RLJ Lodging Trust (RLJ) 2020年年度報告「NYSE」.pdf

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1、2020 ANNUAL REPORTRLJ LODGING TRUST(“RLJ”)is a self-advised,publicly traded real estate investment trust that owns primarily premium-branded,high-margin,focused-service and compact full-service hotels.Our hotels are geographically diverse and concentrated in major urban markets that provide multiple

2、 demand generators from business,leisure and other travelers.URBAN MARKETS(NUMBER OF HOTELS)LODGING SEGMENTS(%OF HOTEL ROOMS)SERVICE LEVEL55%COMPACT FULL-SERVICE 3%FULL-SERVICE42%FOCUSED-SERVICE41%HILTON 36%MARRIOTT 14%OTHER 9%HYATT BRAND22K+ROOMS101 HOTELS23 STATESNOTE:AS OF MARCH 2021TO OUR SHAREH

3、OLDERSEmbassy Suites Tampa Downtown,Tampa,FLBy all measures,2020 was a year like no other.The far-reaching impact of the pandemic was felt across the lodging industry,the nation and the entire world.Like so many other industries,lodging demand evaporated.Given the severity of the pandemics impact,I

4、am proud of how well our team responded.Our priorities were focused on protecting our people,our guests and our liquidity.We were nimble and quickly pivoted to redirect all our efforts to preserving our platform and navigating the uncertainty of the pandemic.The tremendous response by our team to th

5、is crisis has allowed us to emerge in a relative position of strength.We are not only positioned to benefit early during the recovery,but are also poised to outperform throughout the entire lodging cycle as we advance our long-term growth opportunities.RLJ LODGING TRUST 2020 ANNUAL REPORT1$1B+IN LIQ

6、UIDITYEXPERIENCED LEADERSHIPTrack record of consistently and seamlessly executing on stated objectivesOUR COVID RESPONSEAt the onset of this crisis,we took several decisive steps operationally.Working with our operating partners,we implemented a number of aggressive cost containment initiatives incl

7、uding reducing staffing levels,closing F&B outlets,eliminating all non-essential services and closing floors to reduce room inventory.As the operating environment became more difficult,we made the prudent decision to suspend operations at 57 hotels.As many states began lifting restrictions,we develo

8、ped a thoughtful framework to reopen our hotels in a socially and financially responsible manner.Our approach was focused on minimizing our operating shortfalls by reopening those hotels that were best positioned to control costs and capture available demand in this low occupancy environment,while m

9、aintaining guest and employee safety.We ended the year with 93%of our hotels open.In conjunction with our operational response,we took a number of steps to bolster our liquidity and to preserve balance sheet flexibility.We reduced our 2020 capital plan by over 80%,limiting capital spending largely t

10、o in-flight projects that were nearing completion.Additionally,we decreased our quarterly common dividend and strategically drew down on our line of credit to shore up our liquidity position.Finally,we secured covenant waivers to create incremental balance sheet capacity given the ongoing uncertaint

11、y around the duration and depth of this crisis.The successful execution of all of these efforts improved our liquidity,minimized our cash burn and allowed us to end the year with over$1 billion of liquidity,which will enable us to take advantage of both internal and external value creation opportuni

12、ties.Embassy Suites Minneapolis Airport,Minneapolis,MN10%RESORTSSTRONG LIQUIDITYProvides flexibility and optionality to drive internal and external growth35%DRIVE-TO MARKETSAS A PERCENTAGE OF 2019 REVENUES50%SUITESRLJ LODGING TRUST 2020 ANNUAL REPORT3EARLY RECOVERYAlthough the extreme challenges fac

13、ing our industry are ongoing,as 2021 unfolds,we expect our relative positioning to continue to allow us to rebound more quickly than many of our peers.Our confidence draws from our lean operating model and the construct and geographic diversification of our portfolio.In particular:our portfolio of f

14、ocused-service and compact full-service hotels,which have smaller footprints and are less operationally complex,allows our properties to achieve break-even at lower occupancy levels;our lean operating model allows our hotels to achieve profitability earlier;and,our transient orientation and exposure

15、 to many leisure-oriented markets positions us to ramp up early during recovery,and the attractiveness of our all-suite products will further bolster this ramp as the new normal unfolds.The relative advantages that our portfolio offers are already proving out,as demonstrated throughout the year by t

16、he number of hotels reopened,the pace of our occupancy ramp up and the number of assets that achieved positive EBITDA.Our recent performance illustrates that when a sustained recovery does unfold,our portfolio will benefit earlier than our peers.Courtyard Charleston Historic District,Charleston,SC96

17、%OPEN HOTELSAS OF MARCH,202180%TRANSIENTAS A PERCENTAGE OF 2019 REVENUESEMBEDDED VALUEMultiple conversion and ROI opportunities to drive incremental growth throughout the cycleLooking ahead,we continue to believe that the pace of vaccine distribution and the reopening of offices will be critical to

18、the recovery of our industry.We are encouraged by the significant progress that has been made towards the distribution of vaccines since the beginning of this year.Given this progress,our confidence,relative to the recovery accelerating during the back half of 2021,is incrementally more positive tod

19、ay.While the road to recovery will span several years,we are confident that our industry will fully return to pre-pandemic demand levels.As this recovery takes hold,our portfolio construct will allow us to grow revenues earlier,achieve overall profitability quicker and position us to take advantage

20、of growth opportunities sooner.More importantly,we are poised to outperform throughout the lodging cycle given the following:first,our strong liquidity of over$1 billion will allow us to emerge with a healthy and flexible balance sheet and enable us to pursue our growth strategy;second,our large ass

21、et base will allow us the optionality to recycle capital;third,the improved overall long-term growth profile of our portfolio will allow us to achieve stronger top line performance;and finally,our EBITDA growth will be amplified by the execution of our embedded growth catalysts,including the convers

22、ions at Mandalay Beach,Santa Monica and Charleston,all of which will allow us to create significant value for our shareholders throughout the cycle.Now,I would be remiss to not acknowledge that this past year was also marked by social unrest highlighting racial inequality.Racial equality and diversi

23、ty have always been core tenets of RLJ.We maintain an unwavering commitment to diversity throughout the organization,including at the Board level.This is reflected in over half of our employees being ethnically diverse and over half being women,with a similar profile for our Board.We are proud to be

24、 one of the most diverse companies(public or private)in the entire real estate industry and are committed to maintaining and expanding our diversity.Although 2020 was a difficult year,we are pleased with how we performed and our ability to navigate this crisis,which was made possible by the tremendo

25、us efforts of our dedicated team of seasoned professionals and the ongoing support of our partners and stakeholders.We are encouraged by the opportunities that lie ahead and thank you for your continued support of RLJ.We look forward to continuing to work tirelessly on your behalf to create meaningf

26、ul shareholder value.LESLIE D.HALE PRESIDENT&CEOROBERT L.JOHNSON EXECUTIVE CHAIRMANLOOKING FORWARDRenaissance Boulder Flatiron,Boulder,CORLJ LODGING TRUST 2020 ANNUAL REPORT4POSITIONED TO OUTPERFORMPortfolio construct positions RLJ to outperform throughout the entire cycleUNITED STATESSECURITIES AND

27、 EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K?ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THESECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2020OR?TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THESECURITIES EXCHANGE ACT OF 1934For the transition period from to Com

28、mission File Number 001-35169RLJ LODGING TRUST(Exact Name of Registrant as Specified in Its Charter)Maryland27-4706509(State or Other Jurisdiction of(I.R.S.EmployerIncorporation or Organization)Identification No.)3 Bethesda Metro Center,Suite 1000Bethesda,Maryland20814(Address of Principal Executive

29、 Offices)(Zip Code)(301)280-7777(Registrants Telephone Number,Including Area Code)Securities registered pursuant to Section 12(b)of the Act:Title of ClassTrading SymbolName of Exchange on Which RegisteredCommon Shares of beneficial interest,par valueRLJNew York Stock Exchange$0.01 per share$1.95 Ser

30、ies A Cumulative Convertible PreferredRLJ-ANew York Stock ExchangeShares,par value$0.01 per shareSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes?No?Indicate by chec

31、k mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the Act.Yes?No?Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of theSecurities Exchange Act of 1934 during the preceding 12 months(or for such

32、shorter period that the registrant was required tofile such reports),and(2)has been subject to such filing requirements for the past 90 days.?Yes?NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted pursuant to Rule 405 of R

33、egulation S-T(232.405 of this chapter)during the preceding 12 months(or for suchshorter period that the registrant was required to submit such files).?Yes?NoIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,smaller reporting compa

34、ny,or an emerging growth company.See the definitions of large accelerated filer,accelerated filer,smaller reporting company,and emerging growth company in Rule 12b-2 of the Exchange Act.Large accelerated filer?Accelerated filer?Non-accelerated filer?Smaller reporting company?Emerging growth company?

