DiamondRock Hospitality Company Annual Report 2023

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FY2023 Annual Report · DiamondRock Hospitality Company

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ANNUAL REPORT 2023

2023 H IGHLIGHTS

$1.1B COMPARABLE TOTAL REVENUE

4% COMPARABLE TOTAL REVENUE GROWTH

$0.93 ADJUSTED FFO/SHARE

PORTFO LIO MAP

CHICO HOT SPRINGS RESORT & DAY SPA, PARADISE VALLEY, MONTANA

Urban Gateway

Urban Lifestyle

Luxury Resort
▲ Lifestyle Resort

DIVER SIFIED PORTFOLIO
DIVER SIFIED PORTFOLIO
% OF 2023 EBITDA
% OF 2023 EBITDA

9,700+
ROOMS

36
PROPERTIES

25
GEOGRAPHIC MARKETS

Urban Gateway

Urban Lifestyle

Luxury Resorts

Lifestyle Resorts

16%

20%

46%

18%

THE WORTHINGTON RENAISSANCE FORT WORTH HOTEL, FORT WORTH, TEXAS

DEAR SHAREHOLDERS

2023 was another successful year
for DiamondRock Hospitality Company
(“DiamondRock” or the “Company”) across several
fronts. First, our total shareholder return beat the
performance of the FTSE Nareit All Equity REITs
Index (the “REIT Index”). Second, DiamondRock’s
high quality portfolio of hotels and resorts
achieved a record level of total revenue. Third,
the Company acquired a unique resort hotel that
aligns with our strategy of expanding into differ-
entiated travel experiences in unique locations.
Fourth, several exciting and high-value renova-
tion and repositioning projects were completed
or launched during the year. Lastly, the Company
continued to bolster its already strong balance
sheet to position DiamondRock for the future.

ONE OF THE CORE STRENGTHS OF

DIAMONDROCK’S PLATFORM, IS THE ABILITY TO

UNLOCK VALUE AT ITS HOTELS THROUGH THE

IDENTIFICATION AND EXECUTION OF HIGH-VALUE,

RETURN-ON-INVESTMENT (“ROI”) PROJECTS.

2023 PERFORMANCE
DiamondRock’s total shareholder return for the
year was 16.3% from the combination of the stock
price increasing 15% and a dividend yield of 1.3%.
We were pleased that this strong total share-
holder return beat the returns of the REIT Index
by close to 500 basis points and was top quartile
versus our primary peer set of full-service lodging
REITs over the prior three-year period.

The 2023 operating performance of DiamondRock’s
hotel portfolio was also among the strongest in
the peer set. Comparable total portfolio revenue
of $1.1 billion set a new record for the Company
with a 4% increase over the prior year. As an even
stronger affirmation of our strategic positioning,
comparable RevPAR increased 8.7% over pre-
pandemic 2019; this exceeded the peer average
by 7.5 percentage points. The Company’s inten-
tional choices over the last decade to avoid some
of the most troubled urban markets and empha-
size external growth into lifestyle and leisure-
oriented properties has been pivotal in achieving
these returns.

EXTERNAL GROWTH
Prudent capital allocation has always been a
core focus at DiamondRock. In 2023, full-service
lodging REITs (including DiamondRock) gener-
ally traded at a discount to the net asset value
of their underlying real estate portfolio. As
such, we repurchased a modest number of our
shares and remained very disciplined on acquisi-
tions. We executed one acquisition during the
year that met our strict criteria and furthered
DiamondRock’s focus on the leading trends
in lodging. On August 1, 2023, the Company
acquired Chico Hot Springs Resort, a lifestyle
resort and ranch, located in Paradise Valley,
Montana and near Yellowstone National Park. This
fee-simple, unencumbered property sits on 748-
acres and fits squarely in DiamondRock’s strat-
egy with strong cash flow and upside potential
through both the implementation of best asset
management practices and future expansion
opportunities.

INTERNAL GROWTH
One of the core strengths of DiamondRock’s
platform is the ability to unlock value at its
hotels through the identification and execu-
tion of high-value, return-on-investment (“ROI”)
projects. The Company has a strong track record
of being a leader in these value-enhancing ini-
tiatives, and 2023 was no exception. The largest
repositioning was the $32 million conversion
of a branded hotel in downtown Boston into an
independent, lifestyle hotel relaunched as The
Dagny. Initial guest feedback and reviews have
been incredibly positive. We underwrote that
the net operating profit of the hotel will increase
more than 50% from 2023 as it fully stabilizes
over the next few years. The value creation from
this project comes both from incremental cash
flow as well as the higher exit value associated
with an unencumbered hotel. During the year,
we also launched several additional ROI projects,
including the conversion of the Hilton Burlington
Lake Champlain into a lifestyle hotel to be
renamed The Hotel Champlain, Curio Collection
by Hilton, as well the repositioning of the
Bourbon Orleans Hotel to elevate the customer
base, guest experience and profitability given

DIAMONDROCK HOSPITALITY 2023

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D I A M O N D R O C K H O S P I TA L I T Y 2 0 2 3

The future is bright for DiamondRock. Our portfolio
of 36 hotels and resorts is well-positioned to take
advantage of the leading travel trends as our proper-
ties are located in both prime urban markets
and unique resort destinations. The outlook for
DiamondRock’s performance is enhanced by our
differentiated strategy and focus on lifestyle-
oriented properties that continue to lead the
way in traveler preference. Further, we believe
the Company’s performance will be bolstered
by our identification and implementation of ROI
projects. Lastly, DiamondRock’s fortress balance
sheet positions the Company to take advantage
of market dislocation and create value through
thoughtful capital allocation.

As always, we appreciate your confidence in our
team, our strategy, and the platform’s ability to
deliver solid returns for shareholders.

Mark W. Brugger
President & Chief Executive Officer

D I A M O N D R O C K
& S U S TA I N A B I L I T Y

DiamondRock is committed to
sustainability and reducing its carbon
footprint. To offset its paper usage, a
donation has been made to replant
10 trees for every tree used in the
production of this report to One Tree
Planted, a non-profit organization
focused on global reforestation.

the hotel’s prime location in the French Quarter.
In addition to these projects, the Company
maintains a robust pipeline of over a dozen more
ROI projects.

THE OUTLOOK FOR DIAMONDROCK’S

PERFORMANCE IS ENHANCED BY OUR

DIFFERENTIATED STRATEGY AND FOCUS ON

LIFESTYLE-ORIENTED PROPERTIES THAT CONTINUE

TO LEAD THE WAY IN TRAVELER PREFERENCE.

FORTRESS BALANCE SHEET
A key pillar of DiamondRock’s strategy remains its
fortress balance sheet. We believe that low lever-
age and a flexible capital structure enables the
Company to withstand the volatility of the lodg-
ing cycle, while maintaining valuable investment
capacity in order to take advantage of oppor-
tunities during periods of market dislocation
when many others have to sit on the sidelines.
The Company ended 2023 with a debt-to-book
value of only 29%, corporate cash of $167 million
(including restricted cash), and full availability of
its $400 million revolving credit facility.

OUTLOOK
There are numerous reasons to remain bullish
on the future of the travel industry and lodging.
Following the impact of the global pandemic, the
current trends are very encouraging. In 2023, the
lodging industry sold more than 1.3 billion rooms
to people traveling for pleasure, group meetings,
and business. Leisure travel has taken an even
higher priority in the lives of consumers around
the globe. Group business in 2024 will likely
exceed pre-pandemic levels as the traditional
reasons to gather, such as information sharing,
culture building, and associate training, have only
strengthened. Business transient demand, while
still well below pre-pandemic levels, continues
to gradually improve and there were solid gains
achieved in negotiating special corporate rates
headed into 2024. Moreover, the new hotel sup-
ply was dramatically cut during the pandemic
and the number of hotels under development in
the United States remains at less than half of the
historical average. The supply and demand imbal-
ance sets up for a potentially long run of revenue
growth in many hotel markets.

DIAMONDROCK HOSPITALITY 2023

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2023

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

Commission file number 001-32514
DIAMONDROCK HOSPITALITY COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Maryland
(State of Incorporation)

20-1180098
(I.R.S. Employer Identification No.)

2 Bethesda Metro Center, Suite 1400,
(Address of Principal Executive Offices)

Bethesda,

Maryland

20814
(Zip Code)

(240) 744-1150
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Common Stock, $0.01 par value
8.250% Series A Cumulative Redeemable
Preferred Stock, $0.01 par value per share

Trading symbol(s)
DRH

Name of Exchange on Which Registered
New York Stock Exchange

DRH Pr A

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act ☑ Yes □ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. □ Yes ☑ No
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
Smaller reporting company

☑ Accelerated filer
□

Emerging growth company

□
□

Non-accelerated filer

□

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included

in the filing reflect the correction of an error to previously issued financial statements. □

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). □

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). □ Yes ☑ No
The aggregate market value of the common equity held by non-affiliates of the Registrant (assuming for these purposes, but without conceding,
that all executive officers and Directors are ‘‘affiliates’’ of the Registrant) as of June 30, 2023, the last business day of the Registrant’s most recently
completed second fiscal quarter, was $1.7 billion (based on the closing sale price of the Registrant’s Common Stock on that date as reported on the New
York Stock Exchange).

The registrant had 209,627,197 shares of its $0.01 par value Common Stock outstanding as of February 26, 2024.

Documents Incorporated by Reference

Portions of the registrant’s Proxy Statement for its 2024 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission

not later than 120 days after December 31, 2023, are incorporated by reference in Part III herein.

Table of Contents

INDEX

Page No.

Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.

Item 5.

Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.

Item 9A.
Item 9B.
Item 9C.

Item 10.
Item 11.
Item 12.

Item 13.
Item 14.

Item 15.
Item 16.

PART I
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of Operations .
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . . . . . .

PART III
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence. . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV
Exhibits and Financial Statement Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5
14
35
35
37
43
43

44
46
46
59
59

60
60
60
60

61
61

61
61
61

62
65

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K, other than purely historical information, including
estimates, projections, statements relating to our business plans, objectives and expected operating results, and the
assumptions upon which those statements are based, are ‘‘forward-looking statements’’ within the meaning of the
Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words ‘‘believes,’’
‘‘project,’’ ‘‘expects,’’ ‘‘anticipates,’’ ‘‘estimates,’’ ‘‘intends,’’ ‘‘strategy,’’ ‘‘plan,’’ ‘‘may,’’ ‘‘will,’’ ‘‘would,’’ ‘‘will
be,’’ ‘‘will continue,’’ ‘‘will likely result,’’ ‘‘strive,’’ ‘‘endeavor,’’ ‘‘mission,’’ ‘‘goal,’’ and similar expressions.
Forward-looking statements are based on current expectations and assumptions that are subject to risks and
uncertainties which may cause actual results to differ materially from the forward-looking statements.

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 elevated inflation and interest rates,
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, elevated inflation, 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;

the adverse impact of any future pandemic, epidemic or outbreak of any highly infectious disease 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 real estate investment trust
(‘‘REIT’’) 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.

The risks and uncertainties set forth above are not exhaustive. Other sections of this Annual Report on
Form 10-K, including Item 1A ‘‘Risk Factors’’ and Item 7 ‘‘Management’s Discussion and Analysis of Financial
Condition and Results of Operations,’’ discuss these and other risks and uncertainties that could cause actual results
and events to differ materially from such forward-looking statements.

Except as required by law, we undertake no obligation to update or revise publicly any forward-looking

statements, whether as a result of new information, future events or otherwise.

References in this Annual Report on Form 10-K to ‘‘we,’’ ‘‘our,’’ ‘‘us’’ and ‘‘the Company’’ refer to
requires, DiamondRock Hospitality Limited

including as the context

DiamondRock Hospitality Company,
Partnership, as well as our other direct and indirect subsidiaries.

SUMMARY OF RISK FACTORS

The risk factors detailed in Item 1A entitled ‘‘Risk Factors’’ in this Annual Report on Form 10-K, are the risks
that we believe are material to our investors and a reader should carefully consider them. Those risks are not all of
the risks we face and other factors not presently known to us or that we currently believe are immaterial may also
affect our business if they occur. The following is a summary of the risk factors detailed in Item 1A:

•

Our hotels are subject to significant competition and our business model, especially our concentration in
premium full-service hotels, can be highly volatile, which may make it difficult to execute our long-term
business strategy.

Unfavorable market and economic conditions in the U.S. and in the specific markets where our hotels are
located and other factors beyond our control, including effects on macroeconomic indicators such as U.S.
gross domestic product (‘‘GDP’’) growth, employment, personal discretionary spending levels, corporate
earnings and investment, foreign exchange rates and travel demand, may adversely affect the lodging
industry.

• We may be unable to comply with financial covenants, obtain waivers, or renegotiate such covenants under
our senior unsecured credit facility and unsecured term loans, which could result in a default and potential
acceleration of our indebtedness and impact our ability to make additional borrowings.

•

The increase in the use of third-party internet travel intermediaries and the increase in alternative lodging
channels, such as Airbnb, could adversely affect our profitability.

The decrease in business-related travel could adversely affect our profitability.

Due to restrictions in our hotel management agreements, franchise agreements, mortgage agreements and
ground leases, we may not be able to sell our hotels at the highest possible price, or at all.

• We may be subject to unknown or contingent liabilities related to hotels we currently own, as well as hotels
that we have sold or may acquire in the future, for, among other things, uninsured losses and environmental
contamination.

• We are susceptible to delays in completing ongoing or future renovations and capital improvements due to
potential lack of funding for such expenditures, disruptions in the supply of materials or products and the
inability of contractors to perform on a timely basis, or at all.

•

Several of our hotels are operated under franchise agreements and we are subject to the risks associated
with the franchise brand and the costs associated with maintaining the franchise license, as well as risks
associated with concentrating the majority of our portfolio under the Marriott International, Inc.
(″Marriott″), Hilton Worldwide Holdings Inc. (″Hilton″) or IHG Hotels & Resorts (″IHG″) brands.

Our results of operations are highly dependent on the management of our hotel properties by third-party
hotel management companies.

Any future pandemic, epidemic or outbreak of any highly infectious disease could cause widespread
disruption in the U.S., regional and global economies, travel and the hospitality industry and could
materially and adversely impact our business, financial condition and results of operations.

• Many of our costs, such as operating expenses, interest expense and acquisition and renovation costs, could

be adversely impacted by periods of heightened inflation.

•

High interest rates and/or the unavailability of certain types of financing could make it difficult for us to
finance or refinance properties and adversely impact the amounts, sources and costs of capital available to
us in the future.

The terms of the agreements governing our outstanding indebtedness may limit our financial and operating
activities and our ability to make distributions to our stockholders and may also adversely affect our ability
to incur additional debt to fund future needs.

Failure to maintain our qualification as a REIT would have significant adverse consequences to the value
of our common stock and our 8.250% Series A Cumulative Redeemable Preferred Stock (‘‘Series A
Preferred Stock’’).

•

Natural disasters caused by climate change or otherwise, terrorist attacks, active shooter attacks, significant
military actions, outbreaks of contagious diseases, pandemics, or other widespread health emergencies may
adversely impact our financial condition and results of operations.

• We depend on senior executive officers whose continued service is not guaranteed, and changes in our

senior executive officers may adversely affect the operation of our business.

• We and our hotel managers rely on information technology in our operations and any material failures,
interruptions, security failures, or cybersecurity incidents related to our or our hotel
inadequacies,
managers’ information technologies and systems could harm our business and adversely impact our results
of operations.

•

Even if we maintain our status as a REIT, in certain circumstances, we may be subject to federal and state
income taxes, which would reduce our cash available for distribution to our stockholders.

• We may be subject to litigation, which could have a material adverse effect on our financial condition,
results of operations, cash flow and trading price of our common stock and our Series A Preferred Stock.
• We must comply with applicable governmental regulations, including, without limitation, the Americans

with Disabilities Act, which could be costly.

•

The ability of our stockholders to control our policies and effect a change of control of our company is
limited by certain provisions of our charter, our bylaws and by Maryland law.

• We may be unable to generate sufficient cash flows from our operations to make distributions to our
stockholders at expected levels, and we cannot assure you of our ability to make distributions in the future.

This section contains forward-looking statements. You should refer to the explanation of the qualifications and

limitations on forward-looking statements beginning on page 1.

PART I

Item 1.

Business

Overview

DiamondRock Hospitality Company is a lodging-focused Maryland corporation operating as a REIT for
U.S. federal income tax purposes. As of December 31, 2023, we owned a portfolio of 36 premium hotels and resorts
that contain 9,746 guest rooms located in 25 different markets in the United States. The markets that we target are
those that we believe align with our strategic objectives, which include investing in assets in destination markets with
constrained supply trends, those that provide geographic diversity relative to our existing portfolio, and those markets
that are considered to have high growth potential.

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.

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, renovate and asset manage premium hotel properties in the United
States. Our portfolio is concentrated in major urban markets and destination resort locations. All of our hotels are
managed by a third party—either an independent operator or a brand operator, such as Marriott.

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.

Our Company

We commenced operations in July 2004 and became a public reporting company in May 2005. Our common
stock and Series A Preferred Stock are traded on the New York Stock Exchange (the ‘‘NYSE’’) under the symbols
‘‘DRH’’ and ‘‘DRH Pr A’’, respectively.

Our Business Strategy

We plan to strategically allocate capital in order to create value depending on our cost of capital. If our cost of

capital is attractive, we expect to:

•

pursue strategic acquisitions in line with our target asset type;

consider opportunistically raising equity; and

evaluate opportunities to dispose of non-core hotels.

