| Segment Information |
12. Segment Information The Company considers each of its hotels to be an operating segment and has aggregated its hotels into a single reportable segment, Hotel Ownership. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The key measure the CODM uses to allocate resources and assess performance is individual hotel net income (loss) before interest expense, income taxes, and depreciation and amortization for REITs, adjusted to exclude the following items that are not reflective of its ongoing operating performance or incurred in the normal course of business (“Hotel Adjusted EBITDAre”): | ● | Property-level severe weather-related restoration expenses; |
| ● | Pre-opening costs associated with extensive renovation projects; |
| ● | Property-level legal settlements, restructuring, severance, and management transition costs; |
| ● | Taxes assessed on commercial rents; and |
| ● | Other nonrecurring identified adjustments. |
The following tables include revenues, significant hotel operating expenses, and Hotel Adjusted EBITDAre for the Company’s hotels, reconciled to the consolidated amounts included in the accompanying consolidated statements of operations, which the CODM uses to manage its business, such as how to allocate capital to its hotels and how to determine the Company’s acquisition and disposition strategies (in thousands): | | | | | | | | | Three Months Ended March 31, | | | 2026 | | 2025 | Revenues | | | | | | | Total revenues | | $ | 259,709 | | $ | 234,065 | | | | | | | | Expenses | | | | | | | Room | | | 41,998 | | | 38,266 | Food and beverage | | | 51,272 | | | 47,891 | Other operating | | | 6,724 | | | 5,771 | Advertising and promotion | | | 13,692 | | | 12,501 | Repairs and maintenance | | | 9,581 | | | 9,537 | Utilities | | | 7,137 | | | 6,741 | Franchise costs | | | 4,585 | | | 4,459 | Property tax, ground lease and insurance | | | 20,145 | | | 19,029 | Other property-level expenses (1) | | | 32,758 | | | 29,098 | | | | 187,892 | | | 173,293 | | | | | | | | Hotel Adjusted EBITDAre | | $ | 71,817 | | $ | 60,772 |
| | | | | | | | | Three Months Ended March 31, | | | 2026 | | 2025 | Reconciliation of Hotel Adjusted EBITDAre to Net Income | | | | | | | Hotel Adjusted EBITDAre | | $ | 71,817 | | $ | 60,772 | Non-hotel operating expenses, net (2) | | | (8) | | | 7 | Severe weather-related restoration expenses (3) | | | (2,073) | | | — | Pre-opening expenses (3) | | | — | | | (3,253) | Taxes assessed on commercial rents (3) | | | (299) | | | (163) | Amortization of right-of-use assets and obligations | | | (2) | | | 288 | Corporate overhead | | | (6,835) | | | (8,905) | Depreciation and amortization | | | (34,177) | | | (32,275) | Interest and other income | | | 1,533 | | | 1,564 | Interest expense | | | (11,277) | | | (12,682) | Income tax provision, net | | | (122) | | | (98) | Net income | | $ | 18,557 | | $ | 5,255 |
| (1) | Other property-level expenses include property-level general and administrative expenses, such as payroll, benefits, and other employee-related expenses, contract and professional fees, credit and collection expenses, employee recruitment, relocation and training expenses, labor dispute expenses, consulting fees, management fees, and other expenses. |
| (2) | Non-hotel operating expenses, net are included in property tax, ground lease and insurance on the accompanying consolidated statements of operations for the three months ended March 31, 2026 and 2025, and include corporate-level current year property taxes and insurance, as well as any prior year property taxes assessed on sold hotels, net of any refunds received. |
| (3) | When assessing a hotel’s operating performance, the CODM excludes certain items that are not indicative of the ongoing operating performance of the Company’s hotels, including severe weather-related restoration expenses, pre-opening expenses associated with extensive renovation projects, and taxes assessed on commercial rents. |
The CODM does not receive asset information by segment. Assets reported to the CODM are consistent with those included on the Company’s consolidated balance sheets, with particular emphasis on the Company’s cash and cash equivalents, restricted cash, and debt.
|