10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-32514

DIAMONDROCK HOSPITALITY COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Maryland			20-1180098
(State of Incorporation)			(I.R.S. Employer Identification No.)
2 Bethesda Metro Center, Suite 1400,	Bethesda,	Maryland	20814
(Address of Principal Executive Offices)			(Zip Code)

(240) 744-1150

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	DRH	New York Stock Exchange
8.250% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share	DRH Pr A	New York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, 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					☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

The registrant had 210,861,105 shares of its $0.01 par value common stock outstanding as of May 6, 2022.

Table of Contents

INDEX

	Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited):
Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	1
Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021	2
Consolidated Statements of Equity for the Three Months Ended March 31, 2022 and 2021	3
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	4
Notes to the Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures about Market Risk	33
Item 4. Controls and Procedures	33
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	34
Item 1A. Risk Factors	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3. Defaults Upon Senior Securities	34
Item 4. Mine Safety Disclosures	34
Item 5. Other Information	34
Item 6. Exhibits	35

PART I. FINANCIAL INFORMATION

Item I.Financial Statements

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	March 31, 2022		December 31, 2021
ASSETS	(unaudited)
Property and equipment, net	$	2,659,123	$	2,651,444
Right-of-use assets	97,067		100,212
Restricted cash	38,882		36,887
Due from hotel managers	154,199		120,671
Prepaid and other assets	98,375		17,472
Cash and cash equivalents	41,581		38,620
Total assets	$	3,089,227	$	2,965,306
LIABILITIES AND EQUITY
Liabilities:
Mortgage and other debt, net of unamortized debt issuance costs	$	574,909	$	578,651
Unsecured term loans, net of unamortized debt issuance costs	398,668		398,572
Senior unsecured credit facility	200,000		90,000
Total debt	1,173,577		1,067,223
Lease liabilities	109,149		108,605
Deferred rent	61,955		60,800
Due to hotel managers	102,879		85,493
Unfavorable contract liabilities, net	62,313		62,780
Accounts payable and accrued expenses	41,331		51,238
Deferred income related to key money, net	9,103		8,203
Total liabilities	1,560,307		1,444,342
Equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized:
8.250% Series A Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share), 4,760,000 shares issued and outstanding at March 31, 2022 and December 31, 2021	48		48
Common stock, $0.01 par value; 400,000,000 shares authorized; 210,861,105 and 210,746,895 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	2,109		2,107
Additional paid-in capital	2,294,129		2,293,990
Accumulated deficit	(773,357)		(780,931)
Total stockholders’ equity	1,522,929		1,515,214
Noncontrolling interests	5,991		5,750
Total equity	1,528,920		1,520,964
Total liabilities and equity	$	3,089,227	$	2,965,306

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

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DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended March 31,
	2022		2021
Revenues:
Rooms	$	132,170	$	50,412
Food and beverage	45,748		13,925
Other	18,915		8,600
Total revenues	196,833		72,937
Operating Expenses:
Rooms	33,830		13,828
Food and beverage	33,221		11,561
Management fees	4,020		1,119
Franchise fees	5,810		2,447
Other hotel expenses	70,509		48,935
Depreciation and amortization	26,655		26,962
Impairment losses	2,843		122,552
Corporate expenses	6,033		7,159
Business interruption insurance income	(499)		—
Total operating expenses, net	182,422		234,563
Interest and other expense (income), net	286		(156)
Interest expense	4,119		8,484
Total other expenses, net	4,405		8,328
Income (loss) before income taxes	10,006		(169,954)
Income tax benefit (expense)	54		(1,613)
Net income (loss)	10,060		(171,567)
Less: Net (income) loss attributable to noncontrolling interests	(32)		720
Net income (loss) attributable to the Company	10,028		(170,847)
Distributions to preferred stockholders	(2,454)		(2,454)
Net income (loss) attributable to common stockholders	$	7,574	$	(173,301)
Earnings (loss) per share:
Earnings (loss) per share available to common stockholders—basic	$	0.04	$	(0.82)
Earnings (loss) per share available to common stockholders—diluted	$	0.04	$	(0.82)

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

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DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except share and per share amounts)

(unaudited)

	Preferred Stock			Common Stock
	Shares	Par Value		Shares	Par Value		Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2021	4,760,000	$	48	210,746,895	$	2,107	$	2,293,990	$	(780,931)	$	1,515,214	$	5,750	$	1,520,964
Distributions on preferred stock ($0.5156 per preferred share)	—	—		—	—		—		(2,454)		(2,454)		—		(2,454)
Share-based compensation	—	—		114,210	2		139		—		141		209		350
Net income	—	—		—	—		—		10,028		10,028		32		10,060
Balance at March 31, 2022	4,760,000	$	48	210,861,105	$	2,109	$	2,294,129	$	(773,357)	$	1,522,929	$	5,991	$	1,528,920

	Preferred Stock			Common Stock
	Shares	Par Value		Shares	Par Value		Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2020	4,760,000	48		210,073,514	$	2,101	$	2,285,491	$	(576,531)	$	1,711,109	$	7,816	$	1,718,925
Distributions on preferred stock ($0.5156 per preferred share)	—	—		—	—		—		(2,454)		(2,454)		—		(2,454)
Share-based compensation	—	—		170,251	2		18		—		20		281		301
Net loss	—	—		—	—		—		(170,847)		(170,847)		(720)		(171,567)
Balance at March 31, 2021	4,760,000	$	48	210,243,765	$	2,103	$	2,285,509	$	(749,832)	$	1,537,828	$	7,377	$	1,545,205

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

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DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	10,060	$	(171,567)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	26,655		26,962
Corporate asset depreciation as corporate expenses	59		56
Non-cash lease expense and other amortization	1,568		1,672
Non-cash interest rate swap fair value adjustment	(7,502)		2,731
Amortization of debt issuance costs	653		611
Impairment losses	2,843		122,552
Amortization of deferred income related to key money	(99)		(99)
Share-based compensation	1,160		1,783
Changes in assets and liabilities:
Prepaid expenses and other assets	248		4,299
Due to/from hotel managers	(16,934)		(15,188)
Accounts payable and accrued expenses	(5,557)		(8,756)
Net cash provided by (used in) operating activities	13,154		(34,944)
Cash flows from investing activities:
Capital expenditures	(11,628)		(11,956)
Property acquisitions	(64,061)		—
Purchase deposits	(36,180)		—
Receipt of deferred key money	1,000		—
Net cash used in investing activities	(110,869)		(11,956)
Cash flows from financing activities:
Scheduled mortgage debt principal payments	(3,935)		(3,797)
Draws on senior unsecured credit facility	110,000		45,000
Payment of debt financing costs	(120)		(1,149)
Distributions on common stock and units	(10)		(117)
Distributions on preferred stock	(2,454)		(2,454)
Shares redeemed to satisfy tax withholdings on vested share-based compensation	(810)		(1,482)
Net cash provided by financing activities	102,671		36,001
Net increase (decrease) in cash, cash equivalents, and restricted cash	4,956		(10,899)
Cash, cash equivalents, and restricted cash at beginning of period	75,507		134,846
Cash, cash equivalents, and restricted cash at end of period	$	80,463	$	123,947

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

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DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)

(in thousands)

(unaudited)

Supplemental Disclosure of Cash Flow Information:

	Three Months Ended March 31,
	2022		2021
Cash paid for interest	$	10,549	$	10,476
Cash paid (refunded) for income taxes, net	$	1	$	(330)
Non-cash investing and financing activities:
Unpaid dividends and distributions declared	$	9	$	21
Accrued capital expenditures	$	10,422	$	2,526

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the amount shown within the consolidated statements of cash flows:

	March 31, 2022		December 31, 2021
Cash and cash equivalents	$	41,581	$	38,620
Restricted cash	38,882		36,887
Total cash, cash equivalents and restricted cash	$	80,463	$	75,507

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

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DIAMONDROCK HOSPITALITY COMPANY

Notes to the Consolidated Financial Statements

(Unaudited)

1. Organization

DiamondRock Hospitality Company (the “Company” or “we”) is a lodging-focused real estate company that owns a portfolio of premium hotels and resorts. Our hotels are concentrated in major urban markets and in destination resort locations, and the majority of our hotels are operated under a brand owned by one of the leading global lodging brand companies (Marriott International, Inc. or Hilton Worldwide). We are an owner, as opposed to an operator, of the hotels in our portfolio. As an owner, we receive all of the operating profits or losses generated by our hotels after we pay fees to the hotel managers and hotel brands, which are based on the revenues and profitability of the hotels.

As of March 31, 2022, we owned 33 hotels with 9,454 guest rooms, located in the following markets: Atlanta, Georgia; Boston, Massachusetts (2); Burlington, Vermont; Charleston, South Carolina; Chicago, Illinois (2); Denver, Colorado (2); Destin, Florida (2); Fort Lauderdale, Florida; Fort Worth, Texas; Huntington Beach, California; Key West, Florida (2); Marathon, Florida; New Orleans, Louisiana; New York, New York (3); Phoenix, Arizona; Salt Lake City, Utah; San Diego, California; San Francisco, California (2); Sedona, Arizona (2); Sonoma, California; South Lake Tahoe, California; Washington, D.C. (2); and Vail, Colorado.

During the three months ended March 31, 2022, we acquired the Tranquility Bay Beachfront Resort located in Marathon, Florida. See Note 9 for further discussion of the acquisition. On April 1, 2022, we acquired the Kimpton Fort Lauderdale Beach Resort located in Fort Lauderdale, Florida. See Note 12 for further discussion of the acquisition.

We conduct our business through a traditional umbrella partnership real estate investment trust, or UPREIT, in which our hotel properties are owned by our operating partnership, DiamondRock Hospitality Limited Partnership, or subsidiaries of our operating partnership. The Company is the sole general partner of our operating partnership and owns 99.7% of the limited partnership units (“common OP units”) of our operating partnership as of March 31, 2022. The remaining 0.3% of the common OP units are held by third parties and executive officers of the Company. See Note 5 for additional disclosures related to common OP units.

2.Summary of Significant Accounting Policies

Basis of Presentation

Our financial statements include all of the accounts of the Company and its subsidiaries in accordance with U.S. GAAP. All intercompany accounts and transactions have been eliminated in consolidation. If the Company determines that it has an interest in a variable interest entity within the meaning of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation, the Company will consolidate the entity when it is determined to be the primary beneficiary of the entity. Our operating partnership meets the criteria of a variable interest entity. The Company is the primary beneficiary and, accordingly, we consolidate our operating partnership.

In our opinion, the accompanying unaudited consolidated financial statements reflect all adjustments necessary to present fairly our financial position, the results of our operations, the statements of equity, and cash flows. Interim results are not necessarily indicative of full-year performance because of the impact of seasonal and short-term variations. We believe the disclosures made are adequate to prevent the information presented from being misleading. However, the unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2021, included in our Annual Report on Form 10-K filed on February 22, 2022.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Risks and Uncertainties

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The state of the overall economy can significantly impact hotel operational performance and thus, impact our financial position. Should any of our hotels experience a significant decline in operational performance, it may affect our ability to make distributions to our stockholders and service debt or meet other financial obligations.

Currently, one of the most significant risks and uncertainties relates to the COVID-19 pandemic. The COVID-19 pandemic has adversely affected the hospitality industry in general and our business in particular. The extent to which our business will continue to be affected by COVID-19 will largely depend on future developments, which we cannot predict with a high degree of confidence, including the potential emergence of a new variant strain of COVID-19 and the actions of governments and individuals to contain COVID-19 and its variants or mitigate its impact. To the extent that certain travel activity in the U.S. is materially and adversely affected by COVID-19, the overall business and financial results of the hospitality industry, as well as the business and financial results of the Company, would similarly continue to be materially and adversely impacted.

Fair Value Measurements

In evaluating fair value, U.S. GAAP outlines a valuation framework and creates a fair value hierarchy that distinguishes between market assumptions based on market data (observable inputs) and a reporting entity’s own assumptions about market data (unobservable inputs). The hierarchy ranks the observability of inputs used to determine fair value, which are then classified and disclosed in one of the three categories. The three levels are as follows:

•Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities

•Level 2 - Inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets in markets that are not active and model-derived valuations whose inputs are observable

•Level 3 - Model-derived valuations with unobservable inputs

Property and Equipment

Investment purchases of hotel properties, land, land improvements, building and furniture, fixtures and equipment and identifiable intangible assets that are not businesses are accounted for as asset acquisitions and recorded at relative fair value based upon total accumulated cost of the acquisition. Direct acquisition-related costs are capitalized as a component of the acquired assets. Property and equipment purchased after the hotel acquisition date is recorded at cost. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from the Company’s accounts and any resulting gain or loss is included in the statements of operations.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5 to 40 years for buildings, land improvements, and building improvements and 1 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets.

We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse changes in the demand for lodging at the properties, current or projected losses from operations, and an expectation that the property is more likely than not to be sold significantly before the end of its useful life. If present, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel, less costs to sell, exceed its carrying amount. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel’s estimated fair market value is recorded and an impairment loss is recognized.

We will classify a hotel as held for sale in the period that we have made the decision to dispose of the hotel, a binding agreement to purchase the property has been signed under which the buyer has committed a significant amount of nonrefundable cash and no significant financing or other contingencies exist which could cause the transaction to not be completed in a timely manner. If these criteria are met, we will record an impairment loss if the fair value less costs to sell is lower than the carrying amount of the hotel and related assets and will cease recording depreciation expense. We will classify the assets and related liabilities as held for sale on the balance sheet.

Cash and Cash Equivalents

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We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Revenue Recognition

Revenues from hotel operations are recognized when the goods or services are provided. Revenues consist of room sales,

food and beverage sales, and other hotel department revenues, such as telephone, parking, gift shop sales and resort fees. Rooms revenue is recognized over the length of stay that the hotel room is occupied by the customer. Food and beverage revenue is recognized at the point in time in which the goods and/or services are rendered to the customer, such as for restaurant dining services or banquet services. Other revenues are recognized at the point in time or over the time period that goods or services are provided to the customer. Certain ancillary services are provided by third parties and we assess whether we are the principal or agent in these arrangements. If we are the agent, revenue is recognized based upon the commission earned from the third party. If we are the principal, we recognize revenue based upon the gross sales price.

Advance deposits are recorded as liabilities when a customer or group of customers provides a deposit for a future stay or

banquet event at our hotels. Advance deposits are converted to revenue when the services are provided to the customer or when a customer with a noncancelable reservation fails to arrive for part or all of the reservation. Conversely, advance deposits are generally refundable upon guest cancellation of the related reservation within an established period of time prior to the reservation.

Income Taxes

We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings during the period in which the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of March 31, 2022 and December 31, 2021, we had a valuation allowance of $18.7 million and $14.9 million, respectively, on our deferred tax assets.

We have elected to be treated as a real estate investment trust, or REIT, under the provisions of the Internal Revenue Code of 1986, as amended, which requires that we distribute at least 90% of our taxable income annually to our stockholders and comply with certain other requirements. In addition to paying federal and state taxes on any retained income, we may be subject to taxes on “built-in gains” on sales of certain assets. Our taxable REIT subsidiaries will generally be subject to federal, state, local and/or foreign income taxes. In order for the income from our hotel property investments to constitute “rents from real properties” for purposes of the gross income tests required for REIT qualification, the income we earn cannot be derived from the operation of any of our hotels. Therefore, we lease each of our hotel properties to wholly owned taxable REIT subsidiaries.

We may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite our belief that our filing position is supportable, the benefit of that tax position is not recognized in the consolidated statements of operations. We recognize interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. We recognize unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, or by expiration of the applicable statute of limitation.

We had no accruals for tax uncertainties as of March 31, 2022 and December 31, 2021.

Intangible Assets and Liabilities

Intangible assets and liabilities recorded may include management or franchise agreement intangibles and in-place lease intangibles assumed as part of the acquisition of certain hotels. We review the terms of agreements assumed in conjunction with the purchase of a hotel to determine if an intangible asset or liability exists. Intangible assets or liabilities are recorded at the acquisition date and amortized using the straight-line method over the expected useful life. We do not amortize intangible assets with indefinite useful lives, but we review these assets for impairment annually or at interim periods if events or circumstances indicate that the asset may be impaired. In connection with our acquisition of Tranquility Bay Beachfront Resort, we recognized

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a $45.2 million right-to-manage intangible asset related to the rental management agreements with third-party unit owners. See Note 9 for more information, including information about the impairment recognized during the three months ended March 31, 2022. We currently have no other intangible assets. The remaining useful life of this intangible asset as of March 31, 2022 is approximately 39.8 years. The intangible asset, net of accumulated amortization of $0.3 million, was $42.1 million as of March 31, 2022. Amortization expense for the three months ended March 31, 2022 totaled $0.3 million. Amortization expense is expected to be $1.1 million annually for the remaining useful life of the asset.

Earnings (Loss) Per Share

Basic earnings (loss) per share (“EPS”) is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period plus other potentially dilutive securities such as stock grants. No adjustment is made for shares that are anti-dilutive during a period.

Share-based Compensation

We account for share-based employee compensation using the fair value based method of accounting. We record the cost of awards with service or market conditions based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

Comprehensive Income

We do not have any comprehensive income other than net income. If we have any comprehensive income in future periods, such that a statement of comprehensive income would be necessary, such statement will be reported as one statement with the consolidated statement of operations.

Derivative Instruments

In the normal course of business, we are exposed to the effects of interest rate changes. We may enter into derivative instruments, including interest rate swaps and caps, to manage or hedge interest rate risk. Derivative instruments are recorded at fair value on the balance sheet date. We have not elected hedge accounting treatment for the changes in the fair value of derivatives. Changes in the fair value of derivatives are recorded each period and are included in interest expense in the consolidated statements of operations.

Noncontrolling Interests

The noncontrolling interest is the portion of equity in our consolidated operating partnership not attributable, directly or indirectly, to the Company. Such noncontrolling interests are reported on the consolidated balance sheets within equity, separately from the Company’s equity. The noncontrolling interests are classified as permanent equity as we have the right to choose to settle each holder's redemption of the interest in either cash or delivery of shares of our common stock. See Note 5 for additional details. On the consolidated statements of operations, revenues, expenses and net income or loss from our less-than-wholly-owned operating partnership are reported within the consolidated amounts, including both the amounts attributable to the Company and noncontrolling interests. Income or loss is allocated to noncontrolling interests based on their weighted average ownership percentage for the applicable period. Consolidated statements of equity include beginning balances, activity for the period and ending balances for stockholders’ equity, noncontrolling interests and total equity.

Restricted Cash

Restricted cash primarily consists of cash held in reserve for replacement of furniture and fixtures generally held by our hotel managers and cash held in escrow pursuant to lender requirements.

Debt Issuance Costs

Financing costs are recorded at cost as a component of the debt carrying amount and consist of loan fees and other costs incurred in connection with the issuance of debt. Amortization of debt issuance costs is computed using a method that approximates the effective interest method over the remaining life of the debt and is included in interest expense in the accompanying consolidated statements of operations. Debt issuance costs related to our Revolving Credit Facility (defined in

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Note 8) are included within prepaid and other assets on the accompanying consolidated balance sheets. These debt issuance costs are amortized ratably over the term of the Revolving Credit Facility, regardless of whether there are any outstanding borrowings, and the amortization is included in interest expense in the accompanying consolidated statements of operations.

Due to/from Hotel Managers

The due from hotel managers consists of hotel level accounts receivable, periodic hotel operating distributions receivable from managers and prepaid and other assets held by the hotel managers on our behalf. The due to hotel managers represents liabilities incurred by the hotel on behalf of us in conjunction with the operation of our hotels which are legal obligations of the Company.

Key Money

Key money received in conjunction with entering into hotel management or franchise agreements or completing specific capital projects is deferred and amortized over the term of the hotel management agreement, the term of the franchise agreement, or other systematic and rational period, if appropriate. Key money is classified as deferred income in the accompanying consolidated balance sheets and amortized as an offset to management fees or franchise fees.

Leases

We determine if an arrangement is a lease or contains an embedded lease at inception. For agreements with both lease and nonlease components (e.g., common-area maintenance costs), we do not separate the nonlease components from the lease components, but account for these components as one. We determine the lease classification (operating or finance) at lease inception.

Right-of-use assets and lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. The discount rate used to determine the present value of the lease payments is our incremental borrowing rate as of the lease commencement date, as the implicit rate is not readily determinable. The right-of-use assets also include any initial direct costs and any lease payments made at or before the commencement date, and is reduced for any unrestricted incentives received at or before the commencement date.

Options to extend or terminate the lease are included in the recognition of our right-of-use assets and lease liabilities when it is reasonably certain that we will exercise the option. Variable payments that are based on an index or a rate are included in the recognition of our right-of-use assets and lease liabilities using the index or rate at lease commencement; however, changes to these lease payments due to rate or index updates are recorded as rent expense in the period incurred. Contingent rentals based on a percentage of sales in excess of stipulated amounts are not included in the measurement of the lease liability and right-of-use asset but will be recognized as variable lease expense when they are incurred. Leases that contain provisions that increase the fixed minimum lease payments based on previously incurred variable lease payments related to performance will be remeasured, as these payments now represent an increase in the fixed minimum payments for the remainder of the lease term. However, leases with provisions that increase minimum lease payments based on changes in a reference index or rate (e.g. Consumer Price Index) will not be remeasured as such changes do not constitute a resolution of a contingency.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of our cash and cash equivalents. We maintain cash and cash equivalents with various financial institutions. We perform periodic evaluations of the relative credit standing of these financial institutions and limit the amount of credit exposure with any one institution.

Segment Reporting

Each one of our hotels is an operating segment. We evaluate each of our properties on an individual basis to assess performance, the level of capital expenditures, and acquisition or disposition transactions. Our evaluation of individual properties is not focused on property type (e.g. urban, suburban, or resort), brand, geographic location, or industry classification.

We aggregate our operating segments using the criteria established by U.S. GAAP, including the similarities of our product offering, types of customers and method of providing service. All of our properties react similarly to economic

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stimulus, such as business investment, changes in Gross Domestic Product, and changes in travel patterns. As such, all our operating segments meet the aggregation criteria, resulting in a single reportable segment represented by our consolidated financial results.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued Accounting Standard Update 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications to ease reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. ASU 2020-04 permits a contract with a modified reference rate to be accounted for as a continuation of the existing contract. We have not entered into any contract modifications yet as it directly relates to reference rate reform, but we anticipate undertaking such modifications in the future related to our variable rate debt and interest rate swaps indexed to LIBOR. The adoption of ASU 2020-04 is not expected to have a material impact on our consolidated financial statements.