35、If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transitionperiod for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the ExchangeAct.?Indicate by check mark whether the registrant has fil

36、ed a report on and attestation to its managements assessment of theeffectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.?Indicate by check mark wh

37、ether the registrant is a shell company(as defined in Rule 12b-2 of the ExchangeAct).?Yes?NoThe aggregate market value of the 161,745,955 common shares of beneficial interest held by non-affiliates of theRegistrant was approximately$1,526,881,815 based on the closing price of$9.44 as reported on the

38、 New York Stock Exchangefor such common shares of beneficial interest on June 30,2020.As of February 19,2021,164,972,516 common shares of beneficial interest of the Registrant,$0.01 par value per share,were outstanding.Documents Incorporated by ReferencePortions of the Definitive Proxy Statement for

39、 our 2021 Annual Meeting of Shareholders are incorporated by referenceinto Part III of this report.We expect to file our proxy statement within 120 days after December 31,2020.TABLE OF CONTENTSForm 10-KItem No.Report PagePART IItem 1.Business.4Item 1A.Risk Factors.11Item 1B.Unresolved Staff Comments

40、.30Item 2.Properties.30Item 3.Legal Proceedings.35Item 4.Mine Safety Disclosures.35PART IIItem 5.Market for Registrants Common Equity,Related Shareholder Matters andIssuer Purchases of Equity Securities.36Item 6.Selected Financial Data.38Item 7.Managements Discussion and Analysis of Financial Condit

41、ion and Results ofOperations.38Item 7A.Quantitative and Qualitative Disclosures About Market Risk.55Item 8.Financial Statements and Supplementary Data.56Item 9.Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure.56Item 9A.Controls and Procedures.56Item 9B.Other Inform

42、ation.57PART IIIItem 10.Directors,Executive Officers and Corporate Governance.58Item 11.Executive Compensation.58Item 12.Security Ownership of Certain Beneficial Owners and Management andRelated Shareholder Matters.58Item 13.Certain Relationships and Related Transactions and Director Independence.58

43、Item 14.Principal Accountant Fees and Services.58PART IVItem 15.Exhibits and Financial Statement Schedules.58Item 16.Form 10-K Summary.641SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTSCertain statements in this Annual Report on Form 10-K,other than purely historical information,including estimates,pr

44、ojections,statements relating to our business plans,objectives and expectedoperating results,and the assumptions upon which those statements are based,are forward-lookingstatements within the meaning of the Private Securities Litigation Reform Act of 1995,Section 27A ofthe Securities Act of 1933,as

45、amended,and Section 21E of the Securities Exchange Act of 1934,asamended.These forward-looking statements generally are identified by the use of the words believe,project,expect,anticipate,estimate,plan,may,will,will continue,intend,should,may or similar expressions.Although we believe that the expe

46、ctations reflected in such forward-looking statements are based upon reasonable assumptions,beliefs and expectations,such forward-looking statements are not predictions of future events or guarantees of future performance and ouractual results could differ materially from those set forth in the forw

47、ard-looking statements.Currently,one of the most significant factors that could cause actual outcomes to differ materiallyfrom our forward-looking statements is the continued adverse effect of the current pandemic of thenovel coronavirus(COVID-19)on our financial condition,results of operations,cash

48、 flows andperformance,the real estate market and the global economy and financial markets.The extent to whichthe COVID-19 pandemic will continue to impact us will depend on future developments,which arehighly uncertain and cannot be predicted with confidence.These future developments may include,amo

49、ng others,the duration of the pandemic and its impact on the demand for travel and on levels ofconsumer confidence,the actions governments,businesses and individuals take in response to thepandemic,the impact of the pandemic on global and regional economies,travel and economic activity,and the pace

50、of recovery when the COVID-19 pandemic subsides.Moreover,investors are cautioned tointerpret many of the risks identified under the section entitled Risk Factors within this AnnualReport on Form 10-K as being heightened as a result of the ongoing and numerous adverse impacts ofthe COVID-19 pandemic.

51、Additional factors that might cause actual outcomes to differ materially from our forward-lookingstatements include the following:the current global economic uncertainty,increased direct competition,changes in government regulations or accounting rules,changes in local,national and global real estat

52、econditions,declines in the lodging industry,seasonality of the lodging industry,risks related to naturaldisasters,such as earthquakes and hurricanes,hostilities,including future terrorist attacks or fear ofhostilities that affect travel,our ability to obtain lines of credit or permanent financing o

53、n satisfactoryterms,changes in interest rates,access to capital through offerings of our common and preferred sharesof beneficial interest,or debt,our ability to identify suitable acquisitions,our ability to close onidentified acquisitions and integrate those businesses,and inaccuracies of our accou

54、nting estimates.Adiscussion of these and other risks and uncertainties that could cause actual results and events to differmaterially from such forward-looking statements is included in Risk Factors and ManagementsDiscussion and Analysis of Financial Condition and Results of Operations within this A

55、nnual Reporton Form 10-K.Given these uncertainties,undue reliance should not be placed on such statements.Except as required by law,we undertake no obligation to update or revise publicly any forward-lookingstatements,whether as a result of new information,future events or otherwise.Except where the

56、context suggests otherwise,we define certain terms in this Annual Report on Form 10-K as follows:our company,we,us and our refer to RLJ Lodging Trust,a Maryland real estateinvestment trust,together with its consolidated subsidiaries,including RLJ Lodging Trust,L.P.,aDelaware limited partnership,whic

57、h we refer to as the Operating Partnership;our hotel properties refers to the 103 hotels owned by us as of December 31,2020;a compact full-service hotel typically refers to any hotel with(1)less than 300 guestrooms andless than 12,000 square feet of meeting space,or(2)more than 300 guestrooms where,

58、unliketraditional full-service hotels,the operations focus primarily on the rental of guestrooms such2that a significant majority of its total revenue is generated from room rentals rather than othersources,such as food and beverage;a focused-service hotel typically refers to any hotel where the ope

59、rations focus primarily onthe rental of guestrooms and that offers services and amenities to a lesser extent than atraditional full-service or compact full-service hotel.For example,a focused-service hotel mayhave a restaurant,but,unlike a restaurant in a traditional full-service or compact full-ser

60、vicehotel,it may not offer three meals per day and may not offer room service.In addition,afocused-service hotel differs from a compact full-service hotel in that it typically has less than2,000 square feet of meeting space,if any at all;TRS refers to each of our taxable REIT subsidiaries that are w

61、holly-owned,directly orindirectly,by the Operating Partnership and any disregarded subsidiaries of our TRSs;Average Daily Rate(ADR)represents the total hotel room revenues divided by the totalnumber of rooms sold in a given period;Occupancy represents the total number of hotel rooms sold in a given

62、period divided by thetotal number of rooms available;and Revenue Per Available Room(RevPAR)is the product of ADR and Occupancy.For a more in depth discussion of ADR,Occupancy and RevPAR,please refer to the Key Indicatorsof Operating Performance section.3PART IItem 1.BusinessOur CompanyWe are a self-

63、advised and self-administered Maryland real estate investment trust(REIT)thatowns primarily premium-branded,high-margin,focused-service and compact full-service hotels.We areone of the largest U.S.publicly-traded lodging REITs in terms of both number of hotels and number ofrooms.Our hotels are conce

64、ntrated in markets that we believe exhibit multiple demand generators andattractive long-term growth prospects.We believe premium-branded,focused-service and compactfull-service hotels with these characteristics generate high levels of RevPAR,strong operating marginsand attractive returns.As of Dece

65、mber 31,2020,we owned 103 hotel properties with approximately 22,700 rooms,located in 23 states and the District of Columbia.We owned,through wholly-owned subsidiaries,a100%interest in 99 of our hotel properties,a 98.3%controlling interest in the DoubleTreeMetropolitan Hotel New York City,a 95.0%con

66、trolling interest in The Knickerbocker,and 50%interests in entities owning two hotel properties.We consolidate our real estate interests in the101 hotel properties in which we hold a controlling financial interest,and we record the real estateinterests in the two hotel properties in which we hold an

67、 indirect 50%interest using the equity methodof accounting.We lease 102 of the 103 hotel properties to our TRSs,of which we own a controllingfinancial interest.For U.S.federal income tax purposes,we elect to be taxed as a REIT.Substantially all of ourassets and liabilities are held by,and all of our

68、 operations are conducted through,the OperatingPartnership.We are the sole general partner of the Operating Partnership.As of December 31,2020,we owned,through a combination of direct and indirect interests,99.5%of the units of limitedpartnership interest in the Operating Partnership(OP units).COVID

69、-19The global outbreak of a novel strain of coronavirus(COVID-19)and the public health measuresthat have been undertaken in response have had,and will likely continue to have,a material adverseimpact on the global economy and all aspects of our business.Significant events affecting travel,including

70、the COVID-19 pandemic,typically have an impact onbooking patterns,with the full extent of the impact generally determined by the duration of the eventand its impact on travel decisions.The effects of the COVID-19 pandemic,including relatedgovernment restrictions,border closings,quarantining,shelter-

71、in-place orders and social distancing,have significantly limited non-essential travel and also resulted in increased national unemployment andpossible lasting changes in consumer behavior that will create headwinds for our hotel properties evenafter government restrictions are lifted.Since we cannot

72、 estimate when the COVID-19 pandemic andthe responsive measures to combat it will end,we cannot estimate the ultimate operational andfinancial impact of COVID-19 on our business.The effects of the COVID-19 pandemic havesignificantly impacted our operations in 2020,and combined with macroeconomic tre

73、nds such as thecurrent economic recession,reduced consumer spending,including on travel,and increasedunemployment,lead us to believe that the ongoing effects of the COVID-19 pandemic on ouroperations continue to have a material adverse impact on our financial results and liquidity and suchadverse im

74、pact may continue well beyond the containment of such outbreak and vaccinationdistribution.4The Lodging IndustryThe lodging industry in the United States consists of public and private entities that operate in anextremely diversified market under a variety of brand names.The key participants in the

75、lodgingindustry are as follows:Ownersown the hotel property and typically enter into a management agreement with anindependent third party to manage the hotel property.The hotel properties may be branded andoperated under the managers brand or branded under a separate franchise agreement.Franchisors

76、own a brand or brands and provide the franchised hotels with brand recognition,marketing support and worldwide reservation systems.Managersresponsible for the day-to-day operation of the hotel property,including theemployment of the hotel staff,the determination of room rates,the development of sale

77、s andmarketing plans,the preparation of operating and capital expenditure budgets and thepreparation of financial reports for the owner.Our Investment and Business StrategiesOur objective is to generate strong returns for our shareholders by acquiring and owning primarilypremium-branded,focused-serv

78、ice and compact full-service hotels at prices where we believe we cangenerate attractive returns on investment and long-term value appreciation through proactive assetmanagement.We also intend to selectively dispose of hotel properties when we believe the returns havebeen maximized or the hotel prop

79、erties no longer meet our strategy in order to have investmentcapacity for other opportunities,which may include acquisitions.We intend to pursue this objectivethrough the following investment and business strategies:Investment Strategies Targeted ownership of premium-branded,focused-service and com

80、pact full-service hotels.We believethat premium-branded,focused-service and compact full-service hotels have the potential togenerate attractive returns relative to other types of hotels due to their ability to achieveRevPAR levels at or close to those generated by traditional full-service hotels,wh

