000,000 will be offered by the
Operating Company.
 
  The specific terms of the Securities for which this Prospectus is being
delivered will be set forth in the applicable Prospectus Supplement and will
include, where applicable: (i) in the case of Preferred Stock, the specific
designations and stated value per share, any dividend, liquidation,
redemption, conversion, voting and other rights, and any initial public
offering price; and (ii) in the case of Paired Common Stock, any public
offering price. In addition, such specific terms may include limitations on
direct or beneficial ownership and restrictions on transfer of the Securities,
in each case as may be consistent with the REIT's Certificate of Incorporation
as then in effect and/or the Operating Company's Certificate of Incorporation
as then in effect, as the case may be, or otherwise appropriate to preserve
the status of the REIT as a real estate investment trust for federal income
tax purposes. See "Restrictions on Transfers of Capital Stock."
 
  The applicable Prospectus Supplement will also contain information, where
appropriate, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Securities
covered by such Prospectus Supplement.
 
  The Securities may be offered by the Companies directly to one or more
purchasers, through agents designated from time to time by the Companies or to
or through underwriters or dealers. If any agents or underwriters are involved
in the sale of any of the Securities, their names, and any applicable purchase
price, fee, commission or discount arrangement between or among them, will be
set forth, or will be calculable from the information set forth, in an
accompanying Prospectus Supplement. See "Plan of Distribution." No Securities
may be sold without delivery of a Prospectus Supplement describing the method
and terms of the offering of such Securities.
 
                               ----------------
 
 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
  EXCHANGE COMMISSION  NOR HAS  THE COMMISSION PASSED  UPON THE  ACCURACY OR
   ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
 
                               ----------------
 
                 THE DATE OF THIS PROSPECTUS IS JULY 18, 1997

 
                             AVAILABLE INFORMATION
 
  The Companies have filed with the Securities and Exchange Commission (the
"SEC" or "Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Securities. This Prospectus, which constitutes part
of the Registration Statement, omits certain of the information contained in
the Registration Statement and the exhibits thereto on file with the
Commission pursuant to the Securities Act and the rules and regulations of the
Commission thereunder. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. The Registration
Statement, including exhibits thereto, may be inspected and copies obtained
from the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: 7 World Trade Center, 13th Floor, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material may be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Companies file
information electronically with the Commission, and the Commission maintains a
Web Site that contains reports, proxy and information statements and other
information regarding registrants (including the Companies) that file
electronically with the Commission. The address of the Commission's Web Site
is (http://www.sec.gov).
 
  The Companies are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports and proxy statements and other information
with the Commission. Such reports, proxy statements and other information can
be inspected and copied at the locations described above. Copies of such
materials can be obtained by mail from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. In addition, reports, proxy and information
statements and other information concerning the Companies can be inspected at
the offices of the New York Stock Exchange ("NYSE"), 20 Broad Street, New
York, New York 10005.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
  The following documents are incorporated herein by reference:
 
CORPORATION AND OPERATING COMPANY
 
  1. Current Reports on Form 8-K of Patriot American Hospitality, Inc. and
Patriot American Hospitality Operating Company dated July 1, 1997 (Nos. 001-
09319 and 001-09320 filed July 15, 1997), July 15, 1997 (Nos. 001-09319 and
001-09320 filed July 21, 1997), July 22, 1997 (Nos. 001-09319 and 001-09320
filed July 22, 1997), September 17, 1997 (Nos. 001-09319, 001-09320 filed
September 17, 1997), September 30, 1997, as amended (Nos. 001-09319, 001-
09320, filed October 14, 1997 and October 28, 1997) and September 30, 1997
(Nos. 001-09319 and 001-09320 filed November 12, 1997);
 
  2. Quarterly Report on Form 10-Q of Patriot American Hospitality, Inc. and
Patriot American Hospitality Operating Company (Nos. 001-09319, 001-09320) for
the fiscal quarter ended June 30, 1997, and
 
  3. The description of the paired shares of REIT Common Stock and Operating
Company Common Stock contained or incorporated by reference in the REIT's and
the Operating Company's Registration Statement on Form 8-A (Nos. 001-09319,
001-09320), including any amendments thereto.
 
CALIFORNIA JOCKEY CLUB AND BAY MEADOWS OPERATING COMPANY
 
  1. Annual Report on Form 10-K of California Jockey Club and Bay Meadows
Operating Company (Nos. 001-09319, 001-09320) for the fiscal year ended
December 31, 1996;
 
                                       2

 
  2. Current Reports on Form 8-K of California Jockey Club and Bay Meadows
Operating Company dated (i) February 24, 1997 (Nos. 001-09319, 001-09320 filed
March 3, 1997) and (ii) May 28, 1997 (Nos. 001-09319, 001-09320 filed June 5,
1997);
 
  3. Quarterly Report on Form 10-Q of California Jockey Club and Bay Meadows
Operating Company (Nos. 001-09319, 001-09320) for the fiscal quarter ended
March 31, 1997; and
 
  4. Quarterly Report on Form 10-Q/A of California Jockey Club and Bay Meadows
Operating Company (Nos. 001-09319, 001-09320) for the fiscal quarter ended
March 31, 1997 (filed May 16, 1997).
 
PATRIOT AMERICAN HOSPITALITY, INC. (PATRIOT)
 
  1. Annual Report on Form 10-K of Patriot American Hospitality, Inc., (No.
001-13898) for the fiscal year ended December 31, 1996;
 
  2. Current Reports on Form 8-K of Patriot American Hospitality, Inc., dated:
(i) April 2, 1996, as amended (No. 001-13898 filed April 17, 1996 and June 14,
1996) reporting the acquisition of certain assets, (ii) December 5, 1996 (No.
001-13898 filed December 5, 1996) reporting the acquisition of certain assets,
(iii) January 16, 1997, as amended (No. 001-13898 filed January 31, 1997,
February 21, 1997, April 8, 1997, April 9, 1997 and May 19, 1997), reporting
the consummation of the acquisition of Carefree Resorts Corporation and
Resorts Limited Partnership and certain other assets, (iv) February 24, 1997
(No. 001-13898 filed March 3, 1997) reporting the execution of a merger
agreement between Patriot and California Jockey Club and (v) April 14, 1997,
as amended (No. 001-13898 filed April 17, 1997 and April 18, 1997), reporting
the execution of a merger agreement between Patriot and Wyndham Hotel
Corporation and the related stock purchase agreement and the execution of
agreements with partnerships affiliated with members of the Trammell Crow
family providing for the acquisition by the REIT of 11 full- service Wynham-
branded hotels; and
 
  3. Quarterly Report on Form 10-Q of Patriot American Hospitality, Inc. (No.
001-13898) as of and for the fiscal quarter ended March 31, 1997.
 
  All other documents filed with the Commission by the REIT or the Operating
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Securities are to be incorporated herein by reference and such
documents shall be deemed to be a part hereof from the date of filing of such
documents. Any statement contained in this Prospectus or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
that also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
 
  ANY PERSON RECEIVING A COPY OF THIS PROSPECTUS MAY OBTAIN, WITHOUT CHARGE,
UPON WRITTEN OR ORAL REQUEST, A COPY OF ANY OF THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN, EXCEPT FOR THE EXHIBITS TO SUCH DOCUMENTS. WRITTEN REQUESTS
SHOULD BE MAILED TO 3030 LBJ FREEWAY, SUITE 1500, DALLAS, TX 75234, ATTENTION:
SHAREHOLDER RELATIONS (TELEPHONE NO. 972-888-8000).
 
                                       3

 
                                 THE COMPANIES
 
RECENT DEVELOPMENTS
 
  On July 1, 1997, the REIT (formerly known as California Jockey Club, "Cal
Jockey") merged (the "Merger") with Patriot American Hospitality, Inc., a
Virginia corporation ("Patriot"), with the REIT being the surviving
corporation. Upon completion of the Merger, the REIT and the Operating Company
(formerly known as Bay Meadows Operating Company, "Bay Meadows") were the
surviving entities, each with a limited partnership subsidiary which holds
substantially all of its assets and conducts substantially all of its
operations. Following the Merger, the surviving entities have continued the
operations of Patriot, the REIT and the Operating Company.
 
THE REIT
 
  The REIT is a self-administered real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"). The REIT owns
interests in a portfolio of hotels which are diversified by franchise or brand
affiliation, and serve primarily major U.S. business centers. In addition to
hotels catering primarily to business travelers, the REIT's portfolio also
includes world-class resort hotels and prominent hotels in major tourist
destinations. The REIT also leases approximately 174 acres of land in San
Mateo, California on which the Bay Meadows Racecourse (the "Racecourse") is
situated.
 
  The REIT conducts substantially all of its operations through Patriot
American Hospitality Partnership, L.P., a Virginia partnership (the "Realty
Partnership"), which owns, directly and through its subsidiaries, the REIT's
interests in each of its hotels. Through its wholly-owned subsidiaries, PAH
GP, Inc. and PAH, LP, Inc., the REIT owns the sole general partnership
interest and its limited partnership interest in the Realty Partnership.
 
  Since 1983, the shares of REIT Common Stock have been paired and have traded
together with the shares of Operating Company Common Stock as a single unit
pursuant to a stock pairing agreement. The terms of the pairing agreement are
set forth in the Pairing Agreement dated as of February 17, 1983 and amended
from time to time thereafter, by and between the REIT and the Operating
Company.
 
