Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of basic and incentive management fees

Total basic and incentive management fees incurred by the Company’s continuing operations during the years ended December 31, 2015, 2014 and 2013 were included in property general and administrative expense on the Company’s consolidated statements of operations as follows (in thousands):


	2015		2014		2013
Basic management fees	$	34,426	$	31,485	$	25,218
Incentive management fees		5,020		4,034		3,025
Total basic and incentive management fees	$	39,446	$	35,519	$	28,243

Schedule of license and franchise costs

Total license and franchise fees incurred by the Company’s continuing operations during the years ended December 31, 2015, 2014 and 2013 were included in the Company’s consolidated statements of operations as follows (in thousands):


	2015		2014		2013
Franchise assessments (1)	$	28,193	$	26,689	$	22,200
Franchise royalties		11,903		11,582		10,732
Total franchise costs	$	40,096	$	38,271	$	32,932

(1)

Includes advertising, reservation and priority club assessments.

Schedule of assets under capital lease

Assets under capital lease were included in investment in hotel properties, net on the Company’s consolidated balance sheets as follows (in thousands):


	December 31,
	2015		2014
Buildings and improvements	$	58,799	$	58,799
Furniture, fixtures and equipment		—		104
		58,799		58,903
Accumulated depreciation		(5,268)		(3,841)
	$	53,531	$	55,062

Schedule of future minimum lease payments under capital leases

Future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of December 31, 2015 are as follows (in thousands):


2016	$	1,403
2017		1,403
2018		1,403
2019		1,403
2020		1,403
Thereafter		108,010
Total minimum lease payments (1)		115,025
Less: Amount representing interest (2)		(99,449)
Present value of net minimum lease payments (3)	$	15,576

(1)

Minimum lease payments do not include percentage rent which may be paid under the Hyatt Chicago Magnificent Mile building lease on the basis of 4.0% of the hotel’s gross room revenues over a certain threshold. The Company recorded $0.1 million in percentage rent during 2015, and zero in percentage rent during both 2014 and 2013.

(2)

Interest includes the amount necessary to reduce net minimum lease payments to present value calculated at the Company’s incremental borrowing rate at lease inception.

(3)

The present value of net minimum lease payments are reflected in the Company’s consolidated balance sheet as of December 31, 2015 as a current obligation of $1,000, which is included in accounts payable and accrued expenses, and as a long-term obligation of $15.6 million, which is included in capital lease obligations, less current portion.

Entity's hotels obligated to unaffiliated third parties under the terms of ground, building and air leases

During 2015, 2014 and 2013, certain of the Company’s hotels were obligated to unaffiliated third parties under the terms of ground, building and air leases as follows:


	2015	2014	2013
Number of hotels with ground, building and/or air leases (1)	8	9	10

Number of ground leases (1)	7	8	9
Number of building leases (2)	1	1	1
Number of air leases (1)	2	3	3
Total number of ground, building and air leases	10	12	13

(1)

Both 2014 and 2013 include ground and air leases related to the Doubletree Guest Suites Times Square. The Company sold its interests in the Doubletree Guest Suites Times Square in December 2015.

(2)

The building lease is considered by the Company to be a capital lease, as noted above.

Schedule of ground, building and air lease rent

Total rent expense incurred pursuant to ground, building and air lease agreements for the years ended December 31, 2015, 2014 and 2013 was included in property tax, ground lease and insurance in the Company’s consolidated statements of operations as follows (in thousands):


	2015		2014		2013
Minimum rent, including straightline adjustments	$	14,484	$	14,999	$	15,228
Percentage rent (1)		3,256		2,718		2,131
	$	17,740	$	17,717	$	17,359

(1)

Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds.

Schedule of future minimum payments of operating leases

Future minimum payments under the terms of the ground and air leases, as well as the sublease on the corporate facility, in effect at December 31, 2015 are as follows (in thousands):


2016	$	7,273
2017		10,280
2018		10,235
2019		10,102
2020		10,119
Thereafter		331,713
Total	$	379,722

Schedule of hotel geographic concentration of risk

As of December 31, 2015, the Company’s 29 hotels were concentrated in California, Illinois, Massachusetts and the greater Washington DC area as follows:


							Greater
							Washington DC
	California		Illinois		Massachusetts		Area
Number of hotels	9		3		3		3
Percentage of total rooms	32	%	8	%	14	%	13	%
Percentage of total revenue for the year ended December 31, 2015	36	%	8	%	14	%	12	%

- Definition

Tabular disclosure of a lessee's leasing arrangements including: (1) the basis on which contingent rental payments are determined, (2) the existence and terms of renewal or purchase options and escalation clauses, (3) restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing, (4) rent holidays, rent concessions, or leasehold improvement incentives and unusual provisions or conditions. Disclosure may also include the specific period used to amortize material leasehold improvements made at the inception of the lease or during the lease term. Additionally, for operating leases having initial or remaining noncancelable lease terms in excess of one year: (a) future minimum rental payments required as of the date of the latest balance sheet presented, in the aggregate and for each of the five succeeding fiscal years, (b) the total of minimum rentals to be received in the future under noncancelable subleases as of the date of the latest balance sheet presented, and (c) for all operating leases, rental expense for each period for which an income statement is presented, with separate amounts for minimum rentals, contingent rentals, and sublease rentals. Rental payments under leases with terms of a month or less that were not renewed need not be included.

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