COMMITMENTS AND CONTINGENCIESLease Commitments—The Company is a tenant under long-term ground leases at five of its hotel properties. Three of these leases are operating leases and two are finance leases. The ground lease agreements terminate at various dates between 2023 and 2096 and several of the agreements include multiple renewal options for generally five or ten year periods. The Company is also a tenant under an operating lease for its corporate office, which terminates in August 2021 and includes renewal options for two five-year terms. As the Company is reasonably certain that it will exercise the options to extend its ground leases, fixed payments associated with the extensions are included in the measurement of related right-of-use assets and lease liabilities. Payments associated with the option to extend the corporate office lease are not included in the measurement of the right-of-use asset and lease liability, as the associated payments cannot be reasonably estimated. Additionally, as of June 30, 2020, the Company leased certain technology equipment located at its hotel sites under finance leases.

Operating lease costs related to ground leases are included in hotel operating expenses, while operating lease costs related to the Company’s office lease are included in general and administrative expenses, in the condensed consolidated statements of operations. Finance lease interest costs are included in interest expense, net in the condensed consolidated statements of operations (see Note 7) or, when pertaining to assets under development, are capitalized and included in property and equipment, net on the condensed consolidated balance sheets (see Note 5). No amortization costs were incurred during the three and six months ended June 30, 2020 and 2019 for finance leases pertaining to land or land in development. The Company has no variable lease costs or short-term leases.

For the three and six months ended June 30, 2020 and 2019, the components of the Company’s total lease costs are as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease costs	$	769	$	770	$	1,538	$	1,538
Finance lease costs	80		61		146		122
Total lease costs	$	849	$	831	$	1,684	$	1,660

The Company’s right-of-use assets and lease liabilities are as follows (in thousands):


	June 30, 2020		December 31, 2019
Right-of-use assets:
Operating⁽¹⁾	$	3,719	$	4,863
Finance⁽²⁾	4,415		3,979

Lease liabilities:
Operating⁽³⁾	11,545		12,590
Finance	3,767		3,379

_________________________________

(1)Included in other assets on the accompanying condensed consolidated balance sheets.

(2)Included in property and equipment, net on the accompanying condensed consolidated balance sheets.

(3)Included in accounts payable and accrued liabilities on the accompanying condensed consolidated balance sheets.

Maturities of lease liabilities as of June 30, 2020, are as follows (in thousands):


Years Ending December 31,	Operating Leases			Finance Leases
Remainder of 2020	$	1,460		$	307
2021	2,220			738
2022	806			397
2023	552			400
2024	503			402
2025	503			429
Thereafter	77,091			2,671
Total	$	83,135		$	5,344

Total discounted lease liability	$	11,545		$	3,767
Difference between undiscounted cash flows and discounted cash flows	$	71,590		$	1,577

Weighted-average remaining lease term	47 years			11 years
Weighted-average discount rate	6.4		%	6.7		%

The Company’s leases do not contain residual value guarantees and do not contain restrictions with respect to incurring additional financial obligations or paying dividends. As of June 30, 2020, the Company does not have any material leases that have not yet commenced.

Letter of Credit—As of June 30, 2020, the Company had one outstanding letter of credit, issued by the Corporation, for $0.2 million, which is collateralized by the Corporation Revolving Credit Facility.

Legal Contingencies—As of June 30, 2020, six purported class action lawsuits in California have been filed against the Company. The complaints allege, among other things, failure to provide meal and rest periods, wage and hour violations and violations of the Fair Credit Reporting Act. The complaints seek, among other relief, collective and class certification of the lawsuits, unspecified damages, costs and expenses, including attorneys’ fees, and such other relief as the court might find just and proper.

With respect to the Fair Credit Reporting Act violations alleged in the lawsuits described above, the parties reached a tentative settlement agreement in May 2019, which is subject to certain conditions, including court approval. During the three months ended June 30, 2019, the Company recorded a payable and a corresponding insurance receivable for the amount of the tentative settlement. The expected resolution of the alleged Fair Credit Reporting Act violations in the lawsuits did not have, and is not expected to have, a material adverse impact on the Company’s condensed consolidated financial statements, results of operations or liquidity.

With respect to the meal and rest period and the wage and hour violations alleged in the lawsuits described above, excluding the one lawsuit described below, the parties reached a tentative settlement agreement in January 2020, which is subject to certain conditions, including court approval. During the three months ended December 31, 2019, the Company incurred a loss and recorded a charge equal to the amount of the tentative settlement. The expected resolution of the alleged meal and rest period and wage and hour violations in the lawsuits did not have, and is not expected to have, a material adverse impact on the Company’s condensed consolidated financial statements, results of operations or liquidity.