  The REIT's principal executive offices are located at 3030 LBJ Freeway,
Suite 1500, Dallas, Texas 75234 and its telephone number at that location is
(972) 888-8000.
 
THE OPERATING COMPANY
 
  The Corporation currently leases 42 hotels to the Operating Company.
 
  The Operating Company is also engaged in the business of conducting and
offering pari-mutuel wagering (meaning that individuals wager against each
other and not against the operator of the facility) on thoroughbred horse
racing at the Racecourse. In addition to live horse racing at the Racecourse,
the Operating Company simulcasts its horse races to as many as 31 sites in
California and as many as 450 sites in the remainder of the world.
Additionally, the Operating Company acts as an off-track wagering facility,
allowing patrons to wager on horse races at other tracks, even when live horse
racing is not being conducted at the Racecourse, by accepting simulcasts of
horse races conducted throughout the United States, Canada, Mexico, Australia
and Hong Kong. The Operating Company generates revenues from commissions on
pari-mutuel wagering, admissions, parking, program sales and the food and
beverage concessions at the Racecourse. As described above, shares of
Operating Company Common Stock are paired and trade together with the shares
of REIT Common Stock as a single unit on the NYSE pursuant to the Pairing
Agreement.
 
  The Operating Company's principal executive offices are located at 3030 LBJ
Freeway, Suite 1500, Dallas, Texas 75234 and its telephone number at that
location is (972) 888-8000.
 
                                       4

 
                                USE OF PROCEEDS
 
  Unless otherwise described in the applicable Prospectus Supplement, the
Companies intend to apply the net proceeds from the sale of Securities to
general corporate and working capital purposes, including, without limitation,
repayment of indebtedness, investment in new properties and maintenance of
currently owned properties.
 
                      RATIOS OF EARNINGS TO FIXED CHARGES
 
CAL JOCKEY AND BAY MEADOWS
 
  The following table sets forth the historical consolidated ratios of
earnings to fixed charges for California Jockey Club and Bay Meadows Operating
Company for the periods shown:
 


                                                     YEAR ENDED DECEMBER 31,
                              THREE MONTHS ENDED --------------------------------
                                MARCH 31, 1997   1996   1995   1994  1993   1992
                              ------------------ ----  ------ ------ ----- ------
                                                         
Ratio........................       76.84x        (a)  84.20x 55.09x 8.49x 20.52x

- --------
(a) Earnings were insufficient to cover fixed charges by $501,000.
 
PATRIOT
 
  The following table sets forth the historical consolidated ratios of
earnings to fixed charges for Patriot for the periods shown:
 


                                                                    YEAR ENDED
                                                                   DECEMBER 31,
                                                  SIX MONTHS ENDED -------------
                                                   JUNE 30, 1997   1996  1995(A)
                                                  ---------------- ----- -------
                                                                
Ratio............................................      2.55x       7.00x 80.37x

- --------
(a) Patriot commenced operations on October 2, 1995.
 
  The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of pre-tax income from
continuing operations plus fixed charges. Fixed charges consist of interest
expense and the amortization of debt issuance costs. To date, the Companies
have not issued any Preferred Stock; therefore, the ratios of earnings to
combined fixed charges and Preferred Stock dividend requirements are the same
as the ratios of earnings to fixed charges presented above.
 
                                       5

 
                         DESCRIPTION OF CAPITAL STOCK
 
  The Amended and Restated Certificate of Incorporation of the REIT (the "REIT
Charter"), authorizes the REIT to issue up to 1.5 billion shares of capital
stock, consisting of (i) 650 million shares of REIT Common Stock, (ii) 100
million shares of REIT Preferred Stock, and (iii) 750 million shares of excess
stock, $.01 par value (the "Excess Stock"). The REIT Charter grants the REIT
Board of Directors the power to create and authorize the issuance of REIT
Preferred Stock in one or more series, having such voting rights, such rights
to dividends and distributions and rights in liquidation, such conversion,
exchange and redemption rights and such designations, preferences and
participations and such other limitations and restrictions as are not
prohibited by the REIT Charter or applicable law as are specified by the REIT
Board of Directors in its discretion. As of November 12, 1997, the REIT Board
of Directors had not created or authorized any class or series of REIT
Preferred Stock and no shares of Excess Stock were outstanding.
 
  The Amended and Restated Certificate of Incorporation of the Operating
Company (the "Operating Company Charter") currently authorizes the Operating
Company to issue up to 1.5 billion shares of capital stock, consisting of (i)
650 million shares of Operating Company Common Stock, (ii) 100 million shares
of Operating Company Preferred Stock, and (iii) 750 million shares of Excess
Stock. The Operating Company Charter grants the Operating Company Board of
Directors the power to create and authorize the issuance of Operating Company
Preferred Stock in one or more series, having such voting rights, such rights
to dividends and distributions and rights in liquidation, such conversion,
exchange and redemption rights and such designations, preferences and
participations and such other limitations and restrictions as are not
prohibited by the Operating Company Charter or applicable law as are specified
by the Operating Company Board of Directors in its discretion. As of November
12, 1997, the Operating Company Board of Directors had not created or
authorized any class or series of Operating Company Preferred Stock and no
shares of Excess Stock were outstanding.
 
  Under the Pairing Agreement, shares of Paired Common Stock and shares of
Preferred Stock of either the REIT or the Operating Company that are
convertible into shares of Paired Common Stock shall not be transferrable or
transferred on the books of the REIT or the Operating Company unless a
simultaneous transfer is made by the same transferor to the same transferee of
an equal number of shares of that same class or series of common stock or
Preferred Stock of the other company. Neither the REIT nor the Operating
Company may issue shares of REIT Common Stock and Operating Company Common
Stock, as the case may be, or shares of Preferred Stock that are convertible
into shares of Paired Common Stock unless provision has been made for the
simultaneous issuance or transfer to the same person of the same number of
shares of that same class or series of common stock or Preferred Stock of the
other company and for the pairing of such shares. Each certificate issued for
paired shares of REIT Common Stock and Operating Company Common Stock must be
issued "back-to-back" with a certificate evidencing the same number of shares
of the other company. Each certificate must bear a conspicuous legend on its
face referring to the restrictions on ownership and transfer under the Bylaws
of each Company.
 
  In addition, neither the REIT nor the Operating Company may declare a stock
dividend, issue any rights or warrants or otherwise reclassify shares unless
the other company simultaneously takes the same or equivalent action.
 
                                       6

 
                        DESCRIPTION OF PREFERRED STOCK
 
  The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the REIT Charter and the Operating Company Charter
(collectively the "Charters") and any applicable amendment to the REIT Charter
or the Operating Company Charter designating terms of a series of Preferred
Stock (a "Designating Amendment").
 
  With the exception of Preferred Stock that is convertible into Paired Common
Stock, the REIT may authorize and issue REIT Preferred Stock without the
issuance by the Operating Company of corresponding shares, and the Operating
Company may authorize and issue Operating Company Preferred Stock without the
issuance by the REIT of corresponding shares. Furthermore, the Pairing
Agreement does not limit the power of the Board of Directors of each of the
REIT and the Operating Company to independently determine the rights,
preferences and restrictions of such shares.
 
  Subject to the limitations prescribed by the REIT Charter and the Operating
Company Charter, respectively, the Board of Directors of each of the REIT and
the Operating Company is authorized to provide for the issuance of shares of
Preferred Stock in one or more series, to establish the number of shares in
each series and to fix the designations, powers, preferences and rights of
each such series and the qualifications, limitations or restrictions thereof.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. Because the Board of Directors of each of the
REIT and the Operating Company has the power to establish the preferences and
rights of each class or series of Preferred Stock, the Board of Directors of
each of the REIT and the Operating Company may afford the holders of any
series or class of Preferred Stock preferences, powers and rights, voting or
otherwise, senior to the rights of holders of shares of Paired Common Stock.
 
TERMS
 
  Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms, including:
 
     (1) The title and stated value of such Preferred Stock and whether such
  Preferred Stock is paired;
 
     (2) The number of shares of such Preferred Stock offered, the
  liquidation preference per share and the offering price of such Preferred
  Stock;
 
     (3) The dividend rate(s), period(s) and/or payment date(s) or method(s)
  of calculation thereof applicable to such Preferred Stock;
 
     (4) The date from which dividends on such Preferred Stock shall
  accumulate, if applicable;
 
     (5) The procedures for any auction and remarketing, if any, for such
  Preferred Stock;
 
     (6) The provision for a sinking fund, if any, for such Preferred Stock;
 
     (7) The provision for redemption, if applicable, of such Preferred
  Stock;
 
     (8) Any listing of such Preferred Stock on any securities exchange;
 
     (9) The terms and conditions, if applicable, upon which such Preferred
  Stock will be convertible into Paired Common Stock, including the
  conversion price or rate (or manner of calculation thereof);
 
                                       7

 
    (10) Any other specific terms, preferences, rights, limitations or
  restrictions of such Preferred Stock;
 
    (11) A discussion of federal income tax considerations applicable to such
  Preferred Stock;
 
    (12) The relative ranking and preference of such Preferred Stock as to
  dividend rights and rights upon liquidation, dissolution or winding up of
  the affairs of the REIT or the Operating Company, respectively;
 
    (13) Any limitations on issuance of any series of Preferred Stock ranking
  senior to or on a parity with such series of Preferred Stock as to dividend
  rights and rights upon liquidation, dissolution or winding up of the
  affairs of the REIT or the Operating Company, respectively; and
 
    (14) Any limitations on direct or beneficial ownership and restrictions
  on transfer, in each case as may be appropriate to preserve the status of
  the REIT as a real estate investment trust.
 