81、ile achievinghigher profit margins due to their more efficient operating model and less volatile cash flows.Use of premium hotel brands.We believe in affiliating our hotels with premium brands owned byleading international franchisors such as Marriott,Hilton and Hyatt.We believe that utilizingpremiu

82、m brands provides significant advantages because of their guest loyalty programs,worldwide reservation systems,effective product segmentation,global distribution and strongcustomer awareness.Focus on high-growth markets.We focus on owning and acquiring hotel properties in marketsthat we believe exhi

83、bit multiple demand generators and attractive long-term growth prospects.As a result,we believe that these hotel properties generate higher returns on investment.Business Strategies Maximize returns from our hotel properties.We believe that our hotel properties have thepotential to generate improvem

84、ents in RevPAR and earnings before interest,taxes,depreciationand amortization(EBITDA)as a result of our proactive asset management and the anticipatedlong-term recovery of the United States economy.We actively monitor and advise our third-party management companies on most aspects of our hotels ope

85、rations,including propertypositioning,physical design,capital planning and investment,guest experience and overallstrategic direction.We regularly review opportunities to further invest in our hotel properties in5an effort to enhance quality and attractiveness,increase long-term value and generate a

86、ttractivereturns on investment.Pursue a disciplined hotel acquisition strategy.We seek to acquire additional hotel properties atprices below replacement cost where we believe we can generate attractive returns oninvestment.We intend to target acquisition opportunities where we can enhance value bypu

87、rsuing proactive investment strategies such as renovation,repositioning or rebranding.Pursue a disciplined capital recycling program.We intend to continue to pursue a disciplinedcapital allocation strategy designed to maximize the return on our investments by selectivelyselling hotel properties that

88、 are no longer consistent with our investment strategy or whosereturns appear to have been maximized.To the extent that we sell our hotel properties,exceptas may be required by our debt agreements,we intend to redeploy the capital into otherinvestment opportunities,including without limitation,acqui

89、sitions,brand conversions,greeninitiatives and space configuration opportunities.Continue to improve our balance sheet.We intend to continue to maintain a flexible capitalstructure that allows us to execute our strategy.We believe that a strong balance sheet is a keycompetitive advantage that afford

90、s us a lower cost of capital and positions us for growth.Westructure our debt profile to maintain financial flexibility and a balanced maturity schedule withaccess to different forms of financing.6Our HotelsOur hotel properties operate under strong,premium brands,with approximately 87%of our hotelpr

91、operties operating under existing relationships with Marriott,Hilton or Hyatt.The following tablesets forth the brand affiliations of our hotel properties as of December 31,2020:Number ofPercentage ofNumber ofPercentage ofBrand Affiliationshotelstotal hotelsroomstotal roomsMarriottResidence Inn.1312

92、.6%1,7307.6%Courtyard.1413.5%2,86012.6%Fairfield Inn&Suites.54.9%6462.8%Marriott.54.9%1,7387.7%Renaissance.32.9%7823.4%SpringHill Suites.32.9%4372.0%Subtotal.4341.7%8,19336.1%HiltonEmbassy Suites.2120.4%5,79025.5%Hilton Garden Inn.54.9%1,1004.9%DoubleTree.43.9%1,3976.2%Hampton Inn/Hampton Inn&Suites

93、.21.9%3131.4%Homewood Suites.21.9%3451.5%Hilton.11.0%2311.0%Subtotal.3534.0%9,17640.5%HyattHyatt House.76.8%1,1885.2%Hyatt Place.32.9%4662.1%Hyatt Centric.21.9%2661.2%Subtotal.1211.6%1,9208.5%WyndhamWyndham.87.8%2,52811.1%Subtotal.87.8%2,52811.1%Other Brand Affiliation.54.9%8583.8%Total.103100.0%22,

94、675100.0%Asset ManagementWe have a dedicated team of asset management professionals that proactively work with our third-party management companies to maximize profitability at each of our hotels to the extent permittedunder the REIT rules.Our asset management team monitors the performance of our ho

95、tels on a dailybasis and holds frequent ownership meetings with corporate operations executives and key personnel atthe hotels.Our asset management team works closely with our third-party management companies onkey aspects of each hotels operation,including,among others,revenue management,marketposi

96、tioning,cost structure,capital and operational budgeting,as well as the identification andevaluation of return on investment initiatives and overall business strategy.In addition,we retainapproval rights on key staffing positions at many of our hotels,such as the hotels general manager anddirector o

97、f sales.We believe that our strong asset management process helps to ensure that each hotelis being operated to our and our franchisors standards,that our hotel properties are being adequatelymaintained in order to preserve the value of the asset and to ensure the safety of our customers,andthat our

98、 management companies are maximizing revenues,profits and operating margins.7CompetitionThe U.S.lodging industry is highly competitive.Our hotel properties compete with otherparticipants in the lodging industry for guests in each of their markets on the basis of several factors,including,among other

99、s,location,quality of accommodations,convenience,brand affiliation,roomrates,service levels,amenities and the availability of lodging and event space.Competition is oftenspecific to the individual markets in which our hotel properties are located and includes competitionfrom existing and new hotels

100、in the focused-service and compact full-service hotel segments andnon-traditional accommodations for travelers,such as online services that market homes andcondominiums as an alternative to hotel rooms.We believe that hotels,such as our hotels,that areaffiliated with leading national brands,such as

101、the Marriott,Hilton and Hyatt brands,will enjoycompetitive advantages associated with operating under such brands.We face competition for the acquisition of hotel properties from institutional pension funds,private equity funds,REITs,hotel companies and other parties who are engaged in the acquisiti

102、on ofhotel properties.Some of these competitors may have substantially greater financial and operationalresources and access to capital,a lower cost of capital and/or greater knowledge of the markets inwhich we seek to invest.This competition may reduce the number of suitable investment opportunitie

103、soffered to us and decrease the attractiveness of the terms on which we may acquire our targeted hotelinvestments,including the cost thereof.SeasonalityThe lodging industry is seasonal in nature,which can cause quarterly fluctuations in our revenues.For example,our hotels in the Chicago,Illinois met

104、ropolitan area experience lower revenues andprofits during the winter months of December through March,while our hotels in Florida generallyhave higher revenues in the months of January through April.This seasonality can be expected tocause periodic fluctuations in a hotels room revenues,occupancy l

105、evels,room rates,operating expensesand cash flows.Our Financing StrategyOver time,we intend to finance our long-term growth with equity issuances and debt financingwith staggered maturities.Our strategy with respect to our debt profile is to primarily have unsecureddebt and a greater percentage of f

106、ixed rate and hedged floating rate debt as compared to unhedgedfloating rate debt.Our debt is currently comprised of unsecured senior notes,unsecured creditagreements,and mortgage loans secured by certain hotel properties.We have a mix of fixed andfloating rate debt;however,the majority of our debt

107、either bears interest at fixed rates or effectivelybears interest at fixed rates due to interest rate swaps on the debt.Organizational StructureWe were formed as a Maryland REIT in January 2011.We conduct our business through atraditional umbrella partnership real estate investment trust(UPREIT)in w

108、hich our hotel propertiesare indirectly owned by the Operating Partnership,through limited partnerships,limited liabilitycompanies or other subsidiaries.We are the sole general partner of the Operating Partnership and,asof December 31,2020,we owned 99.5%of the OP units in the Operating Partnership.I

109、n the future,we may issue OP units from time to time in connection with acquiring hotel properties,financing,compensation or other reasons.In order for the income from our hotel operations to constitute rents from real property forpurposes of the gross income tests required for REIT qualification,we

110、 cannot directly or indirectlyoperate any of our hotel properties.Accordingly,we lease our hotels,and we intend to lease any hotelswe acquire in the future,to subsidiaries of our TRSs(TRS lessees),which are wholly-owned by us.8Our TRS lessees have engaged,or will engage,third-party management compan

111、ies to manage our hotelproperties,and any hotel properties we acquire in the future,on market terms.Our TRS lessees pay rent to us that we intend to treat as rents from real property,provided thatthe third-party management companies engaged by our TRS lessees to manage our hotel properties aredeemed

112、 to be eligible independent contractors and certain other requirements are met.Our TRSsare subject to U.S.federal,state and local income taxes applicable to corporations.RegulationGeneralOur hotel properties are subject to various U.S.federal,state and local laws,ordinances andregulations,including

113、regulations relating to common areas and fire and life safety requirements.Webelieve that each of our hotel properties has the necessary permits and approvals to operate itsbusiness.Americans with Disabilities ActOur hotel properties must comply with the applicable provisions of the Americans with D

114、isabilitiesAct of 1990 and the Accessibility Guidelines promulgated thereunder(the ADA),to the extent thatsuch hotels are public accommodations as defined by the ADA.The ADA may require the removalof structural barriers to access by persons with disabilities in certain public areas of our hotels whe

115、resuch removal is readily achievable.We believe that our hotel properties are in substantial compliancewith the ADA and that we will not be required to make substantial capital expenditures to address therequirements of the ADA.However,non-compliance with the ADA could result in imposition of fineso

116、r an award of damages to private litigants.The obligation to make readily achievable accommodationsis an ongoing one,and we will continue to assess our hotels and to make alterations as appropriate inthis respect.Environmental MattersUnder various federal,state and local laws,ordinances and regulati

117、ons relating to the protection ofthe environment,a current or previous owner or operator(including tenants)of real estate may besubject to liability related to contamination resulting from the presence or discharge of hazardous ortoxic substances at that property and may be required to investigate a

118、nd clean up such contaminationat that property or emanating from that property.These costs could be substantial and liability underthese laws may attach without regard to whether the owner or operator knew of,or was responsiblefor,the presence of the contaminants,and the liability may be joint and s

119、everal.The presence ofcontamination or the failure to remediate contamination at our hotels may expose us to third-partyliability for cleanup costs,property damage or bodily injury,natural resource damages and costs orexpenses related to liens or property use restrictions and materially and adversel