With respect to one lawsuit, although the Company believes it is reasonably possible that it may incur losses associated with such matter, it is not possible to estimate the amount of loss or range of loss, if any, that might result from adverse judgments, settlements or other resolution based on the early stage of the lawsuit, the uncertainty as to the certification of a class or classes and the size of any certified class, if applicable, and the lack of resolution of significant factual and legal issues. However, depending on the amount and timing, an unfavorable resolution of the lawsuit or a change in the Company's assessment of the likelihood of loss could have a material adverse effect on the Company’s condensed consolidated financial statements, results of operations or liquidity in a future period. The Company believes that it has meritorious defenses and is prepared to vigorously defend the lawsuit.

The Company is not a party to any additional litigation or claims, other than routine matters arising in the ordinary course of business that are incidental to the operation of the business of the Company. The Company believes that the results of all additional litigation and claims, individually or in the aggregate, will not have a material adverse effect on the Company's condensed consolidated financial statements, its business, results of operations and financial condition.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIESLease Commitments—The Company is a tenant under long-term ground leases at five of its hotel properties. Three of these leases are operating leases and two are finance leases. The ground lease agreements terminate at various dates between 2023 and 2096 and several of the agreements include multiple renewal options for generally five or ten year periods. The Company is also a tenant under an operating lease for its corporate office, which terminates in August 2021 and includes renewal options for two five-year terms. As the Company is reasonably certain that it will exercise the options to extend its ground leases, fixed payments associated with the extensions are included in the measurement of related right-of-use assets and lease liabilities. Payments associated with the option to extend the corporate office lease are not included in the measurement of the right-of-use asset and lease liability, as the associated payments cannot be reasonably estimated. Additionally, as of June 30, 2020, the Company leased certain technology equipment located at its hotel sites under finance leases.

Operating lease costs related to ground leases are included in hotel operating expenses, while operating lease costs related to the Company’s office lease are included in general and administrative expenses, in the condensed consolidated statements of operations. Finance lease interest costs are included in interest expense, net in the condensed consolidated statements of operations (see Note 7) or, when pertaining to assets under development, are capitalized and included in property and equipment, net on the condensed consolidated balance sheets (see Note 5). No amortization costs were incurred during the three and six months ended June 30, 2020 and 2019 for finance leases pertaining to land or land in development. The Company has no variable lease costs or short-term leases.

For the three and six months ended June 30, 2020 and 2019, the components of the Company’s total lease costs are as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease costs	$	769	$	770	$	1,538	$	1,538
Finance lease costs	80		61		146		122
Total lease costs	$	849	$	831	$	1,684	$	1,660

The Company’s right-of-use assets and lease liabilities are as follows (in thousands):


	June 30, 2020		December 31, 2019
Right-of-use assets:
Operating⁽¹⁾	$	3,719	$	4,863
Finance⁽²⁾	4,415		3,979

Lease liabilities:
Operating⁽³⁾	11,545		12,590
Finance	3,767		3,379

_________________________________

(1)Included in other assets on the accompanying condensed consolidated balance sheets.

(2)Included in property and equipment, net on the accompanying condensed consolidated balance sheets.

(3)Included in accounts payable and accrued liabilities on the accompanying condensed consolidated balance sheets.

Maturities of lease liabilities as of June 30, 2020, are as follows (in thousands):


Years Ending December 31,	Operating Leases			Finance Leases
Remainder of 2020	$	1,460		$	307
2021	2,220			738
2022	806			397
2023	552			400
2024	503			402
2025	503			429
Thereafter	77,091			2,671
Total	$	83,135		$	5,344

Total discounted lease liability	$	11,545		$	3,767
Difference between undiscounted cash flows and discounted cash flows	$	71,590		$	1,577

Weighted-average remaining lease term	47 years			11 years
Weighted-average discount rate	6.4		%	6.7		%

The Company’s leases do not contain residual value guarantees and do not contain restrictions with respect to incurring additional financial obligations or paying dividends. As of June 30, 2020, the Company does not have any material leases that have not yet commenced.

Letter of Credit—As of June 30, 2020, the Company had one outstanding letter of credit, issued by the Corporation, for $0.2 million, which is collateralized by the Corporation Revolving Credit Facility.

Legal Contingencies—As of June 30, 2020, six purported class action lawsuits in California have been filed against the Company. The complaints allege, among other things, failure to provide meal and rest periods, wage and hour violations and violations of the Fair Credit Reporting Act. The complaints seek, among other relief, collective and class certification of the lawsuits, unspecified damages, costs and expenses, including attorneys’ fees, and such other relief as the court might find just and proper.

With respect to the Fair Credit Reporting Act violations alleged in the lawsuits described above, the parties reached a tentative settlement agreement in May 2019, which is subject to certain conditions, including court approval. During the three months ended June 30, 2019, the Company recorded a payable and a corresponding insurance receivable for the amount of the tentative settlement. The expected resolution of the alleged Fair Credit Reporting Act violations in the lawsuits did not have, and is not expected to have, a material adverse impact on the Company’s condensed consolidated financial statements, results of operations or liquidity.