RANK
 
  Unless otherwise specified in the Prospectus Supplement, the Preferred Stock
will, with respect to dividend rights and rights upon liquidation, dissolution
or winding up of the REIT or the Operating Company, as the case may be, rank
(i) senior to all classes or series of Paired Common Stock, and to all equity
securities ranking junior to such Preferred Stock, (ii) on a parity with all
equity securities issued by the REIT or the Operating Company, respectively,
the terms of which specifically provide that such equity securities rank on a
parity with the Preferred Stock and (iii) junior to all equity securities
issued by the REIT or the Operating Company, respectively, the terms of which
specifically provide that such equity securities rank senior to the Preferred
Stock. The term "equity securities" does not include convertible debt
securities.
 
DIVIDENDS
 
  Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the REIT or the Board of
Directors of the Operating Company, as the case may be, out of the respective
assets of the REIT or the Operating Company legally available for payment,
cash dividends at such rates and on such dates as will be set forth in the
applicable Prospectus Supplement. Each such dividend shall be payable to
holders of record as they appear on the share transfer books of the REIT or
the Operating Company, as the case may be, on such record dates as shall be
fixed by the Board of Directors of the REIT or the Board of Directors of the
Operating Company, as the case may be.
 
  Dividends on any series of the Preferred Stock may be cumulative or non-
cumulative, as provided in the applicable Prospectus Supplement. Dividends, if
cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Directors of the REIT or the
Board of Directors of the Operating Company, as the case may be, fails to
declare a dividend payable on a dividend payment date on any series of the
Preferred Stock for which dividends are non-cumulative, then the holders of
such series of the Preferred Stock will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
REIT or the Operating Company, as the case may be, will have no obligation to
pay the dividend accrued for such period, whether or not dividends on such
series are declared payable on any future dividend payment date.
 
  If Preferred Stock of any series is outstanding, no dividends will be
declared or paid or set apart for payment on any capital stock of the REIT or
the Operating Company, as the case may be, of any other series ranking, as to
dividends, on a parity with or junior to the Preferred Stock of such series
for any period unless (i) if such series of Preferred Stock has a cumulative
dividend, full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof is
set apart for such payment on the Preferred Stock of such series for all past
dividend periods and the then current dividend period or (ii) if such series
of Preferred Stock does not have a cumulative dividend, full dividends for the
then current dividend period have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof is set apart for
such payment on the Preferred Stock of such series. When dividends are not
paid in full (or a sum sufficient for such full payment is not so set apart)
upon Preferred Stock of any series and the shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Preferred Stock
of such series,
 
                                       8

 
all dividends declared upon Preferred Stock of such series and any other
series of Preferred Stock ranking on a parity as to dividends with such
Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share of Preferred Stock of such series and such other series of
Preferred Stock shall, in all cases, bear to each other the same ratio that
accrued dividends per share on the Preferred Stock of such series (which shall
not include any accumulation in respect of unpaid dividends for prior dividend
periods if such Preferred Stock does not have a cumulative dividend) and such
other series of Preferred Stock bear to each other. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on Preferred Stock of such series which may be in arrears.
 
  Except as provided in the immediately preceding paragraph, unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock of such series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
is set apart for payment for all past dividend periods and the then current
dividend period and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for payment for the then
current dividend period, no dividends (other than of shares of Paired Common
Stock or other shares of capital stock ranking junior to the Preferred Stock
of such series as to dividends and upon liquidation) shall be declared or paid
or set aside for payment nor shall any other distribution be declared or made
upon the Paired Common Stock, or any other capital stock of the REIT or the
Operating Company, as the case may be, ranking junior to or on a parity with
the Preferred Stock of such series as to dividends and upon liquidation, nor
shall any shares of Paired Common Stock, or any other shares of capital stock
of the REIT or the Operating Company, as the case may be, ranking junior to or
on a parity with the Preferred Stock of such series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any such shares) by the REIT or the Operating Company, as the
case may be, (except by conversion into or exchange for other capital stock of
the REIT or the Operating Company, as the case may be, ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation).
 
  Any dividend payment made on shares of a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividends due with
respect to shares of such series which remain payable.
 
REDEMPTION
 
  If so provided in the applicable Prospectus Supplement, the Preferred Stock
will be subject to mandatory redemption or redemption at the option of the
REIT or the Operating Company, as the case may be, as a whole or in part, in
each case upon the terms, at the times and at the redemption prices set forth
in such Prospectus Supplement.
 
  The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the REIT or the Operating Company,
as the case may be, in each year commencing after a date to be specified, at a
redemption price per share to be specified, together with an amount equal to
all accrued and unpaid dividends thereon (which shall not, if such Preferred
Stock does not have a cumulative dividend, include any accumulation in respect
of unpaid dividends for prior dividend periods) to the date of redemption. The
redemption price may be payable in cash or other property, as specified in the
applicable Prospectus Supplement. If the redemption price for Preferred Stock
of any series is payable only from the net proceeds of the issuance of shares
of capital stock of the REIT or the Operating Company, as the case may be, the
terms of such Preferred Stock may provide that, if no such shares of capital
stock shall have been issued or to the extent the net proceeds from any
issuance are insufficient to pay in full the aggregate redemption price then
due, such Preferred Stock shall automatically and mandatorily be converted
into the applicable shares of capital stock of the REIT or the Operating
Company, as the case may be, pursuant to conversion provisions specified in
the applicable Prospectus Supplement.
 
                                       9

 
  Notwithstanding the foregoing, unless (i) if a series of Preferred Stock has
a cumulative dividend, full cumulative dividends on all shares of such series
of Preferred Stock shall have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof is set apart for
payment for all past dividend periods and the then current dividend period and
(ii) if a series of Preferred Stock does not have a cumulative dividend, full
dividends on all shares of the Preferred Stock of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart for payment for the then current dividend
period, no shares of such series of Preferred Stock shall be redeemed unless
all outstanding shares of Preferred Stock of such series are simultaneously
redeemed; provided, however, that the foregoing shall not prevent the purchase
or acquisition of Preferred Stock of such series to preserve the status of the
REIT as a real estate investment trust or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of Preferred
Stock of such series. In addition, unless (i) if such series of Preferred
Stock has a cumulative dividend, full cumulative dividends on all outstanding
shares of such series of Preferred Stock have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof is
set apart for payment for all past dividend periods and the then current
dividend period and (ii) if such series of Preferred Stock does not have a
cumulative dividend, full dividends on the Preferred Stock of such series have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for payment for the then
current dividend period, the REIT or the Operating Company, as the case may
be, shall not purchase or otherwise acquire directly or indirectly any shares
of Preferred Stock of such series (except by conversion into or exchange for
capital shares of the REIT or the Operating Company, as the case may be,
ranking junior to the Preferred Stock of such series as to dividends and upon
liquidation); provided, however, that the foregoing shall not prevent the
purchase or acquisition of shares of Preferred Stock of such series to
preserve the status of the REIT as a real estate investment trust or pursuant
to a purchase or exchange offer made on the same terms to holders of all
outstanding shares of Preferred Stock of such series.
 
  If fewer than all of the outstanding shares of Preferred Stock of any series
are to be redeemed, the number of shares to be redeemed will be determined by
the REIT or the Operating Company, as the case may be, and such shares may be
redeemed pro rata from the holders of record of such shares in proportion to
the number of such shares held or for which redemption is requested by such
holder (with adjustments to avoid redemption of fractional shares) or by any
other equitable manner determined by the REIT or the Operating Company, as the
case may be.
 
  Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Stock of
any series to be redeemed at the address shown on the stock transfer books of
the REIT or the Operating Company, as the case may be. Each notice shall
state: (i) the redemption date; (ii) the number of shares and series of the
Preferred Stock to be redeemed; (iii) the redemption price; (iv) the place or
places where certificates for such Preferred Stock are to be surrendered for
payment of the redemption price; (v) that dividends on the shares to be
redeemed will cease to accrue on such redemption date; and (vi) the date upon
which the holder's conversion rights, if any, as to such shares shall
terminate. If fewer than all the shares of Preferred Stock of any series are
to be redeemed, the notice mailed to each such holder thereof shall also
specify the number of shares of Preferred Stock to be redeemed from each such
holder. If notice of redemption of any Preferred Stock has been given and if
the funds necessary for such redemption have been set aside by the REIT or the
Operating Company, as the case may be, in trust for the benefit of the holders
of any Preferred Stock so called for redemption, then from and after the
redemption date dividends will cease to accrue on such Preferred Stock, and
all rights of the holders of such shares will terminate, except the right to
receive the redemption price.
 