If we believe our cost of capital is elevated, we expect to create value over the long term to stockholders by

deploying investment capacity into share repurchases.

We prefer a relatively efficient capital structure. We structure our hotel investments to be straightforward and
to fit within our conservative capital structure; however, we will consider a more complex transaction (e.g. the
issuance of operating partnership units to limited partners or entry into a joint venture) if we believe that the projected
returns to our stockholders will significantly exceed the returns that would otherwise be available.

High-Quality Urban and Destination Resort Hotels

As of December 31, 2023, we owned 36 premium hotels and resorts throughout the United States. Our hotels
and resorts are primarily categorized as luxury and upper upscale as defined by STR, Inc. and are generally located
in high barrier-to-entry markets with multiple demand generators. Our portfolio is composed primarily of hotels and
resorts located in popular leisure destinations and major urban markets. We consider lodging properties located in
major urban markets and resort destinations to be the most capable of generating dynamic cash flow growth and
achieving superior long-term capital appreciation.

We have enhanced our hotel portfolio over the past several years by recycling capital from non-core hotels,
located in slower growth markets, to higher quality hotels located primarily in urban and destination resort markets
that align with our strategic goals. Over 97% of revenues for the year ended December 31, 2023 was derived from
core urban and resort destination hotels. Our capital recycling program has also achieved several other important
strategic portfolio goals that include improving our portfolio’s geographic, climate, operator and brand diversity. In
addition, we have repositioned certain of our hotels through a change in brand, comprehensive renovation and/or
change in third-party hotel manager to a more efficient operator, which further improved our portfolio’s brand and
management diversity.

We are highly sensitive to our cost of capital and may pursue acquisitions that create value in the near term. We
will continue to evaluate our portfolio for opportunities to upgrade our portfolio by considering strategic acquisitions
and opportunistic non-core hotel dispositions. Our acquisition strategy focuses primarily on hotels that we believe
present unique value-add opportunities.

We evaluate each hotel in our portfolio to assess the optimal brand and management strategy for the individual
hotel and market. We leverage the leading global hotel brands at many of our hotels, which are flagged under a brand
owned by Marriott, Hilton or IHG. We also maintain a portion of our hotels as independent lifestyle hotels. We
believe that premier global hotel brands create significant value for certain hotels as a result of each brand’s ability
to produce incremental revenue through their strong reservation and loyalty rewards systems and sales organizations.
We are also interested in owning independent or non-branded hotels located in premier or unique markets where we
believe that the returns on such a hotel may be higher than if the hotel were operated under a globally-recognized
brand.

Innovative Asset Management

We believe that we can create significant value in our portfolio through innovative asset management strategies
such as rebranding, renovating and repositioning our hotels. We completed rebrandings at five of our hotels since
2021 and are currently completing rebrandings and repositionings at three additional hotels. We regularly evaluate
our portfolio to determine if there are additional opportunities to employ these value-add strategies.

Our asset management team is focused on improving hotel profit margins through revenue management
strategies and cost control programs. Our asset management team also focuses on identifying new and potential value
creation opportunities across our portfolio, including implementing resort or amenity fees, creating incremental guest
rooms, leasing out restaurants to more profitable third-party operators, converting underutilized space to revenue-
generating meeting space, marketing underutilized midweek bookings and implementing programs to reduce energy
consumption and increase labor efficiency.

Our senior management team has established a broad network of hotel industry contacts and relationships,
including relationships with hotel owners, financiers, operators, project managers and contractors and other key
industry participants. We use our broad network of hotel industry contacts and relationships to maximize the value
of our hotels. We strive to negotiate management agreements that give us the right to exert influence over the
management of our properties, annual budgets and all capital expenditures (all to the extent permitted under the REIT
rules), and then to use those rights to continually monitor and improve the performance of our properties. We
cooperatively partner with our hotel managers in an attempt to increase operating results and long-term asset values
at our hotels. In addition to working directly with the personnel at our hotels, our senior management team also has
long-standing professional relationships with our hotel managers’ senior executives, and we work directly with these
senior executives to improve the performance of our hotels.

Conservative Capital Structure

We believe that a conservative capital structure maximizes investment capacity while reducing enterprise risk.
We currently employ a conservative debt profile with prudent leverage. We maintain balance sheet flexibility with

our existing corporate cash, limited near-term debt maturities, capacity under our senior unsecured credit facility and
32 of our 36 hotels unencumbered by mortgage debt as of December 31, 2023. We believe it is prudent to reduce the
inherent risk of highly cyclical lodging fundamentals through a low leverage capital structure. Over time, we intend
to finance our long-term growth with issuances of common and preferred equity securities and debt financings having
staggered maturities. We may also consider entering into joint ventures or alliances with one or more third parties to
pursue attractive investment opportunities.

We believe that our strategically designed capital structure is a value creation tool that can be used over the entire

lodging cycle. Specifically, we believe that lower leverage benefits us in the following ways:

•

it provides capacity to fund attractive acquisitions;

it enhances our ability to maintain a sustainable dividend;

it enables us to opportunistically repurchase shares during periods of stock price dislocation; and

it provides capacity to fund late-cycle capital needs.

As of December 31, 2023, our outstanding debt consists of a combination of unsecured term loans and fixed-rate
property-specific mortgage debt. We prefer that a significant portion of our portfolio remain unencumbered by debt
in order to provide maximum 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.

Corporate Responsibility

Created in 2014, our Corporate Responsibility program incorporates governance, environmental, and social
initiatives in our overall business strategy, investment decisions and asset management strategies. Our Corporate
Responsibility program is guided by executive and board-level oversight, with the board’s Nominating and Corporate
Governance Committee assigned to oversee the policies, strategy, and implementation of the program. In 2023, as
a result of our commitment to sustainability, we were ranked first in sustainability performance as the America’s
Regional Listed Sector Leader for Hotels for the fifth consecutive year by the GRESB Real Estate Assessment for
the Standing Investments Benchmark.

We are committed to transparent reporting of our environmental, social, and governance (‘‘ESG’’) initiatives. In
January 2024, we published our most recent annual Corporate Responsibility Report, which includes ESG policies,
environmental and social programs, historic results and performance targets. The annual Corporate Responsibility
Report is prepared in accordance with relevant international standards and best practices, including standards
developed for the real estate sector by the International Financial Reporting Standards (‘‘IFRS’’) Foundation, which
was formerly known as the Sustainable Accounting Standards Board.

Accounting metrics and disclosures for the real estate industry are provided by the IFRS Foundation, which
publishes the Real Estate Sustainability Accounting Standard. This standard advises that total energy consumed
(‘‘Total Energy Consumption’’) and total water withdrawn (‘‘Total Water Consumption’’) are the metrics that best
correspond with the real estate industry. The water and energy data we use is first gathered from utility statements
and then reviewed, aggregated, and analyzed by third-parties.

Beginning in 2021, we engaged an independent third party to verify our energy and water consumption data. The
following charts display our Total Energy Consumption and Total Water Consumption for 2020, 2021 and 2022, the
last fiscal year for which data is available. These metrics relate to our hotels owned for the entire year presented. In
2020 and 2021, total consumption of both energy and water was significantly reduced due to the historically low
occupancy levels at our hotels as a result of the COVID-19 pandemic.

We display key metrics, documents, programs and policies through the Global Reporting Initiative (‘‘GRI’’)
Index, and in accordance with the GRI framework. We also display disclosures in accordance with the framework
established by the Task Force on Climate-Related Financial Disclosures.

Annually, we submit a response to the GRESB survey (the ‘‘GRESB Report’’), which benchmarks our approach
and performance on ESG indicators against other real estate companies. The GRESB Report is accessible on our
website. The information included in, referenced to, or otherwise accessible through the GRESB Report, is not
incorporated by reference in, or considered to be a part of, this report or any document unless expressly incorporated
by reference therein.

For more information on our Corporate Responsibility program, as well as our enterprise-wide policies, please
see our current Corporate Responsibility Report available at https://investor.drhc.com/sustainability-report. The
information included in, referenced to, or otherwise accessible through our website, is not incorporated by reference
in, or considered to be part of, this report or any document unless expressly incorporated by reference therein.

Our Corporate Structure

We conduct our business through a traditional umbrella partnership REIT, or UPREIT, in which our hotels are
owned by subsidiaries of our operating partnership, DiamondRock Hospitality Limited Partnership. We are the sole
general partner of our operating partnership and own either directly or indirectly 99.7% of the limited partnership
units (‘‘common OP units’’) of our operating partnership. The remaining 0.3% of the common OP units are held by
third parties and executive officers of the Company. A portion of our common OP units were issued in connection
with our acquisition of Cavallo Point, The Lodge at the Golden Gate (‘‘Cavallo Point’’) in December 2018. Each
common OP unit currently owned by holders other than us is redeemable, at the option of the holder, for an amount
of cash equal to the market value of one share of our common stock or, at our election, one share of our common
stock, in each case subject to adjustment upon the occurrence of stock splits, mergers, consolidations or similar
pro-rata share transactions. As of December 31, 2023, limited partners held 723,166 common OP units. In the future,
we may issue additional common OP units from time to time in connection with acquiring hotel properties, financing,
compensation, or other reasons.

In order for the income from our hotel investments to constitute ‘‘rents from real property’’ for purposes of the
gross income tests required for REIT qualification, we must lease each of our hotels to a wholly-owned subsidiary
of our taxable REIT subsidiary, or TRS (each, a TRS lessee), or to an unrelated third party. In turn, our TRS lessees
must engage a third-party management company to manage the hotels. As of December 31, 2023, we leased all of
our hotels to TRS lessees, except for one hotel that is directly owned by a TRS.

The following chart shows our corporate structure as of the date of this report:

Competition

The hotel industry is highly competitive and our hotels are subject to competition from other hotels for guests.
Competition is based on a number of factors, including convenience of location, reputation, brand affiliation, price,
range of services, guest amenities, and quality of customer service. Competition is specific to the individual markets
in which our properties are located and will include competition from existing and new hotels operated under brands
in the full-service, select-service and extended-stay segments. We believe that properties flagged with a Marriott,
Hilton or IHG-affiliated brand will enjoy the competitive advantages associated with their operations under such
brand. We believe these global brands’ reservation systems and national advertising, marketing and promotional
services combined with strong management by third-party operators enable our properties to perform favorably in
terms of both occupancy and room rates relative to other brands and non-branded hotels. The guest loyalty programs
operated by these global brands generate repeat guest business that might otherwise go to competing hotels. Increased
competition may have a material adverse effect on occupancy, Average Daily Rate (or ADR) and Revenue per
Available Room (or RevPAR), or may require us to make capital improvements that we otherwise would not
undertake, which may result in decreases in the profitability of our hotels.

In addition to competing with traditional hotels and lodging facilities, we compete with alternative lodging,
including third-party providers of short-term rental properties and serviced apartments. We compete based on a
number of factors, including room rates, quality of accommodations, service levels, convenience of location,
reputation, reservation systems, brand recognition and supply and availability of alternative lodging.

We face competition for the acquisition of hotels from institutional pension funds, private equity funds, REITs,
hotel companies and others who are engaged in hotel acquisitions and investments. Some of these competitors have
substantially greater financial and operational resources than we have and may have greater knowledge of the markets

in which we seek to invest. This competition may reduce the number of suitable investment opportunities offered to
us and increase the cost of acquiring our targeted hotel investments.

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.

Governmental Regulations

Compliance with various governmental regulations has an impact on our business, including our capital
expenditures, earnings and competitive position, which can be material. We incur costs to monitor and take actions
to comply with governmental regulations that are applicable to our business, which include, among others, federal
securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations,
environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real
property and the Americans with Disabilities Act of 1990.

See ‘‘Item 1A – Risk Factors’’ for a discussion of material risks to us, including, to the extent material, to our
competitive position, relating to governmental regulations, and see ‘‘Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations’’ together with our consolidated financial statements, including the
related notes included therein, for a discussion of material information relevant to an assessment of our financial
condition and results of operations, including, to the extent material, the effects that compliance with governmental
regulations may have upon our capital expenditures and earnings.

Employees and Human Capital

As of December 31, 2023, we employed 33 full-time employees. None of our employees is a member of any
union. During 2023, all employees involved in the day-to-day operation of our hotels were employed by third-party
management companies engaged pursuant to hotel management agreements. The employees of our hotel managers
at the Courtyard New York Manhattan/Fifth Avenue, Courtyard New York Manhattan/Midtown East, Hilton Garden
Inn New York/Times Square Central, Westin Boston Seaport District and The Dagny Boston are currently represented
by labor unions and are subject to collective bargaining agreements.

We believe prioritizing employee well-being is a key element for attracting and retaining the best and most
talented associates. Our key human capital management objectives are to attract, recruit, hire, develop and promote
a deep and diverse bench of talent that translates into a strong and successful workforce. To support these objectives,
our human resources programs are designed to develop talent to prepare them for the critical roles and leadership
positions for the future; reward and support employees through competitive pay and benefit programs; enhance our
culture through efforts to foster, promote, and preserve a culture of diversity and inclusion; and evolve and invest in
technology, tools, and resources to enable employees at work.

Insurance

We carry comprehensive liability, fire, extended coverage, windstorm, business interruption and rental loss
insurance covering all of the properties in our portfolio. In addition, we carry earthquake and terrorism insurance on
our properties in an amount and with deductibles which we believe are commercially reasonable. We do not carry
insurance for generally uninsured losses such as loss from riots, war or acts of God. Certain of the properties in our
portfolio are located in areas known to be seismically active or subject to hurricanes and we believe that we have
appropriate insurance for those risks, although they are subject to higher deductibles than ordinary property
insurance.

Most of our hotel management agreements and mortgage agreements require that we obtain and maintain
property insurance, business interruption insurance, flood insurance, earthquake insurance (if the hotel is located in
an ‘‘earthquake prone zone’’ as determined by the U.S. Geological Survey) and other customary types of insurance
related to hotels. We comply with all such requirements. In addition, either we or the hotel manager are responsible
for obtaining general liability insurance, workers’ compensation and employer’s liability insurance.

Available Information

We maintain a website at the following address: www.drhc.com. We make our proxy statements, annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, including exhibits, and amendments
to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the ‘‘Exchange Act’’), available on our website free of charge as soon as reasonably practicable after such
reports and amendments are electronically filed with, or furnished to, the Securities and Exchange Commission (the
‘‘SEC’’). Such reports are also available by accessing the EDGAR database on the SEC’s website at www.sec.gov.

Our website is also a key source of important information about us. We post to the Investor Relations section
of our website important information about our business, our operating results and our financial condition and
prospects, including, for example, information about material acquisitions and dispositions, our earnings releases and
certain supplemental financial information related or complimentary thereto. The website also has a Corporate
Governance page that includes, among other things, copies of our charter, our bylaws, our Code of Business Conduct
and Ethics and the charters for each standing committee of our Board of Directors: currently, the Audit Committee,
the Compensation Committee and the Nominating and Corporate Governance Committee. We intend to disclose on
our website any amendment to, or waiver of, any provisions of our Code of Business Conduct and Ethics that apply
to any of our directors, executive officers or senior financial officers that would otherwise be required to be disclosed
under the rules of the SEC or the NYSE. Copies of our charter, our bylaws, our Code of Business Conduct and Ethics
and our SEC reports are also available in print to stockholders upon request addressed to Investor Relations,
DiamondRock Hospitality Company, 2 Bethesda Metro Center, Suite 1400, Bethesda, Maryland 20814 or through the
‘‘Information Request’’ section on the Investor Relations page of our website.

The information included in, referenced to, or otherwise accessible through our website, is not incorporated by
reference in, or considered to be a part of, this report or any document unless expressly incorporated by reference
therein.

DiamondRock Hospitality Company is traded on the NYSE under the symbols ‘‘DRH’’ and ‘‘DRH Pr A.’’

Supplemental Material U.S. Federal Income Tax Considerations

The following discussion supplements and updates the disclosure under ‘‘Material U.S. Federal Income Tax
Considerations’’ in the prospectus dated August 6, 2021 contained in our Registration Statement on Form S-3 filed
with the SEC on August 6, 2021 (such disclosure, the ‘‘Base Disclosure’’). Capitalized terms used in this section that
are not otherwise defined shall have the same meaning as when used in the Base Disclosure.

On December 29, 2022, the IRS promulgated final Treasury Regulations under Sections 897, 1441, 1445, and
1446 of the Code that were, in part, intended to coordinate various withholding regimes for non-U.S. stockholders.
The final Treasury Regulations provide that:

The withholding rules applicable to ordinary REIT dividends paid to a non-U.S. stockholder (generally, a
30% rate of withholding on gross amounts unless otherwise reduced by treaty or effectively connected with
such non-U.S. stockholder’s trade or business within the United States and proper certifications are
provided) apply to (a) that portion of any distribution paid by us that is not designated as a capital gain
dividend, a return of basis or a distribution in excess of the non-U.S. stockholder’s adjusted basis in its
stock that is treated as gain from the disposition of such stock and (b) any portion of a capital gain dividend
paid by us that is not treated as gain attributable to the sale or exchange of a United States real property
interest by reason of the recipient not owning more than 10% of a class of our stock that is regularly traded
on an established securities market during the one-year period ending on the date of the capital gain
dividend.

ii. The withholding rules under FIRPTA apply to a distribution paid by us in excess of a non-U.S.
stockholder’s adjusted basis in our stock, unless the interest in our stock is not a United States real property
interest (for example, because we are a domestically controlled qualified investment entity) or the
distribution is paid to a ‘‘withholding qualified holder.’’A ‘‘withholding qualified holder’’ means a qualified
holder (as defined below) and a foreign partnership all of the interests of which are held by qualified
holders, including through one or more partnerships.

iii. The withholding rules under FIRPTA apply to any portion of a capital gain dividend paid to a non-U.S.
stockholder that is attributable to the sale or exchange of a United States real property interest, unless it is
paid to a withholding qualified holder.