With respect to the meal and rest period and the wage and hour violations alleged in the lawsuits described above, excluding the one lawsuit described below, the parties reached a tentative settlement agreement in January 2020, which is subject to certain conditions, including court approval. During the three months ended December 31, 2019, the Company incurred a loss and recorded a charge equal to the amount of the tentative settlement. The expected resolution of the alleged meal and rest period and wage and hour violations in the lawsuits did not have, and is not expected to have, a material adverse impact on the Company’s condensed consolidated financial statements, results of operations or liquidity.

With respect to one lawsuit, although the Company believes it is reasonably possible that it may incur losses associated with such matter, it is not possible to estimate the amount of loss or range of loss, if any, that might result from adverse judgments, settlements or other resolution based on the early stage of the lawsuit, the uncertainty as to the certification of a class or classes and the size of any certified class, if applicable, and the lack of resolution of significant factual and legal issues. However, depending on the amount and timing, an unfavorable resolution of the lawsuit or a change in the Company's assessment of the likelihood of loss could have a material adverse effect on the Company’s condensed consolidated financial statements, results of operations or liquidity in a future period. The Company believes that it has meritorious defenses and is prepared to vigorously defend the lawsuit.

The Company is not a party to any additional litigation or claims, other than routine matters arising in the ordinary course of business that are incidental to the operation of the business of the Company. The Company believes that the results of all additional litigation and claims, individually or in the aggregate, will not have a material adverse effect on the Company's condensed consolidated financial statements, its business, results of operations and financial condition.

Entity Information [Line Items]

COMMITMENTS AND CONTINGENCIES

Lease Commitments—ESH REIT is a tenant under long-term ground leases at five of its hotel properties. Three of these leases are operating leases and two are finance leases. The ground lease agreements terminate at various dates between 2023 and 2096 and several of the agreements include multiple renewal options for generally five or ten year periods. As ESH REIT is reasonably certain that it will exercise the options to extend its ground leases, fixed payments associated with the extensions are included in the measurement of related right-of-use assets and lease liabilities. Additionally, as of June 30, 2020, ESH REIT leased certain technology equipment located at its hotel sites under finance leases.

Operating lease costs related to ground leases are included in hotel operating expenses in the condensed consolidated statements of operations. Finance lease interest costs are included in interest expense, net in the condensed consolidated statements of operations (see Note 7) or, when pertaining to assets under development, are capitalized and included in property and equipment, net on the condensed consolidated balance sheets (see Note 5). No amortization costs were incurred during the three and six months ended June 30, 2020 and 2019 for finance leases pertaining to land or land in development. ESH REIT has no variable lease costs or short-term leases.

For the three and six months ended June 30, 2020 and 2019, components of ESH REIT’s total lease costs are as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease costs	$	327	$	327	$	653	$	652
Finance lease costs	80		61		146		122
Total lease costs	$	407	$	388	$	799	$	774

ESH REIT’s right-of-use assets and lease liabilities are as follows (in thousands):


	June 30, 2020		December 31, 2019
Right-of-use assets:
Operating⁽¹⁾	$	1,740	$	2,084
Finance⁽²⁾	4,415		3,979

Lease liabilities:
Operating⁽³⁾	9,128		9,207
Finance	3,767		3,379

_________________________________

(1)Included in other assets on the accompanying condensed consolidated balance sheets.

(2)Included in property and equipment, net on the accompanying condensed consolidated balance sheets.

(3)Included in accounts payable and accrued liabilities on the accompanying condensed consolidated balance sheets.

Maturities of lease liabilities as of June 30, 2020, are as follows (in thousands):


Years Ending December 31,	Operating Leases			Finance Leases
Remainder of 2020	$	392		$	307
2021	784			738
2022	806			397
2023	552			400
2024	503			402
2025	503			429
Thereafter	77,091			2,671
Total	$	80,631		$	5,344

Total discounted lease liability	$	9,128		$	3,767
Difference between undiscounted cash flows and discounted cash flows	$	71,503		$	1,577

Weighted-average remaining lease term	59 years			11 years
Weighted-average discount rate	6.6		%	6.7		%

ESH REIT’s leases do not contain residual value guarantees and do not contain restrictions with respect to incurring additional financial obligations or paying dividends. As of June 30, 2020, ESH REIT does not have any leases that have not yet commenced.

Legal Contingencies—ESH REIT is not a party to any litigation or claims, other than routine matters arising in the ordinary course of business that are incidental to the operation of its business. ESH REIT believes that the results of all litigation and claims, individually or in the aggregate, will not have a material adverse effect on its condensed consolidated financial statements, its business, results of operations and financial condition.