Note 3—Summary of Significant Accounting Policies

Significant Accounting Policies

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Hotel revenues and hotel expenses—The Company became responsible for operating two hotel properties that reverted to it on January 1, 2026 following the expiration of a master lease. Revenues and expenses from these hotel operations primarily include room reservations and food and beverage. Room revenues are derived from the occupancy of the Company’s hotel rooms and is driven by the occupancy and average daily rate charged. Food and beverage revenues consist of revenues from group functions, which may include banquet revenues and audio-visual revenues, as well as outlet revenues from the restaurants and lounges at the Company’s properties. Revenues are recognized as the services or products are provided. Room expenses include housekeeping, reservation systems, room supplies, laundry services and front desk costs. Food and beverage expenses primarily include food, beverage and the associated labor costs. The Company also incurs other costs from its hotel operations including marketing, insurance, management fees, ground rent, property taxes and other administrative costs. Revenues from the Company’s hotel operations are included in “Hotel revenues” and expenses from hotel operations are included in “Hotel expenses” in the Company’s consolidated statements of operations, and each are included in the Company’s Hotel Operations segment.

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Fair Values—The Company is required to disclose fair value information with regard to its financial instruments, whether or not recognized in the consolidated balance sheets, for which it is practical to estimate fair value. The Financial Accounting Standards Board (“FASB”) guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The following fair value hierarchy prioritizes the inputs to be used in valuation techniques to measure fair value: Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The Company determines the estimated fair values of financial assets and liabilities based on a hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the Company and the Company’s own assumptions about market participant assumptions.

The following table presents the carrying value and fair value for the Company’s financial instruments ($ in millions):

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New accounting pronouncements—In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update 2024-03, “Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires disclosure of additional information about specific cost and expense categories in the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating ASU 2024-03 but does not expect this standard to have a material impact on its consolidated financial statements.