3.Property and Equipment

Property and equipment as of March 31, 2022 and December 31, 2021 consists of the following (in thousands):

	March 31, 2022		December 31, 2021
Land	$	548,443	$	546,800
Land improvements	7,994		7,994
Buildings and site improvements	2,694,128		2,667,024
Furniture, fixtures and equipment	506,264		501,505
Construction in progress	15,372		14,485
	3,772,201		3,737,808
Less: accumulated depreciation	(1,113,078)		(1,086,364)
	$	2,659,123	$	2,651,444

As of March 31, 2022 and December 31, 2021, we had accrued capital expenditures of $10.4 million and $7.3 million, respectively.

4. Leases

We are subject to operating leases, the most significant of which are ground leases. We are the lessee to ground leases under eight of our hotels and two parking garages as of March 31, 2022. The lease liabilities for our operating leases assume the exercise of all available extension options, as we believe they are reasonably certain to be exercised. As of March 31, 2022, our operating leases have a weighted-average remaining lease term of 65 years and a weighted-average discount rate of 5.77%.

The components of operating lease expense, which is included in other hotel expenses in our consolidated statements of operations, and cash paid for amounts included in the measurement of lease liabilities, are as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Operating lease cost	$	2,786	$	2,760
Variable lease payments	$	230	$	41
Cash paid for amounts included in the measurement of operating lease liabilities	$	985	$	866

Maturities of lease liabilities as of March 31, 2022 are as follows (in thousands):

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Year Ending December 31,
2022 (excluding the three months ended March 31, 2022)	$	2,991
2023	4,033
2024	4,012
2025	4,072
2026	4,640
Thereafter	759,838
Total lease payments	779,586
Less imputed interest	(670,437)
Total lease liabilities	$	109,149

5. Equity

Common Shares

We are authorized to issue up to 400 million shares of common stock, $0.01 par value per share. Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Holders of our common stock are entitled to receive dividends out of assets legally available for the payment of dividends when authorized by our board of directors.

In August 2021, we implemented an “at-the-market” equity offering program (the “ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million. We have not sold any shares under the ATM Program.

Preferred Shares

We are authorized to issue up to 10,000,000 shares of preferred stock, $0.01 par value per share. Our board of directors is required to set for each class or series of preferred stock the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, and terms or conditions of redemption.

As of March 31, 2022 and December 31, 2021, there were 4,760,000 shares of Series A Preferred Stock issued and outstanding with a liquidation preference each of $25.00 per share. On or after August 31, 2025, the Series A Preferred Stock will be redeemable at the Company's option, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date.

Operating Partnership Units

In connection with our acquisition of Cavallo Point in December 2018, we issued 796,684 common OP units to third parties, otherwise unaffiliated with the Company, at $11.76 per unit. Each common OP unit is redeemable at the option of the holder. Holders of common OP units have certain redemption rights, which enable them to cause our operating partnership to redeem their units in exchange for cash per unit equal to the market price of our common stock, at the time of redemption, or, at our option, for shares of our common stock on a one-for-one basis, subject to adjustment upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions.

Long-Term Incentive Partnership units (“LTIP units”), which are also referred to as profits interest units, may be issued to eligible participants under the 2016 Plan (as defined in Note 6 below) for the performance of services to or for the benefit of our operating partnership. LTIP units are a class of partnership unit in our operating partnership and will receive, whether vested or not, the same per-unit distributions as the outstanding common OP units, which equal per-share dividends on shares of our common stock. Initially, LTIP units have a capital account balance of zero, do not receive an allocation of operating income (loss), and do not have full parity with common OP units with respect to liquidating distributions. If such parity is reached, vested LTIP units are converted into an equal number of common OP units, and thereafter will possess all of the rights and interests of common OP units, including the right to exchange the common OP units for cash per unit equal to the market price of our common stock, at the time of redemption, or, at our option, for shares of our common stock on a one-for-one basis, subject to adjustment upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions. See Note 6 for additional disclosures related to LTIP units.

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There were 748,044 and 639,622 common OP units held by unaffiliated third parties and executive officers of the Company as of March 31, 2022 and December 31, 2021, respectively. There were 26,966 and 135,388 LTIP units outstanding as of March 31, 2022 and December 31, 2021, respectively. All vested LTIP units have reached economic parity with common OP units and have been converted into common OP units.

Dividends and Distributions

Our board of directors suspended our quarterly common dividend commencing with the first quarter dividend that would have been paid in April 2020. The resumption in quarterly common dividends will be determined by our board of directors after considering our projected taxable income, obligations under our financing agreements, expected capital requirements, and risks affecting our business.

We have paid the following dividends to holders of our Series A Preferred Stock during 2022:

Payment Date	Record Date	Dividend per Share
March 31, 2022	March 18, 2022	$	0.515625

6. Stock Incentive Plans

We are authorized to issue up to 6,082,664 shares of our common stock under our 2016 Equity Incentive Plan (the “2016 Plan”), of which we have issued or committed to issue 4,965,407 shares as of March 31, 2022. In addition to these shares, additional shares of common stock may be issued from time to time in connection with the performance stock unit awards as further described below.

Restricted Stock Awards

Restricted stock awards issued to our officers and employees generally vest over a three to five year period from the date of grant based on continued employment. We measure compensation expense for the restricted stock awards based upon the fair market value of our common stock at the date of grant. Compensation expense is recognized on a straight-line basis over the vesting period and is included in corporate expenses in the accompanying consolidated statements of operations. A summary of our restricted stock awards from January 1, 2022 to March 31, 2022 is as follows:

	Number of Shares	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2022	1,443,295	$	9.46
Granted	425,731	9.56
Vested	(260,680)	9.54
Forfeited	(211,543)	9.45
Unvested balance at March 31, 2022	1,396,803	$	9.47

The total unvested share awards as of March 31, 2022 are expected to vest as follows: 8,202 shares during 2022, 395,532 shares during 2023, 461,677 shares during 2024, 260,114 shares during 2025, and 271,278 shares during 2026. As of March 31, 2022, the unrecognized compensation cost related to restricted stock awards was $11.1 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 34 months. We recorded $0.8 million of compensation expense related to restricted stock awards for each of the three months ended March 31, 2022 and 2021. The compensation expense recorded for the three months ended March 31, 2022 includes the reversal of $0.2 million of previously recognized compensation expense in connection with the resignation of our former Executive Vice President and Chief Operating Officer.

Performance Stock Units

Performance stock units (“PSUs”) are restricted stock units that vest three years from the date of grant. Each executive officer is granted a target number of PSUs (the “PSU Target Award”). The actual number of shares of common stock issued to each executive officer is based on the Company's achievement of certain performance targets. Under this framework, 50% of the PSUs are based on relative total stockholder return and 50% on hotel market share improvement. The achievement of

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certain levels of total stockholder return relative to the total stockholder return of a peer group of publicly-traded lodging REITs is measured over a three-year performance period. There is no payout of shares of our common stock if our total stockholder return falls below the 30th percentile of the total stockholder returns of the peer group. The maximum number of shares of common stock issued to an executive officer is equal to 150% of the PSU Target Award and is earned if our total stockholder return is equal to or greater than the 75th percentile of the total stockholder returns of the peer group. The number of PSUs earned is limited to 100% of the PSU Target Award if the Company's total stockholder return is negative for the three-year performance period. The improvement in market share for each of our hotels is measured over a three-year performance period based on a report prepared for each hotel by STR Global, a well-recognized benchmarking service for the hospitality industry. There is no payout of shares of our common stock if the percentage of our hotels with market share improvements is less than 30%. The maximum number of shares of common stock issued to an executive officer is equal to 150% of the PSU Target Award and is earned if the percentage of our hotels with market share improvements is greater than or equal to 75%.

We measure compensation expense for the PSUs based upon the fair market value of the award at the grant date. Compensation expense is recognized on a straight-line basis over the three-year performance period and is included in corporate expenses in the accompanying consolidated statements of operations. The grant date fair value of the portion of the PSUs based on our relative total stockholder return is determined using a Monte Carlo simulation performed by a third-party valuation firm. The grant date fair value of the portion of the PSUs based on hotel market share improvement is the closing price of our common stock on the grant date.

On February 22, 2022, our board of directors granted 337,702 PSUs to our executive officers. The grant date fair value of the portion of the PSUs based on our relative total stockholder return was $9.84 using the assumptions of volatility of 71.4% and a risk-free rate of 1.74%. The grant date fair value of the portion of the PSUs based on hotel market share was $9.56, which was the closing stock price of our common stock on such date.

A summary of our PSUs from January 1, 2022 to March 31, 2022 is as follows:

	Number of Target Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2022	969,240	$	9.45
Granted	337,702	9.70
Vested (1)	(269,224)	10.14
Forfeited	(160,533)	9.34
Unvested balance at March 31, 2022	877,185	$	11.06

______________________

(1)The number of shares of common stock earned for the PSUs vested in 2022 was equal to 100.0% of the PSU Target Award.

The total unvested PSUs as of March 31, 2022 are expected to vest as follows: 296,596 units during 2023, 294,445 units during 2024 and 286,144 units during 2025. The number of shares earned upon vesting is subject to the attainment of the performance goals described above. As of March 31, 2022, the unrecognized compensation cost related to the PSUs was $5.3 million and is expected to be recognized on a straight-line basis over a weighted average period of 27 months. We recorded $0.2 million and $0.7 million of compensation expense related to the PSUs for the three months ended March 31, 2022 and 2021, respectively. The compensation expense recorded for the three months ended March 31, 2022 includes the reversal of $0.5 million of previously recognized compensation expense in connection with the resignation of our former Executive Vice President and Chief Operating Officer.

LTIP Units

LTIP units are designed to offer executives a long-term incentive comparable to restricted stock, while potentially allowing them to enjoy a more favorable income tax treatment. Each LTIP unit awarded is deemed equivalent to an award of one share of common stock reserved under the 2016 Plan. At the time of award, LTIP units do not have full economic parity with common OP units, but can achieve such parity over time upon the occurrence of specified events in accordance with partnership tax rules.

A summary of our LTIP units from January 1, 2022 to March 31, 2022 is as follows:

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	Number of Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2022	135,388	$	10.22
Vested (1)	(108,422)	10.38
Unvested balance at March 31, 2022	26,966	$	9.58

______________________

(1)As of March 31, 2022, all vested LTIP units have achieved economic parity with common OP units and have been converted to common OP units.

The total remaining unvested LTIP units as of March 31, 2022 of 26,966 are expected to vest in 2023.

As of March 31, 2022, the unrecognized compensation cost related to LTIP unit awards was $0.2 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 11 months. We recorded $0.2 million and $0.3 million of compensation expense related to LTIP unit awards for the three months ended March 31, 2022 and 2021, respectively.

7. Earnings (Loss) Per Share

Basic EPS is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted EPS is calculated by dividing net income (loss) available to common stockholders that has been adjusted for dilutive securities, by the weighted-average number of common shares outstanding including dilutive securities.

Unvested share-based awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of EPS pursuant to the two-class method. Accordingly, distributed and undistributed earnings attributable to unvested share-based compensation (participating securities) have been excluded, as applicable, from net income or loss available to common stockholders used in the basic and diluted EPS calculations.

The following is a reconciliation of the calculation of basic and diluted EPS (in thousands, except share and per share data):

	Three Months Ended March 31,
	2022		2021
Numerator:
Net income (loss) attributable to common stockholders	$	7,574	$	(173,301)
Dividends declared on unvested share-based compensation	—		—
Net income (loss) available to common stockholders	$	7,574	$	(173,301)
Denominator:
Weighted-average number of common shares outstanding—basic	212,491,561		211,671,581
Effect of dilutive securities:
Unvested restricted common stock	229,682		—
Shares related to unvested PSUs	429,575		—
Weighted-average number of common shares outstanding—diluted	213,150,818		211,671,581
Earnings (loss) per share:
Earnings (loss) per share available to common stockholders—basic	$	0.04	$	(0.82)
Earnings (loss) per share available to common stockholders—diluted	$	0.04	$	(0.82)

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For the three months ended March 31, 2021, 757,591 of unvested restricted common shares and 695,654 of unvested PSUs were excluded from the diluted weighted-average common shares outstanding, as their effect would be anti-dilutive.

The common OP units held by the noncontrolling interest holders have been excluded from the denominator of the diluted earnings (loss) per share calculation as there would be no effect on the amounts since the common OP units' share of income or loss would also be added or subtracted to derive net income (loss) available to common stockholders.

8. Debt

The following table sets forth information regarding the Company’s debt as of March 31, 2022 and December 31, 2021 (dollars in thousands):

			Principal Balance as of
Loan	Interest Rate as of March 31, 2022	Maturity Date	March 31, 2022		December 31, 2021
Salt Lake City Marriott Downtown at City Creek mortgage loan	LIBOR + 3.25% (1)	January 2023	$	43,120	$	43,570
Westin Washington, D.C. City Center mortgage loan	3.99%	January 2023	55,299		55,913
The Lodge at Sonoma Resort mortgage loan	3.96%	April 2023	25,413		25,542
Westin San Diego Bayview mortgage loan	3.94%	April 2023	58,166		58,600
Courtyard New York Manhattan/Midtown East mortgage loan	4.40%	August 2024	77,445		77,882
Worthington Renaissance Fort Worth Hotel mortgage loan	3.66%	May 2025	76,992		77,453
Hotel Clio mortgage loan	4.33%	July 2025	58,456		58,789
Westin Boston Seaport District mortgage loan	4.36%	November 2025	181,679		182,755
Unamortized debt issuance costs			(1,661)		(1,853)
Total mortgage debt, net of unamortized debt issuance costs			574,909		578,651
Unsecured term loan	LIBOR + 2.40% (2) (4)	October 2023	50,000		50,000
Unsecured term loan	LIBOR + 2.40% (3) (4)	July 2024	350,000		350,000
Unamortized debt issuance costs			(1,332)		(1,428)
Unsecured term loans, net of unamortized debt issuance costs			398,668		398,572
Senior unsecured credit facility	LIBOR + 2.55% (4)	July 2023 (5)	200,000		90,000
Total debt, net of unamortized debt issuance costs			$	1,173,577	$	1,067,223
Weighted-Average Interest Rate	3.78%

_______________________

(1)LIBOR is subject to a floor of 1.0%.

(2)We are party to an interest rate swap agreement that fixes LIBOR at 2.41% through October 2023.

(3)We are party to an interest rate swap agreement that fixes LIBOR at 1.70% through July 2024 for $175 million of the loan. LIBOR is subject to a floor of 0.25%.

(4)LIBOR is subject to a floor of 0.25%.

(5)The credit facility may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions.

Mortgage and Other Debt

We have incurred limited recourse, property specific mortgage debt secured by certain of our hotels. In the event of default, the lender may only foreclose on the secured assets; however, in the event of fraud, misapplication of funds or other

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customary recourse provisions, the lender may seek payment from us. As of March 31, 2022, eight of our 33 hotels were secured by mortgage debt.

Our mortgage debt contains certain property specific covenants and restrictions, including minimum debt service coverage ratios or debt yields that trigger “cash trap” provisions, as well as restrictions on incurring additional debt without lender consent. Such cash trap provisions are triggered when the hotel’s operating results fall below a certain debt service coverage ratio or debt yield. When these provisions are triggered, all of the excess cash flow generated by the hotel is deposited directly into cash management accounts for the benefit of our lenders until a specified debt service coverage ratio or debt yield is reached and maintained for a certain period of time. Such provisions do not provide the lender the right to accelerate repayment of the underlying debt. As of March 31, 2022, the debt service coverage ratios or debt yields for all of our mortgage loans, except for the mortgage loan secured by the Salt Lake City Marriott Downtown at City Creek, were below the minimum thresholds such that the cash trap provision of each respective loan was triggered. As of March 31, 2022, we had $3.1 million held in cash traps, which is included within the restricted cash on the accompanying balance sheet. We do not expect that such cash traps will affect our ability to satisfy our short-term liquidity requirements.

Senior Unsecured Credit Facility and Unsecured Term Loans

We are party to credit agreements (the “Credit Agreements”) that provide for a $400 million senior unsecured credit facility (the “Revolving Credit Facility”), which matures in July 2023, a $350 million unsecured term loan maturing in July 2024 (the “Facility Term Loan”) and a $50 million unsecured term loan maturing in October 2023 (the “2023 Term Loan”). The maturity date for the Revolving Credit Facility may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions. The interest rate on the Revolving Credit Facility and unsecured term loans is based upon LIBOR, plus an applicable margin based upon the Company’s leverage ratio. In addition to the interest payable on amounts outstanding under the Revolving Credit Facility, we are required to pay an amount equal to 0.20% of the unused portion of the Revolving Credit Facility if the average usage is greater than 50% or 0.30% of the unused portion of the Revolving Credit Facility if the average usage is less than or equal to 50%.

On each of June 9, 2020, August 14, 2020, January 20, 2021 and February 4, 2022, we executed amendments (the “Amendments”) to the Credit Agreements (as amended, the “Amended Credit Agreements”) for the Revolving Credit Facility and term loans. These Amendments provided for a waiver of the quarterly tested financial covenants beginning with the second quarter of 2020 through the first quarter of 2022 (the “Covenant Relief Period”) and allow for certain other modifications to the covenants thereafter through the second quarter of 2023 (the “Ratio Adjustment Period”).

During the Covenant Relief Period and until the date we have demonstrated compliance with the financial covenants for the fiscal quarter following the end of the Covenant Relief Period, the Amendments (i) require that the net cash proceeds from certain incurrences of indebtedness, equity issuances and asset dispositions will, subject to various exceptions, be applied as a mandatory prepayment of the amounts outstanding under the Amended Credit Agreements, (ii) impose an additional covenant that we and our subsidiaries maintain minimum liquidity, defined as unrestricted cash plus available capacity on the Revolving Credit Facility, of at least $125.0 million, (iii) impose additional negative covenants that will limit our ability to incur additional indebtedness, pay dividends and distributions (except to the extent required to maintain REIT status), repurchase shares, make prepayments of other indebtedness, make capital expenditures, conduct asset dispositions or transfers and make investments, in each case subject to various exceptions, and (iv) permit the payment of dividends on the Company's preferred stock, up to $25.0 million annually.

A summary of the most significant covenants is as follows:

		Modified	Actual at
	Covenant	Covenant (1)	March 31, 2022
Maximum leverage ratio (2)	60%	65%	50.0%
Minimum fixed charge coverage ratio (3)	1.50x	1.00x to 1.50x	1.68x
Secured recourse indebtedness	Less than 45% of Total Asset Value	Less than 45% of Total Asset Value	27.7%
Unencumbered leverage ratio	60.0%	65.0%	35.6%
Unencumbered implied debt service coverage ratio	1.20x	1.00x to 1.20x	1.86x

_____________________________

(1)Covenant requirements during the Ratio Adjustment Period.

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(2)Leverage ratio is net indebtedness, as defined in the Credit Agreements, divided by total asset value, defined in the Credit Agreements as the value of our owned hotels based on hotel net operating income divided by a defined capitalization rate.

(3)Fixed charge coverage ratio is Adjusted EBITDA, generally defined in the Credit Agreements as EBITDA less FF&E reserves, for the most recently ending 12 months, to fixed charges, which is defined in the Credit Agreements as interest expense, all regularly scheduled principal payments and payments on capitalized lease obligations, for the same most recently ending 12-month period.

During the Covenant Relief Period and the Ratio Adjustment Period, the Amendments also set the applicable interest rate to LIBOR plus a margin of 2.55% for the Revolving Credit Facility and LIBOR plus a margin of 2.40% for the Facility Term Loan and 2023 Term Loan. The Amendments also add a LIBOR floor of 0.25% to the variable interest rate calculation.

As of March 31, 2022, we had $200.0 million of borrowings outstanding under the Revolving Credit Facility. We incurred interest and unused fees on the Revolving Credit Facility of $1.3 million and $0.7 million for the three months ended March 31, 2022 and 2021, respectively. We incurred interest on the unsecured term loans of $3.6 million for each of the three months ended March 31, 2022 and 2021.

9. Acquisitions

On January 6, 2022, we acquired the 103-room Tranquility Bay Beachfront Resort located in Marathon, Florida, for $63.0 million, excluding prorations and transaction costs. The acquisition was funded with corporate cash. The acquisition includes income from 84 units owned by third parties that currently participate in the hotel's rental management program and the majority of the intervals in three units that are structured as vacation ownership. We own the remaining 16 rooms in fee simple. We recognized a $45.2 million right-to-manage intangible asset related to the long-term rental agreements (“RMAs”) that were purchased as part of the acquisition. The intangible asset is recorded within prepaid and other assets on the accompanying consolidated balance sheet as of March 31, 2022. The intangible asset will be amortized over a period of 40 years, which is our estimate of its useful life, inclusive of expected renewal periods. In March 2022, we entered into agreements to purchase four of the third-party owned units for $4.1 million in aggregate. In connection with the purchase agreements, we evaluated the recoverability of the right-to-manage intangible asset related to the RMAs, and as a result, we recorded an impairment loss of $2.8 million. On March 23, 2022, we closed on the purchase of two of the four third-party owned units for $1.7 million.

10. Fair Value Measurements and Interest Rate Swaps

The fair value of certain financial assets and liabilities and other financial instruments as of March 31, 2022 and December 31, 2021, in thousands, is as follows:

	March 31, 2022				December 31, 2021
	Carrying    Amount (1)		Fair Value		Carrying     Amount (1)		Fair Value
Debt	$	1,173,577	$	1,146,622	$	1,067,223	$	1,066,139

_______________

(1)The carrying amount of debt is net of unamortized debt issuance costs.

The fair value of our debt is a Level 2 measurement under the fair value hierarchy (see Note 2). We estimate the fair value of our debt by discounting the future cash flows of each instrument at estimated market rates.

The Company's interest rate derivatives, which are not designated or accounted for as cash flow hedges, consisted of the following as of March 31, 2022 and December 31, 2021, in thousands:

									Fair Value of Assets (Liabilities)
Hedged Debt	Type	Rate Fixed		Index	Effective Date	Maturity Date	Notional Amount		March 31, 2022		December 31, 2021
$50 million term loan	Swap	2.41	%	1-Month LIBOR	January 7, 2019	October 18, 2023	$	50,000	$	(232)	$	(1,565)
$350 million term loan	Swap	1.70	%	1-Month LIBOR	July 25, 2019	July 25, 2024	$	175,000	2,807		(3,362)
									$	2,575	$	(4,927)

The fair values of the interest rate swap agreements are included in accounts payable and accrued expenses on the accompanying consolidated balance sheets as of March 31, 2022 and December 31, 2021. The fair value of our interest rate swaps is a Level 2 measurement under the fair value hierarchy. We estimate the fair value of the interest rate swap based on the interest rate yield curve and implied market volatility as inputs and adjusted for the counterparty's credit risk. We concluded

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the inputs for the credit risk valuation adjustment are Level 3 inputs, however these inputs are not significant to the fair value measurement in its entirety.