120、y affect our ability tosell,lease or develop the real estate or to incur debt using the real estate as collateral.Our hotel properties are subject to various federal,state,and local environmental,health andsafety laws and regulations.Our hotel properties incur costs to comply with these laws and reg

121、ulationsand could be subject to fines and penalties for non-compliance.The costs of complying withenvironmental,health and safety laws could increase as new laws are enacted and existing laws aremodified.Some of our hotel properties contain asbestos-containing building materials.We believe that thea

122、sbestos is appropriately contained in accordance with current environmental regulations and that wehave no need for any immediate remediation or current plans to remove the asbestos.9We believe that our hotel properties are in compliance,in all material respects,with all federal,state and local envi

123、ronmental ordinances and regulations regarding hazardous or toxic substances andother environmental matters,the violation of which could have a material adverse effect on us.Although we have not received written notice from any governmental authority of any materialnoncompliance,liability or claim r

124、elating to hazardous or toxic substances or other environmentalmatters in connection with any of our present properties,we can offer no assurance that a materialenvironmental claim will not be asserted against us in the future.InsuranceWe carry comprehensive general liability,fire,extended coverage,

125、business interruption,rental lossof income coverage and umbrella liability coverage on all of our hotels,including earthquake,wind,flood and hurricane coverage on hotels in areas where we believe such coverages are warranted,ineach case with limits of liability that we deem adequate.Similarly,we are

126、 insured against the risk ofdirect physical damage in amounts we believe to be adequate to reimburse us,on a replacement costbasis,for the costs incurred to repair or rebuild each hotel,including loss of income during thereconstruction period.We have selected policy specifications and insured limits

127、 which we believe to beappropriate given the relative risk of loss,the cost of the coverage and industry practice.We do notcarry insurance for generally uninsurable risks,including,but not limited to losses caused bycommunicable or infectious diseases,war or governmental actions such as government s

128、eizures ofproperty.In the opinion of our management,our hotels are adequately insured.Human CapitalAs of December 31,2020,we had 77 employees.We strive to maintain a workplace that is freefrom discrimination or harassment on the basis of race,color,sex,religion,age,ethnicity,nationalorigin,disabilit

129、y,sexual orientation,gender identification or any other status protected by applicablelaws.We conduct annual trainings to prevent discrimination and harassment and monitor employeeconduct year-round.Our key human capital management objectives are to attract,recruit,hire,develop and promote adeep and

130、 diverse bench of talent that translates into a strong and successful workforce.To supportthese objectives,our human resources programs are designed to develop talent to prepare them forcritical roles and leadership positions for the future;reward and support employees throughcompetitive pay and ben

131、efit programs;enhance our culture through efforts to foster,promote,andpreserve a culture of diversity and inclusion;and evolve and invest in technology,tools,and resourcesto enable employees at work.Environmental,Social,and Governance(ESG)We set ESG objectives to integrate sustainability across our

132、 portfolio.We intend to enhancestrategic decision making by identifying and addressing material risks and opportunities that mitigatelong-term environmental damage to our hotel properties.We seek to minimize our business impacts byimplementing relevant practices that build the resilience of our hote

133、ls and stakeholders.Corporate InformationOur principal executive offices are located at 3 Bethesda Metro Center,Suite 1000,Bethesda,Maryland 20814.Our telephone number is(301)280-7777.Our website is located .The information that is found on or accessible through our website is notincorporated into,a

134、nd does not form a part of,this Annual Report on Form 10-K or any other reportor document that we file with or furnish to the SEC.We have included our website address in thisAnnual Report on Form 10-K as an inactive textual reference and do not intend it to be an active linkto our website.10We make

135、available on our website,free of charge,our Annual Report on Form 10-K,QuarterlyReports on Form 10-Q,Current Reports on Form 8-K and amendments to those reports filed orfurnished pursuant to Section 13(a)or 15(d)of the Exchange Act as soon as reasonably practicableafter we electronically file such m

136、aterial with,or furnish it to,the SEC.We also make available on ourwebsite on the Corporate Governance page under the Investor Relations section various documentsrelated to our corporate governance including our:Board Committee Charters;Corporate GovernanceGuidelines;Code of Business Conduct and Eth

137、ics;Complaint Procedures for Financial and AuditingMatters;Declaration of Trust;and Bylaws.This Annual Report on Form 10-K and other reports filed with the SEC are available on theSECs website,which contains reports,proxy and information statements,and other informationregarding issuers that file el

138、ectronically with the SEC.The SECs website address is www.sec.gov.Item 1A.Risk FactorsSet forth below are the risks that we believe are material to our shareholders.You should carefullyconsider the following risks in evaluating our Company and our business.The occurrence of any of thefollowing risks

139、 could materially and adversely impact our financial condition,results of operations,cashflows,the market price of our common shares,and our ability to,among other things,satisfy our debtservice obligations and to make distributions to our shareholders,which in turn could cause ourshareholders to lo

140、se all or a part of their investment.Some statements in this report including statements inthe following risk factors constitute forward-looking statements.Please refer to the section entitled SpecialNote About Forward-Looking Statements at the beginning of our Annual Report on Form 10-K.Risks Relat

141、ed to Our Business and Hotel PropertiesThe current outbreak of the novel coronavirus(COVID-19)has significantly adversely impacted anddisrupted,and is expected to continue to significantly adversely impact and disrupt,our business,financialperformance and condition,operating results and cash flows.F

142、urther,the spread of the COVID-19 outbreakhas caused severe disruptions in the U.S.and global economy and financial markets and could result in thecontinuation of widespread business continuity issues for an unknown duration.Since first being reported in December 2019,the novel strain of coronavirus

143、(COVID-19)hasspread globally,including to every state in the United States.The outbreak of COVID-19 has had,andanother pandemic in the future could similarly have,significant repercussions across regional and globaleconomies and financial markets.The global impact of the outbreak has been rapidly ev

144、olving andmany countries,including the United States,have reacted by instituting a wide variety of controlmeasures including states of emergency,mandatory quarantines,implementing shelter in placeorders,border closures,and restricting travel and large gatherings.Furthermore,the outbreak hastriggered

145、 a global economic recession.COVID-19 has disrupted our business and has had a material adverse effect,and will continue tomaterially adversely impact and disrupt,our business,financial performance and condition,operatingresults and cash flows.The effects of the pandemic on the hotel industry are un

146、precedented.Globaldemand for lodging has been drastically reduced and occupancy levels have reached historic lows.Sincelate February 2020,we have experienced a significant decline in occupancy and RevPAR associated withCOVID-19 throughout our portfolio.As of December 31,2020,7 of our 103 hotel prope

147、rties remainclosed.All of our open hotels are currently operating at significantly reduced occupancy levels.Inaddition,we may need or elect to temporarily suspend the operations at our hotels in the future as aresult of the COVID-19 pandemic.It is not currently known when the suspended operations at

148、 ourclosed hotels will resume at any level,or if we will need to suspend operations at additional hotels.Additional factors that would negatively impact our ability to operate successfully during orfollowing the COVID-19 pandemic or another pandemic,or that could otherwise significantly adversely11i

149、mpact and disrupt our business,financial performance and condition,operating results and cash flows,include:sustained negative consumer or business sentiment,economic metrics or demand for travel,including beyond the end of the COVID-19 pandemic,which could further adversely impactdemand for lodging

150、;our ability to reopen our hotels in a timely manner,or at all,and our ability to attract customersto our hotels when we are able to reopen;increased operational costs to maintain hotels,including hotels that are no longer in operation,and increased sanitation measures at hotels that continue to ope

151、rate;the scaling back or delay of a significant amount of planned capital expenditures,includingplanned renovation projects,which could adversely affect the value of our properties;continued reduction or the elimination of quarterly dividends;our increased indebtedness and decreased operating revenu

152、es,which could increase our risk ofdefault on our loans;continued volatility of our stock price;our dependence on our third-party management companies,which are facing similar challengesfrom the COVID-19 pandemic;disruptions in our supply chains,which may impact our hotels that are still operating o

153、r havere-opened;fluctuations in regional and local economies;the continued service and availability of personnel,including our senior leadership team,and ourability to recruit,attract and retain skilled personnel to the extent our management or personnelare impacted by the outbreak of pandemic or ep

154、idemic disease and are not available or allowedto conduct work;our ability to ensure business continuity in the event our continuity of operations plan is noteffective or improperly implemented or deployed during a disruption;disruptions as a result of corporate employees working remotely,including

155、risk of cybersecurityincidents and disruptions to internal control procedures;and difficulty accessing debt and equity capital on attractive terms,or at all,and a severe disruptionand instability in the global financial markets or deteriorations in credit and financing conditionsmay affect our abili

156、ty to meet our liquidity needs by restricting or otherwise limiting our accessto capital necessary to fund business operations and affect the availability and terms of futureborrowings,renewals or refinancings.Any of the negative impacts of the COVID-19 pandemic,including those described above,alone

157、 orin combination with others,may have a material adverse effect on our results of operations,financialcondition and cash flows.The significance,extent and duration of the impacts caused by the COVID-19 pandemic on ourbusiness,financial condition,operating results and cash flows,remains largely unce

158、rtain and dependenton future developments that cannot be accurately predicted at this time,such as the continued severity,duration,transmission rate and geographic spread of COVID-19 in the United States,the extent andeffectiveness of the containment measures taken,the effectiveness of the distribut

159、ion and efficacy ofvaccines,and the responses of the overall economy,the financial markets and the population,particularly in areas in which we operate,as containment measures are lifted and,in some cases,12reinstated.Furthermore,there can be no guarantee that the demand for lodging,and consumerconf

160、idence in travel generally,will recover as quickly as other industries after the COVID-19 pandemichas largely subsided.As a result,we cannot provide an estimate of the overall impact of the COVID-19pandemic on our business or when,or if,we will be able to resume normal operations.Nevertheless,the CO

161、VID-19 pandemic presents material uncertainty and risk with respect to our business,financialperformance and condition,operating results and cash flows.We require a significant amount of cash to service our debt and sustain our operations.Our ability togenerate cash depends on many factors beyond ou