LIQUIDATION PREFERENCE
 
  Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the REIT or the Operating Company, as the case may be, then,
before any distribution or payment shall be made to the holders of any Paired
Common Stock or any other class or series of capital stock of the REIT or the
Operating Company, as the case may be, ranking junior to the Preferred Stock
in the distribution of assets upon any liquidation,
 
                                      10

 
dissolution or winding up of the REIT or the Operating Company, as the case
may be, the holders of each series of Preferred Stock shall be entitled to
receive out of assets of the REIT or the Operating Company, as the case may
be, legally available for distribution to stockholders liquidating
distributions in the amount of the liquidation preference per share, if any,
set forth in the applicable Prospectus Supplement, plus an amount equal to all
dividends accrued and unpaid thereon (which shall not include any accumulation
in respect of unpaid noncumulative dividends for prior dividend periods).
After payment of the full amount of the liquidating distributions to which
they are entitled, the holders of Preferred Stock will have no right or claim
to any of the remaining assets of the REIT or the Operating Company, as the
case may be. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of the REIT or
the Operating Company, as the case may be, are insufficient to pay the amount
of the liquidating distributions on all outstanding shares of Preferred Stock
and the corresponding amounts payable on all shares of other classes or series
of capital stock of the REIT or the Operating Company, as the case may be,
ranking on a parity with the Preferred Stock in the distribution of assets,
then the holders of the Preferred Stock and all other such classes or series
of capital stock shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
 
  If liquidating distributions shall have been made in full to all holders of
Preferred Stock, the remaining assets of the REIT or the Operating Company, as
the case may be, shall be distributed among the holders of any other classes
or series of capital stock ranking junior to the Preferred Stock upon
liquidation, dissolution or winding up, according to their respective rights
and preferences and in each case according to their respective number of
shares. For such purposes, the consolidation or merger of the REIT or the
Operating Company, as the case may be, with or into any other corporation,
trust or entity, or the sale, lease or conveyance of all or substantially all
of the property or business of the REIT or the Operating Company, as the case
may be, shall not be deemed to constitute a liquidation, dissolution or
winding up of the REIT or the Operating Company, as the case may be.
 
VOTING RIGHTS
 
  Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
 
  Unless provided otherwise for any series of Preferred Stock, so long as any
shares of Preferred Stock of a series remain outstanding, the REIT or the
Operating Company, as the case may be, will not, without the affirmative vote
or consent of the holders of at least two-thirds of the shares of such series
of Preferred Stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting (such series voting separately as a class),
(i) authorize or create, or increase the authorized or issued amount of, any
class or series of capital stock ranking junior to such series of Preferred
Stock with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up, or reclassify any authorized capital
stock of the REIT or the Operating Company, as the case may be, into such
shares, or create, authorize or issue any obligation or security convertible
into or evidencing the right to purchase any such shares or (ii) amend, alter
or repeal the provisions of the REIT Charter or the Operating Company Charter
or the Designating Amendment for such series of Preferred Stock, whether by
merger, consolidation or otherwise (any such occurrence, an "Event"), so as to
materially and adversely affect any right, preference, privilege or voting
power of such series of Preferred Stock or the holders thereof; provided,
however, with respect to the occurrence of any of the Events set forth in (ii)
above, so long as the Preferred Stock remains outstanding with the terms
thereof materially unchanged, taking into account that, upon the occurrence of
an Event, the REIT or the Operating Company, as the case may be, may not be
the surviving entity, the occurrence of any such Event shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
power of holders of Preferred Stock, and provided further that (A) any
increase in the amount of the authorized Preferred Stock or the creation or
issuance of any other series of Preferred Stock or (B) any increase in the
amount of authorized shares of such series or any other series of Preferred
Stock, in each case ranking on a parity with or junior to the Preferred Stock
of such series with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers.
 
                                      11

 
  The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred Stock shall
have been redeemed or called for redemption and sufficient funds shall have
been deposited in trust to effect such redemption.
 
CONVERSION RIGHTS
 
  The terms and conditions, if any, upon which any series of Preferred Stock
is convertible into Paired Common Stock will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
shares of Paired Common Stock into which the shares of Preferred Stock are
convertible, the conversion price or rate (or manner of calculation thereof),
the conversion period, provisions as to whether conversion will be at the
option of the holders of the Preferred Stock or the REIT or the Operating
Company, as the case may be, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such series of Preferred Stock.
 
RESTRICTIONS ON OWNERSHIP
 
  For the REIT to qualify as a real estate investment trust under the Code,
not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (as defined in the Code
to include certain entities) during the last half of a taxable year. To assist
the REIT in meeting this requirement, the REIT may take certain actions to
limit the beneficial ownership, directly or indirectly, by a single person of
the REIT's outstanding equity securities, including any Preferred Stock of the
REIT. Therefore, the Designating Amendment for each series of Preferred Stock
of the REIT may contain provisions restricting the ownership and transfer of
the Preferred Stock. The applicable Prospectus Supplement will specify any
additional ownership limitations relating to a series of Preferred Stock. See
"Restrictions on Transfers of Capital Stock."
 
TRANSFER AGENT
 
  The transfer agent and registrar for the Preferred Stock will be set forth
in the applicable Prospectus Supplement.
 
                                      12

 
                      DESCRIPTION OF PAIRED COMMON STOCK
 
  The following description of the Paired Common Stock sets forth certain
general terms and provisions of the Paired Common Stock to which any
Prospectus Supplement may relate. The statements below describing the Paired
Common Stock are in all respects subject to and qualified in their entirety by
reference to the applicable provisions of the REIT Charter and the Operating
Company Charter and the REIT Bylaws and the Operating Company Bylaws.
 
GENERAL
 
  The Paired Common Stock is currently listed on the NYSE under the symbol
"PAH." As of November 12, 1997, there were 68,006,621 shares of Paired Common
Stock outstanding. The Paired Common Stock will, when issued, be fully paid
and nonassessable and will have no preemptive rights.
 
TERMS
 
  Subject to the preferential rights of any other class or series of stock,
holders of shares of Paired Common Stock will be entitled to receive dividends
and other distributions in cash, stock or property of the REIT or the
Operating Company, as the case may be, as and when authorized and declared by
the respective Board of Directors of each company out of assets legally
available therefor and to share ratably in the assets of the respective
company legally available for distribution to its respective stockholders in
the event of its liquidation, dissolution or winding up after payment of, or
adequate provision for, all known debts and liabilities of the REIT or the
Operating Company, as the case may be.
 
  Each outstanding share of Paired Common Stock entitles its holder to one
vote on all matters submitted to a vote of stockholders, including the
election of Directors and, except as otherwise required by law or except as
provided with respect to any other class or series of stock, the holders of
Paired Common Stock will possess the exclusive voting power.
 
  Holders of Paired Common Stock have no conversion, sinking fund or
redemption rights, or preemptive rights to subscribe for any securities of the
REIT or the Operating Company.
 
  Each of the REIT and the Operating Company intends to furnish its
stockholders with annual reports containing audited consolidated financial
statements and an opinion thereon expressed by an independent public
accounting firm and quarterly reports for the first three quarters of each
fiscal year containing unaudited financial information.
 
  All shares of Paired Common Stock have equal dividend, distribution,
liquidation and other rights, and will have no preference, appraisal or
exchange rights.
 
  Pursuant to the Delaware General Corporation Law (the "DGCL"), a merger or
consolidation involving either of the REIT or the Operating Company requires
the approval of a majority of the outstanding shares of the constituent
corporation to the transaction entitled to vote on such a matter.
 
RESTRICTIONS ON OWNERSHIP
 
  For the REIT to qualify as a real estate investment trust under the Code,
not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (as defined in the Code
to include certain entities) during the last half of a taxable year. To assist
the REIT in meeting this requirement, the REIT and the Operating Company may
take certain actions to limit the beneficial ownership, directly or
indirectly, by a single person of the REIT's or the Operating Company's
outstanding equity securities. See "Restrictions on Transfers of Capital
Stock."
 
TRANSFER AGENT
 
  The transfer agent and registrar for the Paired Common Stock is American
Stock Transfer & Trust Company of New York, New York.
 
                                      13

 
                  RESTRICTIONS ON TRANSFERS OF CAPITAL STOCK
 
  For the REIT to qualify as a real estate investment trust under the Code,
among other things, not more than 50% in value of its outstanding capital
stock may be owned, directly or indirectly, by five or fewer individuals
(defined in the Code to include certain entities) during the last half of a
taxable year, and such capital stock must be beneficially owned by 100 or more
persons during at least 335 days of a taxable year of 12 months or during a
proportionate part of a shorter taxable year (in each case, other than the
first such year).
 
  The Charters provide that no person or entity may Beneficially Own or
Constructively Own (as those terms are defined in the Charters) in excess of
9.8% of the outstanding shares of any class or series of the common stock or
Preferred Stock (collectively, the "Equity Stock") of the REIT or the
Operating Company (the "Ownership Limit"), unless the Ownership Limit is
waived by the Board of Directors of the relevant corporation in accordance
with the Charters. Any transfer of Equity Stock of the REIT or the Operating
Company that would (i) result in any person or entity owning, directly or
indirectly, shares of Equity Stock of the REIT or the Operating Company in
excess of the Ownership Limit, unless the Ownership Limit is waived by the
Board of Directors of the relevant corporation in accordance with the
Charters, (ii) result in the capital stock of the REIT being beneficially
owned (within the meaning of Section 856(a)(5) of the Code) by fewer than 100
persons within
the meaning of Section 856(a)(5) of the Code, (iii) result in the REIT being
"closely held" within the meaning of Section 856(h) of the Code or (iv) cause
the REIT to own, actually or constructively, 10% or more of the ownership
interests in a tenant of the real property of the REIT or a subsidiary of the
REIT within the meaning of section 856(d)(2)(B) of the Code, shall be void ab
initio, and the intended transferee will acquire no right or interest in such
shares of Equity Stock.
 