The carrying amount of our other financial instruments approximate fair value due to the short-term nature of these financial instruments.

11. Commitments and Contingencies

Litigation

We are subject to various claims, lawsuits and legal proceedings, including routine litigation arising in the ordinary course of business, regarding the operation of our hotels and Company matters. While it is not possible to ascertain the ultimate outcome of such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance will not have a material adverse impact on our financial condition or results of operations. The outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties.

12. Subsequent Events

On April 1, 2022, we acquired the 96-room Kimpton Fort Lauderdale Beach Resort located in Fort Lauderdale, Florida for $35.3 million, excluding prorations and transaction costs.

On April 7, 2022, we closed on the purchase of two third-party owned units at Tranquility Bay Beachfront Resort for $2.5 million. In connection with entering into purchase agreements to acquire the units, we recorded an impairment loss in the first quarter of 2022. See Note 9 for additional information about the impairment.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. These forward-looking statements are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions, whether in the negative or affirmative. Forward-looking statements are based on management’s current expectations and assumptions and are not guarantees of future performance. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the risks discussed herein and the risk factors discussed from time to time in our periodic filings with the Securities and Exchange Commission, including in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021 as updated by our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Accordingly, there is no assurance that the Company’s expectations will be realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this report to reflect events, circumstances or changes in expectations after the date of this report.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

•negative developments in the economy, including, but not limited to, job loss or growth trends, an increase in unemployment or a decrease in corporate earnings and investment;

•increased competition in the lodging industry and from alternative lodging channels or third party internet intermediaries in the markets in which we own properties;

•failure to effectively execute our long-term business strategy and successfully identify and complete acquisitions and dispositions;

•risks and uncertainties affecting hotel management, operations and renovations (including, without limitation, construction delays, increased construction costs, disruption in hotel operations and the risks associated with our management and franchise agreements);

•risks associated with the availability and terms of financing and the use of debt to fund acquisitions and renovations or refinance existing indebtedness, including the impact of higher interest rates on the cost and/or availability of financing;

•risks associated with our level of indebtedness and our ability to satisfy our obligations under our debt agreements;

•risks associated with the lodging industry overall, including, without limitation, decreases in the frequency of travel and increases in operating costs;

•risks and uncertainties associated with our obligations under our management agreements;

•risks associated with natural disasters and other unforeseen catastrophic events, including the emergence of a pandemic or other widespread health emergency;

•the adverse impact of COVID-19 on the U.S., regional and global economies, travel, the hospitality industry, and on our financial condition and results of operations and our hotels;

•costs of compliance with government regulations, including, without limitation, the Americans with Disabilities Act;

•potential liability for uninsured losses and environmental contamination;

•risks associated with security breaches through cyber-attacks or otherwise, as well as other significant disruptions of our and our hotel managers’ information technologies and systems, which support our operations and those of our hotel managers;

•risks associated with our potential failure to maintain our qualification as a REIT (as defined below) under the Internal Revenue Code of 1986, as amended (the “Code”);

•possible adverse changes in tax and environmental laws; and

•risks associated with our dependence on key personnel whose continued service is not guaranteed.

Overview

DiamondRock Hospitality Company is a lodging-focused Maryland corporation operating as a real estate investment trust (“REIT”). As of March 31, 2022, we owned a portfolio of 33 premium hotels and resorts that contain 9,454 guest rooms located in 23 different markets in North America.

As an owner, rather than an operator, of lodging properties, we receive all of the operating profits or losses generated by our hotels after the payment of fees due to hotel managers and hotel brands, which are calculated based on the revenues and profitability of each hotel.

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Our strategy is to apply aggressive asset management, prudent financial strategy, and disciplined capital allocation to high quality lodging properties in North American urban and resort markets with superior growth prospects and high barriers-to-entry. Our goal is to deliver long-term stockholder returns that exceed those generated by our peers through a combination of dividends and enduring capital appreciation.

Our primary business is to acquire, own, asset manage and renovate premium hotel properties in the United States. Our portfolio is concentrated in major urban market cities and destination resort locations. Each of our hotels is managed by a third party—either an independent operator or a brand operator, such as Marriott International, Inc.

We critically evaluate each of our hotels to ensure that we own a portfolio of hotels that conforms to our vision, supports our mission and corresponds with our strategy. On a regular basis, we analyze our portfolio to identify opportunities to invest capital in certain projects or market non-core assets for sale in order to increase our portfolio quality. We are committed to a conservative capital structure with prudent leverage. We regularly assess the availability and affordability of capital in order to maximize stockholder value and minimize enterprise risk. In addition, we are committed to following sound corporate governance practices and to being open and transparent in our communications with our stockholders.

Key Indicators of Financial Condition and Operating Performance

We use a variety of operating and other information to evaluate the financial condition and operating performance of our business. These key indicators include financial information that is prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), as well as other financial information that is not prepared in accordance with U.S. GAAP. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the performance of individual hotels, groups of hotels and/or our business as a whole. We periodically compare historical information to our internal budgets as well as industry-wide information. These key indicators include:

•Occupancy percentage;

•Average Daily Rate (or ADR);

•Revenue per Available Room (or RevPAR);

•Earnings Before Interest, Income Taxes, Depreciation and Amortization (or EBITDA), Earnings Before Interest, Income Taxes, Depreciation and Amortization for real estate (or EBITDAre), and Adjusted EBITDA; and

•Funds From Operations (or FFO) and Adjusted FFO.

Occupancy, ADR and RevPAR are commonly used measures within the hotel industry to evaluate operating performance. RevPAR, which is calculated as the product of ADR and occupancy percentage, is an important statistic for monitoring operating performance at the individual hotel level and across our business as a whole. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and regional basis. ADR and RevPAR include only room revenue. Room revenue comprised approximately 67% of our total revenues for the three months ended March 31, 2022 and is dictated by demand, as measured by occupancy percentage, pricing, as measured by ADR, and our available supply of hotel rooms.

Our ADR, occupancy percentage and RevPAR performance may be impacted by macroeconomic factors such as U.S. economic conditions generally, regional and local employment growth, personal income and corporate earnings, office vacancy rates and business relocation decisions, airport and other business and leisure travel, increased use of lodging alternatives, new hotel construction and the pricing strategies of our competitors. In addition, our ADR, occupancy percentage and RevPAR performance is dependent on the continued success of our hotels' global brands.

We also use EBITDA, EBITDAre, Adjusted EBITDA, FFO and Adjusted FFO as measures of the financial performance of our business. See “Non-GAAP Financial Measures.”

COVID-19 Pandemic

The novel coronavirus (COVID-19) has had and continues to have a significant effect on our industry in general and our business in particular. The demand for lodging materially decreased beginning in March 2020 and remains at historically low

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levels. Three of our hotels suspended operations for a period of time during the three months ended March 31, 2021. All of our hotels were open during the three months ended March 31, 2022. The comparability of our results of operations for the three months ended March 31, 2022 to the three months ended March 31, 2021 has been impacted by the effects of the pandemic.

COVID-19 case counts increased early in the first quarter of 2022 following the emergence of the Omicron variant, but quickly decreased during the latter half of the quarter. Demand at our leisure-focused hotels improved in 2021 and 2022 to date. Demand at our other hotels remains at historically low levels. The COVID-19 pandemic has had a significant negative impact on our operations and financial results and is expected to continue to have a negative impact on our results of operations, financial position and cash flows for the remainder of 2022. Our portfolio's operating results have improved during the three months ended March 31, 2022 relative to the three months ended March 31, 2021.

As the recovery continues, we expect that the pace will vary from market to market and may be uneven in nature. Although there are signs of a a robust recovery in business travel in 2022 to date relative to 2021, there remains significant uncertainty regarding the future pace of recovery and whether and when business travel and larger group meetings will return to pre-pandemic levels. The emergence of new variant strains of COVID-19 has the potential to slow or reverse positive trends expected in 2022 and beyond.

Our Hotels

The following tables set forth certain operating information for the three months ended March 31, 2022 for each of our hotels owned during the period.

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Property	Location	Number of Rooms	Occupancy (%)		ADR ($)		RevPAR ($)		% Change from 2021 RevPAR(1)
Chicago Marriott Downtown Magnificent Mile (2)	Chicago, Illinois	1,200	27.4	%	$	168.57	$	46.13	N/A
Westin Boston Seaport District	Boston, Massachusetts	793	53.7	%	194.05		104.27		482.3	%
Salt Lake City Marriott Downtown at City Creek	Salt Lake City, Utah	510	49.0	%	176.07		86.21		161.2	%
Worthington Renaissance Fort Worth Hotel	Fort Worth, Texas	504	64.3	%	194.19		124.90		162.7	%
Westin San Diego Bayview	San Diego, California	436	53.0	%	175.00		92.81		198.8	%
Westin Fort Lauderdale Beach Resort	Fort Lauderdale, Florida	433	87.7	%	336.96		295.38		106.9	%
Westin Washington, D.C. City Center	Washington, D.C.	410	35.2	%	175.98		62.02		368.8	%
Hilton Boston Downtown/Faneuil Hall	Boston, Massachusetts	403	63.0	%	174.41		109.95		386.4	%
The Hythe Vail	Vail, Colorado	344	67.0	%	663.43		444.73		61.9	%
Courtyard New York Manhattan/Midtown East	New York, New York	321	63.6	%	199.77		127.03		50.3	%
Atlanta Marriott Alpharetta	Atlanta, Georgia	318	41.6	%	141.87		59.03		173.1	%
The Gwen Hotel	Chicago, Illinois	311	58.2	%	213.18		124.11		176.8	%
Hilton Garden Inn New York/Times Square Central (2)	New York, New York	282	77.8	%	162.46		126.40		N/A
Embassy Suites by Hilton Bethesda	Bethesda, Maryland	272	26.4	%	113.40		29.97		53.8	%
Hilton Burlington Lake Champlain	Burlington, Vermont	258	58.6	%	157.63		92.30		145.3	%
Hotel Palomar Phoenix	Phoenix, Arizona	242	76.8	%	247.83		190.39		158.6	%
Bourbon Orleans Hotel	New Orleans, Louisiana	220	49.6	%	244.94		121.61		N/A
Henderson Beach Resort	Destin, Florida	216	44.3	%	411.26		182.13		22.1	%
Hotel Clio	Denver, Colorado	199	62.4	%	258.96		161.68		104.3	%
Courtyard New York Manhattan/Fifth Avenue (2)	New York, New York	189	82.9	%	161.28		133.69		N/A
Margaritaville Beach House Key West	Key West, Florida	186	92.0	%	579.43		532.94		84.5	%
The Lodge at Sonoma Resort	Sonoma, California	182	48.0	%	367.07		176.30		194.7	%
Courtyard Denver Downtown	Denver, Colorado	177	60.0	%	151.12		90.65		169.8	%
Renaissance Charleston Historic District Hotel	Charleston, South Carolina	167	80.3	%	311.69		250.35		105.0	%
Kimpton Shorebreak Resort	Huntington Beach, California	157	71.8	%	297.03		213.36		114.0	%
Cavallo Point, The Lodge at the Golden Gate	Sausalito, California	142	44.6	%	683.10		304.93		188.2	%
Havana Cabana Key West	Key West, Florida	106	93.8	%	411.65		386.07		62.6	%
Tranquility Bay Beachfront Resort	Marathon, Florida	103	83.3	%	947.75		789.49		29.4	%
Hotel Emblem San Francisco	San Francisco, California	96	53.4	%	189.44		101.10		418.1	%
L'Auberge de Sedona	Sedona, Arizona	88	68.5	%	1,046.12		716.30		23.8	%
The Landing Lake Tahoe Resort & Spa	South Lake Tahoe, California	82	46.5	%	408.90		189.99		13.5	%
Orchards Inn Sedona	Sedona, Arizona	70	63.7	%	309.21		196.91		24.9	%
Henderson Park Inn	Destin, Florida	37	60.6	%	511.93		310.39		38.4	%
TOTAL/WEIGHTED AVERAGE		9,454	55.8	%	$	278.57	$	155.43	122.4	%

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(1)The percentage change from 2021 RevPAR reflects the comparable period in 2021 to our 2022 ownership period for our 2022 and 2021 acquisitions.

(2)The hotel was closed for all or a portion of the three months ended March 31, 2021.

Results of Operations

Our results of operations for the three months ended March 31, 2022 improved relative to the three months ended March 31, 2021 as all of our hotels were open for the entire quarter, government mandates eased, vaccines were distributed, and travel demand increased.

Comparison of the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

In response to the COVID-19 pandemic, operations were suspended at three of our hotels for all or a portion of the three months ended March 31, 2021. All of our hotels were open during the three months ended March 31, 2022.

Revenue. Revenue consists primarily of the room, food and beverage and other operating revenues from our hotels, as follows (dollars in millions):

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	Three Months Ended March 31,
	2022		2021		% Change
Rooms	$	132.2	$	50.4	162.3	%
Food and beverage	45.7		13.9		228.8	%
Other	18.9		8.6		119.8	%
Total revenues	$	196.8	$	72.9	170.0	%

Our total revenues increased $123.9 million from $72.9 million for the three months ended March 31, 2021 to $196.8 million for the three months ended March 31, 2022.

The following are key hotel operating statistics for the three months ended March 31, 2022 and 2021. The 2021 operating statistics reflect the period in 2021 comparable to our ownership period in 2022 for hotels acquired in 2021 and 2022.

	Three Months Ended March 31,
	2022			2021			% Change
Occupancy %	55.8		%	29.6		%	26.2	%
ADR	$	278.57		$	236.10		18.0	%
RevPAR	$	155.43		$	69.88		122.4	%

Rooms revenues increased by $81.8 million from the three months ended March 31, 2021 to the three months ended March 31, 2022 primarily due to increases in occupancy and ADR as our hotels continued to recover from the COVID-19 pandemic. Additionally, the acquisitions of the Bourbon Orleans Hotel and Henderson Park Inn in July 2021, Henderson Beach Resort in December 2021 and Tranquility Bay Beachfront Resort in January 2022 (collectively, our “2021/2022 acquisitions”) contributed to the increase in rooms revenue by $13.9 million.

Food and beverage revenues increased $31.8 million from the three months ended March 31, 2021 to the three months ended March 31, 2022 primarily due to increases in occupancy as our hotels continued to recover from the COVID-19 pandemic. Additionally, our 2021/2022 acquisitions contributed to the increase in food and beverage revenues by $3.5 million.

Other revenues, which primarily represent spa, parking, resort fees and attrition and cancellation fees, increased by $10.3 million from the three months ended March 31, 2021 to the three months ended March 31, 2022 primarily due to increases in occupancy as our hotels continued to recover from the COVID-19 pandemic, as well as increases in attrition and cancellation fees. Additionally, our 2021/2022 acquisitions contributed to the increase in other revenues by $2.0 million.

Hotel operating expenses. The operating expenses consisted of the following (dollars in millions):

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	Three Months Ended March 31,
	2022		2021		% Change
Rooms departmental expenses	$	33.8	$	13.8	144.9	%
Food and beverage departmental expenses	33.2		11.6		186.2
Other departmental expenses	4.8		2.0		140.0
General and administrative	16.8		9.9		69.7
Utilities	5.6		4.1		36.6
Repairs and maintenance	8.8		5.8		51.7
Sales and marketing	12.4		5.8		113.8
Franchise fees	5.8		2.4		141.7
Base management fees	3.6		1.1		227.3
Incentive management fees	0.4		—		100.0
Property taxes	10.8		14.1		(23.4)
Other fixed charges	8.9		3.8		134.2
Severance costs	(0.5)		0.1		(600.0)
Professional fees and pre-opening costs related to Frenchman's Reef	—		0.6		(100.0)
Lease expense	3.0		2.8		7.1
Total hotel operating expenses	$	147.4	$	77.9	89.2	%

Our hotel operating expenses increased $69.5 million from the three months ended March 31, 2021 to the three months ended March 31, 2022 primarily due to increases in occupancy as our hotels continued to recover from the COVID-19 pandemic and other related operating costs stemming from the timing and extent of the COVID-19 pandemic. Additionally, our 2021/2022 acquisitions contributed to the increase in hotel operating expenses by $15.0 million. The increase in hotel operating expenses was partially offset by a $3.3 million decrease due to our dispositions of Frenchman's Reef & Morning Star Marriott Beach Resort in April 2021 and The Lexington Hotel in June 2021.

Depreciation and amortization. Depreciation and amortization is recorded on our hotel buildings over 40 years for the periods subsequent to acquisition. Depreciable lives of hotel furniture, fixtures and equipment are estimated as the time period between the acquisition date and the date that the hotel furniture, fixtures and equipment will be replaced. Our depreciation and amortization expense decreased $0.3 million, or 1.1%, from the three months ended March 31, 2021 primarily due to the sale of The Lexington Hotel in June 2021.

Impairment losses. During the three months ended March 31, 2022, we recorded an impairment loss of $2.8 million on the right-to-manage intangible asset related to the rental management agreements at Tranquility Bay Beachfront Resort upon entering into purchase agreements during the three months ended March 31, 2022 to acquire four third-party owned units. During the three months ended March 31, 2021, we recorded impairment losses of $122.6 million related to the dispositions of The Lexington Hotel and Frenchman's Reef & Morning Star Marriott Beach Resort.

Corporate expenses. Corporate expenses principally consist of employee-related costs, including base payroll, bonus, restricted stock and severance. Corporate expenses also include corporate operating costs, professional fees and directors’ fees. Our corporate expenses decreased $1.2 million, or 15.7%, from $7.2 million for the three months ended March 31, 2021 to $6.0 million for the three months ended March 31, 2022 primarily due to the reversal of compensation expense during the three months ended March 31, 2022 resulting from the forfeiture of long-term incentive awards related to the resignation of our former Executive Vice President and Chief Operating Officer.

Business interruption insurance income. During the three months ended March 31, 2022, we recognized $0.5 million of business interruption insurance income related to the impact of the Caldor wildfire at The Landing Lake Tahoe Resort & Spa, which caused the hotel to be closed for 21 days in 2021. We did not recognize any business interruption insurance income during the three months ended March 31, 2021.

Interest expense. Our interest expense was $4.1 million and $8.5 million for the three months ended March 31, 2022 and 2021, respectively, and was comprised of the following (in millions):

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	Three Months Ended March 31,
	2022		2021
Mortgage debt interest	$	6.0	$	6.3
Unsecured term loan interest	3.6		3.6
Credit facility interest and unused fees	1.3		0.7
Amortization of debt issuance costs and debt premium	0.7		0.6
Interest rate swap mark-to-market and net settlements	(7.5)		(2.7)
	$	4.1	$	8.5

The decrease in interest expense is primarily related to the mark-to-market of our interest rate swaps.

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of funds necessary to pay our scheduled debt service and operating expenses, ground lease payments (see Note 4 to the accompanying consolidated financial statements), capital expenditures directly associated with our hotels and distributions to our preferred stockholders, as well as the maturities of four mortgage loans in the next 12 months. We have suspended our quarterly common stock dividend. We currently expect that our existing cash balances and available capacity on our senior unsecured credit facility will be sufficient to meet our short-term liquidity requirements.

Our mortgage debt agreements contain “cash trap” provisions that are triggered when the hotel’s operating results fall below a certain debt service coverage ratio. When these cash trap provisions are triggered, all of the excess cash flow generated by the hotel is deposited directly into cash management accounts for the benefit of our lenders until a specified debt service coverage ratio is reached and maintained for a certain period of time. Such provisions do not allow the lender the right to accelerate repayment of the underlying debt. As of March 31, 2022, the debt service coverage ratios or debt yields for all of our mortgage loans, except for the mortgage loan secured by the Salt Lake City Marriott Downtown at City Creek, were below the minimum thresholds such that the cash trap provision of each respective loan was triggered. We do not expect that such cash traps will affect our ability to satisfy our short-term liquidity requirements.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotels, renovations, and other capital expenditures that need to be made periodically to our hotels, scheduled debt payments, debt maturities, redemption of limited operating partnership units (“common OP units”), ground lease payments, and making distributions to our common and preferred stockholders. We expect to meet our long-term liquidity requirements through various sources of capital, including cash provided by operations, borrowings, issuances of additional equity, including common OP units, and/or debt securities and proceeds from property dispositions. Our ability to incur additional debt is dependent upon a number of factors, including the state of the credit markets, our degree of leverage, the value of our unencumbered assets and borrowing restrictions imposed by existing lenders. Our ability to raise capital through the issuance of additional equity and/or debt securities is also dependent on a number of factors including the current state of the capital markets, investor sentiment and intended use of proceeds. We may need to raise additional capital if we identify acquisition opportunities that meet our investment objectives and require liquidity in excess of existing cash balances. Our ability to raise funds through the issuance of equity securities depends on, among other things, general market conditions for hotel companies and REITs and market perceptions about the Company.

Our Financing Strategy

Since our formation in 2004, we have been committed to a conservative capital structure with prudent leverage. Our outstanding debt consists of fixed interest rate mortgage debt, unsecured term loans and borrowings on our senior unsecured credit facility. We have a preference to maintain a significant portion of our portfolio as unencumbered assets in order to provide balance sheet flexibility. We expect that our strategy will enable us to maintain a balance sheet with an appropriate amount of debt throughout all phases of the lodging cycle. We believe that it is prudent to reduce the inherent risk of highly cyclical lodging fundamentals through a low leveraged capital structure.

We prefer a relatively simple but efficient capital structure. We generally structure our hotel acquisitions to be straightforward and to fit within our capital structure; however, we will consider a more complex transaction, such as the issuance of common OP units in connection with the acquisition of Cavallo Point, The Lodge at the Golden Gate, if we believe that the projected returns to our stockholders will significantly exceed the returns that would otherwise be available.

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We believe that we maintain a reasonable amount of debt. As of March 31, 2022, we had $1.2 billion of debt outstanding with a weighted average interest rate of 3.78% and a weighted average maturity date of approximately 2.2 years. We have four mortgage debt maturities within 12 months of May 6, 2022, and 25 of our 33 hotels unencumbered by mortgage debt. We remain committed to our core strategy of prudent leverage.