In the case of FIRPTA Withholding under clause (ii) above, the applicable withholding rate is currently 15%,
and in the case of FIRPTA Withholding under clause (iii) above, the withholding rate is currently 21%. For purposes
of FIRPTA Withholding under clause (iii), whether a capital gain dividend is attributable to the sale or exchange of
a United States real property interest is determined taking into account the general exception from FIRPTA
distribution treatment for distributions paid to certain non-U.S. stockholders under which any distribution paid by us
to a non-U.S. stockholder with respect to any class of stock which is regularly traded on an established securities
market located in the United States is not treated as gain recognized from the sale or exchange of a United States real
property interest if such non-U.S. stockholder did not own more than 10% of such class of stock at any time during
the one-year period ending on the date of such distribution. To the extent inconsistent, these Treasury Regulations
supersede the discussion on withholding contained in the Base Disclosure under the heading ‘‘Material U.S. Federal
if,
Income Tax Considerations—Taxation of Non-U.S. Stockholders Holding Capital Stock.’’ However,
notwithstanding these Treasury Regulations, we encounter difficulties in properly characterizing a distribution for
purposes of the withholding rules, we may decide to withhold on such distribution at the highest possible U.S. federal
withholding rate that we determine could apply.

Additionally, the first sentence of the seventh paragraph under the heading ‘‘Material U.S. Federal Income Tax
Considerations—Taxation of Non-U.S. Stockholders Holding Capital Stock—Distributions’’ is hereby deleted and
replaced with the following:

Distributions to a non-U.S. stockholder that we designate as capital gain dividends but that are not
attributable to gain from our sale or exchange of United States real property interests (and thus not subject to
FIRPTA Withholding) will be subject to U.S. federal income taxation if (i) the capital gain dividend is effectively
connected with the non-U.S. stockholder’s United States trade or business, in which case the non-U.S.
stockholder will be subject to the same treatment as U.S. stockholders with respect to such gain and may be
subject to the 30% branch profits tax in the case of a non-U.S. stockholder that is a non-U.S. corporation, or
(ii) the non-U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days
or more during the taxable year and meets certain other criteria, in which case the non-U.S. stockholder will
incur a 30% tax on the individual’s capital gains derived from sources within the United States for the taxable
year.

The final Treasury Regulations also provide new guidance regarding qualified foreign pension funds.
Accordingly, the second paragraph under the heading ‘‘Material U.S. Federal Income Tax Considerations—Taxation
of Non-U.S. Stockholders Holding Capital Stock—Special FIRPTA Rules’’ is hereby deleted and replaced with the
following:

Generally, for purposes of FIRPTA, and subject to the discussion below regarding ‘‘qualified holders,’’
neither a ‘‘qualified foreign pension fund’’ (as defined below) nor any entity all of the interests of which are held
by a qualified foreign pension fund is treated as a foreign person, thereby exempting such entities from tax under
FIRPTA. A ‘‘qualified foreign pension fund’’ is an organization or arrangement (i) created or organized in a
foreign country, (ii) established by a foreign country (or one or more political subdivisions thereof) or one or
more employers to provide retirement or pension benefits to current or former employees (including
self-employed individuals) or their designees as a result of, or, in consideration for, services rendered, (iii) which
does not have a single participant or beneficiary that has a right to more than 5% of its assets or income,
(iv) which is subject to government regulation and with respect to which annual information about its
beneficiaries is provided, or is otherwise available, to relevant local tax authorities, and (v) with respect to
which, under its local laws, (A) contributions that would otherwise be subject to tax are deductible or excluded
from its gross income or taxed at a reduced rate, or (B) taxation of its investment income is deferred, or such
income is excluded from its gross income or taxed at a reduced rate. Under Treasury Regulations, subject to the
discussion below regarding ‘‘qualified holders,’’ a ‘‘qualified controlled entity’’ also is not generally treated as
a foreign person for purposes of FIRPTA. A qualified controlled entity generally includes a trust or corporation
organized under the laws of a foreign country all of the interests of which are held by one or more qualified
foreign pension funds either directly or indirectly through one or more qualified controlled entities.

Treasury Regulations further require that a qualified foreign pension fund or qualified controlled entity will
not be exempt from FIRPTA with respect to dispositions of United States real property interests or REIT
distributions attributable to the same unless the qualified foreign pension fund or qualified controlled entity is
a ‘‘qualified holder.’’ To be a qualified holder, a qualified foreign pension fund or qualified controlled entity
must satisfy one of two alternative tests at the time of the disposition of the United States real property interest

or the REIT distribution. Under the first test, a qualified foreign pension fund or qualified controlled entity is
a qualified holder if it owned no United States real property interests as of the earliest date during an
uninterrupted period ending on the date of the disposition or distribution during which it qualified as a qualified
foreign pension fund or qualified controlled entity. Alternatively, if a qualified foreign pension fund or qualified
controlled entity held United States real property interests as of the earliest date during the period described in
the preceding sentence, it can be a qualified holder only if it satisfies certain testing period requirements.

Treasury Regulations also provide that a foreign partnership all of the interests of which are held by
qualified holders, including through one or more partnerships, may certify its status as such and will not be
treated as a foreign person for purposes of withholding under Section 1445 of the Code (and Section 1446 of
the Code, as applicable).

Distributions that are attributable to gain from the sales of United States real property interests received by
a qualified foreign pension fund or a qualified controlled entity that satisfies the requirements to be a qualified
holder will not be subject to U.S. federal income or withholding tax. All other distributions received by a
qualified foreign pension fund or a qualified controlled entity will be taxed as described above under
‘‘—Taxation of Non-U.S. Stockholders Holding Capital Stock—Distributions.’’ Gain of a qualified holder from
the sale or exchange of our stock and distributions treated as gain from the sale or exchange of our stock under
the rules described above under ‘‘—Taxation of Non-U.S. Stockholders Holding Capital Stock—Distributions,’’
will not be subject to U.S. federal income or withholding tax, unless such gain is treated as effectively connected
with the qualified foreign pension fund’s (or the qualified controlled entity’s, as applicable) conduct of a
U.S. trade or business, in which case, the qualified foreign pension fund (or qualified controlled entity) generally
will be subject to a tax at the same graduated rates applicable to U.S. stockholders, unless an applicable income
tax treaty provides otherwise, and may be subject to the 30% branch profits tax on its effectively connected
earnings and profits, subject to adjustments, in the case of a foreign corporation.

Item 1A. Risk Factors

Set forth below are the risks that we believe are material to our investors and should be carefully considered. These
risks are not all of the risks we face and other factors not presently known to us or that we currently believe are immaterial
may also affect our business if they occur. This section contains forward-looking statements. You should refer to the
explanation of the qualifications and limitations on forward-looking statements beginning on page 1.

Risks Related to Our Business and Operations

Our business model, especially our concentration in premium full-service hotels, can be highly volatile.

We solely own hotels, a very different asset class from many other REITs. A typical healthcare REIT, for
example, has long-term leases with third-party tenants, which provide a relatively stable long-term stream of revenue.
Our TRS lessees, on the other hand, do not enter into leases with hotel managers. Instead, the TRS lessee engages
the hotel manager pursuant to a management agreement and pays the manager a fee for managing the hotel. The TRS
lessee receives all of the operating profit or losses at the hotel. Moreover, virtually all hotel guests stay at the hotel
for only a few nights, so the rate and occupancy at each of our hotels changes every day. As a result, our earnings
may be highly volatile.

In addition to fluctuations related to our business model, our hotels are, and will continue to be, subject to
various long-term operating risks common to the hotel industry, many of which are beyond our control, including:

•

dependence on business and commercial travelers and tourism, both of which vary with consumer and
business confidence in the strength of the economy;

decreases in the frequency of business travel that may result from alternatives to in-person meetings,
including as post-COVID-19 pandemic norms continue to evolve;

competition from other hotels and alternative lodging channels located in the markets in which we own
properties;

competition from third-party internet travel intermediaries;

an over-supply or over-building of hotels in the markets in which we own properties, which could adversely
affect occupancy rates, revenues and profits at our hotels;

increases in energy and transportation costs and other expenses affecting travel, which may affect travel
patterns and reduce the number of business and commercial travelers and tourists;

increases in operating costs due to inflation and other factors that may not be offset by increased room rates; and

changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs
of compliance.

In addition, our hotels are mostly in the premium full-service segment of the hotel business, which, historically,
tends to have the strongest operating results in a growing economy and the weakest results in a contracting or slow
growth economy when many travelers might curtail travel or choose lower cost hotels. In periods of weak demand,
profitability is negatively affected by the relatively high fixed costs of operating premium full-service hotels as
compared to other classes of hotels.

The occurrence of any of the foregoing factors could have a material adverse effect on our business, financial

condition, results of operations and our ability to make distributions to our stockholders.

Economic conditions and other factors beyond our control may adversely affect the lodging industry.

Our entire business is related to the lodging industry. The performance of the lodging industry is highly cyclical
and has historically been linked to key macroeconomic indicators, such as U.S. GDP growth, employment, personal
discretionary spending levels, corporate earnings and investment, foreign exchange rates and travel demand. Given
that our hotels are concentrated in major urban markets and destination resort locations in the U.S., our business may
be particularly sensitive to changes in foreign exchange rates or a negative international perception of the U.S. arising
from its political or other positions. Furthermore, other macroeconomic factors, such as consumer confidence and
conditions which negatively shape public perception of travel, including travel-related disruptions or incidents and
their impact on travel, may have a negative effect on the lodging industry and may adversely impact our revenues
and profitability.

Our hotels are subject to significant competition.

Currently, the markets where our hotels are located are very competitive. However, a material increase in the
supply of new hotel rooms to a market can quickly destabilize that market and existing hotels can experience rapidly
decreasing RevPAR and profitability. If such over-building occurs in one or more of our major markets, our business,
financial condition, results of operations and our ability to make distributions to our stockholders may be materially
adversely affected.

Our hotels are subject to seasonal volatility, which is expected to contribute to fluctuations in our financial
condition and results of operations.

The periods during which our hotels experience higher revenues vary from property to property, depending
principally upon location and the customer base served. This seasonality can be expected to cause periodic
fluctuations in a hotel’s room revenues, occupancy levels, room rates and operating expenses. We can provide no
assurances that our cash flows will be sufficient to offset any shortfalls that occur as a result of these fluctuations.
Volatility in our financial performance resulting from the seasonality of our hotels could have a material adverse
effect on our business, financial condition, results of operations and our ability to make distributions to our
stockholders.

The increase in the use of third-party internet travel intermediaries and the increase in alternative lodging
channels, such as Airbnb, could adversely affect our profitability.

Many of our managers and franchisors contract with third-party internet travel intermediaries, including, but not
limited to Expedia.com and Priceline.com and their subsidiaries. These internet intermediaries are generally paid
commissions and transaction fees by our managers and franchisors for sales of our rooms through such agencies.
These intermediaries initially focused on leisure travel, but have grown to focus on corporate travel and group
meetings as well. If bookings through these intermediaries increase, these internet intermediaries may be able to
negotiate higher commissions, reduced room rates or other contract concessions from us, our managers or our
franchisors. In addition, internet intermediaries use extensive marketing, which could result in hotel consumers
developing brand loyalties to the offered brands and such internet intermediary instead of our management or
franchise brands. Further, internet intermediaries emphasize pricing and quality indicators, such as a star rating
system, at the expense of brand identification. In response to these intermediaries, the brand operators and franchisors
have launched initiatives to offer discounted rates for booking on their sites, which could put downward pressure on
rates and revenue. In addition, an increasing number of companies have entered various aspects of the online travel
market. Google, for example, has established a hotel meta-search business (‘‘Hotel Ads’’), as well as its ‘‘Book on
Google’’ reservation functionality. An increase in hotel reservations made through Google or its competitors, such as
Apple, Amazon or Facebook, may reduce the value of our franchise brands, which may negatively affect our average
rates and revenues.

In addition to competing with traditional hotels and lodging facilities, we compete with alternative lodging,
including third-party providers of short-term rental properties and serviced apartments, such as Airbnb, as well as
alternative meeting and event space platforms, such as Convene. We compete based on a number of factors, including
room rates, quality of accommodations, service levels, convenience of location, reputation, reservation systems,
brand recognition and supply and availability of alternative lodging and event space. Increasing use of these
alternative facilities could materially adversely affect the occupancy at our hotels and could put downward pressure
on average rates and revenues.

The rise of social media review platforms, including, but not limited to Tripadvisor.com, could impact our
occupancy levels and operating results as people might be more inclined to write about their dissatisfaction rather
than satisfaction with a hotel stay.

The increased use of business-related technology may materially and adversely affect the need for business-related
travel, and, therefore, demand for rooms in some of our hotels.

The increased use of Zoom video conferencing, Microsoft Teams and other teleconferencing and video-
conference technology by businesses has resulted in decreased business travel as companies have leveraged the use
of technologies that allow multiple parties from different locations to participate in virtual meetings without traveling
to a centralized meeting location, such as our hotels. To the extent that such technologies, or new technologies,
continue to play a role in day-to-day business interactions and the necessity for business-related travel decreases,
demand for hotel rooms may decrease and our hotels could be materially and adversely affected.

Investments in hotels are illiquid and we may not be able to respond in a timely fashion to adverse changes in the
performance of our properties.

Because real estate investments are relatively illiquid, our ability to promptly sell one or more hotel properties
or investments in our portfolio in response to changing economic, financial and investment conditions may be
limited. Moreover, the Code imposes restrictions on a REIT’s ability to dispose of properties that are not applicable
to other types of real estate companies. In particular, the tax laws applicable to REITs require that we hold our hotels
for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forego or defer
sales of hotels that would otherwise be in our best interests.

In addition, the real estate market is affected by many factors that are beyond our control, including:
•

adverse changes in international, national, regional and local economic and market conditions;

•

changes in supply of competitive hotels;

changes in interest rates and in the availability, cost and terms of debt financing;

changes in tax laws and property tax rates, or an increase in the assessed valuation of a property for real
estate tax purposes;

changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs
of compliance with laws and regulations, fiscal policies and ordinances;

fluctuations in foreign currency exchange rates;

the ongoing need for capital improvements, particularly in older structures;

changes in operating expenses; and

pandemics and the outbreak of diseases, federal, state and local government shutdowns, airline strikes, civil
unrest, active shooter attacks, acts of God, including earthquakes, floods, wildfires, hurricanes and other
natural disasters and acts of war or terrorism and their consequences, which may result in uninsured losses.

It may be in the best interest of our stockholders to sell one or more of our hotels in the future. We cannot predict
whether we will be able to sell any hotel property or investment at an acceptable price or otherwise on reasonable
terms and conditions. We also cannot predict the length of time that will be necessary to find a willing purchaser and
to close the sale of a hotel property or loan.

These facts and any others that would impede our ability to respond to adverse changes in the performance of
our hotel properties could have a material adverse effect on our operating results and financial condition, as well as
our ability to make distributions to our stockholders.

Due to restrictions in our hotel management agreements, franchise agreements, mortgage agreements and ground
leases, we may not be able to sell our hotels at the highest possible price, or at all.

Certain of our current hotel management and franchise agreements are long-term.

All but four of our hotel management agreements are terminable at our option. The remaining four hotel
management agreements have remaining terms ranging from approximately four years to 35 years, inclusive of
renewal periods that are exercisable at the option of the property manager. We are subject to franchise agreements
at certain of our properties, with remaining terms of up to 27 years, inclusive of renewal periods that are exercisable
at the option of the franchisor. See Item 2, Properties, for hotel management and franchise agreement details. Because
some of our hotels would have to be sold subject to the applicable agreement, the term length of an agreement may
deter some potential purchasers and could adversely impact the price realized from any such sale. To the extent that
we receive lower sale proceeds, our business, financial condition, results of operations and our ability to make
distributions to stockholders could be materially adversely affected.

Our mortgage agreements contain certain provisions that may limit our ability to sell our hotels.

In order to assign or transfer our rights and obligations under certain of our mortgage agreements, we generally
must obtain the consent of the lender, pay a fee equal to a fixed percentage of the outstanding loan balance, and pay
any costs incurred by the lender in connection with any such assignment or transfer. These provisions of our mortgage
agreements may limit our ability to sell our hotels which, in turn, could adversely impact the price realized from any
such sale. To the extent that we receive lower sale proceeds, our business, financial condition, results of operations
and our ability to make distributions to stockholders could be materially adversely affected.

Our ground leases contain certain provisions that may limit our ability to sell our hotels.

Our ground lease agreements with respect to the Embassy Suites by Hilton Bethesda, the Salt Lake City Marriott
Downtown at City Creek, the Westin Boston Seaport District, the Hotel Palomar Phoenix, the Courtyard New York
Manhattan/Fifth Avenue and Cavallo Point, as well as the ground lease underlying our annex sublease at the Orchards
Inn Sedona, require the consent of the lessor for assignment or transfer. These provisions of our ground leases may
limit our ability to sell our hotels which, in turn, could adversely impact the price realized from any such sale. In
addition, at any given time, investors may be disinterested in buying properties subject to a ground lease and may
pay a lower price for such properties than for a comparable property owned in fee simple or they may not purchase
such properties at any price. Accordingly, we may find it difficult to sell a property subject to a ground lease or may
receive lower proceeds from any such sale. To the extent that we receive lower sale proceeds or are unable to sell
the hotel at an opportune time or at all, our business, financial condition, results of operations and our ability to make
distributions to stockholders could be materially adversely affected.