162、r control,and we may not be able to generate cash requiredto service our debt.Our ability to meet our debt service obligations or refinance our debt depends on our futureoperating and financial performance and capacity to generate cash.Our performance and capacity togenerate cash will be affected by

163、 our ability to implement our business strategy successfully,but alsocertain general economic,financial,competitive,regulatory and other factors beyond our control,including the disruption caused by the COVID-19 pandemic.If we cannot generate sufficient cash tomeet our debt service obligations or fu

164、nd our other business needs,we may,among other things,needto refinance all or a portion of our debt,obtain additional financing,or continue to delay plannedcapital expenditures.We cannot assure you that we will be able to generate sufficient cash through anyof the foregoing.If we are unable to refin

165、ance any of our debt or obtain additional financing onreasonable terms or at all,we may not be able to satisfy our debt obligations.We will continue to be significantly influenced by the economies and other conditions in the specific marketsin which we operate,particularly in the metropolitan areas

166、where we have high concentrations of hotels.Our hotels located in the Northern California,Southern California,South Florida,Chicago,Illinois,New York,New York,and Houston,Texas metropolitan areas accounted for approximately12.2%,10.4%,8.5%,8.1%,7.6%,and 6.2%,respectively,of our total number of rooms

167、 available forthe fiscal year ended December 31,2020.As a result,we are particularly susceptible to adverse marketconditions in these areas,including industry downturns,relocation of businesses,localized COVID-19infection rates and governmental actions to address the pandemic,any oversupply of hotel

168、 rooms,political unrest or a reduction in lodging demand.Adverse economic developments in the markets inwhich we have a concentration of hotels,or in any of the other markets in which we operate,or anyincrease in hotel supply or decrease in lodging demand resulting from the local,regional or nationa

169、lbusiness or political climate,could materially and adversely affect us.We are dependent on the performance of the third-party management companies that manage the operationsof each of our hotels and we could be materially and adversely affected if such third-party hotel managers donot manage our ho

170、tels in our best interests.Because U.S.federal income tax laws restrict REITs and their subsidiaries from operating ormanaging hotel properties,we do not operate or manage our hotel properties.Instead,we retain third-party hotel managers to operate our hotel properties pursuant to management agreeme

171、nts.As ofDecember 31,2020,all of our hotel properties had individual management agreements,35 of whichwere with Aimbridge Hospitality(Aimbridge).The success of our hotel properties depends largely on our ability to establish and maintain goodrelationships with the hotel managers.From time to time,di

172、sputes may arise between us and our third-party managers regarding their performance or compliance with the terms of the managementagreements,which in turn could adversely affect our results of operations.We generally will attempt toresolve any such disputes through discussions and negotiations;howe

173、ver,if we are unable to reachsatisfactory results through discussions and negotiations,we may choose to terminate our management13agreement,litigate the dispute or submit the matter to third-party dispute resolution,the outcome ofwhich may be unfavorable to us.In the event that any of our management

174、 agreements are terminated,we can provide noassurances that we could find a replacement manager or that our franchisors will consent to areplacement manager in a timely manner,or at all,or that any replacement manager will be successfulin operating our hotels.Furthermore,if Aimbridge,as our largest

175、provider of management services,isfinancially unable or unwilling to perform its obligations pursuant to our management agreements,ourability to find a replacement manager or managers for our Aimbridge-managed hotels could bechallenging,costly and time consuming.We are subject to the risks associate

176、d with the employment of hotel personnel,particularly with hotels thatemploy unionized labor.Our third-party management companies are responsible for hiring and maintaining the labor forceat each of our hotels.Although we do not directly employ or manage the employees at our hotels,westill are subje

177、ct to many of the costs and risks generally associated with the hotel labor force,particularly those hotels with unionized labor.From time to time,the hotel operations may bedisrupted as a result of strikes,lockouts,public demonstrations or other negative actions and publicity.The resolution of labo

178、r disputes or re-negotiated labor contracts could lead to higher labor costs,eitherby increases in wages or benefits or by changes in work rules that raise hotel operating costs.We donot have the ability to affect the outcome of these negotiations.Restrictive covenants in certain of our management a

179、nd franchise agreements contain provisions limiting orrestricting the sale or financing of our hotels,which could have a material and adverse effect on us.Our management and franchise agreements may contain restrictive covenants that limit or restrictour ability to sell or refinance a hotel without

180、the consent of the management company or franchisor.Some of our franchise agreements provide the franchisor with a right of first offer in the event ofcertain sales or transfers of a hotel and provide that the franchisor has the right to approve any changein the management company engaged to manage

181、the hotel.Generally,we may not agree to sell,leaseor otherwise transfer particular hotels unless the transferee is not a competitor of the managementcompany or franchisor and the transferee assumes the related management and/or franchiseagreements.If the management company or franchisor does not con

182、sent to the sale or financing of ourhotels,we may still sell the hotels,but there could be adverse consequences.Substantially all of our hotel properties operate under either Marriott,Hilton or Hyatt brands;therefore,weare subject to the risks associated with concentrating our portfolio in just thre

183、e brand families.90 of the 103 hotel properties that we owned as of December 31,2020 utilize brands owned byMarriott,Hilton or Hyatt.As a result,our success is dependent in part on the continued success ofMarriott,Hilton or Hyatt and their respective brands.We believe that building brand value is cr

184、itical toincreasing demand and building customer loyalty.Consequently,if market recognition or the positiveperception of Marriott and/or Hilton and/or Hyatt is reduced or compromised,the goodwill associatedwith the Marriott-,Hilton-,or Hyatt-branded hotels in our portfolio may be adversely affected.

185、Furthermore,if our relationship with Marriott,Hilton or Hyatt were to deteriorate or terminate as aresult of disputes regarding the management of our hotels or for other reasons,Marriott and/or Hiltonand/or Hyatt could,under certain circumstances,terminate our current franchise licenses with them or

186、decline to provide franchise licenses for hotels that we may acquire in the future.If any of theforegoing were to occur,it could have a material adverse effect on us.14The failure to make and integrate acquisitions of additional hotels could materially and adversely impede ourgrowth.We can provide n

187、o assurances that we will be successful in identifying attractive hotel properties orportfolios of hotel properties or that,once identified,we will be successful in consummating anacquisition or integrating the acquired property or portfolio into our business.We face significantcompetition for attra

188、ctive investment opportunities from other investors,some of which have greaterfinancial resources,a lower cost of capital and greater access to debt and equity capital than we do.Asa result,we may be unable to acquire certain hotel properties or portfolios of hotel properties that wedeem attractive

189、or the purchase price may be significantly elevated or other terms may be substantiallymore onerous.In addition,we expect to finance future acquisitions through a combination ofborrowings under our unsecured revolving credit facility or other secured or unsecured borrowings,theuse of retained cash f

190、lows,and offerings of equity and debt securities,which may not be available onadvantageous terms,or at all.Any delay or failure on our part to identify,negotiate,finance onfavorable terms,consummate and integrate such acquisitions could materially and adversely impede ourgrowth.Following an acquisit

191、ion or expansion,we may incur acquisition-related costs and assumepotential unknown liabilities and unforeseen increased costs or expenses.The integration of suchacquisitions,especially acquisitions of portfolios of hotel properties,may cause disruptions to ourbusiness,strain management time and res

192、ources and materially and adversely affect our operatingresults and financial condition.Any delay in demand growth due to weaker than anticipated economic growth could materially and adverselyaffect us and our growth prospects.The operating performance of our hotel properties in various U.S.markets

193、has significantlydeclined during the COVID-19 pandemic.Our business strategy depends on achieving revenue and netincome growth from anticipated improvement in demand for hotel rooms as part of the growth of theU.S.economy as well as the global economy.Accordingly,any delay or weaker than anticipated

194、economic growth could materially and adversely affect us and our growth prospects.Furthermore,evenif the U.S.economy and the global economy continue to grow,we cannot provide any assurances thatdemand for hotel rooms will increase from current levels.If demand does not increase in the nearfuture,or

195、if demand weakens,our future results of operations and our growth prospects could bematerially and adversely affected.Any difficulties in obtaining the capital necessary to make required periodic capital expenditures and torenovate our hotel properties could materially and adversely affect our finan

196、cial condition and results ofoperations.Our hotel properties have an ongoing need for renovations and other capital improvements,including the replacement of furniture,fixtures and equipment(FF&E),franchisor-requiredimprovements,and renovation or redevelopment of acquisitions.Our lenders will also l

197、ikely requirethat we set aside annual amounts for capital improvements to our hotel properties.The costs of thesecapital improvements could materially and adversely affect us.We may not be able to fund the capital improvements to our hotel properties or acquisitions solelyfrom the cash provided from

198、 our operating activities because we must distribute annually at least 90%of our REIT taxable income to shareholders in order to maintain our qualification as a REIT.Consequently,we expect to rely upon the availability of debt or equity capital to fund capitalimprovements and acquisitions.If we are

199、unable to obtain the capital necessary to make the requiredperiodic capital expenditures and to renovate our hotel properties on favorable terms,or at all,ourfinancial condition,liquidity and results of operations could be materially and adversely affected.15Competition from other lodging industry p

200、articipants in the markets in which we operate could adverselyaffect occupancy levels and/or ADRs,which could have a material and adverse effect on us.We face significant competition from owners and operators of other hotels and other lodgingindustry participants.In addition,we face competition from

201、 non-traditional accommodations fortravelers,such as online services that market homes and condominiums as an alternative to hotelrooms.Our competitors may have an operating model that enables them to offer accommodations atlower rates than we can,which could result in our competitors increasing the

202、ir occupancy at ourexpense and adversely affecting our ADRs.Given the importance of occupancy and ADR at focused-service and compact full-service hotels,this competition could adversely affect our ability to attractprospective guests,which could materially and adversely affect our business,financial

203、 condition andresults of operations.At December 31,2020,we had approximately$2.6 billion of debt outstanding,which could materially andadversely affect our operating performance and put us at a competitive disadvantage.Required repayments of debt and related interest may materially and adversely aff