Information about our financing activities is available in Note 8 to the accompanying consolidated financial statements.

ATM Program

In August 2021, our board of directors approved an “at-the-market” equity offering program (the “ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million. We have not sold any shares under the ATM Program.

Short-Term Borrowings

Other than borrowings under our senior unsecured credit facility, discussed below, we do not utilize short-term borrowings to meet liquidity requirements.

Senior Unsecured Credit Facility and Unsecured Term Loans

We are party to a $400 million senior unsecured credit facility expiring in July 2023, a $350 million unsecured term loan maturing in July 2024 and a $50 million unsecured term loan maturing in October 2023. The maturity date for the senior unsecured credit facility may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions. As of March 31, 2022, we had $200.0 million of borrowings outstanding under our senior unsecured credit facility. On each of June 9, 2020, August 14, 2020, January 20, 2021 and February 4, 2022, we executed amendments to the credit agreements for our corporate credit facility and term loans. These amendments provided for a waiver of the quarterly tested financial covenants beginning with the second quarter of 2020 through the first quarter of 2022 and allow for certain other modifications to the covenants thereafter through the second quarter of 2023. As of March 31, 2022, we were in compliance with all of the original financial covenants under the credit agreements. We expect to exit the covenant waiver restrictions as of the second quarter of 2022.

Additional information about the credit agreements, including a summary of significant covenants, a description of the restrictions imposed by the amendments and their impacts on our liquidity, sources of capital, and ability to incur additional debt, can be found in Note 8 to the accompanying consolidated financial statements.

Sources and Uses of Cash

We expect that our principal sources of cash will include one or more of the following: net cash flow from hotel operations, sales of our equity and debt securities, debt financings and proceeds from hotel dispositions. Our principal uses of cash are for potential acquisitions of hotel properties, debt service and maturities, share repurchases, capital expenditures, operating costs, ground lease payments, corporate expenses, and any distributions to holders of common stock, common units and preferred stock. As of March 31, 2022, we had $41.6 million of unrestricted cash, $38.9 million of restricted cash and $200.0 million of outstanding borrowings on our senior unsecured credit facility.

Our net cash used in operations was $13.2 million for the three months ended March 31, 2022. Our cash from operations generally consists of the net cash flow from hotel operations, offset by cash paid for corporate expenses and other working capital changes.

Our net cash used in investing activities was $110.9 million for the three months ended March 31, 2022, which consisted of $11.6 million of capital expenditures at our operating hotels, $64.1 million paid for the acquisition of Tranquility Bay Beachfront Resort and the subsequent purchase of two third-party owned units at the resort, and $36.2 million paid in purchase deposits for the acquisition of the Kimpton Fort Lauderdale Beach Resort, which closed on April 1, 2022, offset by $1.0 million of deferred key money received for the Henderson Beach Resort.

Our net cash provided by financing activities was $102.7 million for the three months ended March 31, 2022, which consisted of draws of $110.0 million on our senior unsecured credit facility, offset by $2.5 million of distributions paid to holders of preferred stock, $3.9 million of scheduled mortgage debt principal payments, $0.1 million paid for financing costs for the credit agreements, and $0.8 million paid to repurchase shares for the payment of tax withholding obligations and for accrued dividends upon the vesting of restricted stock.

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We currently anticipate our significant sources of cash for the remainder of the year ending December 31, 2022 will be the net cash flow from hotel operations as the lodging disruptions from COVID-19 continue to subside and draws on our senior unsecured credit facility. We expect our estimated uses of cash for the remainder of the year ending December 31, 2022 will be scheduled debt service payments, payments of outstanding borrowings on our unsecured credit facility, capital expenditures, potential funding of hotel working capital requirements, distributions to preferred stockholders, corporate expenses and potential hotel acquisitions. Additionally, we expect uses of cash in 2023 will include our scheduled debt maturities.

Dividend Policy

We intend to distribute to our stockholders dividends at least equal to our REIT taxable income to avoid paying corporate income tax and excise tax on our earnings (other than the earnings of our TRS, which are all subject to tax at regular corporate rates) and to qualify for the tax benefits afforded to REITs under the Code. In order to qualify as a REIT under the Code, we generally must make distributions to our stockholders each year in an amount equal to at least:

•90% of our REIT taxable income determined without regard to the dividends paid deduction and excluding net capital gains, plus

•90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code, minus

•any excess non-cash income.

The timing and frequency of distributions will be authorized by our board of directors and declared by us based upon a variety of factors, including our financial performance, restrictions under applicable law and our current and future loan agreements, our debt service requirements, our capital expenditure requirements, the requirements for qualification as a REIT under the Code and other factors that our board of directors may deem relevant from time to time.

Our board of directors suspended our quarterly common dividend commencing with the first quarter dividend that would have been paid in April 2020. The payment of future dividends is determined by our board of directors after considering our projected taxable income, obligations under our financing agreements, expected capital requirements, and risks affecting our business. We currently expect to recommence the quarterly common dividend beginning in the third quarter of 2022.

We have paid the following dividends per share to holders of our Series A Preferred Stock during 2022, and through the date of this report:

Payment Date	Record Date	Dividend per Share
March 31, 2022	March 18, 2022	$	0.515625

Capital Expenditures

The management and franchise agreements for each of our hotels provide for the establishment of separate property improvement funds to cover, among other things, the cost of replacing and repairing furniture, fixtures and equipment at our hotels and other routine capital expenditures. Contributions to the property improvement fund are calculated as a percentage of hotel revenues. In addition, we may be required to pay for the cost of certain additional improvements that are not permitted to be funded from the property improvement fund under the applicable management or franchise agreement. As of March 31, 2022, we have set aside $26.0 million for capital projects in property improvement funds, which are included in restricted cash.

In 2022, we expect to spend approximately $100 million on necessary capital improvements and a select few transformational projects with attractive returns on investment. Significant projects in 2022 include the following:

•JW Marriott Denver Cherry Creek: We completed renovations in March 2022 to rebrand the hotel as Hotel Clio, a Luxury Collection Hotel.

•Kimpton Hotel Palomar Phoenix: We plan to complete a comprehensive rebranding and repositioning this year of the rooftop bar and pool at the hotel. The new rooftop will be named The Eden and offer an extraordinary food and beverage experience.

•Hilton Boston Downtown/Faneuil Hall: We expect to commence a comprehensive renovation in the fourth quarter of 2022 to reposition the hotel as an experiential lifestyle property to be completed in mid-2023.

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•Orchards Inn Sedona: We expect to commence the first phase of an upgrade renovation of the resort in late-2022. The two phase renovation, which is expected to be completed in 2023, will reposition the hotel as The Cliffs at L'Auberge.

•Hilton Burlington Lake Champlain: We are working with Hilton Worldwide to potentially rebrand the hotel as a Curio Collection. The repositioning is expected to be completed in early 2023 and include a new restaurant concept by a local renowned chef.

We invested approximately $11.6 million in capital improvements at our hotels during the three months ended March 31, 2022.

Non-GAAP Financial Measures

We use the following non-GAAP financial measures that we believe are useful to investors as key measures of our operating performance: EBITDA, EBITDAre, Adjusted EBITDA, FFO and Adjusted FFO. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with U.S. GAAP. EBITDA, EBITDAre, Adjusted EBITDA, FFO and Adjusted FFO, as calculated by us, may not be comparable to other companies that do not define such terms exactly as the Company.

Use and Limitations of Non-GAAP Financial Measures

Our management and Board of Directors use EBITDA, EBITDAre, Adjusted EBITDA, FFO and Adjusted FFO to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. The use of these non-GAAP financial measures has certain limitations. These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures. We compensate for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable U.S. GAAP financial measures, and our consolidated statements of operations and cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with U.S. GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by U.S. GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our U.S. GAAP results and the reconciliations to the corresponding U.S. GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.

EBITDA, EBITDAre and FFO

EBITDA represents net income (calculated in accordance with U.S. GAAP) excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; and (3) depreciation and amortization. The Company computes EBITDAre in accordance with the National Association of Real Estate Investment Trusts (“Nareit”) guidelines, as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate.” EBITDAre represents net income (calculated in accordance with U.S. GAAP) adjusted for: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; (3) depreciation and amortization; (4) gains or losses on the disposition of depreciated property, including gains or losses on change of control; (5) impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate; and (6) adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.

We believe EBITDA and EBITDAre are useful to an investor in evaluating our operating performance because they help investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization, and in the case of EBITDAre, impairment and gains or losses on dispositions of depreciated property) from our operating results. In addition, covenants included in our debt agreements use EBITDA as a measure of financial compliance. We also use EBITDA and EBITDAre as measures in determining the value of hotel acquisitions and dispositions.

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The Company computes FFO in accordance with standards established by the Nareit, which defines FFO as net income determined in accordance with U.S. GAAP, excluding gains or losses from sales of properties and impairment losses, plus real estate related depreciation and amortization. The Company believes that the presentation of FFO provides useful information to investors regarding its operating performance because it is a measure of the Company's operations without regard to specified non-cash items, such as real estate related depreciation and amortization and gains or losses on the sale of assets. The Company also uses FFO as one measure in assessing its operating results.

Adjustments to EBITDAre and FFO

We adjust EBITDAre and FFO when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted EBITDA and Adjusted FFO, when combined with U.S. GAAP net income, EBITDAre and FFO, is beneficial to an investor's complete understanding of our consolidated operating performance. We adjust EBITDAre and FFO for the following items:

•Non-Cash Lease Expense and Other Amortization: We exclude the non-cash expense incurred from the straight line recognition of expense from our ground leases and other contractual obligations and the non-cash amortization of our favorable and unfavorable contracts, originally recorded in conjunction with certain hotel acquisitions. We exclude these non-cash items because they do not reflect the actual cash amounts due to the respective lessors in the current period and they are of lesser significance in evaluating our actual performance for that period.

•Cumulative Effect of a Change in Accounting Principle: The Financial Accounting Standards Board promulgates new accounting standards that require or permit the consolidated statement of operations to reflect the cumulative effect of a change in accounting principle. We exclude the effect of these adjustments, which include the accounting impact from prior periods, because they do not reflect the Company’s actual underlying performance for the current period.

•Gains or Losses from Early Extinguishment of Debt: We exclude the effect of gains or losses recorded on the early extinguishment of debt because these gains or losses result from transaction activity related to the Company’s capital structure that we believe are not indicative of the ongoing operating performance of the Company or our hotels.

•Hotel Acquisition Costs: We exclude hotel acquisition costs expensed during the period because we believe these transaction costs are not reflective of the ongoing performance of the Company or our hotels.

•Severance Costs: We exclude corporate severance costs, or reversals thereof, incurred with the termination of corporate-level employees and severance costs incurred at our hotels related to lease terminations or structured severance programs because we believe these costs do not reflect the ongoing performance of the Company or our hotels.

•Hotel Manager Transition Items: We exclude the transition items associated with a change in hotel manager because we believe these items do not reflect the ongoing performance of the Company or our hotels.

•Other Items: From time to time we incur costs or realize gains that we consider outside the ordinary course of business and that we do not believe reflect the ongoing performance of the Company or our hotels. Such items may include, but are not limited to the following: pre-opening costs incurred with newly developed hotels; lease preparation costs incurred to prepare vacant space for marketing; management or franchise contract termination fees; gains or losses from legal settlements; costs incurred related to natural disasters; and gains on property insurance claim settlements, other than income related to business interruption insurance.

In addition, to derive Adjusted FFO we exclude any unrealized fair value adjustments to interest rate swaps. We exclude these non-cash amounts because they do not reflect the underlying performance of the Company.

The following table is a reconciliation of our U.S. GAAP net income to EBITDA, EBITDAre and Adjusted EBITDA (in thousands):

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	Three Months Ended March 31,
	2022		2021
Net income (loss)	$	10,060	$	(171,567)
Interest expense	4,119		8,484
Income tax (benefit) expense	(54)		1,613
Real estate related depreciation and amortization	26,655		26,962
EBITDA	40,780		(134,508)
Impairment losses	2,843		122,552
EBITDAre	43,623		(11,956)
Non-cash lease expense and other amortization	1,568		1,672
Professional fees and pre-opening costs related to Frenchman's Reef (1)	—		575
Hotel manager transition items	249		128
Severance costs (2)	(532)		10
Adjusted EBITDA	$	44,908	$	(9,571)

____________________

(1)	Represents pre-opening costs and professional fees related to the reopening of Frenchman's Reef, as well as legal and other costs incurred at Frenchman's Reef as a result of Hurricane Irma that were not covered by insurance.
(2)	Consists of severance costs incurred from the elimination of positions at our hotels, which are classified within other hotel expenses on the consolidated statement of operations.

The following table is a reconciliation of our U.S. GAAP net income to FFO and Adjusted FFO (in thousands):

	Three Months Ended March 31,
	2022		2021
Net income (loss)	$	10,060	$	(171,567)
Real estate related depreciation and amortization	26,655		26,962
Impairment losses	2,843		122,552
FFO	39,558		(22,053)
Distributions to preferred stockholders	(2,454)		(2,454)
FFO available to common stock and unit holders	37,104		(24,507)
Non-cash lease expense and other amortization	1,568		1,672
Professional fees and pre-opening costs related to Frenchman's Reef (1)	—		575
Hotel manager transition items	249		128
Severance costs (2)	(532)		10
Fair value adjustments to interest rate swaps	(7,502)		(2,731)
Adjusted FFO available to common stock and unit holders	$	30,887	$	(24,853)

____________________

(1)	Represents pre-opening costs and professional fees related to the reopening of Frenchman's Reef, as well as legal and other costs incurred at Frenchman's Reef as a result of Hurricane Irma that were not covered by insurance.
(2)	Consists of severance costs incurred from the elimination of positions at our hotels, which are classified within other hotel expenses on the consolidated statement of operations.

Critical Accounting Estimates and Policies

Our unaudited consolidated financial statements include the accounts of DiamondRock Hospitality Company and all consolidated subsidiaries. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future

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uncertainties and, as a result, actual results could differ materially from these estimates. We evaluate our estimates and judgments, including those related to the impairment of long-lived assets, on an ongoing basis. We base our estimates on experience and on various assumptions that are believed to be reasonable under the circumstances. All of our significant accounting policies are disclosed in the notes to our consolidated financial statements. All of our significant accounting policies, including certain critical accounting policies, are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021. The following represent certain critical accounting policies that require us to exercise our business judgment or make significant estimates:  

Investment in Hotels

Investment purchases of hotel properties, land, land improvements, building and furniture, fixtures and equipment, lease assets and liabilities, and identifiable intangible assets that are not businesses are accounted for as asset acquisitions and recorded at relative fair value based upon total accumulated cost of the acquisition. Property and equipment purchased after the hotel acquisition date is recorded at cost.

Identifiable intangible assets are typically related to contracts, including ground lease agreements and hotel management agreements, which are recorded at fair value. Above-market and below-market contract values are based on the present value of the difference between contractual amounts to be paid pursuant to the contracts acquired and our estimate of the fair market contract rates for corresponding contracts. Contracts acquired that are at market do not have significant value. We enter into a hotel management agreement at the time of acquisition and such agreements are generally based on market terms. Intangible assets are amortized using the straight-line method over the remaining non-cancelable term of the related agreements. In making estimates of fair values for purposes of allocating purchase price, we may utilize a number of sources that may be obtained in connection with the acquisition or financing of a property and other market data. Management also considers information obtained about each property as a result of its pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired.

We review our investments in hotels for impairment whenever events or changes in circumstances indicate that the carrying amount of the hotel properties may not be recoverable. Events or circumstances that may cause us to perform a review include, but are not limited to, adverse changes in the demand for lodging at our properties, current or projected losses from operations, and an expectation that the property is more likely than not to be sold significantly before the end of its previously estimated useful life. If such events or circumstances are identified, management performs an analysis to compare the estimated undiscounted future cash flows from operations and the net proceeds from the ultimate disposition of a hotel to the carrying amount of the asset. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotels' estimated fair value is recorded and an impairment loss is recognized. The fair value is determined through various valuation techniques, including discounted cash flow models with estimated discount and terminal capitalization rates, comparable market transactions, third-party appraisals, the net sales proceeds from pending offers, or from transactions that closed subsequent to the end of the reporting period.

Inflation

Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. However, competitive pressures or other factors may limit the ability of our management companies to raise room rates. Inflation may also affect our expenses and cost of capital improvements, including, without limitation, by increasing the costs of labor, employee-related benefits, food, commodities and other materials, taxes, property and casualty insurance and utilities.

Seasonality

The periods during which our hotels experience higher revenues vary from property to property, depending principally upon location and the customer base served. Accordingly, we expect some seasonality in our business. Volatility in our financial performance from the seasonality of the lodging industry could adversely affect our financial condition and results of operations.

New Accounting Pronouncements Not Yet Implemented

See Note 2 to the accompanying consolidated financial statements for additional information relating to recently issued accounting pronouncements.

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Item 3.Quantitative and Qualitative Disclosures about Market Risk

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business strategies, the primary market risk to which we are currently exposed, and, to which we expect to be exposed in the future, is interest rate risk. The face amount of our outstanding debt as of March 31, 2022 was $1.2 billion, of which $418.1 million was variable rate. If market rates of interest on our variable rate debt fluctuate by 100 basis points, interest expense would increase or decrease, depending on rate movement, future earnings and cash flows, by $4.2 million annually.

We entered into (i) an interest rate swap agreement in 2019 to fix LIBOR at 2.41% through maturity for our $50 million unsecured term loan and (ii) an interest rate swap agreement in 2019 to fix LIBOR at 1.70% through maturity for $175 million of our $350 million unsecured term loan. Information about our unsecured term loans and interest rate swap agreements can be found in Note 8 to the accompanying consolidated financial statements.

The LIBOR benchmark has been the subject of national, international and other regulatory guidance and proposals for reform and replacement, with most LIBOR settings not expected to be published after June 30, 2023. In the U.S., the Alternative Reference Rates Committee (“AARC”), which was convened by the Federal Reserve Board and the Federal Reserve Bank of New York, has recommended the Secured Overnight Financing Rate (“SOFR”) plus a recommended spread adjustment as its preferred alternative to USD-LIBOR. There are significant differences between LIBOR and SOFR, such as LIBOR being an unsecured lending rate while SOFR is a secured rate, and SOFR is an overnight rate while LIBOR reflects term rates at different maturities.

We have contracts that are indexed to LIBOR, including contracts governing our variable rate debt and our interest rate swaps. We expect that all LIBOR settings relevant to us will cease to be published or will no longer be representative after June 30, 2023. As a result, any of our LIBOR-based borrowings that extend beyond such date will need to be converted to a replacement rate. Certain risks may arise in connection with transitioning contracts to SOFR or any other alternative variable rate, including any resulting value transfer that may occur. The value of loans, securities, or derivative instruments tied to LIBOR could also be impacted. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require substantial negotiation with each respective counterparty. If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact is likely to vary by contract.

The discontinuation of LIBOR will not affect our ability to borrow or maintain already outstanding borrowings or swaps, but if our contracts indexed to LIBOR, including contracts governing our variable rate debt and our interest rate swaps, are converted to SOFR, the differences between LIBOR and SOFR, plus the recommended spread adjustment, could result in interest costs that are higher than if LIBOR remained available. Additionally, although SOFR is the AARC’s recommended replacement rate, it is also possible that lenders may instead choose alternative replacements that may differ from LIBOR in ways similar to SOFR or in ways that would result in higher interest costs for us. It is not yet possible to predict the magnitude of LIBOR’s end on our borrowing costs given the remaining uncertainty about which rates will replace LIBOR.

Item 4.Controls and Procedures

The Company’s management has evaluated, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, and has concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to give reasonable assurances that information we disclose in reports filed with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There was no change in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during the Company’s most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings

We are subject to various claims, lawsuits and legal proceedings, including routine litigation arising in the ordinary course of business, regarding the operation of our hotels and company matters. While it is not possible to ascertain the ultimate outcome of such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance will not have a material adverse impact on our financial condition or results of operations. The outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties.

Item 1A.Risk Factors

There have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(a)None.

(b)Not applicable.

(c)Issuer Purchases of Equity Securities

Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands)
January 1 - January 31, 2022	—	$	—	—	$	—
February 1 - February 28, 2022	81,379 (1)	$	9.55	—	$	—
March 1 - March 31, 2022	—	$	—	—	$	—

____________________

(1) Reflects shares surrendered to the Company by employees for payment of tax withholding obligations in connection with the vesting of restricted stock.