Some of our hotels are subject to rights of first offer that may limit our ability to sell our hotels.

We are subject to a franchisor’s or operator’s right of first offer, in some instances under our franchise
agreements or management agreements. Such provisions may limit our ability to sell our hotels which, in turn, could
adversely impact the price realized from any such sale. To the extent that we receive lower sale proceeds, our
business, financial condition, results of operations and our ability to make distributions to stockholders could be
materially adversely affected.

We may be subject to unknown or contingent liabilities related to recently sold or acquired hotels, as well as hotels
that we may sell or acquire in the future.

Our recently sold or acquired hotels, as well as hotels we may sell or acquire in the future, may be subject to
unknown or contingent liabilities for which we may be liable to the buyers or for which we may have no recourse,
or only limited recourse, against the sellers. In general, the representations and warranties provided under our
transaction agreements related to the sale or purchase of a hotel may survive for a defined period of time after the
completion of the transaction.

Furthermore,

indemnification under such agreements may be limited and subject

to various materiality
thresholds, a significant deductible, or an aggregate cap on losses. As a result, there is no guaranty that we will not
be obligated to reimburse buyers for their losses or that we will be able to recover any amounts with respect to losses
due to breaches by sellers of their representations and warranties.

In addition, the total amount of costs and expenses that may be incurred with respect to the unknown or
contingent liabilities may exceed our expectations, and we may experience other unanticipated adverse effects, all of
which could materially and adversely affect our operating results and cash flows.

We are subject to risks associated with our ongoing need for renovations and capital improvements as well as
financing for such expenditures.

In order to remain competitive, our hotels have an ongoing need for renovations and other capital improvements,
including replacements, from time to time, of furniture, fixtures and equipment. These capital improvements may
give rise to the following risks:

•

construction cost overruns and delays, including those caused by supply chain disruptions or inflationary
price increases;

a possible shortage of available cash to fund capital improvements and the related possibility that financing
for these capital improvements may not be available to us on affordable terms;

the renovation investment failing to produce the returns on investment that we expect;

disruptions in the operations of the hotel as well as in demand for the hotel while capital improvements are
underway; and

disputes with franchisors/hotel managers regarding compliance with relevant franchise/management
agreements.

The costs of these capital improvements or profit displacements during the completion of these capital
improvements could have a material adverse effect on our business, financial condition, results of operations and our
ability to make distributions to our stockholders.

In addition, we may not be able to fund capital improvements or acquisitions solely from cash provided from
our operating activities because we generally must distribute at least 90% of our REIT taxable income, determined
without regard to the dividends paid deduction and excluding net capital gains, each year to maintain our REIT tax
status. As a result, our ability to fund capital expenditures or investments through retained earnings is very limited.
Consequently, we rely upon the availability of debt or equity capital
to fund our investments and capital
improvements. These sources of funds may not be available on reasonable terms or conditions.

Any future pandemic, epidemic or outbreak of any highly infectious disease could cause widespread disruptions
in the U.S., regional and global economies, travel and the hospitality industry and could materially and adversely
impact our business, financial condition and results of operations.

Any future pandemic, epidemic or outbreak of any highly infectious disease, including the emergence of
additional COVID-19 variants, could cause widespread disruptions to the U.S. and global economy and volatility and
negative pressure in financial markets.

The full extent to which any future pandemic, epidemic or outbreak of any highly infectious disease impacts our
operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence,
including the scope, severity and duration of such pandemic, the emergence and characteristics of new variants, the
actions taken to contain the pandemic or mitigate its impact, including the adoption, administration and effectiveness
of available vaccines, and the direct and indirect economic effects of the pandemic and containment measures, among
others. COVID-19 materially and adversely affected, and COVID-19 or any future pandemic, epidemic or outbreak
of any other highly infectious disease may materially and adversely affect, our business, financial condition and
results of operations, and our ability to pay dividends, and may also have the effect of heightening many of the risks
described below and within this ‘‘Risk Factors’’ section, including:

•

a complete or partial closure or re-closure of, or other operational issues at, one or more of our hotels
resulting from government,
third-party hotel manager or franchisor action, which could materially
adversely affect our operations;

the postponement or cancellation of conferences, conventions, festivals, sporting events, public events and
other group business that would have otherwise brought individuals to the cities in which our hotels are
located, which could cause a decrease in occupancy rates over a prolonged period of time and exacerbate
the seasonal volatility at our hotels;

a general decline of in-person business meetings and an increase in the use of teleconferencing and
video-conference technology, which could cause a sustained shift away from business-related travel and
have a material adverse effect on the overall demand for hotel rooms; and

a decrease in individuals’ willingness to travel as a result of the public health risks and social impacts of
such outbreak or a decrease in consumer spending, which could affect the ability of our hotels to generate
sufficient revenues to meet operating and other expenses in the short- and long-term.

In the event of natural disasters caused by climate change or otherwise, terrorist attacks, active shooter attacks,
significant military actions, outbreaks of contagious diseases or other events for which we may not have adequate
insurance, our operations may suffer.

We are subject to the risks associated with the direct and indirect physical effects of climate change, which can
include more frequent and severe storms, hurricanes, flooding, droughts and wildfires, any of which could have a
material adverse effect on our business, financial condition and results of operations. Seven of our hotels (The Lodge
at Sonoma Resort, Westin San Diego Bayview, Hotel Emblem San Francisco, The Lindy Renaissance Charleston
Hotel, Kimpton Shorebreak Huntington Beach Resort, The Landing Lake Tahoe Resort & Spa, and Cavallo Point)
are located in areas that are seismically active. Nine of our hotels (Havana Cabana Key West, Margaritaville Beach
House Key West, Westin Fort Lauderdale Beach Resort, Henderson Park Inn, Henderson Beach Resort, Bourbon
Orleans Hotel, The Lindy Renaissance Charleston Hotel, Tranquility Bay Beachfront Resort and Kimpton Shorebreak
Fort Lauderdale Beach Resort) are located in areas that have experienced, and will continue to experience, many
hurricanes. Eleven of our hotels are located in metropolitan markets that have been, or may in the future be, targets
of actual or threatened terrorist attacks or active shooter attacks, including New York City, Chicago, Boston, San
Francisco and Washington, D.C. These hotels are material to our financial results, having constituted 73% of our total
revenues in 2023. In addition, to the extent that climate change causes an increase in storm intensity or rising sea

levels, our hotels, which are concentrated in coastal areas and other areas that may be impacted by climate change,
may be susceptible to an increase in weather-related damage. Additionally, even in the absence of direct physical
damage to our hotels, the occurrence of any natural disasters, terrorist attacks, significant military actions, outbreaks
of pandemics or diseases, such as Zika, Ebola, COVID-19, H1N1 or other similar viruses, or severe weather, extreme
temperatures or a changing climate in the area of any of our hotels, will likely have a material adverse effect on
business and commercial travelers and tourists, the economy generally and the hotel and tourism industries in
particular. While we cannot predict the impact of the occurrence of any of these events, such events may result in
decreases in consumer discretionary spending, including the frequency with which our customers choose to stay at
hotels or the amount they spend on hotels, which could result in a material adverse effect on our business, financial
condition, results of operations and our ability to make distributions to our stockholders.

We have acquired and intend to maintain comprehensive insurance on each of our hotels, including liability,
terrorism, fire and extended coverage, of the type and amount that we believe are customarily obtained for or by hotel
owners. We cannot guarantee that such coverage will continue to be available at reasonable rates or with reasonable
deductibles. Our Florida hotels (Havana Cabana Key West, Margaritaville Beach House Key West, Westin Fort
Lauderdale Beach Resort, Henderson Park Inn, Henderson Beach Resort, Tranquility Bay Beachfront Resort and
Kimpton Shorebreak Fort Lauderdale Beach Resort), the Bourbon Orleans Hotel and The Lindy Renaissance
Charleston Hotel each have a deductible of 5% of total insured value for a named storm. In addition, each of our
California hotels (Westin San Diego Bayview, Hotel Emblem San Francisco, Kimpton Shorebreak Huntington Beach
Resort, The Lodge at Sonoma Resort, The Landing Lake Tahoe Resort & Spa and Cavallo Point) have a deductible
of 5% of total insured value for damage due to an earthquake. We have submitted insurance claims relating to natural
disasters at our hotels before and may need to submit similar claims in the future. The prior claims and the increased
incidence of substantial claims due to future natural disasters may adversely impact the availability or pricing of
insurance available to us.

Various types of catastrophic losses, like earthquakes, floods, wildfires, losses from foreign terrorist activities,
or losses from domestic terrorist activities may not be insurable or are generally not insured because of economic
infeasibility, legal restrictions or the policies of insurers. Future lenders may require such insurance, and our failure
to obtain such insurance could constitute a default under loan agreements. Depending on our access to capital,
liquidity and the value of the properties securing the affected loan in relation to the balance of the loan, a default could
have a material adverse effect on our results of operations and ability to obtain future financing.

In the event of a substantial loss, our insurance coverage may not be sufficient to cover the full current market
value or replacement cost of our lost investment. Should an uninsured loss or a loss in excess of insured limits occur,
we could lose all or a portion of the capital we have invested in a hotel, as well as the anticipated future revenue from
that particular hotel. In that event, we might nevertheless remain obligated for any mortgage debt or other financial
obligations secured by or related to the property. Inflation, changes in building codes and ordinances, environmental
considerations and other factors might also prevent us from using insurance proceeds to replace or renovate a hotel
after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be
inadequate to restore our economic position with regard to the damaged or destroyed property.

We and our hotel managers rely on information technology in our operations and any material failures,
inadequacies, interruptions, security failures, or cybersecurity incidents could harm our business.

We and our hotel managers rely on information technologies and systems, including the Internet, to access, store,
transmit, deliver and manage information and processes. Some of these information technologies and systems are
provided by third-party vendors. We rely on commercially available systems, software, tools and monitoring to
provide security for processing, transmission and storage of certain confidential customer information, such as
individually identifiable information, including information relating to financial accounts. Recently, a number of
hotels and hotel management companies have been subject to cybersecurity incidents, including successful attacks
seeking guest credit card information. Moreover, the risk of a cybersecurity incident has generally increased as the
number, intensity and sophistication of attempted attacks and intrusions from around the world has increased.

For these reasons, we and our hotel managers are subject to risks associated with cybersecurity incidents,
whether through cyber-attacks such as ransomware or online fraud schemes, spoofed e-mails and social engineering
efforts by bad actors aimed at obtaining confidential information. Any compromise of the function, security and
availability of our network and systems or the network and systems of our hotel managers or our third-party vendors
could result in disruptions to operations, misappropriated or compromised confidential hotel or guest information,
systems disruptions, the shutdown of our hotels, exploited security vulnerability of our respective networks, delayed

sales or bookings, lost guest reservations and damage to our reputation or the reputations of our hotel managers and
third-party vendors. Although we and our hotel managers have taken steps to protect the security of these systems,
there can be no assurance that such security measures will prevent failures, inadequacies or interruptions in system
services, or that system security will not be breached through physical or electronic break-ins, computer viruses, or
other cybersecurity incidents. The costs to us to eliminate or alleviate cybersecurity incidents could be significant and
may increase as the number, intensity and sophistication of such incidents increases. Disruptions in service, system
shutdowns and cybersecurity incidents affecting either the information technologies and systems of our hotel
managers, our third-party vendors or our own information technologies and systems, including unauthorized
disclosure of confidential information, could have a material adverse effect on our business operations and results,
our financial and compliance reporting and our reputation.

Many of our hotel managers carry cyber insurance policies to protect and offset a portion of potential costs that
may be incurred from a cybersecurity incident. Additionally, we currently have cyber insurance policies to provide
supplemental coverage above the coverage carried by our third-party managers. However, these insurance policies
may not be adequate to cover all loses relating to cybersecurity incidents. Despite various precautionary steps to
protect our hotels from losses resulting from cybersecurity incidents, any occurrence of a cybersecurity incident could
still result in losses at our properties, which could affect our results of operations. We are not aware of any
cybersecurity incidents that we believe to be material or that could have a material adverse effect on our business,
financial condition and results of operations.

Our results of operations are highly dependent on the management of our hotel properties by third-party hotel
management companies.

In order to qualify as a REIT, we cannot operate our hotel properties or control the daily operations of our hotel
properties. Our TRS lessees may not operate these hotel properties and, therefore, they must enter into third-party
hotel management agreements with one or more eligible independent contractors. Thus,
third-party hotel
management companies that enter into management contracts with our TRS lessees control the daily operations of
our hotel properties.

Under the terms of the hotel management agreements that we have entered into, or that we will enter into in the
future, our ability to participate in operating decisions regarding our hotel properties is limited to certain matters,
including approval of the annual operating budget. We currently rely, and will continue to rely, on these hotel
management companies to adequately operate our hotel properties under the terms of the hotel management
agreements. While we and our TRS lessees closely monitor the performance of our hotel managers, we do not have
the authority to require any hotel property to be operated in a particular manner or to govern any particular aspect
of its operations (for instance, setting room rates and cost structures). Thus, even if we believe that our hotel
properties are being operated inefficiently or in a manner that does not result in satisfactory occupancy rates, ADRs
and operating profits, we may not have sufficient rights under our hotel management agreements to enable us to force
the hotel management company to change its method of operation. We can only seek redress if a hotel management
company violates the terms of the applicable hotel management agreement with the TRS lessee, and then only to the
extent of the remedies provided for under the terms of the hotel management agreement. Four of our current
management agreements are non-terminable, subject to certain exceptions for cause or failure to achieve certain
performance targets. In the event that we need to replace any of our hotel management companies pursuant to
termination for cause or performance, we may experience significant disruptions at the affected properties and the
new management companies may not meet our performance expectations, which may have a material adverse effect
on our business, financial condition, results of operations and our ability to make distributions to our stockholders.

We may be unable to maintain good relationships with third-party hotel managers and franchisors.

The success of our respective hotel investments and the value of our franchised properties largely depend on our
ability to establish and maintain good relationships with the third-party hotel managers and franchisors of our
respective hotel management and franchise agreements. If we are unable to maintain good relationships with
third-party hotel managers or franchisors, we may be unable to renew existing management or franchise agreements
or expand relationships with them. Additionally, opportunities for developing new relationships with additional
third-party hotel managers or franchisors may be adversely affected. This, in turn, could have an adverse effect on
our results of operations and our ability to execute our repositioning strategy through a change in brand or change
in third-party hotel manager.

A substantial number of our hotels operate under a brand owned by Marriott, Hilton or IHG; therefore, we are
subject to risks associated with concentrating our portfolio in three hotel chains.

As of the date of this report, 16 of our 36 hotels operate under brands owned by Marriott, three of our hotels
operate under brands owned by Hilton and three of our hotels operate under brands owned by IHG. As a result, our
success is dependent in part on the continued success of Marriott, Hilton and IHG and their respective brands.
Consequently, if market recognition or the positive perception of Marriott, Hilton or IHG is reduced or compromised,
the goodwill associated with the Marriott-, Hilton- and IHG-branded hotels in our portfolio may be adversely
affected, which may have a material adverse effect on our business, financial condition, results of operations and our
ability to make distributions to our stockholders.

Several of our hotels are operated under franchise agreements and we are subject to the risks associated with the
franchise brand and the costs associated with maintaining the franchise license.

As of the date of this report, 22 of our 36 hotels operate under Marriott, Hilton or IHG franchise agreements.
The maintenance of the franchise licenses for branded hotel properties is subject to the franchisors’ operating
standards and other terms and conditions set forth in the applicable franchise agreement. Franchisors periodically
inspect hotel properties to ensure that we, our TRS lessees and management companies follow their brand standards.

If we fail to maintain these required standards, then the brand may terminate its agreement with us and assert
a claim for damages for any liability we may have caused, which could include liquidated damages. Moreover, from
time to time, we may receive notices from franchisors or the hotel brands regarding alleged non-compliance with the
franchise agreements or brand standards, and we may disagree with these claims that we are not in compliance. Any
disputes arising under these agreements could also lead to a termination of a franchise or management agreement and
a payment of liquidated damages. If we were to lose a franchise or hotel brand for a particular hotel, it could harm
the operation, financing, or value of that hotel due to the loss of the franchise or hotel brand name, marketing support
and centralized reservation system, all or any of which could have a material adverse effect on our business, financial
condition, results of operations and our ability to make distributions to stockholders.

Contractual and other disagreements with third-party hotel managers and franchisors could make us liable to
them or result in litigation costs or other expenses.

Our management and franchise agreements with third-party hotel managers require us and the applicable
third-party hotel manager to comply with operational and performance conditions that are subject to interpretation
and could result in disagreements, and we expect this will be true of any management and franchise agreements that
we enter into with future third-party hotel managers or franchisors. At any given time, we may be in disputes with
one or more third-party hotel managers or franchisors.

Any such dispute could be very expensive for us, even if the outcome is ultimately in our favor. We cannot
predict the outcome of any arbitration or litigation, the effect of any negative judgment against us or the amount of
any settlement that we may enter into with any franchisor other third-party hotel manager. In the event we terminate
a management or franchise agreement early and the hotel manager or franchisor considers such termination to have
been wrongful, they may seek damages. Additionally, we may be required to indemnify our third-party hotel
managers and franchisors against disputes with third parties pursuant to our management and franchise agreements.
An adverse result in any of these proceedings could materially and adversely affect our revenues and profitability.