204、ect ouroperating performance.At December 31,2020,we had approximately$2.6 billion of outstanding debt.In addition,we may incur substantial additional debt,including secured debt,in the future.After takinginto consideration the effect of interest rate swaps,approximately 81.3%of our borrowings are fi

205、xed.Increases in interest rates on our existing or future variable rate debt would increase our interestexpense,which could adversely affect our cash flows and our ability to pay distributions toshareholders.Because we anticipate that our operating cash flow will be adequate to repay only a portion

206、of ourdebt at maturity,we expect that we will be required to repay debt through debt refinancings and/orofferings of our securities.The amount of our outstanding debt may adversely affect our ability torefinance our debt.If we are unable to refinance our debt on acceptable terms,or at all,we may be

207、forced to disposeof one or more of our hotels on disadvantageous terms,which may result in losses to us and mayadversely affect the cash available for distributions to our shareholders.In addition,if the prevailinginterest rates or other factors at the time of refinancing result in higher interest r

208、ates upon refinancing,our interest expense would increase,which would adversely affect our future operating results andliquidity.Our outstanding debt,and any additional debt borrowed in the future,may subject us to manyrisks,including the risk that:our cash flows from operations may be insufficient

209、to make required payments of principal andinterest;we may be required to use a substantial portion of our cash flows to pay principal and interest,which would reduce the cash available for distributions to our shareholders;we may be at a competitive disadvantage compared to our competitors that have

210、 less debt;we may be vulnerable to economic volatility,particularly if growth were to slow or stall andreduce our flexibility to respond to difficult market,industry,or economic conditions;the terms of any refinancing may not be in the same amount or on terms as favorable as theterms of the debt bei

211、ng refinanced;and the use of leverage could adversely affect our ability to borrow more money for operations,capital improvements,to finance future acquisitions of hotel properties,to make distributions to16our shareholders,to repurchase common shares,and it could adversely affect the market priceof

212、 our common shares.Disruptions in the financial markets could adversely affect our ability to obtain sufficient third-party financingfor our capital needs on favorable terms,or at all,which could materially and adversely affect us.In recent years,the U.S.financial markets experienced significant pri

213、ce volatility,dislocations andliquidity disruptions,which caused stock market prices to fluctuate substantially and the spreads onprospective debt financings to widen considerably.Renewed volatility and uncertainty in the financialmarkets may negatively impact our ability to access additional financ

214、ing for our capital needs,includinggrowth,acquisition activities and other business initiatives,on favorable terms or at all,which maynegatively affect our business.A prolonged downturn in the financial markets may cause us to seekalternative capital sources of potentially less attractive financing

215、and may require us to further adjustour business plan accordingly.These events also may make it more difficult or costly for us to raisecapital through the issuance of new equity or the incurrence of additional secured or unsecured debt,which could materially and adversely affect us.Replacement of t

216、he LIBOR benchmark interest rate could materially and adversely affect our business,financial condition,results of operations and cash flows.In 2017,the United Kingdoms Financial Conduct Authority,which regulates the LondonInterbank Offered Rate(LIBOR),announced it would phaseout LIBOR by the end of

217、 2021.Consequently,at this time,it is not possible to predict whether LIBOR will continue to be viewed asan acceptable market benchmark or what rate or rates may become acceptable alternatives to LIBOR.The transition from LIBOR,or any changes or reforms to the determination or supervision ofLIBOR,co

218、uld have an adverse impact on our current interest rate hedging arrangements.Thetransition from LIBOR could also create considerable costs and additional risk,which could materiallyand adversely impact our financial condition or results of operations.Since the proposed alternativerates are calculate

219、d differently,the payments under interest rate hedging arrangements that referencethe new rates will differ from those that reference LIBOR.We can provide no assurance regarding thefuture of LIBOR,whether our current interest rate hedging arrangements will continue to use LIBORas a reference rate or

220、 whether any reliance on such rate will be appropriate.Although we are currentlyunable to assess what the ultimate impact of the transition from LIBOR will be,failure to adequatelymanage the transition could hinder our ability to establish effective hedges on our variable rate debt.Our existing inde

221、btedness contains covenants and our failure to comply with all covenants in our debtagreements could materially and adversely affect us.Our existing indebtedness contains customary and financial covenants that may limit our ability toenter into future indebtedness.In addition,our ability to borrow u

222、nder our unsecured revolving creditfacility is subject to compliance with our financial and other covenants,including covenants relating todebt service coverage ratios and leverage ratios.During the year ended December 31,2020,weamended our unsecured credit facilities to suspend the testing of all e

223、xisting financial maintenancecovenants for all periods through and including the fourth quarter of 2021 and provides for lessrestrictive covenants through the first quarter of 2023.Due to the expected impact of the COVID-19pandemic into 2021 and beyond,we may not be able to meet the terms of the ame

224、nded financialcovenants once they are effective in 2022.Our failure to comply with covenants in our existing orfuture indebtedness,as well as our inability to make required principal and interest payments,couldcause a default under the applicable debt agreement,which could result in the acceleration

225、 of the debtand require us to repay such debt with capital obtained from other sources,which may not be availableto us or may be available only on unattractive terms.Furthermore,if we default on secured debt,lenders can take possession of the hotel(s)securing such debt.In addition,debt agreements ma

226、y17contain specific cross-default provisions with respect to specified other indebtedness,giving the lendersthe right to declare a default on its debt and to enforce remedies,including accelerating the maturity ofsuch debt upon the occurrence of a default under such other indebtedness.If we default

227、on several ofour debt agreements or any significant debt agreement,we could be materially and adversely affected.Costs associated with,or failure to maintain,franchisor operating standards may materially and adverselyaffect us.Under the terms of our franchise license agreements,we are required to me

228、et specified operatingstandards and other terms and conditions.We expect that our franchisors will periodically inspect ourhotel properties to ensure that we and the hotel management companies follow brand standards.Failure by us,or any management company that we engage,to maintain these standards o

229、r other termsand conditions could result in a franchise license being canceled or the franchisor requiring us toundertake a costly property improvement program.If a franchise license is terminated due to ourfailure to make required improvements or to otherwise comply with its terms,we also may be li

230、able tothe franchisor for a termination payment,which will vary by franchisor and by hotel.If the fundsrequired to maintain franchisor operating standards are significant,we could be materially andadversely affected.In addition,if we were to lose a franchise license,the underlying value of a particu

231、lar hotelproperty could decline significantly from the loss of the associated name recognition,marketingsupport,participation in guest loyalty programs and the centralized reservation system provided by thefranchisor,which could require us to recognize an impairment charge on the hotel property.Furt

232、hermore,the loss of a franchise license at a particular hotel property could harm our relationshipwith the franchisor,which could impede our ability to operate other hotels under the same brand,limitour ability to obtain new franchise licenses from the franchisor in the future on favorable terms,or

233、atall,and cause us to incur significant costs to obtain a new franchise license for the particular hotel.U.S.federal income tax provisions applicable to REITs may restrict our business decisions regarding thepotential sale of a hotel property.The provisions of the Internal Revenue Code of 1986,as am

234、ended(the Code),applicable toREITs require that we hold our hotel properties for investment,rather than primarily for sale in theordinary course of business,which may cause us to forego or defer sales of hotel properties thatotherwise would be in our best interests.Therefore,we may not be able to va

235、ry our portfolio promptlyin response to economic or other conditions or on favorable terms,which may materially and adverselyaffect our cash flows,our ability to make distributions to shareholders and the market price of ourcommon shares.The U.S.federal income tax provisions applicable to REITs prov

236、ide that any gain realized by aREIT on the sale of property held as inventory or other property held primarily for sale to customersin the ordinary course of business is treated as income from a prohibited transaction that is subjectto a 100%excise tax.We intend to hold our hotel properties for inve

237、stment with a view of long-termappreciation,to engage in the business of acquiring and owning hotel properties,and to makeoccasional sales of hotel properties consistent with our investment objectives.There can be noassurance,however,that the Internal Revenue Service(the IRS)might not contend that o

238、ne or moreof these sales are subject to the 100%excise tax.Moreover,the potential to incur this penalty tax coulddeter us from selling one or more hotel properties even though it would be in the best interests of usand our shareholders for us to do so.There is a statutory safe harbor available for a

239、 limited number ofsales in a single taxable year of properties that have been owned by a REIT for at least two years,butthat safe harbor likely would not apply to all sale transactions that we might otherwise consider.18Joint venture investments could be adversely affected by our lack of sole decisi

240、on-making authority,ourreliance on joint venture partners financial condition and liquidity and disputes between us and our jointventure partners.We own certain hotel properties and other real estate investments through joint ventures.In thefuture,we may enter into additional joint ventures to acqui

241、re,develop,improve or partially dispose ofhotel properties,thereby reducing the amount of capital required by us to make investments anddiversifying our capital sources for growth.Such joint venture investments involve risks not otherwisepresent in a wholly-owned hotel property or a redevelopment pr

242、oject,including the following:we may not have exclusive control over the hotel property or the joint venture,which mayprevent us from taking actions that are in our best interest but opposed by our partners;joint venture agreements often restrict the transfer of a partners interest or may otherwiser

243、estrict our ability to sell the interest when we desire,or on advantageous terms;joint venture agreements may contain provisions pursuant to which one partner may initiateprocedures requiring the other partner to choose between buying the other partners interest orselling its interest to that partne

244、r;a partner may,at any time,have economic or business interests or goals that are,or that maybecome,inconsistent with our business interests or goals;a partner may fail to fund its share of required capital contributions or may become bankrupt,which would mean that we and any other remaining partner

245、s generally would remain liable forthe joint ventures liabilities;or we may,in certain circumstances,be liable for the actions of a partner,and the activities of apartner could adversely affect our ability to qualify as a REIT,even though we do not controlthe joint venture.Any of the above might sub

246、ject a hotel property to liabilities in excess of those contemplated andadversely affect the value of our current and future joint venture investments.Risks Related to the Lodging IndustryOur ability to make distributions to our shareholders may be adversely affected by various operating riskscommon

