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Commitments and Contingencies
 12 Months Ended
Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Hotel Management Agreements
The Company’s hotel properties are operated pursuant to management agreements with various management companies. The remaining terms of these management agreements are up to 10 years, not including renewals, and up to 29 years, including renewals. The majority of the Company’s management agreements are terminable at will by the Company upon paying a termination fee and some are terminable by the Company upon sale of the property, with, in some cases, the payment of termination fees. Most of the agreements also provide the Company the ability to terminate based on failure to achieve defined operating performance thresholds. Termination fees range from zero to up to three times the annual base management and incentive management fees, depending on the agreement and the reason for termination. Certain of the Company’s management agreements are non-terminable except upon the manager’s breach of a material representation or the manager’s failure to meet performance thresholds as defined in the management agreement.
The management agreements require the payment of a base management fee generally between 1% and 4% of hotel revenues. Under certain management agreements, the management companies are also eligible to receive an incentive management fee if hotel operating income, cash flows or other performance measures, as defined in the agreements, exceed certain performance thresholds. The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel.
For the years ended December 31, 2023, 2022 and 2021, combined base and incentive management fees were $39.3 million, $39.6 million and $18.4 million, respectively. Base and incentive management fees are included in other direct and indirect expenses in the Company's accompanying consolidated statements of operations and comprehensive income.
Reserve Funds
Certain of the Company’s agreements with its hotel managers, franchisors, ground lessors and lenders have provisions for the Company to provide funds, typically 4.0% of hotel revenues, sufficient to cover the cost of (a) certain non-routine repairs and maintenance to the hotels and (b) replacements and renewals to the hotels’ furniture, fixtures and equipment.
Restricted Cash
At December 31, 2023 and 2022, the Company had $9.9 million and $11.2 million, respectively, in restricted cash, which consisted of funds held in cash management accounts held by a lender, reserves for replacement of furniture and fixtures, and reserves to pay for real estate taxes, ground rent or property insurance under certain hotel management agreements or loan agreements.
Hotel, Ground and Finance Leases
As of December 31, 2023, the following hotels were subject to leases as follows:
Lease PropertiesLease TypeLease Expiration Date
Restaurant at Southernmost Beach Resort
Operating leaseApril 2029
Paradise Point Resort & SpaOperating leaseMay 2050
Hotel Monaco Washington DCOperating leaseNovember 2059
Argonaut HotelOperating leaseDecember 2059
Hotel Zephyr Fisherman's WharfOperating leaseFebruary 2062
Viceroy Santa Monica HotelOperating leaseSeptember 2065
Estancia La Jolla Hotel & SpaOperating leaseJanuary 2066
San Diego Mission Bay ResortOperating leaseJuly 2068
1 Hotel San FranciscoOperating leaseMarch 2070(1)
Hyatt Regency Boston HarborOperating leaseApril 2077
The Westin Copley Place, BostonOperating leaseDecember 2077(2)
The Liberty, a Luxury Collection Hotel, BostonOperating leaseMay 2080
Jekyll Island Club Resort and Restaurant
Operating leaseJanuary 2089
Hotel Zelos San FranciscoOperating leaseJune 2097
Hotel Palomar Los Angeles Beverly HillsOperating leaseJanuary 2107(3)
Margaritaville Hollywood Beach ResortOperating leaseJuly 2112
Hotel Zeppelin San FranciscoOperating and finance leaseJune 2089(4)
Harbor Court Hotel San FranciscoFinance leaseAugust 2052
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(1)     The expiration date assumes the exercise of a 14-year extension option.
(2)     No payments are required through maturity.
(3)     The expiration date assumes the exercise of all 19 five-year extension options.
(4)     The expiration date assumes the exercise of a 30-year extension option.
The Company's leases may require minimum fixed rent payments, percentage rent payments based on a percentage of revenues in excess of certain thresholds or rent payments equal to the greater of a minimum fixed rent or percentage rent. Minimum fixed rent may be adjusted annually by increases in the consumer price index and may be subject to minimum and maximum increases. Some leases also contain certain restrictions on modifications that can be made to the hotel structures due to their status as national historic landmarks.
The Company records expense on a straight-line basis for leases that provide for minimum rental payments that increase in pre-established amounts over the remaining terms of the leases. Ground rent expense is included in real estate taxes, personal property taxes, property insurance and ground rent in the Company's accompanying consolidated statements of operations and comprehensive income.
The components of ground rent expense for the years ended December 31, 2023, 2022 and 2021 are as follows (in thousands):
For the year ended December 31,
202320222021
Fixed ground rent $19,133 $18,538 $16,825 
Variable ground rent20,252 18,931 9,616 
Total ground rent$39,385 $37,469 $26,441 
Future maturities of lease liabilities for the Company's operating leases at December 31, 2023 were as follows (in thousands):
2024$20,606 
202520,735 
202621,031 
202720,983 
202821,077 
Thereafter1,563,613 
Total lease payments$1,668,045 
Less: Imputed interest(1,347,428)
Present value of lease liabilities$320,617 
Litigation
The nature of the operations of hotels exposes the Company's hotels, the Company and the Operating Partnership to the risk of claims and litigation in the normal course of their business. The Company has insurance to cover certain potential material losses. The Company is not presently subject to any material litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company.