Item 3.Defaults Upon Senior Securities

Not applicable.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

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Item 6.Exhibits

(a)Exhibits

The following exhibits are filed as part of this Form 10-Q:

Exhibit
10.1	Fourth Amendment to Fifth Amended and Restated Credit Agreement dated as of February 4, 2022 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 8, 2022)
31.1*	Certification of Chief Executive Officer Required by Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act
31.2*	Certification of Chief Financial Officer Required by Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act
32.1**	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)
* Filed herewith
** Furnished herewith

-35-

SIGNATURES

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

DiamondRock Hospitality Company

May 6, 2022

/s/ Jeffrey J. Donnelly

Jeffrey J. Donnelly

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

/s/ Briony R. Quinn

Briony R. Quinn

Senior Vice President and Treasurer

(Principal Accounting Officer)

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, Mark W. Brugger, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of DiamondRock Hospitality Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2022

/s/ Mark W. Brugger  

Mark W. Brugger 

Chief Executive Officer
(Principal Executive Officer) 

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, Jeffrey J. Donnelly, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of DiamondRock Hospitality Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2022

/s/ Jeffrey J. Donnelly

Jeffrey J. Donnelly

Executive Vice President and
Chief Financial Officer
(Principal Financial Officer) 

EX-32.1

Exhibit 32.1

Certification

Pursuant to 18 U.S.C. Section 1350

The undersigned officers, who are the Chief Executive Officer and Chief Financial Officer of DiamondRock Hospitality Company (the “Company”), each hereby certifies to the best of his knowledge, that the Company’s Quarterly Report on Form 10-Q (the “Report”) to which this certification is attached, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mark W. Brugger	/s/ Jeffrey J. Donnelly
Mark W. Brugger	Jeffrey J. Donnelly
Chief Executive Officer	Executive Vice President and Chief Financial Officer
May 6, 2022	May 6, 2022

XML

Cover - shares	3 Months Ended
	Mar. 31, 2022	May 06, 2022
Entity Listings [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	001-32514
Entity Registrant Name	DIAMONDROCK HOSPITALITY CO
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	20-1180098
Entity Address, Address Line One	2 Bethesda Metro Center, Suite 1400,
Entity Address, City or Town	Bethesda,
Entity Address, State or Province	MD
Entity Address, Postal Zip Code	20814
City Area Code	240
Local Phone Number	744-1150
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		210,861,105
Entity Central Index Key	0001298946
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false
Common Stock
Entity Listings [Line Items]
Title of 12(b) Security	Common stock, $0.01 par value per share
Trading Symbol	DRH
Security Exchange Name	NYSE
8.250% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share
Entity Listings [Line Items]
Title of 12(b) Security	8.250% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share
Trading Symbol	DRH Pr A
Security Exchange Name	NYSE

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
ASSETS
Property and equipment, net	$ 2,659,123	$ 2,651,444
Right-of-use assets	97,067	100,212
Restricted cash	38,882	36,887
Due from hotel managers	154,199	120,671
Prepaid and other assets	98,375	17,472
Cash and cash equivalents	41,581	38,620
Total assets	3,089,227	2,965,306
Liabilities:
Mortgage and other debt, net of unamortized debt issuance costs	574,909	578,651
Unsecured term loans, net of unamortized debt issuance costs	398,668	398,572
Senior unsecured credit facility	200,000	90,000
Total debt	1,173,577	1,067,223
Lease liabilities	109,149	108,605
Deferred rent	61,955	60,800
Due to hotel managers	102,879	85,493
Unfavorable contract liabilities, net	62,313	62,780
Accounts payable and accrued expenses	41,331	51,238
Deferred income related to key money, net	9,103	8,203
Total liabilities	1,560,307	1,444,342
Equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized: 8.250% Series A Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share), 4,760,000 shares issued and outstanding at June 30, 2021 and December 31, 2020	48	48
Common stock, $0.01 par value; 400,000,000 shares authorized; 210,861,105 and 210,746,895 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	2,109	2,107
Additional paid-in capital	2,294,129	2,293,990
Accumulated deficit	(773,357)	(780,931)
Total stockholders’ equity	1,522,929	1,515,214
Noncontrolling interests	5,991	5,750
Total equity	1,528,920	1,520,964
Total liabilities and equity	$ 3,089,227	$ 2,965,306

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Stockholders' Equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, dividend rate	8.25%	8.25%
Liquidation preference per share (in dollars per share)	$ 25.00	$ 25.00
Preferred stock, shares issued (in shares)	4,760,000	4,760,000
Preferred stock, shares outstanding (in shares)	4,760,000	4,760,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	400,000,000	400,000,000
Common stock, shares issued (in shares)	210,861,105	210,746,895
Common stock, shares outstanding (in shares)	210,861,105	210,746,895

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenues:
Total revenues	$ 196,833	$ 72,937
Operating Expenses:
Depreciation and amortization	26,655	26,962
Impairment losses	2,843	122,552
Corporate expenses	6,033	7,159
Business interruption insurance income	(499)	0
Total operating expenses, net	182,422	234,563
Interest and other expense (income), net	286	(156)
Interest expense	4,119	8,484
Total other expenses, net	4,405	8,328
Income (loss) before income taxes	10,006	(169,954)
Income tax benefit (expense)	54	(1,613)
Net income (loss)	10,060	(171,567)
Less: Net (income) loss attributable to noncontrolling interests	(32)	720
Net income (loss) attributable to the Company	10,028	(170,847)
Distributions to preferred stockholders	(2,454)	(2,454)
Net income (loss) attributable to common stockholders	$ 7,574	$ (173,301)
Earnings (loss) per share:
Earnings (loss) per share available to common stockholders—basic (in dollars per share)	$ 0.04	$ (0.82)
Earnings (loss) per share available to common stockholders—diluted (in dollars per share)	$ 0.04	$ (0.82)
Rooms
Revenues:
Total revenues	$ 132,170	$ 50,412
Operating Expenses:
Operating expenses	33,830	13,828
Food and beverage
Revenues:
Total revenues	45,748	13,925
Operating Expenses:
Operating expenses	33,221	11,561
Other
Revenues:
Total revenues	18,915	8,600
Operating Expenses:
Operating expenses	70,509	48,935
Management fees
Operating Expenses:
Operating expenses	4,020	1,119
Franchise fees
Operating Expenses:
Operating expenses	$ 5,810	$ 2,447

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CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Total	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total Stockholders' Equity	Noncontrolling Interests
Beginning balance (in shares) at Dec. 31, 2020		4,760,000	210,073,514
Beginning Balance at Dec. 31, 2020	$ 1,718,925	$ 48	$ 2,101	$ 2,285,491	$ (576,531)	$ 1,711,109	$ 7,816
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Distributions on preferred stock	(2,454)				(2,454)	(2,454)
Share-based compensation (in shares)			170,251
Share-based compensation	301		$ 2	18		20	281
Net income	(171,567)			0	(170,847)	(170,847)	(720)
Ending balance (in shares) at Mar. 31, 2021		4,760,000	210,243,765
Ending Balance at Mar. 31, 2021	1,545,205	$ 48	$ 2,103	2,285,509	(749,832)	1,537,828	7,377
Beginning balance (in shares) at Dec. 31, 2021		4,760,000	210,746,895
Beginning Balance at Dec. 31, 2021	1,520,964	$ 48	$ 2,107	2,293,990	(780,931)	1,515,214	5,750
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Distributions on preferred stock	(2,454)				(2,454)	(2,454)
Share-based compensation (in shares)			114,210
Share-based compensation	350		$ 2	139		141	209
Net income	10,060				10,028	10,028	32
Ending balance (in shares) at Mar. 31, 2022		4,760,000	210,861,105
Ending Balance at Mar. 31, 2022	$ 1,528,920	$ 48	$ 2,109	$ 2,294,129	$ (773,357)	$ 1,522,929	$ 5,991

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CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Stockholders' Equity [Abstract]
Distributions per preferred share (in dollars per share)	$ 0.5156	$ 0.5156

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Cash flows from operating activities:
Net income (loss)	$ 10,060	$ (171,567)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	26,655	26,962
Corporate asset depreciation as corporate expenses	59	56
Non-cash lease expense and other amortization	1,568	1,672
Non-cash interest rate swap fair value adjustment	(7,502)	2,731
Amortization of debt issuance costs	653	611
Impairment losses	2,843	122,552
Amortization of deferred income related to key money	(99)	(99)
Share-based compensation	1,160	1,783
Changes in assets and liabilities:
Prepaid expenses and other assets	248	4,299
Due to/from hotel managers	(16,934)	(15,188)
Accounts payable and accrued expenses	(5,557)	(8,756)
Net cash provided by (used in) operating activities	13,154	(34,944)
Cash flows from investing activities:
Capital expenditures	(11,628)	(11,956)
Property acquisitions	(64,061)	0
Purchase deposits	(36,180)	0
Receipt of deferred key money	1,000	0
Net cash used in investing activities	(110,869)	(11,956)
Cash flows from financing activities:
Scheduled mortgage debt principal payments	(3,935)	(3,797)
Draws on senior unsecured credit facility	110,000	45,000
Payment of debt financing costs	(120)	(1,149)
Distributions on common stock and units	(10)	(117)
Distributions on preferred stock	(2,454)	(2,454)
Shares redeemed to satisfy tax withholdings on vested share-based compensation	(810)	(1,482)
Net cash provided by financing activities	102,671	36,001
Net increase (decrease) in cash, cash equivalents, and restricted cash	4,956	(10,899)
Cash, cash equivalents, and restricted cash at beginning of period	75,507	134,846	$ 134,846
Cash, cash equivalents, and restricted cash at end of period	80,463	123,947	75,507
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	10,549	10,476
Cash paid (refunded) for income taxes, net	1	(330)
Non-cash investing and financing activities:
Unpaid dividends and distributions declared	9	21
Accrued capital expenditures	10,422	2,526	7,300
Cash and cash equivalents	41,581		38,620
Restricted cash	38,882		36,887
Total cash, cash equivalents and restricted cash	$ 80,463	$ 123,947	$ 75,507

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Organization

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

DiamondRock Hospitality Company (the “Company” or “we”) is a lodging-focused real estate company that owns a portfolio of premium hotels and resorts. Our hotels are concentrated in major urban markets and in destination resort locations, and the majority of our hotels are operated under a brand owned by one of the leading global lodging brand companies (Marriott International, Inc. or Hilton Worldwide). We are an owner, as opposed to an operator, of the hotels in our portfolio. As an owner, we receive all of the operating profits or losses generated by our hotels after we pay fees to the hotel managers and hotel brands, which are based on the revenues and profitability of the hotels.

As of March 31, 2022, we owned 33 hotels with 9,454 guest rooms, located in the following markets: Atlanta, Georgia; Boston, Massachusetts (2); Burlington, Vermont; Charleston, South Carolina; Chicago, Illinois (2); Denver, Colorado (2); Destin, Florida (2); Fort Lauderdale, Florida; Fort Worth, Texas; Huntington Beach, California; Key West, Florida (2); Marathon, Florida; New Orleans, Louisiana; New York, New York (3); Phoenix, Arizona; Salt Lake City, Utah; San Diego, California; San Francisco, California (2); Sedona, Arizona (2); Sonoma, California; South Lake Tahoe, California; Washington, D.C. (2); and Vail, Colorado.

During the three months ended March 31, 2022, we acquired the Tranquility Bay Beachfront Resort located in Marathon, Florida. See Note 9 for further discussion of the acquisition. On April 1, 2022, we acquired the Kimpton Fort Lauderdale Beach Resort located in Fort Lauderdale, Florida. See Note 12 for further discussion of the acquisition.

We conduct our business through a traditional umbrella partnership real estate investment trust, or UPREIT, in which our hotel properties are owned by our operating partnership, DiamondRock Hospitality Limited Partnership, or subsidiaries of our operating partnership. The Company is the sole general partner of our operating partnership and owns 99.7% of the limited partnership units (“common OP units”) of our operating partnership as of March 31, 2022. The remaining 0.3% of the common OP units are held by third parties and executive officers of the Company. See Note 5 for additional disclosures related to common OP units.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

Our financial statements include all of the accounts of the Company and its subsidiaries in accordance with U.S. GAAP. All intercompany accounts and transactions have been eliminated in consolidation. If the Company determines that it has an interest in a variable interest entity within the meaning of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation, the Company will consolidate the entity when it is determined to be the primary beneficiary of the entity. Our operating partnership meets the criteria of a variable interest entity. The Company is the primary beneficiary and, accordingly, we consolidate our operating partnership.

In our opinion, the accompanying unaudited consolidated financial statements reflect all adjustments necessary to present fairly our financial position, the results of our operations, the statements of equity, and cash flows. Interim results are not necessarily indicative of full-year performance because of the impact of seasonal and short-term variations. We believe the disclosures made are adequate to prevent the information presented from being misleading. However, the unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2021, included in our Annual Report on Form 10-K filed on February 22, 2022.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Risks and Uncertainties

The state of the overall economy can significantly impact hotel operational performance and thus, impact our financial position. Should any of our hotels experience a significant decline in operational performance, it may affect our ability to make distributions to our stockholders and service debt or meet other financial obligations.

Currently, one of the most significant risks and uncertainties relates to the COVID-19 pandemic. The COVID-19 pandemic has adversely affected the hospitality industry in general and our business in particular. The extent to which our business will continue to be affected by COVID-19 will largely depend on future developments, which we cannot predict with a high degree of confidence, including the potential emergence of a new variant strain of COVID-19 and the actions of governments and individuals to contain COVID-19 and its variants or mitigate its impact. To the extent that certain travel activity in the U.S. is materially and adversely affected by COVID-19, the overall business and financial results of the hospitality industry, as well as the business and financial results of the Company, would similarly continue to be materially and adversely impacted.

Fair Value Measurements

In evaluating fair value, U.S. GAAP outlines a valuation framework and creates a fair value hierarchy that distinguishes between market assumptions based on market data (observable inputs) and a reporting entity’s own assumptions about market data (unobservable inputs). The hierarchy ranks the observability of inputs used to determine fair value, which are then classified and disclosed in one of the three categories. The three levels are as follows:

•Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities

•Level 2 - Inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets in markets that are not active and model-derived valuations whose inputs are observable

•Level 3 - Model-derived valuations with unobservable inputs

Property and Equipment

Investment purchases of hotel properties, land, land improvements, building and furniture, fixtures and equipment and identifiable intangible assets that are not businesses are accounted for as asset acquisitions and recorded at relative fair value based upon total accumulated cost of the acquisition. Direct acquisition-related costs are capitalized as a component of the acquired assets. Property and equipment purchased after the hotel acquisition date is recorded at cost. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from the Company’s accounts and any resulting gain or loss is included in the statements of operations.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5 to 40 years for buildings, land improvements, and building improvements and 1 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets.

We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse changes in the demand for lodging at the properties, current or projected losses from operations, and an expectation that the property is more likely than not to be sold significantly before the end of its useful life. If present, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel, less costs to sell, exceed its carrying amount. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel’s estimated fair market value is recorded and an impairment loss is recognized.

We will classify a hotel as held for sale in the period that we have made the decision to dispose of the hotel, a binding agreement to purchase the property has been signed under which the buyer has committed a significant amount of nonrefundable cash and no significant financing or other contingencies exist which could cause the transaction to not be completed in a timely manner. If these criteria are met, we will record an impairment loss if the fair value less costs to sell is lower than the carrying amount of the hotel and related assets and will cease recording depreciation expense. We will classify the assets and related liabilities as held for sale on the balance sheet.

Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Revenue Recognition

Revenues from hotel operations are recognized when the goods or services are provided. Revenues consist of room sales,

food and beverage sales, and other hotel department revenues, such as telephone, parking, gift shop sales and resort fees. Rooms revenue is recognized over the length of stay that the hotel room is occupied by the customer. Food and beverage revenue is recognized at the point in time in which the goods and/or services are rendered to the customer, such as for restaurant dining services or banquet services. Other revenues are recognized at the point in time or over the time period that goods or services are provided to the customer. Certain ancillary services are provided by third parties and we assess whether we are the principal or agent in these arrangements. If we are the agent, revenue is recognized based upon the commission earned from the third party. If we are the principal, we recognize revenue based upon the gross sales price.

Advance deposits are recorded as liabilities when a customer or group of customers provides a deposit for a future stay or

banquet event at our hotels. Advance deposits are converted to revenue when the services are provided to the customer or when a customer with a noncancelable reservation fails to arrive for part or all of the reservation. Conversely, advance deposits are generally refundable upon guest cancellation of the related reservation within an established period of time prior to the reservation.

Income Taxes

We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings during the period in which the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of March 31, 2022 and December 31, 2021, we had a valuation allowance of $18.7 million and $14.9 million, respectively, on our deferred tax assets.

We have elected to be treated as a real estate investment trust, or REIT, under the provisions of the Internal Revenue Code of 1986, as amended, which requires that we distribute at least 90% of our taxable income annually to our stockholders and comply with certain other requirements. In addition to paying federal and state taxes on any retained income, we may be subject to taxes on “built-in gains” on sales of certain assets. Our taxable REIT subsidiaries will generally be subject to federal, state, local and/or foreign income taxes. In order for the income from our hotel property investments to constitute “rents from real properties” for purposes of the gross income tests required for REIT qualification, the income we earn cannot be derived from the operation of any of our hotels. Therefore, we lease each of our hotel properties to wholly owned taxable REIT subsidiaries.

We may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite our belief that our filing position is supportable, the benefit of that tax position is not recognized in the consolidated statements of operations. We recognize interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. We recognize unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, or by expiration of the applicable statute of limitation.

We had no accruals for tax uncertainties as of March 31, 2022 and December 31, 2021.

Intangible Assets and Liabilities

Intangible assets and liabilities recorded may include management or franchise agreement intangibles and in-place lease intangibles assumed as part of the acquisition of certain hotels. We review the terms of agreements assumed in conjunction with the purchase of a hotel to determine if an intangible asset or liability exists. Intangible assets or liabilities are recorded at the acquisition date and amortized using the straight-line method over the expected useful life. We do not amortize intangible assets with indefinite useful lives, but we review these assets for impairment annually or at interim periods if events or circumstances indicate that the asset may be impaired. In connection with our acquisition of Tranquility Bay Beachfront Resort, we recognized

a $45.2 million right-to-manage intangible asset related to the rental management agreements with third-party unit owners. See Note 9 for more information, including information about the impairment recognized during the three months ended March 31, 2022. We currently have no other intangible assets. The remaining useful life of this intangible asset as of March 31, 2022 is approximately 39.8 years. The intangible asset, net of accumulated amortization of $0.3 million, was $42.1 million as of March 31, 2022. Amortization expense for the three months ended March 31, 2022 totaled $0.3 million. Amortization expense is expected to be $1.1 million annually for the remaining useful life of the asset.

Earnings (Loss) Per Share

Basic earnings (loss) per share (“EPS”) is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period plus other potentially dilutive securities such as stock grants. No adjustment is made for shares that are anti-dilutive during a period.

Share-based Compensation

We account for share-based employee compensation using the fair value based method of accounting. We record the cost of awards with service or market conditions based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

Comprehensive Income

We do not have any comprehensive income other than net income. If we have any comprehensive income in future periods, such that a statement of comprehensive income would be necessary, such statement will be reported as one statement with the consolidated statement of operations.

Derivative Instruments

In the normal course of business, we are exposed to the effects of interest rate changes. We may enter into derivative instruments, including interest rate swaps and caps, to manage or hedge interest rate risk. Derivative instruments are recorded at fair value on the balance sheet date. We have not elected hedge accounting treatment for the changes in the fair value of derivatives. Changes in the fair value of derivatives are recorded each period and are included in interest expense in the consolidated statements of operations.

Noncontrolling Interests

The noncontrolling interest is the portion of equity in our consolidated operating partnership not attributable, directly or indirectly, to the Company. Such noncontrolling interests are reported on the consolidated balance sheets within equity, separately from the Company’s equity. The noncontrolling interests are classified as permanent equity as we have the right to choose to settle each holder's redemption of the interest in either cash or delivery of shares of our common stock. See Note 5 for additional details. On the consolidated statements of operations, revenues, expenses and net income or loss from our less-than-wholly-owned operating partnership are reported within the consolidated amounts, including both the amounts attributable to the Company and noncontrolling interests. Income or loss is allocated to noncontrolling interests based on their weighted average ownership percentage for the applicable period. Consolidated statements of equity include beginning balances, activity for the period and ending balances for stockholders’ equity, noncontrolling interests and total equity.

Restricted Cash

Restricted cash primarily consists of cash held in reserve for replacement of furniture and fixtures generally held by our hotel managers and cash held in escrow pursuant to lender requirements.

Debt Issuance Costs

Financing costs are recorded at cost as a component of the debt carrying amount and consist of loan fees and other costs incurred in connection with the issuance of debt. Amortization of debt issuance costs is computed using a method that approximates the effective interest method over the remaining life of the debt and is included in interest expense in the accompanying consolidated statements of operations. Debt issuance costs related to our Revolving Credit Facility (defined in

Note 8) are included within prepaid and other assets on the accompanying consolidated balance sheets. These debt issuance costs are amortized ratably over the term of the Revolving Credit Facility, regardless of whether there are any outstanding borrowings, and the amortization is included in interest expense in the accompanying consolidated statements of operations.

Due to/from Hotel Managers

The due from hotel managers consists of hotel level accounts receivable, periodic hotel operating distributions receivable from managers and prepaid and other assets held by the hotel managers on our behalf. The due to hotel managers represents liabilities incurred by the hotel on behalf of us in conjunction with the operation of our hotels which are legal obligations of the Company.

Key Money

Key money received in conjunction with entering into hotel management or franchise agreements or completing specific capital projects is deferred and amortized over the term of the hotel management agreement, the term of the franchise agreement, or other systematic and rational period, if appropriate. Key money is classified as deferred income in the accompanying consolidated balance sheets and amortized as an offset to management fees or franchise fees.

Leases

We determine if an arrangement is a lease or contains an embedded lease at inception. For agreements with both lease and nonlease components (e.g., common-area maintenance costs), we do not separate the nonlease components from the lease components, but account for these components as one. We determine the lease classification (operating or finance) at lease inception.

Right-of-use assets and lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. The discount rate used to determine the present value of the lease payments is our incremental borrowing rate as of the lease commencement date, as the implicit rate is not readily determinable. The right-of-use assets also include any initial direct costs and any lease payments made at or before the commencement date, and is reduced for any unrestricted incentives received at or before the commencement date.

Options to extend or terminate the lease are included in the recognition of our right-of-use assets and lease liabilities when it is reasonably certain that we will exercise the option. Variable payments that are based on an index or a rate are included in the recognition of our right-of-use assets and lease liabilities using the index or rate at lease commencement; however, changes to these lease payments due to rate or index updates are recorded as rent expense in the period incurred. Contingent rentals based on a percentage of sales in excess of stipulated amounts are not included in the measurement of the lease liability and right-of-use asset but will be recognized as variable lease expense when they are incurred. Leases that contain provisions that increase the fixed minimum lease payments based on previously incurred variable lease payments related to performance will be remeasured, as these payments now represent an increase in the fixed minimum payments for the remainder of the lease term. However, leases with provisions that increase minimum lease payments based on changes in a reference index or rate (e.g. Consumer Price Index) will not be remeasured as such changes do not constitute a resolution of a contingency.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of our cash and cash equivalents. We maintain cash and cash equivalents with various financial institutions. We perform periodic evaluations of the relative credit standing of these financial institutions and limit the amount of credit exposure with any one institution.

Segment Reporting

Each one of our hotels is an operating segment. We evaluate each of our properties on an individual basis to assess performance, the level of capital expenditures, and acquisition or disposition transactions. Our evaluation of individual properties is not focused on property type (e.g. urban, suburban, or resort), brand, geographic location, or industry classification.

We aggregate our operating segments using the criteria established by U.S. GAAP, including the similarities of our product offering, types of customers and method of providing service. All of our properties react similarly to economic

stimulus, such as business investment, changes in Gross Domestic Product, and changes in travel patterns. As such, all our operating segments meet the aggregation criteria, resulting in a single reportable segment represented by our consolidated financial results.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued Accounting Standard Update 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications to ease reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. ASU 2020-04 permits a contract with a modified reference rate to be accounted for as a continuation of the existing contract. We have not entered into any contract modifications yet as it directly relates to reference rate reform, but we anticipate undertaking such modifications in the future related to our variable rate debt and interest rate swaps indexed to LIBOR. The adoption of ASU 2020-04 is not expected to have a material impact on our consolidated financial statements.