If we were to lose a brand license at one or more of our hotels, the value of the affected hotels could decline
significantly and we could incur significant costs to obtain new franchise licenses, which could materially and
adversely affect our results of operations and profitability as well as limit or slow our future growth.

The terms of our franchise and brand management agreements generally require us to meet specified operating
standards and other terms and conditions, and compliance with such standards may be costly. Failure by us, or any
hotel management company that we engage, to maintain these standards or other terms and conditions could result
in a franchise license being canceled or the franchisor requiring us to undertake a costly property improvement
program. If a franchise license is terminated due to our failure to make required improvements or to otherwise comply
with its terms, we also may be liable to the franchisor for a termination payment, which could materially and
adversely affect our results of operations and profitability.

If we were to lose a brand license, the underlying value of a particular hotel could decline significantly from the
loss of associated name recognition, marketing support, participation in guest loyalty programs and the centralized

reservation system provided by the franchisor or brand manager, which could require us to recognize an impairment
on the hotel. Furthermore, the loss of a franchise license at a particular hotel could harm our relationship with the
franchisor or brand manager, which could impede our ability to operate other hotels under the same brand, limit our
ability to obtain new franchise licenses or brand management agreements from the franchisor or brand in the future
on favorable terms, or at all, and cause us to incur significant costs to obtain a new franchise license or brand
management agreement for the particular hotel. Accordingly, if we lose one or more franchise licenses or brand
management agreements, it could materially and adversely affect our results of operations and profitability as well
as limit or slow our future growth.

Our business may be adversely affected by consolidation in the lodging industry.

Consolidation among companies in the lodging industry may reduce our bargaining power in negotiating
management agreements and franchise agreements due to decreased competition among major brand companies. We
believe this could provide the major brand companies with leverage when negotiating for property improvement
plans where the franchisor or hotel brand requires renovations to bring the physical condition of a hotel into
compliance with the specifications and standards each franchisor or hotel brand has developed.

Industry consolidation could also result in the lack of differentiation among the brands, which could impact the
ability to drive higher rates in those brands. In addition, to the extent that consolidation among hotel brand companies
adversely affects the loyalty reward program offered by one or more of our hotels, customer loyalty to those hotels
may suffer and demand for guestrooms may decrease. Furthermore, because each hotel brand company relies on its
own network of reservation systems, hotel management systems and customer databases, the integration of two or
more networks may result in a disruption to operations of these systems, such as disruptions in processing guest
reservations, delayed bookings or sales, or lost guest reservations, which could adversely affect our financial
condition and results of operations. Additionally, following the completion of a merger of companies, the costs to
integrate the companies may be absorbed by our impacted hotel or hotels and adversely affect our financial condition
and results of operations.

Our ownership of properties through ground leases exposes us to the risks that we may have difficulty financing
such properties, be forced to sell such properties for a lower price, are unable to extend the ground leases at
maturity or lose such properties upon breach or termination of the ground leases.

We hold a leasehold or subleasehold interest in all or a portion of the land underlying eight of our hotels owned
as of December 31, 2023 (Embassy Suites by Hilton Bethesda, Courtyard New York Manhattan/Fifth Avenue, Salt
Lake City Marriott Downtown at City Creek, Westin Boston Seaport District, Hotel Clio, Orchards Inn Sedona, Hotel
Palomar Phoenix, and Cavallo Point), and a parking area near the Bourbon Orleans Hotel. We may acquire additional
hotels in the future subject to ground leases. In the past, from time to time, secured lenders have been unwilling to
lend, or otherwise charged higher interest rates, for loans secured by a leasehold mortgage compared to loans secured
by a fee simple mortgage. For this reason, we may have a difficult time selling a property subject to a ground lease
or may receive lower proceeds from a sale. Finally, as the lessee under our ground leases, we are exposed to the
possibility of losing the hotel, or a portion of the hotel, upon termination, or an earlier breach by us, of the ground
lease, which could result in a material adverse effect on our business, financial condition, results of operations and
our ability to make distributions to our stockholders.

Furthermore, unless we purchase a fee simple interest in the land and improvements subject to our ground leases,
we will not have any economic interest in the land or improvements at the expiration of our ground leases and
therefore we generally will not share in any increase in value of the land or improvements beyond the term of a
ground lease, notwithstanding our capital outlay to purchase our interest in the hotel or fund improvements thereon,
and will lose our right to use the hotel.

The failure of tenants to make rent payments under our retail and restaurant leases may adversely affect our
results of operation.

On occasion, retail and restaurant tenants at our hotel properties may fail to make rent payments when due.
Generally, we hold security deposits in connection with each lease which may be applied in the event that the tenant
under the lease fails or is unable to make payments; however, these security deposits do not provide us with sustained
cash flow to pay distributions or for other purposes. In the event that a tenant continually fails to make rent payments,
the security deposits may be applied in full to the non-payment of rents, but we face the risk of being able to recover
only a portion of the rents due to us or being unable to recover any amounts whatsoever. If we evict a tenant, we also
face the risk of delay or inability to find a suitable tenant or replacement tenant that suits the needs of our hotel.

We face competition for hotel acquisitions and investments, and we may not be successful in identifying or
completing hotel acquisitions and investments that meet our criteria, which may impede our growth.

One component of our long-term business strategy is expansion through hotel acquisitions and investments.
However, we may not be successful in identifying or completing acquisitions or investments that are consistent with
our strategy. We compete with institutional pension funds, private equity funds, REITs, hotel companies and others
who are engaged in hotel acquisitions and investments. This competition for hotel investments may increase the price
we pay for hotels and these competitors may succeed in acquiring those hotels that we seek to purchase. In addition,
the number of entities competing for suitable hotels may increase in the future, which would increase demand for
these hotels and the prices we must pay to acquire them. If we pay higher prices for hotels, our returns on investment
and profitability may be reduced. Also, future acquisitions of hotels, hotel companies or hotel investments may not
yield the returns we expect, especially if we cannot obtain financing without paying higher borrowing costs, and may
result in stockholder dilution.

Many of our costs, such as operating expenses, interest expense and acquisition and renovation costs, could be
adversely impacted by periods of heightened inflation.

Beginning in 2021, inflation in the United States rose to levels not experienced in recent decades, and we are
seeing its impact on various aspects of our business. Certain of our operating expenses, including, but not limited to,
labor costs, employee-related benefits, food, beverage and utility costs, repairs and maintenance expenses, property
taxes and insurance premiums, have and may continue to negatively impact our business and results of operations.
While, in general, operators of hotels possess the ability to adjust room rates daily to reflect the effects of inflation,
competitive pressures, customer resistance to higher booking costs or other factors may limit the ability of our
management companies to raise room rates. Additionally, inflation may have a negative effect on our ability to
renovate or make capital improvements, including replacements, from time to time, of furniture, fixtures and
equipment. See ‘‘Risk Factors—Risks Related to our Business and Operations—We are subject to risks associated
with our ongoing need for renovations and capital improvements as well as financing for such expenditures.’’

In March 2022, the Federal Reserve began, and it has continued and may continue, to raise interest rates in an
effort to curb inflation. Our direct exposure to increases in interest rates in the short term is limited to our unhedged
variable rate debt, which amounted to approximately $475.0 million as of December 31, 2023. However, the effect
of inflation on interest rates could increase our financing costs over time, either through near-term borrowings under
our Credit Agreement or refinancing of our existing borrowings that may incur higher interest expenses related to the
issuance of new debt. For more information, see ‘‘Risk Factors—Risks Related to our Debt and Financing— Future
debt service obligations may adversely affect our operating results, require us to liquidate our properties, jeopardize
our ability to make cash distributions necessary to maintain our tax status as a REIT and limit our ability to make
distributions to our stockholders.’’

In addition, historically, during periods of increasing interest rates, real estate valuations have generally
decreased as a result of rising capitalization rates, which tend to be positively correlated with interest rates.
Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our portfolio and
result in the decline of the quoted trading price of our securities and market capitalization, as well as lower sales
proceeds from future dispositions.

Even if we successfully complete hotel acquisitions, there can be no assurance that we will be able to
successfully integrate the hotels we acquire into our existing operations or otherwise realize the expected benefits of
these acquisitions. In addition, the acquisition and subsequent integration of the additional hotels into our existing
portfolio may require significant time and focus from our management team and may divert attention from the
day-to-day operations of our business, which could delay the achievement of our strategic objectives. Acquired
properties may be located in markets where we may face risks associated with a lack of market knowledge or
understanding of the local economy, lack of business relationships in the area and unfamiliarity with local
governmental and permitting procedures. Further, the acquired properties may present other unique risks due to the
nature of the assets acquired. Any delay or failure on our part to operate acquired properties to meet our financial
expectations could impede our growth and have an adverse effect on us, including our financial condition, results of
operations, cash flow.

Actions by organized labor could have a material adverse effect on our business.

We believe that unions are generally becoming more aggressive about organizing workers at hotels in certain
geographic locations. Potential labor activities at these hotels could significantly increase the administrative, labor
and legal expenses and reduce the profits that we receive. If hotels in our portfolio are organized, this could have a
material adverse effect on our business, financial condition, results of operation and our ability to make distributions
to our stockholders.

We have entered into management agreements with third-party managers to operate our hotels. Our hotel
managers are responsible for hiring and maintaining the labor force at each of our hotels. From time to time, strikes,
lockouts, public demonstrations or other negative actions and publicity may disrupt hotel operations at any of our
hotels, negatively impact our reputation or the reputation of our brands, or harm relationships with the labor forces
at our hotels. We also may incur increased legal costs and indirect labor costs as a result of contract disputes or other
events. Additionally, hotels where our managers have collective bargaining agreements with employees are more
highly affected by labor force activities than others. The resolution of labor disputes or new or re-negotiated labor
contracts could lead to increased labor costs, either by increases in wages or benefits or by changes in work rules that
raise hotel operating costs. Furthermore, labor agreements may limit the ability of our hotel managers to reduce the
size of hotel workforces during an economic downturn because collective bargaining agreements are negotiated
between the hotel managers and labor unions. We do not have the ability to control the outcome of these negotiations.

Labor shortages could slow our growth or harm our business.

Our success depends in part upon our third-party managers’ ability to attract, motivate and retain a sufficient
number of qualified employees. Qualified individuals needed to fill these positions are in increasingly short supply
in some areas. The inability to recruit and retain these individuals may adversely impact hotel operations and guest
satisfaction, which could harm our business. Additionally, competition for qualified employees may require us or our
third party managers to pay meaningfully higher wages to attract enough employees than has historically been the
case, and continued tightness in labor markets could result in continued escalation of labor costs. In addition, we
could face additional challenges meeting workforce requirements due to changes in workforce dynamics, such as
remote work arrangements or more flexibility in work schedules, which could result in increased labor costs in the
future.

Actions by federal, state or local jurisdictions could have a material adverse effect on our business.

Several local jurisdictions in the U.S. have enacted, or considered, legislation increasing the minimum wage for
workers in the jurisdiction. Some of this legislation applies to hotels only. If a jurisdiction in which the Company
owns a hotel adopts such legislation, then the cost to operate the hotel may increase significantly and could have a
material adverse effect on our business, financial condition, results of operations and our ability to make distributions
to our stockholders.

Risks Related to the Economy and Credit Markets

The lack of availability and terms of financing could adversely impact the amounts, sources and costs of capital
available to us.

The ownership of hotels is very capital intensive. We finance the acquisition of our hotels with a mixture of
equity and long-term debt, while we traditionally finance renovations and operating needs with cash provided from
operations or with borrowings from our corporate credit facility. Our mortgage loans typically have a large balloon
payment due at their maturity. Generally, we find it more efficient to place a significant amount of debt on a small
number of our hotels while we try to maintain a significant number of our hotels unencumbered.

During periods of economic recession, it could be difficult for us to borrow money. In recent years, a significant
percentage of hotel loans were made by lenders who sold such loans to securitized lending vehicles, such as
commercial mortgage backed security (‘‘CMBS’’) pools. If the market for new CMBS issuances results in CMBS
lenders making fewer loans, there is a risk that the debt capital available to us could be reduced.

An uncertain environment in the lodging industry and the economy generally could result in declines in our
average daily room rates, occupancy and RevPAR, and thereby have a material adverse effect on our results of
operations.

The performance of the lodging industry has traditionally been closely linked with the general economy. A stall
in economic growth or an economic recession could have a material adverse effect on our results of operations. When

a property’s occupancy or room rates drop to the point where its revenues are less than its operating expenses, we
are required to spend additional funds in order to cover that property’s operating expenses.

In addition, if the operating results decline at our hotels that are secured by mortgage debt, there may not be
sufficient operating profits from the hotel to fund the debt service on the mortgage. In such a case, we may be forced
to choose from a number of unfavorable options, including using corporate cash, drawing on our corporate credit
facility, selling a hotel on disadvantageous terms, including an unattractive price, or defaulting on the mortgage debt
and permitting the lender to foreclose. Any one of these options could have a material adverse effect on our business,
results of operations, financial condition and ability to pay distributions to our stockholders.

Risks Related to Our Debt and Financing

The instruments governing our existing indebtedness contain, and instruments governing our future indebtedness
may contain, financial covenants that could limit our operations and our ability to make distributions to our
stockholders.

Our existing property-level debt instruments contain, and instruments governing property-level debt we incur in
the future may contain, restrictions (including cash management provisions) that may, under circumstances specified
in the loan agreements, prohibit our subsidiaries that own our hotels from making distributions or paying dividends,
repaying loans to us or other subsidiaries or transferring any of their assets to us or another subsidiary. Failure to meet
our financial covenants could result from, among other things, changes in our results of operations, the incurrence
of additional debt or changes in general economic conditions. In addition, this could cause one or more of our lenders
to accelerate the timing of payments and could have a material adverse effect on our business, financial condition,
results of operations and our ability to make distributions to our stockholders. The terms of our debt may restrict our
ability to engage in transactions that we believe would otherwise be in the best interests of our stockholders.

Our credit facility and term loans contain financial covenants that may constrain our ability to sell assets and
make distributions to our stockholders.

Our corporate credit facility and term loans contain several financial covenants, the most constraining of which
limits the amount of debt that we may incur compared to the value of our hotels (our leverage covenant) and the
amount of debt service we pay compared to our cash flow (our debt service coverage covenant). If we were to default
under either of these covenants or were unable to obtain a waiver of such default, the lenders may require us to repay
all amounts then outstanding under our credit facility and term loans and may terminate our credit facility and term
loans. In each of 2020, 2021 and 2022, we executed amendments to the credit agreements in place at the time in order
to waive the quarterly tested financial covenants and make certain other modifications to the covenants contained
therein. We exited the covenant waivers and modifications as of the second quarter of 2022, and we are in compliance
with all financial covenants, but there can be no assurance that we will be able to meet our financial covenants in
the future or that we will be able to obtain additional waivers from our lenders, if needed. These and our other
financial covenants constrain us from incurring material amounts of additional debt or from selling properties that
generate a material amount of income. In addition, our credit facility requires that we maintain a minimum number
of our hotels as unencumbered assets.

All of our existing mortgage debt agreements contain, and future mortgage debt agreements may contain, ‘‘cash
trap’’ provisions that could limit our ability to make distributions to our stockholders.

All of our loan agreements contain, and future mortgage debt agreements may contain, cash trap provisions that
may be triggered if the performance of the affected hotel or hotels declines to a certain level. If the provisions in one
or more of these loan agreements are triggered, substantially all of the cash flow generated by the hotel or hotels
affected will be deposited directly into lockbox accounts and then swept into cash management accounts for the
benefit of the lenders. Cash will be distributed to us only after certain items are paid, including deposits into leasing
and maintenance reserves and the payment of debt service, insurance, taxes, operating expenses, and extraordinary
capital expenditures and leasing expenses. These ‘‘cash trap’’ provisions do not provide the lender the right to
accelerate repayment of the underlying debt. As of December 31, 2023, we had no cash traps in place. However, the
triggering of cash traps in the future could affect our liquidity and our ability to make distributions to our
stockholders.

There is refinancing risk associated with our debt.

Our typical debt contains limited principal amortization; therefore, the vast majority of the principal must be
repaid at the maturity of the loan in a so-called ‘‘balloon payment.’’ In the event that we do not have sufficient funds

to repay the debt at the maturity of these loans, we will need to refinance this debt. If the credit environment is
constrained at the time of our debt maturities, we would have a very difficult time refinancing debt. When we
refinance our debt, prevailing interest rates and other factors may result in paying a greater amount of debt service,
which will adversely affect our cash flow, and, consequently, our cash available for distribution to our stockholders.
If we are unable to refinance our debt on acceptable terms, we may be forced to choose from a number of unfavorable
options. These options include agreeing to otherwise unfavorable financing terms on one or more of our
unencumbered assets, selling one or more hotels on disadvantageous terms, including unattractive prices or defaulting
on the mortgage and permitting the lender to foreclose. Any one of these options could have a material adverse effect
on our business, financial condition, results of operations and our ability to make distributions to our stockholders.

If we default on our secured debt in the future, the lenders may foreclose on our hotels.

All of our indebtedness, except our credit facility and term loan, is secured by single property first mortgages
on the applicable property. If we default on any of the secured loans, the lender will be able to foreclose on the
property pledged to the relevant
loan. While we have maintained certain of our hotels
unencumbered by mortgage debt, we have a relatively high loan-to-value on a number of our hotels which are subject
to mortgage loans and, as a result, those mortgaged hotels may be at an increased risk of default and foreclosure. In
addition, to the extent that we cannot meet any future debt service obligations, we will risk losing some or all of our
hotels that are pledged to secure our obligations to foreclosure. This could affect our ability to make distributions to
our stockholders.

lender under that

In addition to losing the property, a foreclosure may result in recognition of taxable income. Under the Code,
a foreclosure of property securing non-recourse debt would be treated as a sale of the property for a purchase price
equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured
by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure even though
we did not receive any cash proceeds. As a result, we may be required to identify and utilize other sources of cash
for distributions to our stockholders. If this occurs, our financial condition, cash flow and ability to satisfy our other
debt obligations or ability to pay distributions may be adversely affected.