  Upon the violation of any of the foregoing transfer restrictions contained
in the Charters, that number of shares which violate any of such transfer
restrictions shall automatically be converted into an equal number of shares
of Excess Stock of the REIT or the Operating Company, as the case may be, and
transferred to a trust (a "Trust"). Such shares of Excess Stock held in trust
shall remain outstanding shares of stock of the REIT and the Operating Company
and shall be held by the trustee of the Trust (the "Trustee") for the benefit
of a charitable beneficiary (a "Beneficiary"). In the case of Equity Stock
that is paired, upon the conversion of a share of Equity Stock into a share of
Excess Stock, the corresponding paired share of that same class or series of
Equity Stock of the other company shall simultaneously be converted into a
share of Excess Stock; such shares of Excess Stock shall be paired and shall
be simultaneously transferred to a Trust. Upon the occurrence of such a
conversion of shares of any class or series of Equity Stock into an equal
number of shares of Excess Stock, such shares of Equity Stock shall be
automatically retired and canceled, without any action required by the Board
of Directors of either of the REIT or the Operating Company, and shall
thereupon be restored to the status of authorized but unissued shares of the
particular class or series of Equity Stock from which such Excess Stock was
converted and may be reissued as that particular class or series of Equity
Stock. The Trustee and the Beneficiary shall be designated pursuant to the
terms of the Pairing Agreement. Each share of Excess Stock shall entitle the
holder to the number of votes the holder would have if such share of Excess
Stock was a share of Equity Stock of the same class or series from which such
Excess Stock was converted, on all matters submitted to a vote at any meeting
of stockholders. The Trustee, as record holder of the Excess Stock, shall be
entitled to vote all shares of Excess Stock. Each share of Excess Stock shall
be entitled to the same dividends and distributions (as to timing and amount)
as may be declared by the Board of Directors of the REIT or the Operating
Company, as the case may be, as shares of the class or series of Equity Stock
from which such Excess Stock was converted. The Trustee of the Trust, as
record holder of the shares of the Excess Stock, shall be entitled to receive
all dividends and distributions and shall hold such dividends and
distributions in trust for the benefit of the Beneficiary of the Trust.
 
  Pursuant to the Charters, the Trustee shall have the exclusive and absolute
right to designate a permitted transferee (a "Permitted Transferee") of any
and all shares of Excess Stock if the REIT or the Operating Company or both,
in the case of paired shares, fail to exercise its or their option with
respect to such shares as described below; provided, however, that (i) the
Permitted Transferee so designated purchases for consideration
 
                                      14

 
(whether in a public or private sale) the shares of Excess Stock and (ii) the
Permitted Transferee so designated may acquire such shares of Excess Stock
without violating any of the aforementioned transfer restrictions and without
such acquisition resulting in the exchange of such shares of Equity Stock so
acquired for shares of Excess Stock and the transfer of such shares of Excess
Stock to a Trust. Upon the designation by the Trustee of a Permitted
Transferee, the Trustee shall cause to be transferred to the Permitted
Transferee that number of shares of Excess Stock of the REIT or the Operating
Company, as the case may be, acquired by the Permitted Transferee. Upon such
transfer of the shares of Excess Stock to the Permitted Transferee, such
shares of Excess Stock shall be automatically converted into an equal number
of shares of Equity Stock of the same class and series from which such Excess
Stock was converted. In the case of Equity Stock that is paired, upon the
conversion of a share of Excess Stock into a share of Equity Stock of the same
class or series from which such Excess Stock was converted, the corresponding
paired share of Excess Stock of the other company shall simultaneously be
converted into a share of Equity Stock of the same class or series from which
such Excess Stock was converted and such shares of Equity Stock shall be
paired. Upon the occurrence of such a conversion of shares of Excess Stock
into an equal number of shares of Equity Stock, such shares of Excess Stock
shall be automatically retired and canceled, without any action required by
the Board of Directors of the REIT or the Operating Company, and shall
thereupon be restored to the status of authorized but unissued shares of
Excess Stock and may be reissued as such. The Trustee shall (i) cause to be
recorded on the stock transfer books of the REIT or the Operating Company or
both, in the case of paired shares, that the Permitted Transferee is the
holder of record of such number of shares of Equity Stock and (ii) distribute
to the Beneficiary any and all amounts held with respect to the shares of
Excess Stock after making payment to the record holders of the shares of
Equity Stock that were converted into Excess Stock (each, a "Prohibited
Owner"). If the transfer of shares of Excess Stock to a purported Permitted
Transferee shall violate any of the aforementioned transfer restrictions
including, without limitation, the Ownership Limit, such transfer shall be
void ab initio as to that number of shares of Excess Stock that cause the
violation of any such restriction when such shares are converted into shares
of Equity Stock and the purported Permitted Transferee shall be deemed to be a
Prohibited Owner and shall acquire no rights in such shares of Excess Stock.
Such shares of Equity Stock shall be automatically re-converted into Excess
Stock and transferred to the Trust from which they were originally sold.
 
  A Prohibited Owner shall be entitled to receive from the Trustee following
the sale or other disposition of such shares of Excess Stock the lesser of (i)
(a) in the case of a purported transfer in which the Prohibited Owner gave
value for shares of Equity Stock and which transfer resulted in the conversion
of such shares into shares of Excess Stock, the price per share, if any, such
Prohibited Owner paid for the shares of Equity Stock and (b) in the case of a
non-transfer event or transfer in which the Prohibited Owner did not give
value for such shares (e.g., if the shares were received through a gift or
devise) and which non-transfer event or transfer, as the case may be, resulted
in the conversion of such shares into shares of Excess Stock, the price per
share equal to the Market Price (as determined in the manner set forth in the
Charters) on the date of such non-transfer event or transfer and (ii) the
price per share received by the Trustee from the sale or other disposition of
such shares of Excess Stock. Any amounts received by the Trustee in respect of
such shares of Excess Stock and in excess of such amounts to be paid the
Prohibited Owner shall be distributed to the Beneficiary.
 
  In addition, shares of Excess Stock shall be deemed to have been offered for
sale by a Trust to the REIT or the Operating Company or both, in the case of
paired shares, or a designee of such company or companies, at a price per
share equal to the lesser of (i) the price per share in the transaction that
created such shares of Excess Stock (or, in the case of devise, gift or non-
transfer event, the Market Price at the time of such devise, gift or non-
transfer event) or (ii) the Market Price on the date either company or both
companies, in the case of paired shares, accept such offer. Either company or
both companies, in the case of paired shares, shall have the right to accept
such offer for a period of 90 days following the later of (a) the date of the
non-transfer event or purported transfer which results in such shares of
Excess Stock or (b) the date on which either company or both companies, in the
case of paired shares, determine in good faith that a transfer or non-transfer
event resulting in shares of Excess Stock has previously occurred, if either
company or both companies, in the case of paired shares, do not receive a
notice of such transfer or non-transfer event. In the case of shares of Excess
Stock that are paired, neither the REIT nor the Operating Company shall accept
such an offer with respect to its shares of Excess Stock
 
                                      15

 
without the agreement of the other company to accept such offer with respect
to the corresponding paired shares of its Excess Stock.
 
  Any person or entity that acquires or attempts to acquire shares of Equity
Stock in violation of the aforementioned transfer restrictions, or any person
or entity that owned shares of Equity Stock that were transferred to a Trust,
shall immediately give written notice to the REIT or the Operating Company or
both, in the case of paired shares, of such event and shall provide such other
information as the appropriate company or both companies, as the case may be,
may request to determine the effect, if any, of such violation, on the REIT's
status as a real estate investment trust.
 
  Each person or entity that is an owner, actually or constructively, of
shares of Equity Stock and each person or entity that (including the
stockholder of record) is holding shares of Equity Stock for such an owner
shall provide to the REIT or the Operating Company or both, in the case of
paired shares, a written statement or affidavit stating such information as
the appropriate company or both companies, as the case may be, may request to
determine the REIT's status as a real estate investment trust and to ensure
compliance with the Ownership Limit. In addition, every person or entity that
owns of record, actually or constructively, more than 5%, or such lower
percentages as required pursuant to regulations under the Code, of the
outstanding shares of any class or series of Equity Stock of the REIT or the
Operating Company shall, within 30 days after January 1 of each year,
provide to the REIT or the Operating Company or both, in the case of paired
shares, a written statement or affidavit stating the name and address of such
owner, the number of shares of Equity Stock owned, actually or constructively,
and a description of how such shares are held.
 
  All certificates representing shares of Equity Stock shall bear a legend
referring to the aforementioned transfer restrictions. The transfer
restrictions will continue to apply until the Board of Directors of the REIT
determines that it is no longer in the best interests of the REIT to attempt
to qualify, or to continue to qualify, as a real estate investment trust.
 
  The restrictions on transfer contained in the Charters could have the effect
of delaying, deferring or preventing the acquisition of control of the REIT
and the Operating Company, including certain acquisitions that stockholders
might deem to be in their best interest.
 