247、 to the lodging industry,including competition,over-building and dependence on business travel andtourism.Our hotel properties have different economic characteristics than many other real estate assets.Unlike other real estate assets,hotels generate revenue from guests that typically stay at the hot

248、elproperty for only a few nights,which causes the room rate and occupancy levels at each of our hotelsto change every day,and results in earnings that can be highly volatile.In addition,our hotel properties are subject to various operating risks common to the lodgingindustry,many of which are beyond

249、 our control,including,among others,the following:seasonality of the lodging industry may cause quarterly fluctuations in our operating results;over-building of hotels in the markets in which we operate,which results in an increased supplyof hotels that will adversely affect occupancy and revenues a

250、t our hotel properties;consolidation among companies in the lodging industry may increase the resulting companiesnegotiating power relative to ours,and decrease competition among those companies formanagement and franchise agreements,which could result in higher management or franchisefees;19 increa

251、se in the number of brands owned by Marriott,Hilton and Hyatt,which could result inincreased competition for our hotels;competition from non-traditional accommodations for travelers,such as online services thatmarket homes and condominiums as an alternative to hotel rooms;dependence on business and

252、leisure travelers;increases in energy costs and other expenses affecting travel,which may affect travel patternsand reduce the number of business and leisure travelers;increases in operating costs due to inflation and other factors that may not be offset byincreased room rates;changes in governmenta

253、l laws and regulations,fiscal policies and zoning ordinances and therelated costs of compliance with laws and regulations,fiscal policies and ordinances;adverse effects of international,national,regional and local economic and market conditions;adverse effects of worsening conditions in the lodging

254、industry;and risks generally associated with the ownership of hotels and real estate,as we discuss in detailbelow.The occurrence of any of the foregoing could materially and adversely affect us.The cyclical nature of the lodging industry may cause fluctuations in our operating performance,which coul

255、dhave a material and adverse effect on us.The lodging industry historically has been highly cyclical in nature.Fluctuations in lodging demandand,therefore,operating performance,are caused largely by general economic and local marketconditions,which subsequently affect levels of business and leisure

256、travel.In addition to generaleconomic conditions,new hotel room supply is an important factor that can affect the lodgingindustrys performance,and overbuilding has the potential to further exacerbate the negative impact ofan economic recession.Room rates and occupancy,and thus RevPAR,tend to increas

257、e when demandgrowth exceeds supply growth.We can provide no assurances regarding whether,or the extent to which,lodging demand will rebound or whether any such rebound will be sustained.An adverse change inlodging fundamentals could result in returns that are substantially below our expectations or

258、result inlosses,which could have a material and adverse effect on us.Our ownership of hotel properties with ground leases exposes us to the risks that we may be forced to sell suchhotel properties for a lower price,we may have difficulties financing such hotel properties,we may be unableto renew a g

259、round lease or we may lose such hotel properties upon breach of a ground lease.As of December 31,2020,12 of our consolidated hotel properties and two of our unconsolidatedhotel properties were on land subject to ground leases.Accordingly,we only own a leasehold or similarinterest in those 14 hotel p

260、roperties.Our ground lease agreements require the consent of the lessor orsub-lessor prior to transferring our interest in the ground lease.These provisions may impact our abilityto sell our hotel properties which,in turn,could adversely impact the price realized from any such sale.In addition,at an

261、y given time,investors may be disinterested in buying hotel properties subject to aground lease and may pay a lower price for such hotel properties than for a comparable hotel propertywith a fee simple interest or they may not purchase such hotel properties at any price.Secured lendersmay be unwilli

262、ng to lend,or otherwise charge higher interest rates,for loans secured by a leaseholdmortgage as compared to loans secured by a fee simple mortgage.If we are found to be in breach of aground lease,we could lose the right to use the hotel property.In addition,unless we can purchase afee simple intere

263、st in the underlying land and improvements or extend the terms of these leases before20their expiration,as to which no assurance can be given,we will lose our right to own these hotelproperties and our interest in the improvements upon expiration of the leases.If we were to lose theright to use a ho

264、tel property due to a breach or non-renewal of the ground lease,we would be unableto derive income from such hotel property and we would be required to purchase an interest inanother hotel property in an attempt to replace that income,which could materially and adverselyaffect us.Technology is used

265、in our operations,and any material failure,inadequacy,interruption or security failure ofthat technology could harm the business.We,and our hotel managers and franchisors,rely on information technology networks and systemsto process,transmit and store electronic information,and to manage or support

266、a variety of businessprocesses.These information technology networks and systems can be vulnerable to threats such assystem,network or internet failures;computer hacking or business disruption;cyber-terrorism;viruses,worms or other malicious software programs;and employee error,negligence or fraud.A

267、lthough webelieve we and our hotel managers and franchisors have taken commercially reasonable steps to protectthe security of our systems,there can be no assurance that such security measures will prevent failures,inadequacies or interruptions in system services,or that system security will not be

268、breached.Any failure to maintain proper function,security and availability of information technologynetworks and systems could interrupt our operations,our financial reporting and compliance,damageour reputation,and subject us to liability claims or regulatory penalties,which could have a materialan

269、d adverse effect on our business,financial condition and results of operations.Future terrorist attacks or changes in terror alert levels could materially and adversely affect us.Historically,terrorist attacks and subsequent terrorist alerts have adversely affected the U.S.traveland hospitality indu

270、stries,often disproportionately to the effect on the overall economy.The extent ofthe impact that actual or threatened terrorist attacks in the U.S.or elsewhere could have on domesticand international travel and our business in particular cannot be determined,but any such attacks orthe threat of suc

271、h attacks could have a material and adverse effect on travel and hotel demand and ourability to insure our hotel properties,which could materially and adversely affect us.We face possible risks associated with natural disasters,weather events,and the physical effects of climatechange.We are subject

272、to the risks associated with natural disasters,weather events,and the physicaleffects of climate change,any of which could have a material adverse effect on our properties,operations and business.Over time,our hotel properties located in coastal markets and other areasthat may be impacted by climate

273、 change are expected to experience increases in storm intensity andrising sea-levels causing damage to our hotel properties.As a result,we could become subject tosignificant losses and/or repair costs that may or may not be fully covered by insurance.Other marketsmay experience prolonged variations

274、in temperature or precipitation that may limit access to the waterneeded to operate our hotel properties or significantly increase energy costs,which may subject thoseproperties to additional regulatory burdens,such as limitations on water usage or stricter energyefficiency standards.Weather events

275、and climate change may also affect our business by increasing thecost of(or making unavailable)property insurance on terms we find acceptable in areas mostvulnerable to such events,increasing operating costs at our hotel properties,such as the cost of wateror energy,and requiring us to expend funds

276、as we seek to repair and protect our hotel propertiesagainst such risks.There can be no assurance that natural disasters,weather events,or climate changewill not have a material adverse effect on our hotel properties,operations or business.21Risks Related to Our Organization and StructureThe share o

277、wnership limits imposed by the Code for REITs and our declaration of trust may restrict sharetransfers and/or business combination opportunities.In order for us to maintain our qualification as a REIT under the Code,not more than 50%invalue of our outstanding shares may be owned,directly or indirect

278、ly,by five or fewer individuals(asdefined in the Code to include certain entities)at any time during the last half of each taxable yearfollowing our first year of taxation as a REIT.Our declaration of trust,with certain exceptions,authorizes our board of trustees to take the necessary actions to pre

279、serve our qualification as a REIT.Unless exempted by our board of trustees,no person or entity(other than a person or entity who hasbeen granted an exception)may directly or indirectly,beneficially or constructively,own more than9.8%of the aggregate of our outstanding common shares,by value or by nu

280、mber of shares,whicheveris more restrictive,or 9.8%of the aggregate of the outstanding preferred shares of any class or series,by value or by number of shares,whichever is more restrictive.Our board of trustees may,in its sole discretion,grant an exemption to the share ownership limits,subject to ce

281、rtain conditions and the receipt by our board of trustees of certain representations andundertakings.During the time that such waiver is effective,the excepted holders will be subject to anincreased ownership limit.As a condition to granting such limited exemptions,the excepted holders arerequired t

282、o make representations and warranties to us,which are intended to ensure that we willcontinue to meet the REIT ownership requirements.The excepted holders must inform us if any ofthese representations becomes untrue or is violated,in which case such excepted holder will lose itslimited exemption fro

283、m the share ownership limits.It may be difficult or impractical to effect a change in our control under circumstances that otherwise couldprovide the holders of our common shares with the opportunity to realize a premium over the then-prevailingmarket price of our common shares.Certain advance notic

284、e provisions of our bylaws may inhibit a change in control.These advancenotice provisions may have the effect of delaying,deferring or preventing a transaction or a change incontrol of our company that might involve a premium to the market price of our common stock orotherwise be in our shareholders

285、 best interests.Termination of the employment agreements with our executive officers could be costly and preventa change in control.The employment agreements that we entered into with each of our executiveofficers provide that,if their employment with us terminates under certain circumstances(includ

286、ingupon a change in our control),we are required to pay them severance compensation,includingaccelerating the vesting of their respective equity awards,thereby making it costly to terminate theiremployment without cause.Furthermore,these provisions could delay or prevent a transaction or achange in

287、control that might involve a premium paid for our common shares or otherwise be in thebest interests of our shareholders.Our declaration of trust contains provisions that make the removal of our trustees difficult,whichcould make it difficult for our shareholders to effect changes to our management.