Future debt service obligations may adversely affect our operating results, require us to liquidate our properties,
jeopardize our ability to make cash distributions necessary to maintain our tax status as a REIT and limit our
ability to make distributions to our stockholders.

In the future, we and our subsidiaries may incur substantial additional debt, including secured debt. Borrowing
costs have steadily increased during the last two years and may continue to increase as the U.S. Federal Reserve
addresses inflation and, as a result, borrowing costs on new and refinanced debt may be more expensive. Our existing
debt, and any additional debt borrowed in the future could subject us to many risks, including the risks that:

•

our cash flow from operations will be insufficient to make required payments of principal and interest or
to make cash distributions necessary to maintain our tax status as a REIT;

we may be vulnerable to adverse economic and industry conditions;

we may be required to dedicate a substantial portion of our cash flow from operations to the repayment of
our debt, thereby reducing the cash available for distribution to our stockholders, operations and capital
expenditures, future investment opportunities or other purposes;

the terms of any refinancing might not be as favorable as the terms of the debt being refinanced; and

the use of leverage could adversely affect our stock price and our ability to make distributions to our
stockholders.

If we violate covenants in our future indebtedness agreements, we could be required to repay all or a portion
of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on
favorable terms, if at all.

Refinanced debt could reduce the amounts available for distribution to our stockholders, as well as reduce funds

available for our operations, future investment opportunities or other purposes.

Increases in interest rates may increase our interest expense.

Interest rates are highly sensitive to many factors that are beyond our control, including general economic
conditions and policies of various governmental and regulatory agencies. For instance, during 2022 and 2023 the

U.S. Federal Reserve announced several increases to its benchmark interest rate and may approve one or more
additional rate increases in the future, which increases may be significant. Higher interest rates could increase debt
service requirements on any of our floating rate debt, including our unsecured term loans and any outstanding balance
on our senior unsecured credit facility, and could reduce the amounts available for distribution to our stockholders,
as well as reduce funds available for our operations, future business opportunities or other purposes.

Hedging against interest rate exposure may adversely affect us.

We manage certain exposure to interest rate volatility by using interest rate hedging, such as swap agreements,
to hedge against the possible negative effects of interest rate fluctuations. We may continue to do so in the future.
However, hedging can be expensive, particularly during periods of volatile interest rates, available interest rate
hedges may not correspond directly with the interest rate risk for which protection is sought, the duration of the
interest rate hedge may not match the duration of the related liability, and we cannot assure you that any hedging will
adequately mitigate the adverse effects of interest rate increases or that counterparties under these agreements will
honor their obligations. As a result, our hedging transactions could have a material and adverse effect on our results
of operations.

Risks Related to Regulation and the Environment

Noncompliance with governmental regulations could adversely affect our operating results.

Environmental matters.

Our hotels are, and the hotels that we acquire in the future will be, subject to various federal, state and local
environmental laws and regulations relating to environmental protection. Under these laws, courts and government
agencies may have the authority to require us, as owner of a contaminated property, to clean up the property, even
if we did not know of, or were not responsible for, the contamination. These laws apply to persons who owned a
property at the time it became contaminated so we may incur cleanup costs or other environmental liabilities even
after we sell a property. In addition to the costs of cleanup, environmental contamination can affect the value of a
property and, therefore, an owner’s ability to borrow funds using the property as collateral or to sell the property.
Additionally, under certain environmental laws, courts and government agencies also have the authority to require
that (i) a person who sent waste to a waste disposal facility, such as a landfill or an incinerator, pay for the clean-up
of that facility if it becomes contaminated and threatens human health or the environment and (ii) a person who
arranges for the disposal or treatment, or transports for disposal or treatment, a hazardous substance at a property
owned by another person pay for the costs of removal or remediation of hazardous substances released into the
environment at that property.

Our hotels are also subject to various federal, state, and local environmental, health and safety laws and
regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from
emergency generators, storm water and wastewater discharges, asbestos, lead-based paint, mold and mildew and
waste management. Some of our hotels routinely handle and use hazardous or regulated substances and wastes as part
of their operations, which substances and wastes are subject to regulation (e.g., swimming pool chemicals). Our
hotels incur costs to comply with these laws and regulations and could be subject to fines and penalties for
non-compliance. Additionally, various court decisions have established that third parties may recover damages for
injury caused by property contamination. For instance, a person exposed to asbestos while staying or working in a
hotel may seek to recover damages if he or she suffers injury from the asbestos.

Although we have taken and will take commercially reasonable steps to assess the condition of our properties,
there may be unknown environmental problems associated with our properties. If environmental contamination exists
on our properties, we could become subject to strict, joint and several liability for the contamination by virtue of our
ownership interest. In addition, we are obligated to indemnify our lenders for any liability they may incur in
connection with a contaminated property.

We could be responsible for the costs associated with a contaminated property, including the costs to clean up
a contaminated property or to defend against a claim, and such costs could have a material adverse effect on our
results of operations and financial condition and our ability to pay dividends to our stockholders. Additionally, we
regularly incur costs to comply with environmental laws and we cannot assure you that future laws or regulations will
not impose material environmental liabilities or that the current environmental condition of our hotels will not be
affected by the condition of the properties in the vicinity of our hotels (such as the presence of leaking underground
storage tanks) or by third parties unrelated to us.

Climate change

In recent years, numerous treaties, laws and regulations have been enacted to regulate or limit carbon emissions
and, as a result, we are subject to the risks associated with such transitional effects to a law carbon scenario. These
effects may include, but are not limited to, increased regulation for building efficiency and equipment specifications,
increased regulations or investor requirements for environmental and social disclosures and increased costs to
manage the shift in consumer preferences. For example, in an effort to mitigate the impact of climate change, our
hotels could become subject to increased governmental regulations mandating energy efficiency standards, the usage
of sustainable energy sources and updated equipment specifications which may require additional capital investments
or result in increased operating costs. Additionally, if there is a shift in consumer preferences for more sustainable
travel accommodations, we may also incur increased costs to manage such consumer expectations for sustainable
buildings and hotel operations. The drive to limit carbon emissions and other climate change related regulations and
consumer preferences may require us to make significant investments in our hotels and could result in increased
energy costs at our properties which could have a material adverse effect on our results of operations and our ability
to make distributions to our stockholders.

Americans with Disabilities Act and other changes in governmental rules and regulations.

Our properties must comply with Title III of the Americans with Disabilities Act of 1990 (the ‘‘ADA’’), to the
extent that such properties are ‘‘public accommodations’’ as defined by the ADA. Under the ADA, all public
accommodations must meet various federal non-discrimination requirements related to access and use by individuals
with disabilities. Compliance with the ADA’s requirements could require removal of architectural barriers to access
and non-compliance could result in the payment of civil penalties, damages, and attorneys’ fees and costs. We believe
that our properties are in substantial compliance with the ADA; however, the obligation to comply with the ADA is
an ongoing one, and we will continue to assess our properties and to make alterations as appropriate in this regard.
If we are required to make substantial modifications to our hotels, whether to comply with the ADA or other changes
in governmental rules and regulations, our financial condition, results of operations and ability to make distributions
to our stockholders could be adversely affected.

Our hotel properties may contain or develop harmful mold, which could lead to liability for adverse health effects
and costs of remediating the problem.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur,
particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may
produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing, as exposure to mold
may cause a variety of adverse health effects and symptoms, including allergic reactions. As a result, the presence
of mold to which our hotel guests or employees could be exposed at any of our properties could require us to
undertake a costly remediation program to contain or remove the mold from the affected property, which would
reduce our cash available for distribution. In addition, exposure to mold by our guests or employees, management
company employees or others could expose us to liability if property damage or adverse health concerns arise.

Risks Related to Our Status as a REIT

We cannot assure you that we will remain qualified as a REIT.

We believe that we are qualified to be taxed as a REIT for U.S. federal income tax purposes for our taxable year
ended December 31, 2023, and we expect to continue to qualify as a REIT for future taxable years, but we cannot
assure you that we have qualified, or will remain qualified, as a REIT. The REIT qualification requirements are
extremely complex and official interpretations of the U.S. federal income tax laws governing qualification as a REIT
are limited. Certain aspects of our REIT qualification are beyond our control. Accordingly, we cannot be certain that
we will be successful in operating so that we can remain qualified as a REIT. At any time, new laws, interpretations
or court decisions may change the U.S. federal tax laws or the U.S. federal income tax consequences of our
qualification as a REIT. Moreover, our charter provides that our board of directors may revoke or otherwise terminate
our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest
to continue to qualify as a REIT.

If we fail to qualify as a REIT and do not qualify for certain statutory relief provisions, or otherwise cease to
be a REIT, we will be subject to U.S. federal income tax on our taxable income at the corporate rate. We might need
to borrow money or sell assets in order to pay any such tax. Also, we would not be allowed a deduction for dividends

paid to our stockholders in computing our taxable income and we would no longer be compelled to make distributions
under the Code. Unless we were entitled to relief under certain U.S. federal income tax laws, we could not re-elect
REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT. If we fail to qualify
as a REIT but are eligible for certain relief provisions, then we may retain our status as a REIT, but we may be
required to pay a penalty tax, which could be substantial.

Maintaining our REIT qualification contains certain restrictions and drawbacks.

Complying with REIT requirements may cause us to forgo otherwise attractive opportunities.

To remain qualified as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning,
among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to
our stockholders and the ownership of our stock. In order to meet these tests, we may be required to forgo attractive
business or investment opportunities. For example, we may not lease to our TRS any hotel which contains gaming. Thus,
compliance with the REIT requirements may hinder our ability to operate solely to maximize profits.

To qualify as a REIT, we must meet annual distribution requirements.

In order to remain qualified as a REIT, we generally are required to distribute at least 90% of our REIT taxable
income, determined without regard to the dividends paid deduction and excluding net capital gains, each year to our
stockholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT
taxable income, we will be subject to U.S. federal corporate income tax on our undistributed REIT taxable income.
In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our
stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. As a result of
differences between cash flow and the accrual of income and expenses for tax purposes, or nondeductible
expenditures, for example, our REIT taxable income in any given year could exceed our cash available for
distribution. Accordingly, we may be required to borrow money or sell assets at disadvantageous prices, distribute
amounts that would otherwise be invested in future acquisitions or capital expenditures or used for the repayment of
debt, pay dividends in the form of ‘‘taxable stock dividends’’ or find another alternative source of funds to make
distributions sufficient to enable us to pay out enough of our taxable income to satisfy the distribution requirement
and to avoid U.S. federal corporate income tax and the 4% nondeductible excise tax in a particular year.

The formation of our TRSs and TRS lessees increases our overall tax liability.

Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more
TRSs. Our domestic TRSs are subject to U.S. federal and state income tax on their taxable income. The taxable
income of our TRS lessees currently consists and generally will continue to consist of revenues from the hotels leased
by our TRS lessees plus, in certain cases, key money payments (amounts paid to us by a hotel management company
in exchange for the right to manage a hotel we acquire) and yield support payments, net of the operating expenses
for such properties and rent payments to us. Such taxes could be substantial.

We will be subject to a 100% excise tax to the extent that transactions with our TRSs are not conducted on an
arm’s-length basis. For example, to the extent that the rent paid by one of our TRS lessees exceeds an arm’s-length
rental amount, such excess is potentially subject to this excise tax. While we believe that we structure all of our leases
on an arm’s-length basis, upon an audit, the IRS might disagree with our conclusion.

If the leases of our hotels to our TRS lessees are not respected as true leases for U.S. federal income tax
purposes, we will fail to qualify as a REIT.

To qualify as a REIT, we must annually satisfy two gross income tests, under which specified percentages of
our gross income must be derived from certain sources, such as ‘‘rents from real property.’’ Rents paid to us by our
TRS lessees pursuant to the leases of our hotels will constitute substantially all of our gross income. In order for such
rent to qualify as ‘‘rents from real property’’ for purposes of the gross income tests, the leases must be respected as
true leases for U.S. federal income tax purposes and not be treated as service contracts, financing arrangements, joint
ventures or some other type of arrangement. If our leases are not respected as true leases for U.S. federal income tax
purposes, we will fail to qualify as a REIT.

You may be restricted from transferring our common stock and Series A Preferred Stock.

In order to maintain our REIT qualification, among other requirements, no more than 50% in value of our
outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the U.S. federal
income tax laws to include certain entities) during the last half of any taxable year. In addition, the REIT rules

generally prohibit a manager of one of our hotels from owning, directly or indirectly, more than 35% of our stock
and a person who holds 35% or more of our stock from also holding, directly or indirectly, more than 35% of any
such hotel management company. To qualify for and preserve REIT status, our charter contains an aggregate share
ownership limit, a common share ownership limit, and a preferred share ownership limit. Generally, any shares of
our stock owned by affiliated owners will be added together for purposes of the aggregate share ownership limit, and
any shares of common stock or preferred stock, as applicable, owned by affiliated owners will be added together for
purposes of the common share ownership limit and the preferred share ownership limit.

If anyone transfers or owns shares in a way that would violate the aggregate share ownership limit, the common
share ownership limit, or the preferred share ownership limit (unless such ownership limits have been waived by our
board of directors), or would prevent us from continuing to qualify as a REIT under the U.S. federal income tax laws,
those shares instead will be transferred to a trust for the benefit of a charitable beneficiary and will be either redeemed
by us or sold to a person whose ownership of the shares will not violate the aggregate share ownership limit, the
common share ownership limit, or the preferred share ownership limit. If this transfer to a trust would not be effective
to prevent a violation of the ownership restrictions in our charter, then the initial intended transfer or ownership will
be null and void from the outset. The intended transferee or owner of those shares will be deemed never to have
owned the shares. Anyone who acquires or owns shares in violation of the aggregate share ownership limit, the
common share ownership limit, the preferred share ownership limit (unless such ownership limits have been waived
by our board of directors) or the other restrictions on transfer or ownership in our charter bears the risk of a financial
loss when the shares are redeemed or sold if the market price of our stock falls between the date of purchase and the
date of redemption or sale.

Even if we maintain our status as a REIT, in certain circumstances, we may be subject to U.S. federal and state
income taxes, which would reduce our cash available for distribution to our stockholders.

Even if we qualify and maintain our status as a REIT, we may be subject to U.S. federal income taxes or state
taxes in various circumstances. For example, net income from a ‘‘prohibited transaction’’ will be subject to a
100% tax. In addition, we may not be able to distribute all of our income in any given year, which would result in
corporate level taxes, and we may not make sufficient distributions to avoid excise taxes. We may also decide to
retain certain gains from the sale or other disposition of our property and pay income tax directly on such gains. In
that event, our stockholders would be required to include such gains in income and would receive a corresponding
credit for their share of taxes paid by us. We may also be subject to U.S. state and local and non-U.S. taxes on our
income or properties, either directly or at the level of our operating partnership or the other companies through which
we indirectly own our assets. In addition, we may be subject to U.S. federal, state, local or non-U.S. taxes in other
various circumstances. Any U.S. federal or state taxes that we pay will reduce our cash available for distribution to
our stockholders.

Our property taxes could increase due to property tax rate changes or reassessment, which could impact our cash flow.

Even if we qualify and maintain our status as a REIT, we are required to pay state and local property taxes on
our properties. The property taxes on our properties may increase as property tax rates change or as our properties
are assessed or reassessed by taxing authorities. Therefore, the amount of property taxes we pay in the future may
increase substantially from what we have paid in the past and such increases may not be offset by increased room
rates at our hotels. If the property taxes we pay increase, our financial condition, results of operations, cash flow, per
share trading price of our common stock and Series A Preferred Stock and our ability to satisfy our principal and
interest obligations and to make distributions to our stockholders may be negatively impacted.

Dividends payable by REITs generally do not qualify for reduced tax rates.

A maximum 20% tax rate applies to ‘‘qualified dividend income’’ payable to individual U.S. stockholders.
Dividends payable by REITs, however, are generally not eligible for the reduced rates on qualified dividend income
and are taxed at normal ordinary income tax rates (provided that for taxable years beginning after December 31, 2017
and before January 1, 2026, non-corporate taxpayers generally may deduct 20% of their ordinary REIT dividends that
are not ‘‘capital gain dividends’’ or ‘‘qualified dividend income’’). However, to the extent that our dividends are
attributable to certain dividends that we receive from a TRS, such dividends generally will be eligible for the reduced
rates that apply to qualified dividend income (but will be ineligible for the 20% deduction). The more favorable rates
applicable to regular corporate dividends could cause investors who are individuals to perceive investments in REITs
to be relatively less attractive than investments in the stocks of non-REIT corporations that pay qualified dividend

income, which could adversely affect the value of the stock of REITs, including our common stock and Series A
Preferred Stock. In addition, some non-REIT corporations may choose to pay dividends or increase dividends as a
result of the lower corporate income tax rate that is effective for taxable years beginning after December 31, 2017.
As a result, the trading price of our common stock and Series A Preferred Stock may be negatively impacted.

Failure of our operating partnership to be taxable as a partnership could cause us to fail to qualify as a REIT and
we could suffer other adverse tax consequences.