                       FEDERAL INCOME TAX CONSIDERATIONS
 
  The Corporation believes that each of it and Patriot has operated, prior to
the Merger, and the Corporation intends to continue to operate following the
Merger, in such a manner as to qualify as a REIT under the Code, but no
assurance can be given that such companies have and will at all times so
qualify.
 
  The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a brief and general summary of the material federal
income tax considerations of an investment in the Corporation's and the
Operating Company's Securities to the extent those considerations relate to
the federal income taxation of the Corporation and the Operating Company. To
the extent such considerations relate to the tax treatment of particular
Securities, they will be addressed in the applicable Prospectus Supplement.
Goodwin, Procter & Hoar LLP has reviewed this summary and is of the opinion
that, to the extent that it constitutes matters of law, summaries of legal
matters, or legal conclusions, this summary is accurate in all material
respects. For the particular provisions that govern the federal income tax
treatment of the Corporation and its stockholders, reference is made to
Sections 856 through 860 of the Code and the regulations thereunder. The
following summary is qualified in this entirety by such reference.
 
  The statements in this discussion and the opinions of Goodwin, Procter and
Hoar LLP are based on current provisions of the Code, Treasury Regulations,
the legislative history of the Code, existing administrative rulings and
practices of the Internal Revenue Service (the "IRS"), and judicial decisions.
No assurance can be given that future legislative, judicial, or administrative
actions or decisions, which may be retroactive in effect, will not affect that
accuracy of any statements in this Prospectus with respect to the transaction
entered into or contemplated prior to the effective date of such changes.
 
                                      16

 
  EACH INVESTOR IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF AN INVESTMENT IN THE COMPANIES'
SECURITIES.
 
REIT QUALIFICATION OF THE CORPORATION
 
 General
 
  If certain detailed conditions imposed by the provisions of the Code are
met, entities such as the Corporation and Patriot that invest primarily in
real estate and that otherwise would be treated for federal income tax
purposes as corporations generally are not taxed at the corporate level on
their "real estate investment trust taxable income" that is currently
distributed to stockholders. This treatment substantially eliminates the
"double taxation" on earnings (i.e., taxation at both the corporate and
stockholder levels) that ordinarily results from the use of corporations.
 
  Prior to the consummation of the Merger, the Corporation and Patriot
operated in a manner intended to allow each of them to qualify as a REIT. The
Corporation intends to operate following the Merger in a manner so that the
Corporation will continue to qualify as a REIT. If the Corporation failed to
qualify as a REIT in any taxable year, the Corporation would be subject to
federal income taxation as if it were a domestic corporation, and the
Corporation's stockholders would be taxed in the same manner as stockholders
of ordinary corporations. In this event, the Corporation could be subject to
potentially significant tax liabilities, and the amount of cash available for
distribution to stockholders would be reduced and possibly eliminated.
Moreover, the liabilities of the Corporation following the Merger will include
any unpaid taxes of Patriot, including taxes resulting if Patriot failed to
qualify as REIT for periods prior to the Merger, which also could reduce or
eliminate cash available for distribution to the Corporation's stockholders
following the Merger. Unless entitled to relief under certain Code provisions,
and subject to the discussion below regarding Section 269B(a)(3) of the Code,
the Corporation also would be disqualified from re-electing REIT status for
the four taxable years following the year during which qualification was lost.
 
  The Corporation's qualification and taxation as a REIT following the Merger
will depend upon the Corporation's continuing ability to meet, through actual
operating results, the income and asset requirements, distribution levels,
diversity of stock ownership and other requirements for qualification as a
REIT under the Code. Counsel will not review the Corporation's compliance with
these tests on a continuing basis. Moreover, qualification as a REIT involves
the application of highly technical and complex Code provisions for which
there are only limited judicial or administrative interpretations and the
determination of various factual matters and circumstances not entirely within
the Corporation's control. The complexity of these provisions is greater in
the case of a REIT that owns hotels and leases them to an operating company
with which its stock is paired. Accordingly, no assurance can be given that
the Corporation will satisfy such tests on a continuing basis. Moreover, the
Corporation's ability to qualify as a REIT following the Merger also generally
will depend on the qualification of the Corporation and of Patriot as REITs
for periods prior to the Merger.
 
  Goodwin, Procter & Hoar LLP, special tax counsel to the Corporation, has
rendered an opinion to the Corporation to the effect that commencing with the
taxable year ending December 31, 1983, the Corporation has been organized and
operated in conformity with the requirements for qualification and taxation as
a REIT under the Code, and the Corporation's proposed method of operation will
enable it to continue to meet the requirements for qualification and taxation
as a REIT under the Code. Investors should be aware, however, that opinions of
counsel are not binding upon the IRS or any court. Goodwin, Procter & Hoar
LLP's opinion is based on various assumptions and is conditioned upon certain
representations made by the Corporation and Patriot as to factual matters,
including representations regarding the nature of the Corporation's
properties, and the future conduct of the Corporation's business. The opinion
also assumes that the Merger and related transactions contemplated by the
Merger Agreement occurred as contemplated by such documents. Qualification and
taxation as a REIT depends upon the Corporation's having met and continuing to
meet, through actual annual operating results, the
 
                                      17

 
distribution levels, stock ownership, and other various qualification tests
imposed under the Code. Goodwin, Procter & Hoar LLP has not reviewed and will
not review the Corporation's compliance with those tests on a continuing
basis. Accordingly, no assurance can be given that the actual results of the
Corporation's operations for any particular taxable year have satisfied or
will satisfy such requirements.
 
 Paired Shares
 
  Section 269B(a)(3) of the Code provides that if the shares of a REIT and a
non-REIT are paired, then the REIT and the non-REIT shall be treated as one
entity for purposes of determining whether either company qualifies as a REIT.
If Section 269B(a)(3) applied to the Corporation and the Operating Company,
then the Corporation would not be eligible to be taxed as a REIT. Section
269B(a)(3) does not apply, however, if the shares of the REIT and the non-REIT
were paired on June 30, 1983 and the REIT was taxable as a REIT on June 30,
1983. As a result of this "grandfathering" rule, Section 269B(a)(3) has not
applied to the Corporation and the Operating Company. By its terms, this
"grandfathering" rule will continue to apply to the Corporation after the
Merger. There are, however, no judicial or administrative authorities
interpreting this "grandfathering" rule in the context of a merger or
otherwise, and this interpretation, as well as the opinion of Goodwin, Procter
& Hoar LLP regarding the Corporation's qualification as a REIT, is based
solely on the literal language of the statute. Moreover, no assurance can be
given that new legislation will not change these "grandfathering" provisions.
In addition, if for any reason the Corporation failed to qualify as a REIT in
1983, the benefit of the "grandfathering" rule would not be available to the
Corporation, in which case the Corporation would not qualify as a REIT for any
taxable year.
 
 Potential Reallocation of Income
 
  Due to the paired share structure, the Corporation, the Operating Company,
and their respective subsidiary entities will be controlled by the same
interests. As a result, the IRS could, pursuant to Section 482 of the Code,
seek to distribute, apportion or allocate gross income, deductions, credits or
allowances between or among them if it determines that such distribution,
apportionment or allocation is necessary in order to prevent evasion of taxes
or to clearly reflect income. The Corporation and the Operating Company
believe that all material transactions between them have been negotiated and
structured with the intention of achieving an arm's-length result. The
Corporation believes that all material transactions between the Corporation
and the Operating Company, and among them and/or their subsidiary entities,
will be negotiated and structured with the intention of achieving an arm's-
length result. If true, the potential application of Section 482 of the Code
should not have a material effect on the Corporation or the Operating Company.
There can be no assurance, however, that the IRS will not challenge the terms
of such transactions, or that such challenge would not be successful.
 
 Sale of Land by the Corporation
 
  The agreements governing the Corporation's sales of a stable area (the
"Stable Area") and a 5/8 mile training track oval (the "Training Track Area")
at the Racecourse and the agreement governing the sale of certain other land
to an affiliate of PaineWebber Incorporated (the "PaineWebber Land Sale")
provide that the purchasers will cooperate with the Corporation in structuring
the transactions as tax-deferred like-kind exchanges. There can be no
assurances that the transactions will qualify as tax-deferred like-kind
exchanges or that suitable properties for exchange will be located and the
exchanges completed within the relatively short time periods allowed by
applicable IRS regulations. If the sales cannot be qualified as tax-deferred
like-kind exchanges, but the gain qualifies for capital gains treatment, the
Corporation can elect to distribute the gain to its stockholders, who would be
taxed at applicable capital gains rates. If the proceeds are not distributed,
the gain will be taxed to the Corporation at applicable capital gains rates.
To the extent that the gain does not qualify for capital gains treatment, the
gain will be combined with the Corporation's other taxable income, 95% of
which must be distributed each year in order to maintain the Corporation's
status as a REIT. There can be no assurance, however, that the Corporation
will make any such distribution. Legislative proposals to restrict like-kind
exchanges, if enacted with an effective date that included the PaineWebber
Land Sale, could adversely affect the Corporation's ability to complete a
like-kind exchange, although it is currently anticipated that the new rules
 
                                      18

 
would not apply to exchanges made pursuant to binding agreements in place at
the time of enactment and thus would not apply to the PaineWebber Land Sale.
 