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Property and Equipment

3 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and equipment as of March 31, 2022 and December 31, 2021 consists of the following (in thousands):

	March 31, 2022		December 31, 2021
Land	$	548,443	$	546,800
Land improvements	7,994		7,994
Buildings and site improvements	2,694,128		2,667,024
Furniture, fixtures and equipment	506,264		501,505
Construction in progress	15,372		14,485
	3,772,201		3,737,808
Less: accumulated depreciation	(1,113,078)		(1,086,364)
	$	2,659,123	$	2,651,444

As of March 31, 2022 and December 31, 2021, we had accrued capital expenditures of $10.4 million and $7.3 million, respectively.

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Leases

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Leases

Leases

We are subject to operating leases, the most significant of which are ground leases. We are the lessee to ground leases under eight of our hotels and two parking garages as of March 31, 2022. The lease liabilities for our operating leases assume the exercise of all available extension options, as we believe they are reasonably certain to be exercised. As of March 31, 2022, our operating leases have a weighted-average remaining lease term of 65 years and a weighted-average discount rate of 5.77%.

The components of operating lease expense, which is included in other hotel expenses in our consolidated statements of operations, and cash paid for amounts included in the measurement of lease liabilities, are as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Operating lease cost	$	2,786	$	2,760
Variable lease payments	$	230	$	41
Cash paid for amounts included in the measurement of operating lease liabilities	$	985	$	866

Maturities of lease liabilities as of March 31, 2022 are as follows (in thousands):

Year Ending December 31,
2022 (excluding the three months ended March 31, 2022)	$	2,991
2023	4,033
2024	4,012
2025	4,072
2026	4,640
Thereafter	759,838
Total lease payments	779,586
Less imputed interest	(670,437)
Total lease liabilities	$	109,149

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Equity

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Equity

Equity

Common Shares

We are authorized to issue up to 400 million shares of common stock, $0.01 par value per share. Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Holders of our common stock are entitled to receive dividends out of assets legally available for the payment of dividends when authorized by our board of directors.

In August 2021, we implemented an “at-the-market” equity offering program (the “ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million. We have not sold any shares under the ATM Program.

Preferred Shares

We are authorized to issue up to 10,000,000 shares of preferred stock, $0.01 par value per share. Our board of directors is required to set for each class or series of preferred stock the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, and terms or conditions of redemption.

As of March 31, 2022 and December 31, 2021, there were 4,760,000 shares of Series A Preferred Stock issued and outstanding with a liquidation preference each of $25.00 per share. On or after August 31, 2025, the Series A Preferred Stock will be redeemable at the Company's option, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date.

Operating Partnership Units

In connection with our acquisition of Cavallo Point in December 2018, we issued 796,684 common OP units to third parties, otherwise unaffiliated with the Company, at $11.76 per unit. Each common OP unit is redeemable at the option of the holder. Holders of common OP units have certain redemption rights, which enable them to cause our operating partnership to redeem their units in exchange for cash per unit equal to the market price of our common stock, at the time of redemption, or, at our option, for shares of our common stock on a one-for-one basis, subject to adjustment upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions.

Long-Term Incentive Partnership units (“LTIP units”), which are also referred to as profits interest units, may be issued to eligible participants under the 2016 Plan (as defined in Note 6 below) for the performance of services to or for the benefit of our operating partnership. LTIP units are a class of partnership unit in our operating partnership and will receive, whether vested or not, the same per-unit distributions as the outstanding common OP units, which equal per-share dividends on shares of our common stock. Initially, LTIP units have a capital account balance of zero, do not receive an allocation of operating income (loss), and do not have full parity with common OP units with respect to liquidating distributions. If such parity is reached, vested LTIP units are converted into an equal number of common OP units, and thereafter will possess all of the rights and interests of common OP units, including the right to exchange the common OP units for cash per unit equal to the market price of our common stock, at the time of redemption, or, at our option, for shares of our common stock on a one-for-one basis, subject to adjustment upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions. See Note 6 for additional disclosures related to LTIP units.

There were 748,044 and 639,622 common OP units held by unaffiliated third parties and executive officers of the Company as of March 31, 2022 and December 31, 2021, respectively. There were 26,966 and 135,388 LTIP units outstanding as of March 31, 2022 and December 31, 2021, respectively. All vested LTIP units have reached economic parity with common OP units and have been converted into common OP units.

Dividends and Distributions

Our board of directors suspended our quarterly common dividend commencing with the first quarter dividend that would have been paid in April 2020. The resumption in quarterly common dividends will be determined by our board of directors after considering our projected taxable income, obligations under our financing agreements, expected capital requirements, and risks affecting our business.

We have paid the following dividends to holders of our Series A Preferred Stock during 2022:

Payment Date	Record Date	Dividend per Share
March 31, 2022	March 18, 2022	$	0.515625

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Stock Incentive Plans

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Stock Incentive Plans

Stock Incentive Plans

We are authorized to issue up to 6,082,664 shares of our common stock under our 2016 Equity Incentive Plan (the “2016 Plan”), of which we have issued or committed to issue 4,965,407 shares as of March 31, 2022. In addition to these shares, additional shares of common stock may be issued from time to time in connection with the performance stock unit awards as further described below.

Restricted Stock Awards

Restricted stock awards issued to our officers and employees generally vest over a three to five year period from the date of grant based on continued employment. We measure compensation expense for the restricted stock awards based upon the fair market value of our common stock at the date of grant. Compensation expense is recognized on a straight-line basis over the vesting period and is included in corporate expenses in the accompanying consolidated statements of operations. A summary of our restricted stock awards from January 1, 2022 to March 31, 2022 is as follows:

	Number of Shares	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2022	1,443,295	$	9.46
Granted	425,731	9.56
Vested	(260,680)	9.54
Forfeited	(211,543)	9.45
Unvested balance at March 31, 2022	1,396,803	$	9.47

The total unvested share awards as of March 31, 2022 are expected to vest as follows: 8,202 shares during 2022, 395,532 shares during 2023, 461,677 shares during 2024, 260,114 shares during 2025, and 271,278 shares during 2026. As of March 31, 2022, the unrecognized compensation cost related to restricted stock awards was $11.1 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 34 months. We recorded $0.8 million of compensation expense related to restricted stock awards for each of the three months ended March 31, 2022 and 2021. The compensation expense recorded for the three months ended March 31, 2022 includes the reversal of $0.2 million of previously recognized compensation expense in connection with the resignation of our former Executive Vice President and Chief Operating Officer.

Performance Stock Units

Performance stock units (“PSUs”) are restricted stock units that vest three years from the date of grant. Each executive officer is granted a target number of PSUs (the “PSU Target Award”). The actual number of shares of common stock issued to each executive officer is based on the Company's achievement of certain performance targets. Under this framework, 50% of the PSUs are based on relative total stockholder return and 50% on hotel market share improvement. The achievement of

certain levels of total stockholder return relative to the total stockholder return of a peer group of publicly-traded lodging REITs is measured over a three-year performance period. There is no payout of shares of our common stock if our total stockholder return falls below the 30th percentile of the total stockholder returns of the peer group. The maximum number of shares of common stock issued to an executive officer is equal to 150% of the PSU Target Award and is earned if our total stockholder return is equal to or greater than the 75th percentile of the total stockholder returns of the peer group. The number of PSUs earned is limited to 100% of the PSU Target Award if the Company's total stockholder return is negative for the three-year performance period. The improvement in market share for each of our hotels is measured over a three-year performance period based on a report prepared for each hotel by STR Global, a well-recognized benchmarking service for the hospitality industry. There is no payout of shares of our common stock if the percentage of our hotels with market share improvements is less than 30%. The maximum number of shares of common stock issued to an executive officer is equal to 150% of the PSU Target Award and is earned if the percentage of our hotels with market share improvements is greater than or equal to 75%.

We measure compensation expense for the PSUs based upon the fair market value of the award at the grant date. Compensation expense is recognized on a straight-line basis over the three-year performance period and is included in corporate expenses in the accompanying consolidated statements of operations. The grant date fair value of the portion of the PSUs based on our relative total stockholder return is determined using a Monte Carlo simulation performed by a third-party valuation firm. The grant date fair value of the portion of the PSUs based on hotel market share improvement is the closing price of our common stock on the grant date.

On February 22, 2022, our board of directors granted 337,702 PSUs to our executive officers. The grant date fair value of the portion of the PSUs based on our relative total stockholder return was $9.84 using the assumptions of volatility of 71.4% and a risk-free rate of 1.74%. The grant date fair value of the portion of the PSUs based on hotel market share was $9.56, which was the closing stock price of our common stock on such date.

A summary of our PSUs from January 1, 2022 to March 31, 2022 is as follows:

	Number of Target Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2022	969,240	$	9.45
Granted	337,702	9.70
Vested (1)	(269,224)	10.14
Forfeited	(160,533)	9.34
Unvested balance at March 31, 2022	877,185	$	11.06

______________________

(1)The number of shares of common stock earned for the PSUs vested in 2022 was equal to 100.0% of the PSU Target Award.

The total unvested PSUs as of March 31, 2022 are expected to vest as follows: 296,596 units during 2023, 294,445 units during 2024 and 286,144 units during 2025. The number of shares earned upon vesting is subject to the attainment of the performance goals described above. As of March 31, 2022, the unrecognized compensation cost related to the PSUs was $5.3 million and is expected to be recognized on a straight-line basis over a weighted average period of 27 months. We recorded $0.2 million and $0.7 million of compensation expense related to the PSUs for the three months ended March 31, 2022 and 2021, respectively. The compensation expense recorded for the three months ended March 31, 2022 includes the reversal of $0.5 million of previously recognized compensation expense in connection with the resignation of our former Executive Vice President and Chief Operating Officer.

LTIP Units

LTIP units are designed to offer executives a long-term incentive comparable to restricted stock, while potentially allowing them to enjoy a more favorable income tax treatment. Each LTIP unit awarded is deemed equivalent to an award of one share of common stock reserved under the 2016 Plan. At the time of award, LTIP units do not have full economic parity with common OP units, but can achieve such parity over time upon the occurrence of specified events in accordance with partnership tax rules.

A summary of our LTIP units from January 1, 2022 to March 31, 2022 is as follows:

	Number of Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2022	135,388	$	10.22
Vested (1)	(108,422)	10.38
Unvested balance at March 31, 2022	26,966	$	9.58

______________________

(1)As of March 31, 2022, all vested LTIP units have achieved economic parity with common OP units and have been converted to common OP units.

The total remaining unvested LTIP units as of March 31, 2022 of 26,966 are expected to vest in 2023.

As of March 31, 2022, the unrecognized compensation cost related to LTIP unit awards was $0.2 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 11 months. We recorded $0.2 million and $0.3 million of compensation expense related to LTIP unit awards for the three months ended March 31, 2022 and 2021, respectively.

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Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Earnings (Loss) Per Share

Basic EPS is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted EPS is calculated by dividing net income (loss) available to common stockholders that has been adjusted for dilutive securities, by the weighted-average number of common shares outstanding including dilutive securities.

Unvested share-based awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of EPS pursuant to the two-class method. Accordingly, distributed and undistributed earnings attributable to unvested share-based compensation (participating securities) have been excluded, as applicable, from net income or loss available to common stockholders used in the basic and diluted EPS calculations.

The following is a reconciliation of the calculation of basic and diluted EPS (in thousands, except share and per share data):

	Three Months Ended March 31,
	2022		2021
Numerator:
Net income (loss) attributable to common stockholders	$	7,574	$	(173,301)
Dividends declared on unvested share-based compensation	—		—
Net income (loss) available to common stockholders	$	7,574	$	(173,301)
Denominator:
Weighted-average number of common shares outstanding—basic	212,491,561		211,671,581
Effect of dilutive securities:
Unvested restricted common stock	229,682		—
Shares related to unvested PSUs	429,575		—
Weighted-average number of common shares outstanding—diluted	213,150,818		211,671,581
Earnings (loss) per share:
Earnings (loss) per share available to common stockholders—basic	$	0.04	$	(0.82)
Earnings (loss) per share available to common stockholders—diluted	$	0.04	$	(0.82)

For the three months ended March 31, 2021, 757,591 of unvested restricted common shares and 695,654 of unvested PSUs were excluded from the diluted weighted-average common shares outstanding, as their effect would be anti-dilutive.The common OP units held by the noncontrolling interest holders have been excluded from the denominator of the diluted earnings (loss) per share calculation as there would be no effect on the amounts since the common OP units' share of income or loss would also be added or subtracted to derive net income (loss) available to common stockholders.

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Debt

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Debt

Debt

The following table sets forth information regarding the Company’s debt as of March 31, 2022 and December 31, 2021 (dollars in thousands):

			Principal Balance as of
Loan	Interest Rate as of March 31, 2022	Maturity Date	March 31, 2022		December 31, 2021
Salt Lake City Marriott Downtown at City Creek mortgage loan	LIBOR + 3.25% (1)	January 2023	$	43,120	$	43,570
Westin Washington, D.C. City Center mortgage loan	3.99%	January 2023	55,299		55,913
The Lodge at Sonoma Resort mortgage loan	3.96%	April 2023	25,413		25,542
Westin San Diego Bayview mortgage loan	3.94%	April 2023	58,166		58,600
Courtyard New York Manhattan/Midtown East mortgage loan	4.40%	August 2024	77,445		77,882
Worthington Renaissance Fort Worth Hotel mortgage loan	3.66%	May 2025	76,992		77,453
Hotel Clio mortgage loan	4.33%	July 2025	58,456		58,789
Westin Boston Seaport District mortgage loan	4.36%	November 2025	181,679		182,755
Unamortized debt issuance costs			(1,661)		(1,853)
Total mortgage debt, net of unamortized debt issuance costs			574,909		578,651
Unsecured term loan	LIBOR + 2.40% (2) (4)	October 2023	50,000		50,000
Unsecured term loan	LIBOR + 2.40% (3) (4)	July 2024	350,000		350,000
Unamortized debt issuance costs			(1,332)		(1,428)
Unsecured term loans, net of unamortized debt issuance costs			398,668		398,572
Senior unsecured credit facility	LIBOR + 2.55% (4)	July 2023 (5)	200,000		90,000
Total debt, net of unamortized debt issuance costs			$	1,173,577	$	1,067,223
Weighted-Average Interest Rate	3.78%

_______________________

(1)LIBOR is subject to a floor of 1.0%.

(2)We are party to an interest rate swap agreement that fixes LIBOR at 2.41% through October 2023.

(3)We are party to an interest rate swap agreement that fixes LIBOR at 1.70% through July 2024 for $175 million of the loan. LIBOR is subject to a floor of 0.25%.

(4)LIBOR is subject to a floor of 0.25%.

(5)The credit facility may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions.

Mortgage and Other Debt

We have incurred limited recourse, property specific mortgage debt secured by certain of our hotels. In the event of default, the lender may only foreclose on the secured assets; however, in the event of fraud, misapplication of funds or other

customary recourse provisions, the lender may seek payment from us. As of March 31, 2022, eight of our 33 hotels were secured by mortgage debt.

Our mortgage debt contains certain property specific covenants and restrictions, including minimum debt service coverage ratios or debt yields that trigger “cash trap” provisions, as well as restrictions on incurring additional debt without lender consent. Such cash trap provisions are triggered when the hotel’s operating results fall below a certain debt service coverage ratio or debt yield. When these provisions are triggered, all of the excess cash flow generated by the hotel is deposited directly into cash management accounts for the benefit of our lenders until a specified debt service coverage ratio or debt yield is reached and maintained for a certain period of time. Such provisions do not provide the lender the right to accelerate repayment of the underlying debt. As of March 31, 2022, the debt service coverage ratios or debt yields for all of our mortgage loans, except for the mortgage loan secured by the Salt Lake City Marriott Downtown at City Creek, were below the minimum thresholds such that the cash trap provision of each respective loan was triggered. As of March 31, 2022, we had $3.1 million held in cash traps, which is included within the restricted cash on the accompanying balance sheet. We do not expect that such cash traps will affect our ability to satisfy our short-term liquidity requirements.

Senior Unsecured Credit Facility and Unsecured Term Loans

We are party to credit agreements (the “Credit Agreements”) that provide for a $400 million senior unsecured credit facility (the “Revolving Credit Facility”), which matures in July 2023, a $350 million unsecured term loan maturing in July 2024 (the “Facility Term Loan”) and a $50 million unsecured term loan maturing in October 2023 (the “2023 Term Loan”). The maturity date for the Revolving Credit Facility may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions. The interest rate on the Revolving Credit Facility and unsecured term loans is based upon LIBOR, plus an applicable margin based upon the Company’s leverage ratio. In addition to the interest payable on amounts outstanding under the Revolving Credit Facility, we are required to pay an amount equal to 0.20% of the unused portion of the Revolving Credit Facility if the average usage is greater than 50% or 0.30% of the unused portion of the Revolving Credit Facility if the average usage is less than or equal to 50%.

On each of June 9, 2020, August 14, 2020, January 20, 2021 and February 4, 2022, we executed amendments (the “Amendments”) to the Credit Agreements (as amended, the “Amended Credit Agreements”) for the Revolving Credit Facility and term loans. These Amendments provided for a waiver of the quarterly tested financial covenants beginning with the second quarter of 2020 through the first quarter of 2022 (the “Covenant Relief Period”) and allow for certain other modifications to the covenants thereafter through the second quarter of 2023 (the “Ratio Adjustment Period”).

During the Covenant Relief Period and until the date we have demonstrated compliance with the financial covenants for the fiscal quarter following the end of the Covenant Relief Period, the Amendments (i) require that the net cash proceeds from certain incurrences of indebtedness, equity issuances and asset dispositions will, subject to various exceptions, be applied as a mandatory prepayment of the amounts outstanding under the Amended Credit Agreements, (ii) impose an additional covenant that we and our subsidiaries maintain minimum liquidity, defined as unrestricted cash plus available capacity on the Revolving Credit Facility, of at least $125.0 million, (iii) impose additional negative covenants that will limit our ability to incur additional indebtedness, pay dividends and distributions (except to the extent required to maintain REIT status), repurchase shares, make prepayments of other indebtedness, make capital expenditures, conduct asset dispositions or transfers and make investments, in each case subject to various exceptions, and (iv) permit the payment of dividends on the Company's preferred stock, up to $25.0 million annually.

A summary of the most significant covenants is as follows:

		Modified	Actual at
	Covenant	Covenant (1)	March 31, 2022
Maximum leverage ratio (2)	60%	65%	50.0%
Minimum fixed charge coverage ratio (3)	1.50x	1.00x to 1.50x	1.68x
Secured recourse indebtedness	Less than 45% of Total Asset Value	Less than 45% of Total Asset Value	27.7%
Unencumbered leverage ratio	60.0%	65.0%	35.6%
Unencumbered implied debt service coverage ratio	1.20x	1.00x to 1.20x	1.86x

_____________________________

(1)Covenant requirements during the Ratio Adjustment Period.

(2)Leverage ratio is net indebtedness, as defined in the Credit Agreements, divided by total asset value, defined in the Credit Agreements as the value of our owned hotels based on hotel net operating income divided by a defined capitalization rate.

(3)Fixed charge coverage ratio is Adjusted EBITDA, generally defined in the Credit Agreements as EBITDA less FF&E reserves, for the most recently ending 12 months, to fixed charges, which is defined in the Credit Agreements as interest expense, all regularly scheduled principal payments and payments on capitalized lease obligations, for the same most recently ending 12-month period.

During the Covenant Relief Period and the Ratio Adjustment Period, the Amendments also set the applicable interest rate to LIBOR plus a margin of 2.55% for the Revolving Credit Facility and LIBOR plus a margin of 2.40% for the Facility Term Loan and 2023 Term Loan. The Amendments also add a LIBOR floor of 0.25% to the variable interest rate calculation.

As of March 31, 2022, we had $200.0 million of borrowings outstanding under the Revolving Credit Facility. We incurred interest and unused fees on the Revolving Credit Facility of $1.3 million and $0.7 million for the three months ended March 31, 2022 and 2021, respectively. We incurred interest on the unsecured term loans of $3.6 million for each of the three months ended March 31, 2022 and 2021.

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Acquisitions	3 Months Ended
	Mar. 31, 2022
Business Combination and Asset Acquisition [Abstract]
Acquisitions	Acquisitions On January 6, 2022, we acquired the 103-room Tranquility Bay Beachfront Resort located in Marathon, Florida, for $63.0 million, excluding prorations and transaction costs. The acquisition was funded with corporate cash. The acquisition includes income from 84 units owned by third parties that currently participate in the hotel's rental management program and the majority of the intervals in three units that are structured as vacation ownership. We own the remaining 16 rooms in fee simple. We recognized a $45.2 million right-to-manage intangible asset related to the long-term rental agreements (“RMAs”) that were purchased as part of the acquisition. The intangible asset is recorded within prepaid and other assets on the accompanying consolidated balance sheet as of March 31, 2022. The intangible asset will be amortized over a period of 40 years, which is our estimate of its useful life, inclusive of expected renewal periods. In March 2022, we entered into agreements to purchase four of the third-party owned units for $4.1 million in aggregate. In connection with the purchase agreements, we evaluated the recoverability of the right-to-manage intangible asset related to the RMAs, and as a result, we recorded an impairment loss of $2.8 million. On March 23, 2022, we closed on the purchase of two of the four third-party owned units for $1.7 million.

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Fair Value Measurements and Interest Rate Swaps

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements and Interest Rate Swaps

Fair Value Measurements and Interest Rate Swaps

The fair value of certain financial assets and liabilities and other financial instruments as of March 31, 2022 and December 31, 2021, in thousands, is as follows:

	March 31, 2022				December 31, 2021
	Carrying    Amount (1)		Fair Value		Carrying     Amount (1)		Fair Value
Debt	$	1,173,577	$	1,146,622	$	1,067,223	$	1,066,139

_______________

(1)The carrying amount of debt is net of unamortized debt issuance costs.

The fair value of our debt is a Level 2 measurement under the fair value hierarchy (see Note 2). We estimate the fair value of our debt by discounting the future cash flows of each instrument at estimated market rates.