We believe that our operating partnership will continue to be treated for U.S. federal income tax purposes as a
partnership and not as an association or as a publicly traded partnership taxable as a corporation. As a partnership,
the operating partnership will not be subject to U.S. federal income tax on its income. Instead, each of its partners,
including us, will be allocated that partner’s share of the operating partnership’s income. No assurance can be
provided, however, that the IRS will not challenge the operating partnership’s status as a partnership for U.S. federal
income tax purposes, or that a court would not sustain such a challenge. If the IRS were to determine that our
operating partnership was properly treated as an association or as a publicly traded partnership taxable as a
corporation, our operating partnership would be required to pay U.S. federal income tax at corporate rates on its net
income, its partners would be treated as stockholders of our operating partnership and distributions to partners would
constitute distributions that would not be deductible in computing the operating partnership’s taxable income. In
addition, we could fail to qualify as a REIT, with the resulting consequences described above.

Our UPREIT structure may result in potential conflicts of interest with limited partners in our operating
partnership whose interests may not be aligned with those of our stockholders.

Limited partners in our operating partnership have the right to vote on certain amendments to the agreement that
governs our operating partnership, as well as on certain other matters. Persons holding such voting rights may
exercise them in a manner that conflicts with our stockholders’ interests. As general partner of our operating
partnership, we are obligated to act in a manner that is in the best interests of all partners of our operating partnership.
Circumstances may arise in the future when the interests of limited partners in our operating partnership may conflict
with the interests of our stockholders. These conflicts may be resolved in a manner that some stockholders believe
is not in their best interests.

Legislative or regulatory action could adversely affect our stockholders.

In recent years, numerous legislative, judicial and administrative changes have been made to the U.S. federal
income tax laws applicable to investments in REITs and similar entities. Additional changes to applicable tax laws
are likely to continue to occur in the future, and we cannot assure our stockholders that any such changes will not
adversely affect the taxation of a stockholder. Any such changes could have an adverse effect on an investment in
our common stock and Series A Preferred Stock. All stockholders are urged to consult with their tax advisors with
respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect
on an investment in our common stock and Series A Preferred Stock.

Risks Related to Our Organization and Structure

Provisions of our charter may limit the ability of a third party to acquire control of our company.

Our charter provides that no person may beneficially own more than 9.8% of the aggregate outstanding shares
of our common stock, more than 9.8% of the aggregate outstanding shares of our Series A Preferred Stock, or more
than 9.8% of the value of the aggregate outstanding shares of our capital stock, except certain ‘‘look-through
entities,’’ such as mutual funds, which may beneficially own up to 15% of the aggregate outstanding shares of our
common stock, up to 15% of the aggregate outstanding shares of our Series A Preferred Stock, or up to 15% of the
value of the aggregate outstanding shares of our capital stock. Our board of directors has waived this ownership
limitation for certain investors. Our bylaws waive this ownership limitation for certain other classes of investors.
These ownership limitations may prevent an acquisition of control of our company by a third party without our board
of directors’ approval, even if our stockholders believe the change of control is in their best interests.

Our charter also authorizes our board of directors to issue up to 400,000,000 shares of common stock and up
to 10,000,000 shares of preferred stock, to classify or reclassify any unissued shares of common stock or preferred
stock and to set the preferences, rights and other terms of the classified or reclassified shares. Furthermore, our board
of directors may, without any action by the stockholders, amend our charter from time to time to increase or decrease

the aggregate number of shares of stock of any class or series that we have authority to issue. Issuances of additional
shares of stock may have the effect of delaying, deferring or preventing a transaction or a change in control of our
company that might involve a premium to the market price of our common stock or otherwise be in our stockholders’
best interests.

Certain advance notice provisions of our bylaws may limit the ability of a third party to acquire control of our company.

Our bylaws provide that (a) with respect to an annual meeting of stockholders, nominations of individuals for
election to our board of directors and the proposal of other business to be considered by stockholders may be made
only (i) pursuant to our notice of the meeting, (ii) by the board of directors or (iii) by a stockholder who is entitled
to vote at the meeting and has complied with the advance notice procedures set forth in the bylaws and (b) with
respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought
before the meeting of stockholders and nominations of individuals for election to the board of directors may be made
only (A) by the board of directors or (B) provided that the board of directors has determined that directors shall be
elected at such meeting by a stockholder who is entitled to vote at the meeting and has complied with the advance
notice provisions set forth in the bylaws. These advance notice provisions may have the effect of delaying, deferring
or preventing a transaction or a change in control of our company that might involve a premium to the market price
of our common stock or otherwise be in our stockholders’ best interests.

Provisions of Maryland law may limit the ability of a third party to acquire control of our company.

The Maryland General Corporation Law, or the MGCL, has certain restrictions on a ‘‘business combination’’ and
‘‘control share acquisition’’ which we have opted out of. If an affirmative majority of votes cast by a majority of
stockholders entitled to vote approve it, our board of directors may opt in to such provisions of the MGCL. If we opt
in, and the stockholders approve it, these provisions may have the effect of delaying, deferring or preventing a
transaction or a change in control of our company that might involve a premium price for holders of our common
stock or otherwise be in their best interests.

In addition, provisions of Maryland law permit the board of a corporation with a class of equity securities
registered under the Exchange Act and at least three independent directors, without stockholder approval, to
implement possible takeover defenses, such as a classified board or a two-thirds vote requirement for removal of a
director. These provisions, if implemented, may make it more difficult for a third party to affect a takeover. In
February 2014, however, we amended our charter to prohibit us from dividing directors into classes unless such
action is first approved by the affirmative vote of a majority of the votes cast on the matter by stockholders entitled
to vote generally in the election of directors.

Stockholders have limited control over any changes that we make to our policies.

Our board of directors determines our major policies, including policies related to our investment objectives,
leverage, financing, growth and distributions to our stockholders. Our board of directors may amend or revise these
policies without a vote of our stockholders. This means that our stockholders will have limited control over changes
in our policies and those changes could adversely affect our business, financial condition, results of operations and
our ability to make distributions to our stockholders.

Our success depends on senior executive officers whose continued service is not guaranteed, and changes in our
senior executive officers may adversely affect the operation of our business.

We depend on the efforts and expertise of our senior executive officers to manage our day-to-day operations and
strategic business direction. Finding suitable replacements for senior executive officers could be difficult. The loss
of any of their services could have a material adverse effect on our business, financial condition, results of operations
and our ability to make distributions to our stockholders.

We have entered into an agreement with each of our senior executive officers that provides each of them benefits
in the event that his or her employment is terminated by us without cause, by him or her for good reason or under
certain circumstances following a change of control of our company.

We have entered into an agreement with each of our senior executive officers that provides each of them with
severance benefits if his or her employment is terminated under certain circumstances following a change of control
of our company. Certain of these benefits and the related tax indemnity in the case of certain executive officers could
prevent or deter a change of control of our company that might involve a premium price for our common stock or
otherwise be in the best interests of our stockholders.

We may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders
at expected levels, and we cannot assure you of our ability to make distributions in the future.

We intend to pay quarterly dividends that represent at least 90% of our REIT taxable income. Our ability to make
these intended distributions may be adversely affected by the factors, risks and uncertainties described in this Annual
Report on Form 10-K and other reports that we file from time to time with the SEC. For example, in response to the
COVID-19 pandemic, our board of directors suspended our quarterly common dividend commencing with the
quarterly dividend that would have been paid in April 2020 and resumed quarterly common dividends beginning with
the quarterly dividend that was paid in October 2022. In addition, our board of directors has the sole discretion to
determine the timing, form and amount of any distribution to our stockholders. Our board of directors will make
determinations regarding distributions based upon many facts, including our financial performance, our debt service
obligations, our debt covenants, our capital expenditure requirements, the requirements for qualification as a REIT
and other factors that our board of directors may deem relevant from time to time. As a result, no assurance can be
given that we will be able to make distributions to our stockholders at expected levels, or at all, or that distributions
will increase or even be maintained over time, any of which could materially and adversely affect the market price
of our common stock and Series A Preferred Stock.

Changes in market conditions could adversely affect the market price of our common stock and Series A Preferred
Stock.

As with other publicly traded equity securities, the value of our common stock and Series A Preferred Stock
depends on various market conditions that may change from time to time. Among the market conditions that may
affect the value of our common stock and Series A Preferred Stock are the following:

•

the extent of investor interest in our securities;

the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity
securities, including securities issued by other real estate-based companies;

the underlying asset value of our hotels;

investor confidence in the stock and bond markets, generally;

national and local economic conditions;

changes in tax laws;

our financial performance; and

general stock and bond market conditions.

The market value of our common stock is based primarily upon the market’s perception of our growth potential
and our current and potential future earnings and cash distributions. Consequently, our common stock may trade at
prices that are greater or less than our net asset value per share. If our future earnings or cash distributions are less
than expected, it is likely that the market price of our common stock will diminish.

In addition, interest rates were at historically low levels for an extended period of time but increased
significantly in recent years and may continue to increase in the near term. The market for common shares and
preferred shares of publicly traded REITs may be influenced by the distribution yield on their shares (i.e., the amount
of annual distributions as a percentage of the market price of their shares) relative to market interest rates. As market
interest rates increase, prospective purchasers of REIT common shares and preferred shares may seek to achieve a
higher distribution yield, which we may not be able to, or may choose not to, provide. Thus, higher market interest
rates could cause the returns on investment in our common stock and Series A Preferred Stock to be relatively less
attractive to our investors and the market price of our common stock and Series A Preferred Stock to decline.
Additionally, higher market interest rates may adversely impact the market values of our hotels, which may be
reflected in the market price of our common stock and Series A Preferred Stock.

We may be subject to litigation, which could have a material adverse effect on our financial condition, results of
operations, cash flow and trading price of our common stock and Series A Preferred Stock.

We may be subject to litigation. In addition, we generally indemnify third-party hotel managers for legal costs
resulting from management of our hotels. Some of these claims may result in defense costs, settlements, fines or
judgments against us, some of which are not covered by insurance. The outcome of these legal proceedings cannot

be predicted. Payment of any such costs, settlements, fines or judgments that are not insured could have a material
adverse impact on our financial position and results of operations. In addition, certain litigation or the resolution of
certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact
our results of operations and cash flows, expose us to increased risks that would be uninsured and/or adversely impact
our ability to attract officers and directors.

The market price of our common stock has been volatile and could decline, resulting in a substantial or complete
loss on our common stockholders’ investment.

The market price of our common stock has been highly volatile in the past, and investors in our common stock
may experience a decrease in the value of their shares, including decreases unrelated to our operating performance
or prospects. In the past, securities class action litigation has often been instituted against companies following
periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our
management’s attention and resources.

Future issuances of our common stock, Series A Preferred Stock or our operating partnership’s common OP units,
may depress the market price of our common stock and have a dilutive effect on our existing stockholders.

We cannot predict whether future issuances of our common stock or Series A Preferred Stock or the availability
of shares for resale in the open market may depress the market price of our common stock or Series A Preferred Stock.
Future issuances or sales of a substantial number of shares of our common stock in the public market, or the issuance
of our common stock or Series A Preferred Stock in connection with future property, portfolio or business
acquisitions, or the perception that such issuances or sales might occur, may cause the market price of our shares to
decline. In addition, future issuances or sales of our common stock or Series A Preferred Stock may be dilutive to
existing stockholders.

Our December 2018 acquisition of Cavallo Point was partially funded by the issuance by our operating
partnership of common OP units, which became redeemable by the sellers after the one-year anniversary of such
issuance for cash or, at our election, on a one-for-one basis for shares of our common stock. Pursuant to the terms
of the contribution agreement governing our acquisition of Cavallo Point, if any of the common OP units are
outstanding seven years after their issuance, we have the option to redeem them for cash or shares of our common
stock, at our election. In the future, our operating partnership may issue additional common OP units to acquire
additional properties or portfolios. Such common OP unit issuances would reduce our ownership interest in the
operating partnership and may in the future result in dilution of our shareholders’ equity interests.

Holders of our outstanding Series A Preferred Stock have dividend, liquidation and other rights that are senior
to the rights of the holders of our common stock.

Our board of directors has the authority to designate and issue preferred stock with liquidation, dividend and
other rights that are senior to those of our common stock. As of December 31, 2023, 4,760,000 shares of our Series A
Preferred Stock were issued and outstanding. The aggregate liquidation preference with respect to the outstanding
preferred stock is approximately $119.0 million and aggregate annual dividends on these shares are approximately
$9.8 million. Holders of the Series A Preferred Stock are entitled to cumulative dividends before any dividends may
be declared or set aside on our common stock. Upon our voluntary or involuntary liquidation, dissolution or winding
up, before any payment is made to holders of our common stock, holders of the Series A Preferred Stock are entitled
to receive a liquidation preference of $25.00 per share plus any accrued and unpaid distributions. This will reduce
the remaining amount of our assets, if any, available to distribute to holders of our common stock. In addition, holders
of our Series A Preferred Stock have the right to elect two additional directors to our board of directors whenever
dividends on the preferred shares are in arrears for six or more quarterly dividends, whether or not consecutive.

The conversion rights of our Series A Preferred Stock may be detrimental to holders of our common stock.

As of December 31, 2023, 4,760,000 shares of our Series A Preferred Stock were outstanding and could be
converted, upon the occurrence of limited specified change in control transactions, into shares of our common stock.
The conversation of the Series A Preferred Stock would dilute the stockholder ownership in our Company and
common OP unit holder ownership in our operating partnership and could adversely affect the market price of our
common stock and could impair our ability to raise capital through the sale of additional equity securities.

Future offerings of debt securities or preferred stock, which would be senior to our common stock upon
liquidation and for the purpose of distributions, may cause the market price of our common stock to decline.

In the future, we may increase our capital resources by making additional offerings of debt or equity securities,
which may include senior or subordinated notes, classes of preferred stock and/or common stock. We will be able
to issue additional shares of common stock or preferred stock without stockholder approval, unless stockholder
approval is required by applicable law or the rules of any stock exchange or automated quotation system on which
our securities may be listed or traded. Upon liquidation, holders of our debt securities and shares of preferred stock
and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders
of our common stock. Additional equity offerings could significantly dilute the holdings of our existing stockholders
or reduce the market price of our common stock, or both. Holders of our common stock are not entitled to preemptive
rights or other protections against dilution. Preferred stock and debt, if issued, could have a preference on liquidating
distributions or a preference on dividend or interest payments that could limit our ability to make distributions to the
holders of our common stock. Because our decision to issue securities in any future offering will depend on market
conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our
future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common
stock and diluting their interest.

We cannot guarantee that we will repurchase our common stock pursuant to our share repurchase program or
that our share repurchase program will enhance long-term stockholder value. Share repurchases could also
increase the volatility of the price of our common stock and could diminish our cash reserves.

The timing, manner, price and actual number of shares repurchased under our share repurchase program will
depend on a variety of factors including stock price, corporate and regulatory requirements, market conditions, and
other corporate liquidity requirements and priorities. Our share repurchase program may be limited, suspended or
terminated at any time without prior notice. In addition, repurchases of our common stock pursuant to our share
repurchase program could affect our stock price and increase its volatility. The existence or use of our share
repurchase program may cause our stock price to be higher than it would otherwise be, and could potentially reduce
the market liquidity for our stock. Additionally, our share repurchase program could diminish our cash reserves,
which may impact our ability to finance future growth and to pursue possible any future strategic opportunities or
acquisitions. There can be no assurance that any share repurchases will enhance stockholder value because the market
price of our common stock may decline below the levels at which we repurchased shares of stock. Although our share
repurchase program is intended to enhance long-term stockholder value, there is no assurance that it will do so, and
short-term stock price fluctuations could reduce the program’s effectiveness.

Tax protection agreements may limit our ability to sell or otherwise dispose of certain properties and may require
our operating partnership to maintain certain debt levels that otherwise would not be required to operate our
business.

In connection with contributions of properties to our operating partnership, our operating partnership has entered
and may in the future enter into tax protection agreements under which it agrees to minimize the tax consequences
to the contributing partners resulting from the sale or other disposition of the contributed properties. Tax protection
agreements may make it economically prohibitive to sell any properties that are subject to such agreements. In
addition, we may be required to maintain a minimum level of indebtedness throughout the term of any tax protection
agreement regardless of whether such debt levels are otherwise required to operate our business.

Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

Cyber Risk Management and Strategy

We and our property managers rely on information technology in our operations, and any material failures,
inadequacies, interruptions, security failures, social engineering attacks or cyber-attacks could harm our business. To
help manage these risks, we engage and rely on external experts, internal auditors, and third-party assessors,
including an information technology managed services provider. Our managed services provider currently provides
us with both a virtual chief information security officer (vCISO) and a virtual chief information officer (vCIO), who
offer us advice on technology, infrastructure, management, and productivity in relation to our information technology
capabilities.

Our current view of cybersecurity risk is informed by a risk assessment conducted by a leading third-party
assessor based on a recognized industry framework, which evaluated our cyber risk management controls. Our
managed services provider also conducts periodic assessments of certain applications on our systems to determine,
in part, any necessary security improvements. Our senior management reviews assessments performed by third-party
assessors and our managed services provider to determine the appropriate treatment of identified risks.

We have also developed and have begun implementing a cyber risk management program for our third-party
property managers. This program aims to assess the cybersecurity maturity of various commercial properties that we
own through an evaluation of our property managers’ cybersecurity risk profile.