288、Our declaration oftrust provides that,subject to the rights of the holders of one or more classes or series of preferredshares to elect or remove one or more trustees,a trustee may be removed only for cause and only bythe affirmative vote of the holders of at least two-thirds of the votes entitled t

289、o be cast in the electionof trustees and that our board of trustees has the exclusive power to fill vacant trusteeships,even if theremaining trustees do not constitute a quorum.These provisions make it more difficult to change ourmanagement by removing and replacing trustees and it may delay or prev

290、ent a change in control that isin the best interests of our shareholders.22Our rights and the rights of our shareholders to take action against our trustees and officers are limited,which could limit our shareholders recourse in the event of actions not in our shareholders best interests.Under Maryl

291、and law,generally,a trustee is required to perform his or her duties in good faith,ina manner he or she reasonably believes to be in our best interest and with the care that an ordinarilyprudent person in a like position would use under similar circumstances.Under Maryland law,trusteesare presumed t

292、o have acted with this standard of care.In addition,our declaration of trust limits theliability of our trustees and officers to us and our shareholders for monetary damages,except forliability resulting from the:actual receipt of an improper benefit or profit in money,property or services;or active

293、 and deliberate dishonesty by the trustee or officer that was established by a final judgmentas being material to the cause of action adjudicated.Our declaration of trust and bylaws obligate us,to the fullest extent permitted by Maryland law ineffect from time to time,to indemnify and to pay or reim

294、burse reasonable expenses in advance of thefinal disposition of a proceeding to any present or former trustee or officer who is made or threatenedto be made a party to the proceeding by reason of his or her service to us in that capacity.In addition,we may be obligated to advance the defense costs i

295、ncurred by our trustees and officers.As a result,weand our shareholders may have more limited rights against our trustees and officers than mightotherwise exist absent the current provisions in our declaration of trust and bylaws or that might existwith other companies.If we fail to maintain an effe

296、ctive system of internal control over financial reporting,we may not be able toaccurately report our financial results.To monitor the accuracy and reliability of our financial reporting,we have established an internalaudit function that oversees our internal controls.In addition,we have developed po

297、licies andprocedures with respect to company-wide business processes and cycles in order to implement aneffective system of internal control over financial reporting.We have established,or caused our third-party management companies to establish,controls and procedures designed to ensure that hotelr

298、evenues and expenses are properly recorded at our hotels.We cannot be certain that we will besuccessful in maintaining effective internal control over financial reporting and we may determine inthe future that our existing internal controls need improvement.If we fail to maintain an effectivesystem

299、of internal control,we could be materially harmed or we could fail to meet our reportingobligations.In addition,the existence of a material weakness or significant deficiency in our internalcontrols could result in errors to our financial statements that could require a restatement,cause us tofail t

300、o meet our reporting obligations,result in increased costs to remediate any deficiencies,attractregulatory scrutiny or lawsuits and cause investors to lose confidence in our reported financialinformation,any of which could lead to a substantial decline in the market price of our commonshares.Risks R

301、elated to the Real Estate IndustryThe illiquid nature of real estate investments could significantly impede our ability to respond to changingeconomic,financial,and investment conditions or changes in the operating performance of our hotelproperties,which could materially and adversely affect our ca

302、sh flows and results of operations.Real estate investments,including the focused-service and compact full-service hotels in ourportfolio,are relatively illiquid.As a result,we may not be able to sell a hotel or hotels quickly or onfavorable terms in response to the changing economic,financial and in

303、vestment conditions or changesin the hotels operating performance when it otherwise may be prudent to do so.We cannot predictwhether we will be able to sell any hotel property we desire to sell for the price or on the terms set by23us or whether any price or other terms offered by a prospective purc

304、haser would be acceptable to us.We may be required to expend funds to correct defects or to make improvements before a hotel can besold,and we cannot provide any assurances that we will have the funds available to correct such defectsor to make such improvements.Our inability to dispose of assets at

305、 opportune times or on favorableterms could materially and adversely affect our cash flows and results of operations.In some cases,we may be restricted from disposing of properties contributed to us in the future inexchange for our OP units under tax protection agreements with contributors unless we

306、 incur additionalcosts related to indemnifying those contributors.Uninsured and underinsured losses at our hotel properties could materially and adversely affect us.We maintain comprehensive property insurance on all of our hotel properties and we intend tomaintain comprehensive property insurance o

307、n any hotels that we acquire in the future,including fire,terrorism,and extended coverage.Our comprehensive property insurance program has a$250,000deductible per claim.In addition to the comprehensive property insurance,we maintain general liabilityinsurance at all of our hotel properties.Our gener

308、al liability insurance program has no deductible.Certain types of catastrophic losses,such as windstorms,earthquakes,floods,and losses from foreignand domestic terrorist activities may not be insurable or may not be economically insurable.Even wheninsurable,these policies may have high deductibles a

309、nd/or high premiums.Our coastal hotel propertieseach have a deductible of 5%of total insured value for a named storm.Our lenders may require suchinsurance and our failure to obtain such insurance could constitute a default under the loanagreements,which could have a material and adverse effect on us

310、.In the event of a substantial loss,our insurance coverage may not be sufficient to cover the fullcurrent market value or replacement cost of our lost investment,which could have a material andadverse effect on us.Should an uninsured loss or a loss in excess of insured limits occur,or should webe un

311、successful in obtaining coverage from an insurance carrier,we could lose all or a portion of thecapital we have invested in a hotel property,as well as the anticipated future revenue from the hotelproperty.In that event,we might nevertheless remain obligated for any mortgage debt or otherfinancial o

312、bligations related to the hotel property.We could incur significant costs related to government regulation and litigation with respect to environmentalmatters,which could have a material and adverse effect on us.Our hotel properties are subject to various U.S.federal,state and local environmental,he

313、alth andsafety laws and regulations that impose liability for contamination.Under these laws,governmentalentities have the authority to require us,as the current owner of a hotel property,to perform or payfor the clean-up of contamination at,on,under or emanating from the hotel and to pay for natura

314、lresource damages arising from such contamination.Because these laws also impose liability on personswho owned or operated a property at the time it became contaminated,it is possible we could incurcleanup costs or other environmental liabilities even after we sell or no longer operate the hotelprop

315、erties.The liabilities and the costs associated with environmental contamination at our hotel properties,defending against the claims related to alleged or actual environmental issues,or complying withenvironmental,health and safety laws could be material and could materially and adversely affect us

316、.The discovery of material environmental liabilities at our hotel properties could subject us tounanticipated costs,which could significantly reduce or eliminate our profitability and the cash availablefor distribution to our shareholders.24We may from time to time be subject to litigation that coul

317、d expose us to uncertain or uninsured costs.As owners of hotel properties,we may from time to time face potential claims,litigation andthreatened litigation from guests,visitors to our hotel properties,contractors,sub-contractors andothers.These claims and proceedings are inherently uncertain and th

318、eir costs and outcomes cannot bepredicted with certainty.Some of these claims may result in defense costs,settlements,fines orjudgments against us,and some of which are not,or cannot be,covered by insurance.Payment of anysuch costs,settlements,fines or judgments that are not insured could have a mat

319、erial and adverseimpact on our financial position and results of operations.In addition,certain litigation or theresolution of certain litigation may affect the availability or cost of some of our insurance coverage,which could materially and adversely impact our results of operations and cash flows

320、,expose us toincreased risks that would be uninsured,and/or adversely impact our ability to attract officers andtrustees.Risks Related to Our Status as a REITIf we do not qualify as a REIT,or if we fail to remain qualified as a REIT,we will be subject to U.S.federalincome tax and potentially state a

321、nd local taxes,which would reduce our earnings and the amount of cashavailable for distribution to our shareholders.If we were to fail to qualify as a REIT in any taxable year and any available relief provisions donot apply,we would be subject to U.S.federal and state corporate income tax,and divide

322、nds paid toour shareholders would not be deductible by us in computing our taxable income.Unless we wereentitled to statutory relief under certain Code provisions,we also would be disqualified from taxationas a REIT for the four taxable years following the year in which we failed to qualify as a REI

323、T.Any determination that we do not qualify as a REIT would have a material adverse effect on ourresults of operations and could materially reduce the value of our common shares.Our additional taxliability could be substantial and would reduce our net earnings available for investment,debt service or

324、distributions to shareholders.REIT distribution requirements could adversely affect our ability to execute our business plan or require us tomake distributions of our shares or other securities.We generally must distribute to our shareholders annually at least 90%of our REIT taxableincome,subject to

325、 certain adjustments and excluding any net capital gain.From time to time,we maygenerate taxable income greater than our cash flow.In addition we may be subject to limitations on theability to use our net operating loss carryovers to offset taxable income that we do not distribute.If wedo not have o

326、ther funds available in these situations we could be required to(i)borrow funds onunfavorable terms,(ii)sell investments at disadvantageous prices,(iii)distribute amounts that wouldotherwise be invested in future acquisitions,or(iv)make a taxable distribution of our common sharesas part of a distrib

327、ution in which shareholders may elect to receive our common shares or(subject to alimit measured as a percentage of the total distribution)cash to make distributions sufficient to enableus to pay out enough of our REIT taxable income to satisfy the REIT distribution requirements.Thesealternatives co

328、uld increase our costs or reduce our shareholders equity.Thus,compliance with theREIT distribution requirements may hinder our ability to grow,which could adversely affect the valueof our shares.If our leases are not respected as true leases for U.S.federal income tax purposes,we would likely fail t

329、oqualify as a REIT.To qualify as a REIT,we must satisfy two gross income tests,pursuant to which specifiedpercentages of our gross income must be passive income,such as rent.For the rent paid pursuant tothe hotel leases with our TRSs,which we currently expect will continue to constitute substantiall

330、y all of25our gross income,to qualify for purposes of the gross income tests,the leases must be respected astrue leases for U.S.federal income tax purposes and must not be treated as service contracts,jointventures or some other type of arrangement.We believe that the leases will be respected as tru

331、e leasesfor U.S.federal income tax purposes.There can be no assurance,however,that the IRS will agree withthis characterization.If the leases were not respected as true leases for U.S.federal income taxpurposes,we would not be able to satisfy either of the two gross income tests applicable to REITs

332、andwould likely lose our REIT status.Additionally,we could be subject to a 100%excise tax for anyadjustment to our leases.To comply with the restrictions imposed on REITs,we may have to conduct certain activities and own certainassets through TRSs,which will be subject to normal corporate income tax

333、,and we could be subject to a100%penalty tax on certain income if those transactions are not conducted on arms-length terms.A TRS is a corporation in which a REIT directly or indirectly holds stock and which has elected,with the REIT to be taxable as a regular corporation,at regular corporate income tax rates.As aREIT,we cannot own certain assets or conduct certain activities directly,without risk