The Company's interest rate derivatives, which are not designated or accounted for as cash flow hedges, consisted of the following as of March 31, 2022 and December 31, 2021, in thousands:

									Fair Value of Assets (Liabilities)
Hedged Debt	Type	Rate Fixed		Index	Effective Date	Maturity Date	Notional Amount		March 31, 2022		December 31, 2021
$50 million term loan	Swap	2.41	%	1-Month LIBOR	January 7, 2019	October 18, 2023	$	50,000	$	(232)	$	(1,565)
$350 million term loan	Swap	1.70	%	1-Month LIBOR	July 25, 2019	July 25, 2024	$	175,000	2,807		(3,362)
									$	2,575	$	(4,927)

The fair values of the interest rate swap agreements are included in accounts payable and accrued expenses on the accompanying consolidated balance sheets as of March 31, 2022 and December 31, 2021. The fair value of our interest rate swaps is a Level 2 measurement under the fair value hierarchy. We estimate the fair value of the interest rate swap based on the interest rate yield curve and implied market volatility as inputs and adjusted for the counterparty's credit risk. We concluded

the inputs for the credit risk valuation adjustment are Level 3 inputs, however these inputs are not significant to the fair value measurement in its entirety.

The carrying amount of our other financial instruments approximate fair value due to the short-term nature of these financial instruments.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

We are subject to various claims, lawsuits and legal proceedings, including routine litigation arising in the ordinary course of business, regarding the operation of our hotels and Company matters. While it is not possible to ascertain the ultimate outcome of such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance will not have a material adverse impact on our financial condition or results of operations. The outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties.

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Subsequent Events	3 Months Ended
	Mar. 31, 2022
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn April 1, 2022, we acquired the 96-room Kimpton Fort Lauderdale Beach Resort located in Fort Lauderdale, Florida for $35.3 million, excluding prorations and transaction costs. On April 7, 2022, we closed on the purchase of two third-party owned units at Tranquility Bay Beachfront Resort for $2.5 million. In connection with entering into purchase agreements to acquire the units, we recorded an impairment loss in the first quarter of 2022. See Note 9 for additional information about the impairment.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Our financial statements include all of the accounts of the Company and its subsidiaries in accordance with U.S. GAAP. All intercompany accounts and transactions have been eliminated in consolidation. If the Company determines that it has an interest in a variable interest entity within the meaning of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation, the Company will consolidate the entity when it is determined to be the primary beneficiary of the entity. Our operating partnership meets the criteria of a variable interest entity. The Company is the primary beneficiary and, accordingly, we consolidate our operating partnership.

In our opinion, the accompanying unaudited consolidated financial statements reflect all adjustments necessary to present fairly our financial position, the results of our operations, the statements of equity, and cash flows. Interim results are not necessarily indicative of full-year performance because of the impact of seasonal and short-term variations. We believe the disclosures made are adequate to prevent the information presented from being misleading. However, the unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2021, included in our Annual Report on Form 10-K filed on February 22, 2022.

Use of Estimates

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Risks and Uncertainties

Risks and UncertaintiesThe state of the overall economy can significantly impact hotel operational performance and thus, impact our financial position. Should any of our hotels experience a significant decline in operational performance, it may affect our ability to make distributions to our stockholders and service debt or meet other financial obligations.Currently, one of the most significant risks and uncertainties relates to the COVID-19 pandemic. The COVID-19 pandemic has adversely affected the hospitality industry in general and our business in particular. The extent to which our business will continue to be affected by COVID-19 will largely depend on future developments, which we cannot predict with a high degree of confidence, including the potential emergence of a new variant strain of COVID-19 and the actions of governments and individuals to contain COVID-19 and its variants or mitigate its impact. To the extent that certain travel activity in the U.S. is materially and adversely affected by COVID-19, the overall business and financial results of the hospitality industry, as well as the business and financial results of the Company, would similarly continue to be materially and adversely impacted.

Fair Value Measurements

Fair Value Measurements

In evaluating fair value, U.S. GAAP outlines a valuation framework and creates a fair value hierarchy that distinguishes between market assumptions based on market data (observable inputs) and a reporting entity’s own assumptions about market data (unobservable inputs). The hierarchy ranks the observability of inputs used to determine fair value, which are then classified and disclosed in one of the three categories. The three levels are as follows:

•Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities

•Level 2 - Inputs include quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets in markets that are not active and model-derived valuations whose inputs are observable

•Level 3 - Model-derived valuations with unobservable inputs

Property and Equipment

Property and Equipment

Investment purchases of hotel properties, land, land improvements, building and furniture, fixtures and equipment and identifiable intangible assets that are not businesses are accounted for as asset acquisitions and recorded at relative fair value based upon total accumulated cost of the acquisition. Direct acquisition-related costs are capitalized as a component of the acquired assets. Property and equipment purchased after the hotel acquisition date is recorded at cost. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from the Company’s accounts and any resulting gain or loss is included in the statements of operations.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5 to 40 years for buildings, land improvements, and building improvements and 1 to 10 years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets.

We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse changes in the demand for lodging at the properties, current or projected losses from operations, and an expectation that the property is more likely than not to be sold significantly before the end of its useful life. If present, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel, less costs to sell, exceed its carrying amount. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel’s estimated fair market value is recorded and an impairment loss is recognized.

We will classify a hotel as held for sale in the period that we have made the decision to dispose of the hotel, a binding agreement to purchase the property has been signed under which the buyer has committed a significant amount of nonrefundable cash and no significant financing or other contingencies exist which could cause the transaction to not be completed in a timely manner. If these criteria are met, we will record an impairment loss if the fair value less costs to sell is lower than the carrying amount of the hotel and related assets and will cease recording depreciation expense. We will classify the assets and related liabilities as held for sale on the balance sheet.

Cash and Cash Equivalents

Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Revenue Recognition

Revenue Recognition

Revenues from hotel operations are recognized when the goods or services are provided. Revenues consist of room sales,

food and beverage sales, and other hotel department revenues, such as telephone, parking, gift shop sales and resort fees. Rooms revenue is recognized over the length of stay that the hotel room is occupied by the customer. Food and beverage revenue is recognized at the point in time in which the goods and/or services are rendered to the customer, such as for restaurant dining services or banquet services. Other revenues are recognized at the point in time or over the time period that goods or services are provided to the customer. Certain ancillary services are provided by third parties and we assess whether we are the principal or agent in these arrangements. If we are the agent, revenue is recognized based upon the commission earned from the third party. If we are the principal, we recognize revenue based upon the gross sales price.

Advance deposits are recorded as liabilities when a customer or group of customers provides a deposit for a future stay or

banquet event at our hotels. Advance deposits are converted to revenue when the services are provided to the customer or when a customer with a noncancelable reservation fails to arrive for part or all of the reservation. Conversely, advance deposits are generally refundable upon guest cancellation of the related reservation within an established period of time prior to the reservation.

Income Taxes

Income Taxes

We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings during the period in which the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of March 31, 2022 and December 31, 2021, we had a valuation allowance of $18.7 million and $14.9 million, respectively, on our deferred tax assets.

We have elected to be treated as a real estate investment trust, or REIT, under the provisions of the Internal Revenue Code of 1986, as amended, which requires that we distribute at least 90% of our taxable income annually to our stockholders and comply with certain other requirements. In addition to paying federal and state taxes on any retained income, we may be subject to taxes on “built-in gains” on sales of certain assets. Our taxable REIT subsidiaries will generally be subject to federal, state, local and/or foreign income taxes. In order for the income from our hotel property investments to constitute “rents from real properties” for purposes of the gross income tests required for REIT qualification, the income we earn cannot be derived from the operation of any of our hotels. Therefore, we lease each of our hotel properties to wholly owned taxable REIT subsidiaries.

We may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite our belief that our filing position is supportable, the benefit of that tax position is not recognized in the consolidated statements of operations. We recognize interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. We recognize unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, or by expiration of the applicable statute of limitation.

We had no accruals for tax uncertainties as of March 31, 2022 and December 31, 2021.

Intangible Assets and Liabilities

Intangible Assets and LiabilitiesIntangible assets and liabilities recorded may include management or franchise agreement intangibles and in-place lease intangibles assumed as part of the acquisition of certain hotels. We review the terms of agreements assumed in conjunction with the purchase of a hotel to determine if an intangible asset or liability exists. Intangible assets or liabilities are recorded at the acquisition date and amortized using the straight-line method over the expected useful life. We do not amortize intangible assets with indefinite useful lives, but we review these assets for impairment annually or at interim periods if events or circumstances indicate that the asset may be impaired.

Earnings (Loss) Per Share

Earnings (Loss) Per Share

Basic earnings (loss) per share (“EPS”) is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted EPS is calculated by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period plus other potentially dilutive securities such as stock grants. No adjustment is made for shares that are anti-dilutive during a period.

Share-based Compensation

Share-based Compensation

We account for share-based employee compensation using the fair value based method of accounting. We record the cost of awards with service or market conditions based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

Comprehensive Income

Comprehensive Income

We do not have any comprehensive income other than net income. If we have any comprehensive income in future periods, such that a statement of comprehensive income would be necessary, such statement will be reported as one statement with the consolidated statement of operations.

Derivative Instruments

Derivative Instruments

In the normal course of business, we are exposed to the effects of interest rate changes. We may enter into derivative instruments, including interest rate swaps and caps, to manage or hedge interest rate risk. Derivative instruments are recorded at fair value on the balance sheet date. We have not elected hedge accounting treatment for the changes in the fair value of derivatives. Changes in the fair value of derivatives are recorded each period and are included in interest expense in the consolidated statements of operations.

Noncontrolling Interests

Noncontrolling Interests

The noncontrolling interest is the portion of equity in our consolidated operating partnership not attributable, directly or indirectly, to the Company. Such noncontrolling interests are reported on the consolidated balance sheets within equity, separately from the Company’s equity. The noncontrolling interests are classified as permanent equity as we have the right to choose to settle each holder's redemption of the interest in either cash or delivery of shares of our common stock. See Note 5 for additional details. On the consolidated statements of operations, revenues, expenses and net income or loss from our less-than-wholly-owned operating partnership are reported within the consolidated amounts, including both the amounts attributable to the Company and noncontrolling interests. Income or loss is allocated to noncontrolling interests based on their weighted average ownership percentage for the applicable period. Consolidated statements of equity include beginning balances, activity for the period and ending balances for stockholders’ equity, noncontrolling interests and total equity.

Restricted Cash

Restricted Cash

Restricted cash primarily consists of cash held in reserve for replacement of furniture and fixtures generally held by our hotel managers and cash held in escrow pursuant to lender requirements.

Debt Issuance Costs

Debt Issuance Costs

Financing costs are recorded at cost as a component of the debt carrying amount and consist of loan fees and other costs incurred in connection with the issuance of debt. Amortization of debt issuance costs is computed using a method that approximates the effective interest method over the remaining life of the debt and is included in interest expense in the accompanying consolidated statements of operations. Debt issuance costs related to our Revolving Credit Facility (defined in

Note 8) are included within prepaid and other assets on the accompanying consolidated balance sheets. These debt issuance costs are amortized ratably over the term of the Revolving Credit Facility, regardless of whether there are any outstanding borrowings, and the amortization is included in interest expense in the accompanying consolidated statements of operations.

Due to/from Hotel Managers

Due to/from Hotel Managers

The due from hotel managers consists of hotel level accounts receivable, periodic hotel operating distributions receivable from managers and prepaid and other assets held by the hotel managers on our behalf. The due to hotel managers represents liabilities incurred by the hotel on behalf of us in conjunction with the operation of our hotels which are legal obligations of the Company.

Key Money

Key Money

Key money received in conjunction with entering into hotel management or franchise agreements or completing specific capital projects is deferred and amortized over the term of the hotel management agreement, the term of the franchise agreement, or other systematic and rational period, if appropriate. Key money is classified as deferred income in the accompanying consolidated balance sheets and amortized as an offset to management fees or franchise fees.

Leases

Leases

We determine if an arrangement is a lease or contains an embedded lease at inception. For agreements with both lease and nonlease components (e.g., common-area maintenance costs), we do not separate the nonlease components from the lease components, but account for these components as one. We determine the lease classification (operating or finance) at lease inception.

Right-of-use assets and lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. The discount rate used to determine the present value of the lease payments is our incremental borrowing rate as of the lease commencement date, as the implicit rate is not readily determinable. The right-of-use assets also include any initial direct costs and any lease payments made at or before the commencement date, and is reduced for any unrestricted incentives received at or before the commencement date.

Options to extend or terminate the lease are included in the recognition of our right-of-use assets and lease liabilities when it is reasonably certain that we will exercise the option. Variable payments that are based on an index or a rate are included in the recognition of our right-of-use assets and lease liabilities using the index or rate at lease commencement; however, changes to these lease payments due to rate or index updates are recorded as rent expense in the period incurred. Contingent rentals based on a percentage of sales in excess of stipulated amounts are not included in the measurement of the lease liability and right-of-use asset but will be recognized as variable lease expense when they are incurred. Leases that contain provisions that increase the fixed minimum lease payments based on previously incurred variable lease payments related to performance will be remeasured, as these payments now represent an increase in the fixed minimum payments for the remainder of the lease term. However, leases with provisions that increase minimum lease payments based on changes in a reference index or rate (e.g. Consumer Price Index) will not be remeasured as such changes do not constitute a resolution of a contingency.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of our cash and cash equivalents. We maintain cash and cash equivalents with various financial institutions. We perform periodic evaluations of the relative credit standing of these financial institutions and limit the amount of credit exposure with any one institution.

Segment Reporting

Segment Reporting

Each one of our hotels is an operating segment. We evaluate each of our properties on an individual basis to assess performance, the level of capital expenditures, and acquisition or disposition transactions. Our evaluation of individual properties is not focused on property type (e.g. urban, suburban, or resort), brand, geographic location, or industry classification.

We aggregate our operating segments using the criteria established by U.S. GAAP, including the similarities of our product offering, types of customers and method of providing service. All of our properties react similarly to economic

stimulus, such as business investment, changes in Gross Domestic Product, and changes in travel patterns. As such, all our operating segments meet the aggregation criteria, resulting in a single reportable segment represented by our consolidated financial results.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued Accounting Standard Update 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions to the guidance in U.S. GAAP on contract modifications to ease reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. ASU 2020-04 permits a contract with a modified reference rate to be accounted for as a continuation of the existing contract. We have not entered into any contract modifications yet as it directly relates to reference rate reform, but we anticipate undertaking such modifications in the future related to our variable rate debt and interest rate swaps indexed to LIBOR. The adoption of ASU 2020-04 is not expected to have a material impact on our consolidated financial statements.

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment as of March 31, 2022 and December 31, 2021 consists of the following (in thousands):

	March 31, 2022		December 31, 2021
Land	$	548,443	$	546,800
Land improvements	7,994		7,994
Buildings and site improvements	2,694,128		2,667,024
Furniture, fixtures and equipment	506,264		501,505
Construction in progress	15,372		14,485
	3,772,201		3,737,808
Less: accumulated depreciation	(1,113,078)		(1,086,364)
	$	2,659,123	$	2,651,444

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Leases (Tables)

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Components of Lease Expense and Other Information

The components of operating lease expense, which is included in other hotel expenses in our consolidated statements of operations, and cash paid for amounts included in the measurement of lease liabilities, are as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Operating lease cost	$	2,786	$	2,760
Variable lease payments	$	230	$	41
Cash paid for amounts included in the measurement of operating lease liabilities	$	985	$	866

Summary of Operating Lease Maturities

Maturities of lease liabilities as of March 31, 2022 are as follows (in thousands):

Year Ending December 31,
2022 (excluding the three months ended March 31, 2022)	$	2,991
2023	4,033
2024	4,012
2025	4,072
2026	4,640
Thereafter	759,838
Total lease payments	779,586
Less imputed interest	(670,437)
Total lease liabilities	$	109,149

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Equity (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Schedule of Dividends Payable

We have paid the following dividends to holders of our Series A Preferred Stock during 2022:

Payment Date	Record Date	Dividend per Share
March 31, 2022	March 18, 2022	$	0.515625

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Stock Incentive Plans (Tables)

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Summary of Restricted Stock Awards

A summary of our restricted stock awards from January 1, 2022 to March 31, 2022 is as follows:

	Number of Shares	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2022	1,443,295	$	9.46
Granted	425,731	9.56
Vested	(260,680)	9.54
Forfeited	(211,543)	9.45
Unvested balance at March 31, 2022	1,396,803	$	9.47

Schedule of Nonvested Performance-based Units Activity

A summary of our PSUs from January 1, 2022 to March 31, 2022 is as follows:

	Number of Target Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2022	969,240	$	9.45
Granted	337,702	9.70
Vested (1)	(269,224)	10.14
Forfeited	(160,533)	9.34
Unvested balance at March 31, 2022	877,185	$	11.06

______________________

(1)The number of shares of common stock earned for the PSUs vested in 2022 was equal to 100.0% of the PSU Target Award.

Summary of LTIP Units

A summary of our LTIP units from January 1, 2022 to March 31, 2022 is as follows:

	Number of Units	Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2022	135,388	$	10.22
Vested (1)	(108,422)	10.38
Unvested balance at March 31, 2022	26,966	$	9.58

______________________

(1)As of March 31, 2022, all vested LTIP units have achieved economic parity with common OP units and have been converted to common OP units.

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Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Schedule of Earnings (Loss) Per Share, Basic and Diluted

The following is a reconciliation of the calculation of basic and diluted EPS (in thousands, except share and per share data):

	Three Months Ended March 31,
	2022		2021
Numerator:
Net income (loss) attributable to common stockholders	$	7,574	$	(173,301)
Dividends declared on unvested share-based compensation	—		—
Net income (loss) available to common stockholders	$	7,574	$	(173,301)
Denominator:
Weighted-average number of common shares outstanding—basic	212,491,561		211,671,581
Effect of dilutive securities:
Unvested restricted common stock	229,682		—
Shares related to unvested PSUs	429,575		—
Weighted-average number of common shares outstanding—diluted	213,150,818		211,671,581
Earnings (loss) per share:
Earnings (loss) per share available to common stockholders—basic	$	0.04	$	(0.82)
Earnings (loss) per share available to common stockholders—diluted	$	0.04	$	(0.82)

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Debt (Tables)

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Summary of Long Term Debt

The following table sets forth information regarding the Company’s debt as of March 31, 2022 and December 31, 2021 (dollars in thousands):

			Principal Balance as of
Loan	Interest Rate as of March 31, 2022	Maturity Date	March 31, 2022		December 31, 2021
Salt Lake City Marriott Downtown at City Creek mortgage loan	LIBOR + 3.25% (1)	January 2023	$	43,120	$	43,570
Westin Washington, D.C. City Center mortgage loan	3.99%	January 2023	55,299		55,913
The Lodge at Sonoma Resort mortgage loan	3.96%	April 2023	25,413		25,542
Westin San Diego Bayview mortgage loan	3.94%	April 2023	58,166		58,600
Courtyard New York Manhattan/Midtown East mortgage loan	4.40%	August 2024	77,445		77,882
Worthington Renaissance Fort Worth Hotel mortgage loan	3.66%	May 2025	76,992		77,453
Hotel Clio mortgage loan	4.33%	July 2025	58,456		58,789
Westin Boston Seaport District mortgage loan	4.36%	November 2025	181,679		182,755
Unamortized debt issuance costs			(1,661)		(1,853)
Total mortgage debt, net of unamortized debt issuance costs			574,909		578,651
Unsecured term loan	LIBOR + 2.40% (2) (4)	October 2023	50,000		50,000
Unsecured term loan	LIBOR + 2.40% (3) (4)	July 2024	350,000		350,000
Unamortized debt issuance costs			(1,332)		(1,428)
Unsecured term loans, net of unamortized debt issuance costs			398,668		398,572
Senior unsecured credit facility	LIBOR + 2.55% (4)	July 2023 (5)	200,000		90,000
Total debt, net of unamortized debt issuance costs			$	1,173,577	$	1,067,223
Weighted-Average Interest Rate	3.78%

_______________________

(1)LIBOR is subject to a floor of 1.0%.

(2)We are party to an interest rate swap agreement that fixes LIBOR at 2.41% through October 2023.

(3)We are party to an interest rate swap agreement that fixes LIBOR at 1.70% through July 2024 for $175 million of the loan. LIBOR is subject to a floor of 0.25%.

(4)LIBOR is subject to a floor of 0.25%.

(5)The credit facility may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions.

Summary of the Most Significant Covenants

A summary of the most significant covenants is as follows:

		Modified	Actual at
	Covenant	Covenant (1)	March 31, 2022
Maximum leverage ratio (2)	60%	65%	50.0%
Minimum fixed charge coverage ratio (3)	1.50x	1.00x to 1.50x	1.68x
Secured recourse indebtedness	Less than 45% of Total Asset Value	Less than 45% of Total Asset Value	27.7%
Unencumbered leverage ratio	60.0%	65.0%	35.6%
Unencumbered implied debt service coverage ratio	1.20x	1.00x to 1.20x	1.86x

_____________________________

(1)Covenant requirements during the Ratio Adjustment Period.

(2)Leverage ratio is net indebtedness, as defined in the Credit Agreements, divided by total asset value, defined in the Credit Agreements as the value of our owned hotels based on hotel net operating income divided by a defined capitalization rate. (3)Fixed charge coverage ratio is Adjusted EBITDA, generally defined in the Credit Agreements as EBITDA less FF&E reserves, for the most recently ending 12 months, to fixed charges, which is defined in the Credit Agreements as interest expense, all regularly scheduled principal payments and payments on capitalized lease obligations, for the same most recently ending 12-month period.

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Fair Value Measurements and Interest Rate Swaps (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value of Certain Financial Assets and Liabilities and Other Financial Instruments

The fair value of certain financial assets and liabilities and other financial instruments as of March 31, 2022 and December 31, 2021, in thousands, is as follows:

	March 31, 2022				December 31, 2021
	Carrying    Amount (1)		Fair Value		Carrying     Amount (1)		Fair Value
Debt	$	1,173,577	$	1,146,622	$	1,067,223	$	1,066,139

_______________

(1)The carrying amount of debt is net of unamortized debt issuance costs.