  Notwithstanding the foregoing, in the event that any of the property sold by
the Corporation in the PaineWebber Land Sale constitutes "dealer property,"
then the sales thereof would not be eligible for tax-deferred like-kind
exchange treatment, the gain would be subject to a 100% tax, and the amount of
gain would constitute nonqualifying income that likely would disqualify the
Corporation as a REIT; provided that the 100% tax would not apply and the
amount of gain would not disqualify the Corporation as a REIT if the sales
were eligible for a certain statutory safe harbor (but the gain would have to
be distributed to maintain REIT qualification if the properties nonetheless
constituted dealer property). Although the Corporation believes that the
Stable Area and the Training Track Area do not constitute dealer property, and
the Corporation believes that the PaineWebber Land Sale will not constitute a
sale of dealer property, whether or not such sales constitute sales of dealer
property are factual determinations not susceptible of legal opinion, and the
companies are not receiving opinions from counsel on such determinations.
Moreover, there can be no assurance that the sales will qualify for the
statutory safe harbor referred to above. As a result, the opinion rendered by
Goodwin, Procter & Hoar LLP regarding the Corporation's qualification as a
REIT necessarily relies on representations from Patriot to the effect that
none of the sales constitute sales of dealer property.
 
 Effects of Compliance with REIT Requirements
 
  Operating income derived from hotels or a racetrack does not constitute
qualifying income under the REIT requirements. Accordingly, all of the
Corporation's hotels, other than hotels held by taxable entities in which the
Corporation does not hold voting control (currently the Crowne Plaza Ravinia
Hotel and the Marriott WindWatch Hotel), have been leased to lessees, and the
Corporation will continue to lease such hotels after the Merger. Similarly,
the Corporation has subleased the land underlying the Racecourse and leased
the related improvements to the Operating Company. Rent derived from such
leases will be qualifying income under the REIT requirements, provided several
requirements are satisfied. Among other requirements, a lease may not have the
effect of giving the Corporation a share of the net income of the lessee, and
the amount of personal property leased under the lease must not exceed a
defined, low level. The Corporation also may not provide services, other than
customary services, to the lessee or their subtenants. In addition, the leases
must also qualify as "true" leases for federal income tax purposes (as opposed
to service contracts, joint ventures or other types of arrangements). There
are, however, no controlling Treasury Regulations, published rulings, or
judicial decisions that discuss whether leases similar to these leases
constitute "true" leases. Therefore, there can be no complete assurance that
the IRS will not successfully assert a contrary position.
 
  Payments under a lease will not constitute qualifying income for purposes of
the REIT requirements if the Corporation owns, directly or indirectly, 10% or
more of the ownership interests in the relevant lessee. Constructive ownership
rules apply, such that, for instance, the Corporation is deemed to own the
assets of stockholders who own 10% or more in value of the stock of the
Corporation. The Charters are therefore designed to prevent a stockholder of
the Corporation from owning REIT stock or Operating Company stock that would
cause the Corporation to own, actually or constructively, 10% or more of the
ownership interests in a lessee (including the Operating Company and Patriot
American Hospitality Operating Partnership, L.P. (the "Operating
Partnership")). Thus, the Corporation should never own, actually or
constructively, 10% or more of a lessee. However, because the relevant
constructive ownership rules are broad and it is not possible to monitor
continually direct and indirect transfers of Paired Shares, and because the
charter provisions referred to above may not be effective, no absolute
assurance can be given that such transfers, or other events of which the
Corporation has no knowledge, will not cause the Corporation to own
constructively 10% or more of one or more lessees at some future date.
 
                                      19

 
  In addition to the considerations discussed above, the REIT requirements
will impose a number of other restrictions on the operations of the
Corporation. For example, net income from sales of property sold to customers
in the ordinary course of business (other than inventory acquired by reason of
certain foreclosures) is subject to a 100% tax unless eligible for a certain
safe harbor. If the gross income subject to the 100% tax, when added to gain
from the sale of (i) stock or securities held for less than one year and (ii)
real property held for less than four years (with certain exceptions) exceeds
30% of the Corporation's gross income in any taxable year, the Corporation
will fail to qualify as a REIT. Minimum distribution requirements also
generally require the Corporation to distribute each year at least 95% of its
taxable income for the year (excluding any net capital gain). In addition,
certain asset tests limit the Corporation's ability to acquire non-real estate
assets.
 
 Tax Aspects of the Corporation's Investment in the Realty Partnership and the
 Operating Company's Investment in the Operating Partnership
 
  As a result of the Merger, the Corporation acquired Patriot's general
partner and limited partner interests in the Realty Partnership. In addition,
the Operating Company will conduct substantially all of its operations
following the Merger through the Operating Partnership. The Corporation's
interest in the Realty Partnership and the Operating Company's investment in
the Operating Partnership involve special tax considerations, including those
described below.
 
 Classification as Publicly Traded Partnership
 
  Notwithstanding that the Realty Partnership and the Operating Partnership
are partnerships rather than associations taxable as corporations, the IRS
could allege that the Realty Partnership or the Operating Partnership is a
"publicly traded partnership" under Section 7704 of the Code. If such an
assertion were successfully made, such partnership would be subject to tax as
a corporation under the Code unless certain conditions regarding the nature of
its income were satisfied. In the case of the Realty Partnership, taxation as
a corporation would disqualify the Corporation as a REIT.
 
  A partnership is a publicly traded partnership if interests in such
partnership are either traded on an established securities market or are
"readily tradable on a secondary market (or the substantial equivalent
thereof)." A publicly traded partnership is not taxed as a corporation,
however, if at least 90% of its gross income for each taxable year consists of
certain passive income, including interest, dividends, real property rents,
and gains from the sale or other disposition of real property.
 
  Interests in the Realty Partnership or its subsidiary partnerships have not
been traded on an established securities market and no interests in such
partnerships will be traded on an established securities market following the
Merger and related transactions. Moreover, Patriot believes that, for periods
ending on or before the Merger, the Realty Partnership and each subsidiary
partnership has qualified and will qualify for a certain safe harbor from
treatment as a publicly traded partnership based on the number of partners in
such partnerships as well as the 90% qualifying income exemption referred to
above. It is currently anticipated that following the Merger, these
partnerships will continue to rely on the safe harbor based on the number of
their partners and/or the qualifying income exception and that the Operating
Partnership will rely on the safe harbor based on the number of its partners.
Alternatively, following the Merger, the Realty Partnership Agreement and the
Operating Partnership may rely on restrictions on transfers and redemptions to
be included in their respective partnership agreements designed to prevent
such partnerships being taxed as corporations under Section 7704 of the Code.
There can be no assurance, however, that efforts to avoid taxation as a
corporation under these provisions will be successful.
 
 Taxation of Operating Company
 
  As a "C" corporation under the Code, the Operating Company will be subject
to United States federal income tax on its taxable income at corporate rates.
 
                                      20

 
  Investors are urged to consult their own tax advisors with respect to the
appropriateness of an investment in the Securities offered hereby and with
respect to the tax consequences arising under federal law and the laws of any
state, municipality or other taxing jurisdiction, including tax consequences
resulting from such investor's own tax characteristics. In particular, foreign
investors should consult their own tax advisors concerning the tax
consequences of an investment in the Corporation and the Operating Partnership
including the possibility of United States income tax withholding on
distributions.
 
                             PLAN OF DISTRIBUTION
 
  The REIT and the Operating Company may sell Securities through underwriters
or dealers, directly to one or more purchasers, through agents or through a
combination of any such methods of sale.
 
  The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices.
 
  In connection with the sale of Securities, underwriters or agents may
receive compensation from the REIT, the Operating Company or from purchasers
of Securities, for whom they may act as agents, in the form of discounts,
concessions or commissions. Underwriters may sell Securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agents. Underwriters, dealers, and agents
that participate in the distribution of Securities may be deemed to be
underwriters under the Securities Act, and any discounts or commissions they
receive from the REIT or the Operating Company and any profit on the resale of
Securities they realize may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the REIT or the Operating
Company will be described, in the applicable Prospectus Supplement.
 
  Unless otherwise specified in the related Prospectus Supplement, each series
of Securities will be a new issue with no established trading market, other
than the Paired Common Stock which is listed on the NYSE. Any shares of Paired
Common Stock sold pursuant to a Prospectus Supplement will be listed on the
NYSE, subject to official notice of issuance. The REIT or the Operating
Company may elect to list any series of Preferred Stock on an exchange, but is
not obligated to do so. It is possible that one or more underwriters may make
a market in a series of Securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. Therefore, no
assurance can be given as to the liquidity of, or the trading market for, the
Securities.
 
  Under agreements into which, the REIT or the Operating Company may enter,
underwriters, dealers and agents who participate in the distribution of
Securities may be entitled to indemnification by the REIT or the Operating
Company against certain liabilities, including liabilities under the
Securities Act.
 
  Underwriters, dealers and agents may engage in transactions with, or perform
services for, or be tenants of, the REIT or the Operating Company in the
ordinary course of business.
 
  In order to comply with the securities laws of certain states, if
applicable, the Securities offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in
certain states Securities may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.
 