Schedule of Interest Rate Derivatives

The Company's interest rate derivatives, which are not designated or accounted for as cash flow hedges, consisted of the following as of March 31, 2022 and December 31, 2021, in thousands:

									Fair Value of Assets (Liabilities)
Hedged Debt	Type	Rate Fixed		Index	Effective Date	Maturity Date	Notional Amount		March 31, 2022		December 31, 2021
$50 million term loan	Swap	2.41	%	1-Month LIBOR	January 7, 2019	October 18, 2023	$	50,000	$	(232)	$	(1,565)
$350 million term loan	Swap	1.70	%	1-Month LIBOR	July 25, 2019	July 25, 2024	$	175,000	2,807		(3,362)
									$	2,575	$	(4,927)

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Organization (Details)	3 Months Ended
	Mar. 31, 2022 hotel room
Real Estate Properties [Line Items]
Number of hotels	33
Number of rooms in hotels, resorts and senior loan secured facility (in rooms) | room	9,454
DiamondRock Hospitality Limited Partnership
Real Estate Properties [Line Items]
General partner, ownership interest	99.70%
Limited partners, ownership interest	0.30%
Atlanta, Georgia
Real Estate Properties [Line Items]
Number of hotels	1
Boston, Massachusetts
Real Estate Properties [Line Items]
Number of hotels	2
Burlington, Vermont
Real Estate Properties [Line Items]
Number of hotels	1
Charleston, South Carolina
Real Estate Properties [Line Items]
Number of hotels	1
Chicago, Illinois
Real Estate Properties [Line Items]
Number of hotels	2
Denver, Colorado
Real Estate Properties [Line Items]
Number of hotels	2
Destin, Florida
Real Estate Properties [Line Items]
Number of hotels	2
Fort Lauderdale, Florida
Real Estate Properties [Line Items]
Number of hotels	1
Fort Worth, Texas
Real Estate Properties [Line Items]
Number of hotels	1
Huntington Beach, California
Real Estate Properties [Line Items]
Number of hotels	1
Key West, Florida
Real Estate Properties [Line Items]
Number of hotels	2
Marathon, Florida
Real Estate Properties [Line Items]
Number of hotels	1
New Orleans, Louisiana
Real Estate Properties [Line Items]
Number of hotels	1
New York, New York
Real Estate Properties [Line Items]
Number of hotels	3
Phoenix, Arizona
Real Estate Properties [Line Items]
Number of hotels	1
Salt Lake City, Utah
Real Estate Properties [Line Items]
Number of hotels	1
San Diego, California
Real Estate Properties [Line Items]
Number of hotels	1
San Francisco, California
Real Estate Properties [Line Items]
Number of hotels	2
Sedona, Arizona
Real Estate Properties [Line Items]
Number of hotels	2
Sonoma, California
Real Estate Properties [Line Items]
Number of hotels	1
South Lake Tahoe, California
Real Estate Properties [Line Items]
Number of hotels	1
Washington D.C
Real Estate Properties [Line Items]
Number of hotels	2
Vail, Colorado
Real Estate Properties [Line Items]
Number of hotels	1

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Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Valuation allowance	$ 18.7	$ 14.9
Accrual for tax uncertainties	0.0	$ 0.0
Amortization expense expected annually for remaining useful life	1.1
Tranquility Bay Beachfront Resort | Rental Management Agreements
Property, Plant and Equipment [Line Items]
Intangible assets, gross	$ 45.2
Intangible asset useful life (in years)	39 years 9 months 18 days
Intangible asset, accumulated amortization	$ 0.3
Intangible assets, net	42.1
Amortization expense	$ 0.3
Minimum | Land, Buildings and Improvements
Property, Plant and Equipment [Line Items]
Useful life	5 years
Minimum | Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Useful life	1 year
Maximum | Land, Buildings and Improvements
Property, Plant and Equipment [Line Items]
Useful life	40 years
Maximum | Furniture, fixtures and equipment
Property, Plant and Equipment [Line Items]
Useful life	10 years

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Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Property and Equipment
Property and equipment, at cost	$ 3,772,201	$ 3,737,808
Less: accumulated depreciation	(1,113,078)	(1,086,364)
Property and equipment, net	2,659,123	2,651,444
Land
Property and Equipment
Property and equipment, at cost	548,443	546,800
Land improvements
Property and Equipment
Property and equipment, at cost	7,994	7,994
Buildings and site improvements
Property and Equipment
Property and equipment, at cost	2,694,128	2,667,024
Furniture, fixtures and equipment
Property and Equipment
Property and equipment, at cost	506,264	501,505
Construction in progress
Property and Equipment
Property and equipment, at cost	$ 15,372	$ 14,485

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Property and Equipment - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Property, Plant and Equipment [Abstract]
Accrued capital expenditures	$ 10,422	$ 2,526	$ 7,300

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Leases - Narrative (Details)	Mar. 31, 2022 ground_lease
Lessee, Lease, Description [Line Items]
Weighted-average remaining lease term	65 years
Weighted-average discount rate	5.77%
Hotel
Lessee, Lease, Description [Line Items]
Number of operating leases	8
Parking Garage
Lessee, Lease, Description [Line Items]
Number of operating leases	2

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Leases - Lease Cost and Other Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Leases [Abstract]
Operating lease cost	$ 2,786	$ 2,760
Variable lease payments	230	41
Cash paid for amounts included in the measurement of operating lease liabilities	$ 985	$ 866

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Leases - Operating Lease Maturities (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
2022 (excluding the three months ended March 31, 2022)	$ 2,991
2023	4,033
2024	4,012
2025	4,072
2026	4,640
Thereafter	759,838
Total lease payments	779,586
Less imputed interest	(670,437)
Total lease liabilities	$ 109,149	$ 108,605

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Equity - Narrative (Details) $ / shares in Units, $ in Millions	1 Months Ended		3 Months Ended	12 Months Ended
	Aug. 31, 2021 USD ($) shares	Dec. 31, 2018 $ / shares shares	Mar. 31, 2022 vote $ / shares shares	Dec. 31, 2021 $ / shares shares
Class of Stock [Line Items]
Common stock, shares authorized (in shares)			400,000,000	400,000,000
Common stock, par value (in dollars per share) | $ / shares			$ 0.01	$ 0.01
Votes per common share | vote			1
Preferred stock, shares authorized (up to) (in shares)			10,000,000	10,000,000
Preferred stock, par value (in dollars per share) | $ / shares			$ 0.01	$ 0.01
Liquidation preference per share (in dollars per share) | $ / shares			$ 25.00	$ 25.00
Limited partnership, price per unit (in dollars per unit) | $ / shares		$ 11.76
Option to redeem for common stock ratio		1
Long-term Incentive Plan Unit
Class of Stock [Line Items]
Units outstanding (in shares)			26,966	135,388
Unaffiliated Third Parties
Class of Stock [Line Items]
Common units issued (in shares)		796,684
Operating partnerships units held (in shares)			748,044	639,622
Common Stock
Class of Stock [Line Items]
Aggregate offering price (up to) | $	$ 200.0
Shares sold (in shares)	0
Series A Preferred Stock
Class of Stock [Line Items]
Shares sold (in shares)			4,760,000	4,760,000
Liquidation preference per share (in dollars per share) | $ / shares			$ 25.00
Redemption price per share (in dollars per share) | $ / shares			$ 25.00

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Equity - Schedule of Dividends Payable (Details)	3 Months Ended
	Mar. 31, 2022 $ / shares
Equity [Abstract]
Dividend per share (in dollars per share)	$ 0.515625

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Stock Incentive Plans - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended
	Feb. 22, 2022	Mar. 31, 2022	Mar. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Conversion ratio		1
Unvested restricted common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards expected to vest in 2022 (in shares)		8,202
Awards expected to vest in 2023 (in shares)		395,532
Awards expected to vest in 2024 (in shares)		461,677
Awards expected to vest in 2025 (in shares)		260,114
Awards expected to vest in 2026 (in shares)		271,278
Unrecognized compensation cost		$ 11.1
Unrecognized compensation expense related to compensation awards, period for recognition (in months)		34 months
Compensation expense (reversal)		$ 0.8	$ 0.8
Number of shares, granted (in shares)		425,731
Unvested restricted common stock | Executive Officers
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense (reversal)		$ (0.2)
Unvested restricted common stock | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (in years)		3 years
Unvested restricted common stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (in years)		5 years
Shares related to unvested PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period (in years)		3 years
Awards expected to vest in 2022 (in shares)		296,596
Awards expected to vest in 2023 (in shares)		294,445
Awards expected to vest in 2024 (in shares)		286,144
Unrecognized compensation cost		$ 5.3
Unrecognized compensation expense related to compensation awards, period for recognition (in months)		27 months
Compensation expense (reversal)		$ 0.2	0.7
Performance period (in years)		3 years
Percentage of target award of maximum possible payout to executives		150.00%
Number of units earned if total stockholder return is negative		100.00%
Number of shares, granted (in shares)		337,702
Fair value at grant date (in dollars per share)	$ 9.84
Volatility	71.40%
Risk-free rate	1.74%
Fair value at grant date based on hotel market share (in dollars per share)	$ 9.56
Shares related to unvested PSUs | Executive Officers
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense (reversal)		$ 0.5
Total shareholder return		50.00%
Hotel market share		50.00%
Percentage of total stockholder return for payout of shares		30.00%
Maximum possible payout to executive officer as percentage of the target award		150.00%
Number of shares, granted (in shares)	337,702
Shares related to unvested PSUs | Minimum | Executive Officers
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of total stockholder return for payout of shares		75.00%
Percentage of total stockholder return for payout of shares		75.00%
Shares related to unvested PSUs | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of total stockholder return for payout of shares		30.00%
Long-term Incentive Plan Unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards expected to vest in 2023 (in shares)		26,966
Unrecognized compensation cost		$ 0.2
Unrecognized compensation expense related to compensation awards, period for recognition (in months)		11 months
Compensation expense (reversal)		$ 0.2	$ 0.3
2016 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option and incentive plan, shares authorized (up to) (in shares)		6,082,664
Number of shares issued or committed to issue (in shares)		4,965,407

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Stock Incentive Plans - Stock Awards Activity (Details)	3 Months Ended
	Mar. 31, 2022 $ / shares shares
Unvested restricted common stock
Number of Shares
Beginning Balance (in shares) | shares	1,443,295
Granted (in shares) | shares	425,731
Vested (in shares) | shares	(260,680)
Forfeited (in shares) | shares	(211,543)
Ending Balance (in shares) | shares	1,396,803
Weighted- Average Grant Date Fair Value
Beginning Balance (in dollars per share) | $ / shares	$ 9.46
Granted (in dollars per share) | $ / shares	9.56
Vested (in dollars per share) | $ / shares	9.54
Forfeited (in dollars per share) | $ / shares	9.45
Ending balance (in dollars per share) | $ / shares	$ 9.47
Shares related to unvested PSUs
Number of Shares
Beginning Balance (in shares) | shares	969,240
Granted (in shares) | shares	337,702
Vested (in shares) | shares	(269,224)
Forfeited (in shares) | shares	(160,533)
Ending Balance (in shares) | shares	877,185
Weighted- Average Grant Date Fair Value
Beginning Balance (in dollars per share) | $ / shares	$ 9.45
Granted (in dollars per share) | $ / shares	9.70
Vested (in dollars per share) | $ / shares	10.14
Forfeited (in dollars per share) | $ / shares	9.34
Ending balance (in dollars per share) | $ / shares	$ 11.06
Vesting percentage	100.00%
Long-term Incentive Plan Unit
Number of Shares
Beginning Balance (in shares) | shares	135,388
Vested (in shares) | shares	(108,422)
Ending Balance (in shares) | shares	26,966
Weighted- Average Grant Date Fair Value
Beginning Balance (in dollars per share) | $ / shares	$ 10.22
Vested (in dollars per share) | $ / shares	10.38
Ending balance (in dollars per share) | $ / shares	$ 9.58

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Earnings (Loss) Per Share - Schedule of Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Numerator:
Net income (loss) attributable to common stockholders	$ 7,574	$ (173,301)
Dividends declared on unvested share-based compensation	0	0
Net income (loss) available to common stockholders	$ 7,574	$ (173,301)
Denominator:
Weighted-average number of common shares outstanding—basic (in shares)	212,491,561	211,671,581
Effect of dilutive securities:
Weighted-average number of common shares outstanding—diluted (in shares)	213,150,818	211,671,581
Earnings (loss) per share:
Earnings (loss) per share available to common stockholders—basic (in dollars per share)	$ 0.04	$ (0.82)
Earnings (loss) per share available to common stockholders—diluted (in dollars per share)	$ 0.04	$ (0.82)
Unvested restricted common stock
Effect of dilutive securities:
Unvested restricted common stock and shares related to unvested PSUs (in shares)	229,682	0
Shares related to unvested PSUs
Effect of dilutive securities:
Unvested restricted common stock and shares related to unvested PSUs (in shares)	429,575	0

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Earnings (Loss) Per Share - Narrative (Details)	3 Months Ended
	Mar. 31, 2022 shares
Unvested restricted common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares (in shares)	757,591
Shares related to unvested PSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares (in shares)	695,654

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Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Weighted-average interest rate (as a percent)	3.78%
Total mortgage debt, net of unamortized debt issuance costs	$ 574,909	$ 578,651
Total debt	1,173,577	1,067,223
Senior unsecured credit facility	200,000	90,000
Mortgages
Debt Instrument [Line Items]
Unamortized debt issuance costs	(1,661)	(1,853)
Total mortgage debt, net of unamortized debt issuance costs	574,909	578,651
Unsecured Term Loan
Debt Instrument [Line Items]
Unamortized debt issuance costs	(1,332)	(1,428)
Total debt	398,668	398,572
Unsecured Term Loan Due October 2023 | Unsecured Term Loan
Debt Instrument [Line Items]
Principal balance	$ 50,000	50,000
Unsecured Term Loan Due October 2023 | Unsecured Term Loan | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	2.40%
Unsecured Term Loan Due October 2023 | Interest Rate Swap | Unsecured Term Loan | LIBOR Swap Rate
Debt Instrument [Line Items]
Basis spread on variable rate	2.41%
Unsecured Term Loan due July 2024 | Unsecured Term Loan
Debt Instrument [Line Items]
Principal balance	$ 350,000	350,000
Unsecured Term Loan due July 2024 | Unsecured Term Loan | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	2.40%
Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Senior unsecured credit facility	$ 200,000	90,000
Revolving Credit Facility | Line of Credit | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	2.55%
Unsecured Term Loan, $175 million | Unsecured Term Loan
Debt Instrument [Line Items]
Principal balance	$ 175,000
Unsecured Term Loan, $175 million | Interest Rate Swap | Unsecured Term Loan | LIBOR Swap Rate
Debt Instrument [Line Items]
Basis spread on variable rate	1.70%
Salt Lake City Marriott Downtown at City Creek mortgage loan | Mortgages
Debt Instrument [Line Items]
Basis spread on variable rate	3.25%
Principal balance	$ 43,120	43,570
Westin Washington, D.C. City Center mortgage loan | Mortgages
Debt Instrument [Line Items]
Interest rate, stated percentage	3.99%
Principal balance	$ 55,299	55,913
The Lodge at Sonoma Resort mortgage loan | Mortgages
Debt Instrument [Line Items]
Interest rate, stated percentage	3.96%
Principal balance	$ 25,413	25,542
Westin San Diego Bayview mortgage loan | Mortgages
Debt Instrument [Line Items]
Interest rate, stated percentage	3.94%
Principal balance	$ 58,166	58,600
Courtyard New York Manhattan/Midtown East mortgage loan | Mortgages
Debt Instrument [Line Items]
Interest rate, stated percentage	4.40%
Principal balance	$ 77,445	77,882
Worthington Renaissance Fort Worth Hotel mortgage loan | Mortgages
Debt Instrument [Line Items]
Interest rate, stated percentage	3.66%
Principal balance	$ 76,992	77,453
Hotel Clio mortgage loan | Mortgages
Debt Instrument [Line Items]
Interest rate, stated percentage	4.33%
Principal balance	$ 58,456	58,789
Westin Boston Seaport District mortgage loan | Mortgages
Debt Instrument [Line Items]
Interest rate, stated percentage	4.36%
Principal balance	$ 181,679	$ 182,755
Minimum | Revolving Credit Facility | Line of Credit | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	0.25%
Minimum | Unsecured Term Loan, $175 million | Interest Rate Swap | Unsecured Term Loan | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	0.25%
Minimum | Salt Lake City Marriott Downtown at City Creek mortgage loan | Mortgages | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%

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Debt - Mortgage and Other Debt (Details) $ in Thousands	Mar. 31, 2022 USD ($) hotel	Dec. 31, 2021 USD ($)
Debt Instrument [Line Items]
Number of hotels | hotel	33
Restricted cash | $	$ 38,882	$ 36,887
Mortgages
Debt Instrument [Line Items]
Number of hotels | hotel	8
Mortgages | Salt Lake City Marriott Downtown at City Creek mortgage loan
Debt Instrument [Line Items]
Restricted cash | $	$ 3,100

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Debt - Senior Unsecured Credit Facility and Unsecured Term Loans (Details) - USD ($) $ in Thousands		3 Months Ended
	Feb. 04, 2022	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Aug. 14, 2020
Line of Credit Facility [Line Items]
Percent of unused portion line of credit facility triggering lower commitment fee (as a percent)		50.00%
Minimum liquidity covenant	$ 125,000
Maximum annual preferred dividends					$ 25,000
Senior unsecured credit facility		$ 200,000		$ 90,000
Minimum
Line of Credit Facility [Line Items]
Line of credit facility, unused capacity, commitment fee (as a percent)		0.20%
Maximum
Line of Credit Facility [Line Items]
Line of credit facility, unused capacity, commitment fee (as a percent)		0.30%
Revolving Credit Facility | Line of Credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 400,000
Senior unsecured credit facility		200,000		90,000
Interest and unused credit facility fees		1,300	$ 700
Interest incurred on the facility		$ 3,600	$ 3,600
Revolving Credit Facility | Line of Credit | LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate		2.55%
Revolving Credit Facility | Line of Credit | Minimum | LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate		0.25%
Unsecured Term Loan due July 2024 | Unsecured Term Loan
Line of Credit Facility [Line Items]
Principal balance		$ 350,000		350,000
Unsecured Term Loan due July 2024 | Unsecured Term Loan | LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate		2.40%
Unsecured Term Loan Due October 2023 | Unsecured Term Loan
Line of Credit Facility [Line Items]
Principal balance		$ 50,000		$ 50,000
Unsecured Term Loan Due October 2023 | Unsecured Term Loan | LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate		2.40%

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Debt - Schedule of Debt Covenants (Details) - Senior Unsecured Credit Facility And Unsecured Term Loans	3 Months Ended
	Mar. 31, 2022
Covenant
Line of Credit Facility [Line Items]
Maximum leverage ratio	60.00%
Minimum fixed charge coverage ratio	1.50
Secured recourse indebtedness	45.00%
Unencumbered leverage ratio	60.00%
Unencumbered implied debt service coverage ratio	1.20
Modified Covenant
Line of Credit Facility [Line Items]
Maximum leverage ratio	65.00%
Secured recourse indebtedness	45.00%
Unencumbered leverage ratio	65.00%
Actual
Line of Credit Facility [Line Items]
Maximum leverage ratio	50.00%
Minimum fixed charge coverage ratio	1.68
Secured recourse indebtedness	27.70%
Unencumbered leverage ratio	35.60%
Unencumbered implied debt service coverage ratio	1.86
Minimum | Modified Covenant
Line of Credit Facility [Line Items]
Minimum fixed charge coverage ratio	1.00
Unencumbered implied debt service coverage ratio	1.00
Maximum | Modified Covenant
Line of Credit Facility [Line Items]
Minimum fixed charge coverage ratio	1.50
Unencumbered implied debt service coverage ratio	1.20

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Acquisitions (Details) $ in Thousands			1 Months Ended
	Mar. 23, 2022 USD ($) unit	Jan. 06, 2022 USD ($) room unit hotel	Mar. 31, 2022 USD ($) unit	Dec. 31, 2021 USD ($)
Asset Acquisition [Line Items]
Right-of-use assets			$ 97,067	$ 100,212
Tranquility Bay Beachfront Resort
Asset Acquisition [Line Items]
Number of hotel rooms acquired | room		103
Payments to acquire productive assets		$ 63,000
Number of units owned | hotel		16
Tranquility Bay Beachfront Resort | Third Parties
Asset Acquisition [Line Items]
Payments to acquire productive assets	$ 1,700		$ 4,100
Number of units owned | unit		84
Right-of-use assets		$ 45,200
Intangible asset useful life (in years)		40 years
Number of units to be acquired | unit			4
Impairment loss			$ 2,800
Number of units acquired | unit	2
Tranquility Bay Beachfront Resort | Vacation Ownership Intervals
Asset Acquisition [Line Items]
Number of units owned | unit		3

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Fair Value Measurements and Interest Rate Swaps - Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying value	$ 1,173,577	$ 1,067,223
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Carrying value	1,173,577	1,067,223
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value	$ 1,146,622	$ 1,066,139

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Fair Value Measurements and Interest Rate Swaps - Interest Rate Derivatives (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Interest Rate Swap
Derivative [Line Items]
Fair Value of Assets (Liabilities)	$ 2,575	$ (4,927)
Interest Rate Swap | $50 million term loan
Derivative [Line Items]
Rate Fixed	2.41%
Notional Amount	$ 50,000
Fair Value of Assets (Liabilities)	$ (232)	(1,565)
Interest Rate Swap | $350 million term loan
Derivative [Line Items]
Rate Fixed	1.70%
Notional Amount	$ 175,000
Fair Value of Assets (Liabilities)	2,807	(3,362)
Unsecured Term Loan | $50 million term loan
Derivative [Line Items]
Hedged Debt	50,000	50,000
Unsecured Term Loan | $350 million term loan
Derivative [Line Items]
Hedged Debt	$ 350,000	$ 350,000

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Subsequent Events (Details) $ in Millions					1 Months Ended
	Apr. 07, 2022 USD ($) unit	Apr. 01, 2022 USD ($) hotel	Mar. 23, 2022 USD ($) unit	Jan. 06, 2022 USD ($) room	Mar. 31, 2022 USD ($)
Tranquility Bay Beachfront Resort
Subsequent Event [Line Items]
Number of hotel rooms acquired | room				103
Payments to acquire productive assets				$ 63.0
Tranquility Bay Beachfront Resort | Third Parties
Subsequent Event [Line Items]
Payments to acquire productive assets			$ 1.7		$ 4.1
Number of units acquired | unit			2
Subsequent Event | Kimpton Fort Lauderdale Beach Resort | Fort Lauderdale, Florida
Subsequent Event [Line Items]
Number of hotel rooms acquired | hotel		96
Payments to acquire productive assets		$ 35.3
Subsequent Event | Tranquility Bay Beachfront Resort | Third Parties
Subsequent Event [Line Items]
Payments to acquire productive assets	$ 2.5
Number of units acquired | unit	2