                                    EXPERTS
 
  The Separate and Combined Financial Statements of Cal Jockey and Bay Meadows
and its subsidiary as of December 31, 1996 and 1995, and for each of the three
years in the period ended December 31, 1996,
 
                                      21

 
incorporated by reference in this Prospectus have been audited by Deloitte and
Touche LLP, independent auditors, as stated in their report with respect
thereto (which expresses an unqualified opinion and includes an explanatory
paragraph relating to a proposed merger and certain disagreements between Cal
Jockey and Bay Meadows) and are incorporated by reference herein. The combined
financial statements of the Partnerships of Acquired Hotels as of December 31,
1996 and 1995 and for each of the two years in the period ended December 31,
1996, incorporated in this Prospectus by reference from the report on Form 8-
K/A No. 1 dated September 30, 1997 of Patriot American Hospitality, Inc. and
Patriot American Hospitality Operating Company have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference. Each of the above referenced financial
statements are incorporated herein by reference in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.
 
  The (a) Consolidated Financial Statements of Patriot as of December 31, 1996
and 1995 and for the year ended December 31, 1996 and the period October 2,
1995 (inception of operations) through December 31, 1995 and the related
financial statement schedules, (b) the Combined Financial Statements of the
Initial Hotels as of December 31, 1994 and for the year ended December 31,
1994 and the period January 1, 1995 through October 1, 1995, and (c) the
Financial Statements of NorthCoast Hotels, L.L.C. as of December 31, 1996 and
the period April 2, 1996 (inception of operations) through December 31, 1996
appearing in Patriot's 1996 Annual Report on Form 10-K (and with respect to
the Consolidated Financial Statements of Patriot referred to above also
appearing in the Joint Current Report on Form 8-K of Patriot American
Hospitality Inc. and Patriot American Hospitality Operating Company dated July
1, 1997), have been audited by Ernst & Young LLP, independent auditors, as set
forth in their reports thereon included therein and incorporated herein by
reference. With respect to the Combined Financial Statements of the Initial
Hotels, such report is based in part on the reports of Coopers & Lybrand
L.L.P., independent accountants, as set forth in their respective reports for
Certain of the Initial Hotels and Troy Hotel Investors. The (a) Financial
Statements of Buckhead Hospitality Joint Venture as of December 31, 1995 and
for the year then ended, (b) the Combined Financial Statements of Gateway
Hotel Limited Partnership and Wenatchee Hotel Limited Partnership as of
December 31, 1995 and for the year then ended, and (c) the individual
Statements of Direct Revenue and Direct Operating Expenses for the Plaza Park
Suites Hotel and the Roosevelt Hotel for the year ended December 31, 1995,
appearing in Patriot's Current Report on Form 8-K, dated April 2, 1996, as
amended (filed April 17, 1996 and June 14, 1996), have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. The (a) Statement of
Direct Revenue and Direct Operating Expenses of the Mayfair Suites Hotel for
the year ended December 31, 1995, (b) Statement of Direct Revenue and Direct
Operating Expenses of Marriott Windwatch Hotel for the year ended December 29,
1995, and (c) the Financial Statements of Concorde O'Hare Limited Partnership
as of December 29, 1995 and for the year then ended appearing in Patriot's
Current Report on Form 8-K, dated December 5, 1996 (filed December 5, 1996),
have been audited by Ernst & Young LLP, Independent auditors, as set forth in
their reports thereon included therein and incorporated herein by reference.
The (a) Consolidated Financial Statements of Resorts Limited Partnership as of
and for the years ended December 31, 1996 and 1995, (b) the Financial
Statements of CV Ranch Limited Partnership as of and for the years ended
December 31, 1996 and 1995, and (c) the Financial Statements of Telluride
Resort and Spa Limited Partnership as of and for the years ended December 31,
1996 and 1995, appearing in Patriot's Current Report on Form 8-K, dated
January 16, 1997, as amended (filed January 31, 1997, February 21, 1997, April
6, 1997, April 9, 1997 and May 19, 1997) have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference. The (a) Consolidated Financial
Statements of GAH-II, L.P. as of December 31, 1996 and 1995 and for the years
then ended, (b) the Financial Statements of G.B.H. Joint Venture (d/b/a Grand
Bay Hotel) as of December 31, 1996 and 1995 and for the years then ended, (c)
the Financial Statements of River House Associates (d/b/a Sheraton Gateway
Hotel) as of December 31, 1996 and 1995 and for the years then ended, and (d)
the Financial Statements of W-L Tampa, Ltd. (the Sheraton Grand Hotel) as of
December 31, 1996 and 1995 and for the years then ended, appearing in the
Joint Current Report on Form 8-K of Patriot American Hospitality, Inc. and
Patriot American Hospitality Operating Company dated September 30, 1997, as
amended (filed October 14, 1997 and October 28, 1997), have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
included therein and incorporated herein by reference. Each of the above
referenced financial statements
 
                                      22

 
are incorporated herein by reference in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.
 
  The Financial Statements of Certain of the Initial Hotels as of December 31,
1994 and for the period from January 1, 1995 to October 1, 1995 and for the
year ended December 31, 1994, the Financial Statements of Troy Hotel Investors
as of October 1, 1995 and for the period January 1, 1995 to October 1, 1995
and Troy Park Associates as of December 29, 1994 and for the period January 1,
1994 through December 29, 1994 included in Patriot's 1996 Annual Report on
Form 10-K, the statement of Direct Revenue and Direct Operating Expenses for
the Holiday Inn--Miami Airport for the year ended August 31, 1996 included in
Patriot's Current Report on Form 8-K dated December 5, 1996, the Consolidated
Financial Statements of Wyndham Hotel Corporation as of December 31, 1995 and
1996 and for each of the three years in the period ended December 31, 1996,
included in the Report on Form 10-K dated March 26, 1997 of Wyndham Hotel
Corporation, the Combined Financial Statements of Snavely Hotels as of
December 31, 1996 and for the year then ended, the Combined Financial
Statements of Minneapolis Hotels as of December 31, 1996 and for the year then
ended, and the combined statement of Direct Revenue and Direct Operating
Expenses for the Met Life Hotels for the year ended December 31, 1996,
included in the Report on Form 8-K dated September 17, 1997, and the Financial
Statements of SCP ("Buttas") Inc. as of December 31, 1996 and for the year
then ended, included in the Report on Form 8-K/A No. 1, incorporated by
reference in this Prospectus, have been audited by Coopers & Lybrand, L.L.P.,
independent accountants, as set forth in their reports thereon. Each of the
above-referenced financial statements have been incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting
and auditing.
 
  The Financial Statements of Historic Hotel Partners of Birmingham Limited
Partnership as of December 31, 1994 and 1995 and for the years then ended, the
Financial Statements of Historic Hotel Partners of Chicago, Limited
Partnership as of December 31, 1996 and for the year then ended, and the
Financial Statements of Historic Hotel Partners of Nashville, Limited
Partnership as of December 31, 1996 and for the year then ended incorporated
by reference in this Prospectus, have been audited by Pannell Kerr Forster PC,
independent auditors, as set forth in their reports thereon. Each of the
above-referenced financial statements have been incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting
and auditing.
 
  The CHC Lease Partners financial statements as of December 31, 1996 and 1995
and for the year ended December 31, 1996 and the period inception (October 2,
1995) through December 31, 1995, incorporated by reference in this Prospectus,
by reference to the Current Report on Form 8-K dated July 1, 1997, and the CHC
International, Inc. Hospitality Division financial statements as of November
30, 1996 and 1995 and for the years then ended, incorporated by reference in
this Prospectus, by reference to the Current Report on Form 8-K dated
September 30, 1997, as amended, have been so incorporated in reliance on the
reports of Price Waterhouse LLP, independent certified public accountants,
given on the authority of said firm as experts in auditing and accounting.
 
  The Combined Financial Statements of the Crow Family Hotel Partnerships
incorporated by reference in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are incorporated by reference herein in reliance
upon the authority of said firm as experts in accounting and auditing in
giving said reports.
 
                                      23

 
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  NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER IN-
FORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANIES, THE UNDERWRITER OR ANY OTHER PERSON. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANIES SINCE THE DATE HEREOF OR THAT THE INFOR-
MATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SE-
CURITIES TO WHICH THEY RELATE. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECU-
RITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
 
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                               TABLE OF CONTENTS
 
                             PROSPECTUS SUPPLEMENT


                                                                            PAGE
                                                                            ----
                                                                         
Risk Factors...............................................................  S-1
The Companies..............................................................  S-9
Certain Federal Income Tax Considerations.................................. S-11
Underwriting............................................................... S-14
Use of Proceeds............................................................ S-14
Legal Matters.............................................................. S-14
 
                                   PROSPECTUS
 
Available Information......................................................    2
Incorporation of Certain Documents by Reference............................    2
The Companies..............................................................    4
Use of Proceeds............................................................    5
Ratios of Earnings to Fixed Charges........................................    5
Description of Capital Stock...............................................    6
Description of Preferred Stock.............................................    7
Description of Paired Common Stock.........................................   13
Restrictions on Transfers of Capital Stock.................................   14
Federal Income Tax Considerations..........................................   16
Plan of Distribution.......................................................   21
Experts....................................................................   21

 
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                                1,000,033 SHARES
                              PAIRED COMMON STOCK
 
                                      LOGO
 
                       PATRIOT AMERICAN HOSPITALITY, INC.
 
 
 
                          PATRIOT AMERICAN HOSPITALITY
                               OPERATING COMPANY
 
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                             PROSPECTUS SUPPLEMENT
 
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                            PAINEWEBBER INCORPORATED
 
 
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                               NOVEMBER 13, 1997
 
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