We, like other companies in our industry, face a number of cybersecurity risks in connection with our business.
Although such risks have not materially affected us, including our business strategy, results of operations or financial
condition, to date, we have, from time to time, experienced threats to and security incidents related to our data and
systems. For more information about the cybersecurity risks we face, see Item 1A ″Risk Factors.″

Governance Related to Cybersecurity Risks

DiamondRock engages a managed services provider, which includes vCISO and vCIO services, to assist
DiamondRock with the identification, monitoring, and management of cybersecurity risks. Our managed services
provider reports periodically to our management team, including our Chief Accounting Officer & Treasurer and
General Counsel & Chief Risk Officer. These senior executives then brief the Board on information regarding
security matters at least quarterly. Additionally, we provide cybersecurity training for all Board members and senior
executives.

As part of its charter, the Audit Committee oversees our policies with respect to risk assessment and risk
management, including with respect to cybersecurity risks. The Audit Committee administers its risk oversight
function by receiving regular reports from members of senior management, including the Chief Accounting Office
& Treasurer and General Counsel & Chief Risk Officer, on areas of material risk to the Company. Our Audit
Committee discusses DiamondRock’s cybersecurity program at least annually, and receives quarterly updates from
internal audit or management on cybersecurity incidents or other developments.

Our Board of Directors plays an important role in the risk oversight of the Company. Our Board is involved in
risk oversight through its direct decision-making authority with respect to significant matters and the oversight of
management by the Board’s committees. Our Board also relies on management to bring significant matters impacting
DiamondRock to its attention.

Item 2.

Properties

The following table sets forth certain information for each of our hotels owned as of December 31, 2023.

Hotel

City

State

Illinois

Chicago

Chicago
Marriott Downtown
Magnificent Mile
Westin Boston Seaport
District
Salt Lake City Marriott
Downtown at City Creek
Worthington Renaissance
Fort Worth Hotel
Westin San Diego Bayview San Diego California

Salt Lake
City
Fort Worth Texas

Boston

Utah

Massachusetts Upper

Florida

Fort
Lauderdale
Washington District of
Columbia
Massachusetts Upper

Boston

Westin Fort Lauderdale
Beach Resort
Westin Washington D.C.
City Center
The Dagny Boston (formerly
Hilton Boston
Downtown/Faneuil Hall)
The Hythe Vail
Courtyard New York
Manhattan/Midtown East
Atlanta Marriott Alpharetta Atlanta

Vail
Colorado
New York New York

Georgia

The Gwen

Chicago

Illinois

Chain Scale
Segment(1)

Service
Category

Rooms

Manager

Upper
Upscale

Full Service

1,200 Marriott

Upscale
Upper
Upscale
Upper
Upscale
Upper
Upscale
Upper
Upscale
Upper
Upscale

Upscale

Full Service

793 Aimbridge
Hospitality
510 HEI Hotels &
Resorts
504 Marriott

436 Aimbridge
Hospitality
433 HEI Hotels &
Resorts

Full Service

410 Sage Hospitality

Full Service

403 Aimbridge
Hospitality

Luxury
Upscale

Full Service
Select Service

Upper
Upscale
Luxury

Full Service

344 Vail Resorts
321 HEI Hotels &
Resorts
318 Aimbridge
Hospitality
311 HEI Hotels &
Resorts

Hilton Garden Inn New
York/Times Square Central
Embassy Suites by Hilton
Bethesda
Hilton Burlington Lake
Champlain
Henderson Beach Resort

Kimpton Hotel Palomar
Phoenix
Bourbon Orleans Hotel

Hotel Clio
Courtyard New York
Manhattan/Fifth Avenue
Margaritaville Beach House
Key West
The Lodge at Sonoma
Resort
Courtyard Denver
Downtown
The Lindy Renaissance
Charleston Hotel

New York New York

Upscale

Select Service

282 Highgate Hotels

Bethesda Maryland

Burlington Vermont

Destin

Florida

Phoenix

Arizona

Louisiana

New
Orleans
Denver
Colorado
New York New York

Key West

Florida

Sonoma

California

Denver

Colorado

Charleston South

Carolina

Upper
Upscale
Upper
Upscale
Luxury

Upper
Upscale
Luxury

Full Service

272 Sage Hospitality

Full Service

258 Aimbridge
Hospitality
255 Aimbridge
Hospitality
242 Kimpton Hotels

& Restaurants

Full Service

220 Evolution

Luxury
Upscale

Full Service
Select Service

Hospitality
199 Sage Hospitality
189 Highgate Hotels

Upper
Upscale
Upper
Upscale
Upscale

Upper
Upscale

Full Service

186 Ocean Properties

Full Service

182 Sage Hospitality

Select Service

177 Sage Hospitality

Full Service

167 Aimbridge
Hospitality

Hotel

City

State

Huntington
Beach
Sausalito

California

Chain Scale
Segment(1)

Service
Category

Upper
Upscale
Luxury

Full Service

Rooms

Manager

157 Kimpton Hotels

& Restaurants
142 Passport Resorts

Montana

Economy

Full Service

117 EOS Hospitality

Florida
Florida

Upscale
Luxury

Full Service
Full Service

106 EOS Hospitality
103 EOS Hospitality

Key West
Marathon

Kimpton Shorebreak
Huntington Beach Resort
Cavallo Point, The Lodge at
the Golden Gate
Chico Hot Springs Resort &
Day Spa
Havana Cabana Key West
Tranquility Bay Beachfront
Resort
Hotel Emblem San Francisco San

Pray

California

Kimpton Shorebreak Fort
Lauderdale Beach Resort
L’Auberge de Sedona

Francisco
Fort
Lauderdale
Sedona

Florida

Arizona

Upper
Upscale
Upper
Upscale
Luxury

Full Service

96 Pacifica Hotels

Full Service

96 HEI Hotels &

Full Service

Resorts
88 Evolution

Hospitality

82 Evolution

Hospitality

70 Evolution

Hospitality
40 EOS Hospitality
37 Aimbridge
Hospitality

9,746

The Landing Lake Tahoe
Resort & Spa
Orchards Inn Sedona

South Lake
Tahoe
Sedona

California

Luxury

Full Service

Arizona

Upscale

Full Service

Lake Austin Spa Resort
Henderson Park Inn

Austin
Destin

Texas
Florida

Luxury
Luxury

Full Service
Full Service

Total

(1) As defined by STR, Inc.

Hotel Management Agreements

We are party to hotel management agreements for each hotel we own. The following table sets forth the
expiration date of the current term, the terms of termination of the manager by the Company, and the number of
remaining renewal terms at the manager’s option under the respective hotel management agreements for each of our
hotels as of December 31, 2023. Generally, the term of the hotel management agreements, if applicable, renew
automatically for a negotiated number of consecutive periods upon the expiration of the initial term unless the
manager gives notice to us of its election not to renew the hotel management agreement.

Property

Manager

Terminable

Expiration
Date of
Current
Term

Number of Remaining
Renewal Terms at
Manager’s Exclusive
Option(1)

Atlanta Marriott Alpharetta
Bourbon Orleans Hotel
Cavallo Point, The Lodge at the
Golden Gate
Chicago Marriott Downtown
Magnificent Mile
Chico Hot Springs Resort & Day
Spa

Aimbridge Hospitality At will with no fee 9/2025 None
Evolution Hospitality At will with no fee 7/2026 Month-to-month
Passport Resorts

At will with fee

6/2028 None

Marriott

12/2038 Two ten-year periods

EOS Hospitality

8/2033 Month-to-month

At will with fee
until 8/2024; at will
with no fee
thereafter
At will with fee
At will with no fee 10/2025 None

7/2026 One five-year period

At will with no fee 2/2027 One five-year period

8/2027 None

Sage Hospitality

Sage Hospitality
Highgate Hotels

HEI Hotels & Resorts At will with fee

Courtyard Denver Downtown
Courtyard New York
Manhattan/Fifth Avenue
Courtyard New York
Manhattan/Midtown East
Embassy Suites by Hilton
Bethesda
The Gwen
Havana Cabana Key West
Henderson Beach Resort
Henderson Park Inn
The Dagny Boston (formerly
Hilton Boston Downtown/Faneuil
Hall)
Hilton Burlington Lake Champlain Aimbridge Hospitality At will with no fee N/A
Highgate Hotels
Hilton Garden Inn New
York/Times Square Central
Hotel Clio
Hotel Emblem San Francisco

Sage Hospitality
Pacifica Hotels

HEI Hotels & Resorts At will with fee
EOS Hospitality
At will with no fee 5/2032 Month-to-month
Aimbridge Hospitality At will with no fee 2/2032 Month-to-month
Aimbridge Hospitality At will with no fee 7/2026 Month-to-month
Aimbridge Hospitality At will with no fee 7/2025 None

6/2026 None

Month-to-month

12/2024 One five-year period

(2)

5/2026 One five-year period
3/2028 Two five-year periods

At will with fee
At will fee until
3/2025; at will with
no fee thereafter
At will with no fee 12/2028 One five-year period

Kimpton Hotel &
Restaurant Group
Vail Resorts
7/2024 None
HEI Hotels & Resorts At will with no fee 3/2028 None

At will with fee

(3)

Hotel Palomar Phoenix

The Hythe Vail
Kimpton Shorebreak Fort
Lauderdale Beach Resort
Kimpton Shorebreak Huntington
Beach Resort
Lake Austin Spa Resort
The Landing Lake Tahoe Resort &
Spa
L’Auberge de Sedona

At will with fee

Kimpton Hotel &
Restaurant Group
EOS Hospitality
Evolution Hospitality At will with fee

At will with no fee 11/2032 Month-to-month

9/2024 One five-year period

2/2025 None

Evolution Hospitality At will with fee

10/2024 One five-year period

Property

Manager

Terminable

Expiration
Date of
Current
Term

Number of Remaining
Renewal Terms at
Manager’s Exclusive
Option(1)

At will with fee
No

9/2025 None
7/2027 None

Sage Hospitality
Ocean Properties

The Lodge at Sonoma Resort
Margaritaville Beach House Key
West
Orchards Inn Sedona
The Lindy Renaissance Charleston
Hotel
Salt Lake City Marriott Downtown
at City Creek
Tranquility Bay Beachfront Resort EOS Hospitality
Westin Boston Seaport District
Westin Fort Lauderdale Beach
Resort
Westin San Diego Bayview
Westin Washington D.C. City
Center
Worthington Renaissance Fort
Worth Hotel

Marriott

Evolution Hospitality At will with fee
Aimbridge Hospitality At will with no fee 9/2025 None

10/2024 One five-year period

HEI Hotels & Resorts At will with no fee 9/2025 None

At will with no fee 4/2032 Month-to-month

Aimbridge Hospitality At will with no fee 1/2025 None
HEI Hotels & Resorts At will with no fee 12/2027 None

Aimbridge Hospitality At will with no fee N/A
Sage Hospitality

At will with fee

Month-to-month

11/2026 One five-year period

12/2031 Two ten-year periods

(1)

Certain agreements allow for other extension rights that may be only at our option.

(2) Hotel manager is entitled to one five-year extension option upon achievement of a certain level of net operating income, which is

significantly above current net operating income at the hotel.

(3) Hotel manager is entitled to one five-year extension option if the manager earns an incentive management fee in both 2027 and 2028. The

manager did not earn an incentive management fee in 2023.

Under our hotel management agreements, the hotel manager receives a base management fee and, if certain
financial thresholds are met or exceeded, an incentive management fee. The base management fee is generally
payable as a percentage of gross hotel revenues for each fiscal year. The incentive management fee is generally based
on hotel operating profits, but the fee only applies to that portion of hotel operating profits above a negotiated return
on our invested capital, which we refer to as the owner’s priority. We refer to this excess of operating profits over
the owner’s priority as ‘‘available cash flow.’’

The following table sets forth the base management fee and incentive management fee generally due and

payable each fiscal year, for each of our hotels as of December 31, 2023:

Property

Atlanta Marriott Alpharetta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bourbon Orleans Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cavallo Point, The Lodge at the Golden Gate. . . . . . . . . . . . . . . . . . . . . . .
Chicago Marriott Downtown Magnificent Mile. . . . . . . . . . . . . . . . . . . . . .
Chico Hot Springs Resort & Day Spa . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Courtyard Denver Downtown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Courtyard New York Manhattan/Fifth Avenue. . . . . . . . . . . . . . . . . . . . . . .
Courtyard New York Manhattan/Midtown East . . . . . . . . . . . . . . . . . . . . . .
Embassy Suites by Hilton Bethesda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Gwen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Havana Cabana Key West. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Henderson Beach Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Henderson Park Inn. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Dagny Boston (formerly Hilton Boston Downtown/Faneuil Hall) . . .
Hilton Burlington Lake Champlain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Base
Management Fee(1)

2%
1%(6)

2.5%
3%
2.5%
1.5%(5)
2.25%
1.75%
1.5%(5)
2.25%(9)
2.5%
2.25%
2.5%
1.25%
1.5%(10)

Incentive
Management Fee(2)
15%(3)(4)
15%(3)(4)
20%
15%(7)
15%(3)(8)
10%
15%(3)
15%(3)
10%
15%
15%(3)(8)
15%(3)(4)
15%(3)(4)
15%(3)(4)
10%(4)

Property

Hilton Garden Inn New York/Times Square Central . . . . . . . . . . . . . . . . . .
Hotel Clio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel Emblem San Francisco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel Palomar Phoenix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Hythe Vail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kimpton Shorebreak Fort Lauderdale Beach Resort . . . . . . . . . . . . . . . . . .
Kimpton Shorebreak Huntington Beach Resort . . . . . . . . . . . . . . . . . . . . . .
Lake Austin Spa Resort. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Landing Lake Tahoe Resort & Spa. . . . . . . . . . . . . . . . . . . . . . . . . . . .
L’Auberge de Sedona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Lodge at Sonoma Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Margaritaville Beach House Key West. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Orchards Inn Sedona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Lindy Renaissance Charleston Hotel . . . . . . . . . . . . . . . . . . . . . . . . . .
Salt Lake City Marriott Downtown at City Creek. . . . . . . . . . . . . . . . . . . .
Tranquility Bay Beachfront Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Westin Boston Seaport District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Westin Fort Lauderdale Beach Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Westin San Diego Bayview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Westin Washington D.C. City Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Worthington Renaissance Fort Worth Hotel . . . . . . . . . . . . . . . . . . . . . . . . .

Base
Management Fee(1)

3%
2%
3%
3.5%
2%
2%
2.5%
2.5%
1.25%
2.25%
2%
3%
2.25%
2%
2%
2.5%

1%(11)
2%
1.5%(10
1.5%(5)
3%

Incentive
Management Fee(2)
20%(3)
15%(3)
10%(3)
20%
15%(3)
15%(3)
15%
15%(3)(8)
15%(4)
15%(4)
15%(3)
10%
15%(4)
15%(3)(4)
15%(3)
15%(3)(8)
15%(3)(4)
15%(3)
10%(4)
10%
25%

(1) As a percentage of gross revenues.

(2) As a percentage of hotel operating profits above a specified return on our invested capital or specified operating profit thresholds.

(3)

(4)

(5)

(6)

(7)

(8)

Total incentive management fees are capped at 1% of gross revenues.

The property will not individually earn their incentive fee unless a collective owner’s priority threshold is met.

The base management fee is the sum of 1.5% of gross revenues and 1.5% gross operating profit. Total management fees are capped at 3%
of gross revenues.

The base management fee was 2% from January 2023 through August 2023 and decreased to 1% for the remainder of the year.

Calculated as 15% of net operating income. There is no owner’s priority; however, the Company’s contribution to the hotel’s recent
multi-year property renovation is treated as a deduction in calculating net operating income.

The incentive management fee increases to 1.5% of gross revenues if the gross operating profit exceeds a specified amount plus any owner’s
priority.

(9)

The incentive management fee is capped at 0.75% of gross revenues.

(10) Total management fees are capped at 2.5% of gross revenues.

(11) The base management fee decreases to 0.5% of gross revenues if the annual gross operating profit is less than $36 million. Base management

fees for the year ended December 31, 2023 were decreased to 0.5% of gross revenues.

Additional information regarding fees incurred under hotel management agreements can be found in Note 13 to

our accompanying consolidated financial statements.

Franchise Agreements

The following table sets forth the terms of the hotel franchise agreements for our 19 franchised hotels as of

December 31, 2023:

Franchised Hotels

Atlanta Marriott Alpharetta . . . . . . . . . . . . . . . . . . . . . . .

Expiration
Date of
Agreement

9/2040(1)

Embassy Suites by Hilton Bethesda . . . . . . . . . . . . . . . .

2/2037

Courtyard Denver Downtown . . . . . . . . . . . . . . . . . . . . .
Courtyard New York Manhattan/Fifth Avenue . . . . . . . .
Courtyard New York Manhattan/Midtown East . . . . . . .
The Gwen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hilton Burlington Lake Champlain . . . . . . . . . . . . . . . . .

10/2027
12/2035
8/2042
9/2035
7/2032(3)

Hilton Garden Inn New York/Times Square Central . . .

6/2033

Hotel Clio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10/2036

The Hythe Vail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12/2041

Kimpton Shorebreak Fort Lauderdale Beach Resort. . . .

4/2041

The Lodge at Sonoma Resort . . . . . . . . . . . . . . . . . . . . .
Margaritaville Beach House Key West . . . . . . . . . . . . . .
The Lindy Renaissance Charleston Hotel . . . . . . . . . . . .
Salt Lake City Marriott Downtown at City Creek . . . . .

12/2035
4/2041
12/2031
9/2040(1)

Westin Boston Seaport District . . . . . . . . . . . . . . . . . . . .

12/2026

Westin Fort Lauderdale Beach Resort . . . . . . . . . . . . . . .

12/2034

Westin San Diego Bayview . . . . . . . . . . . . . . . . . . . . . . .

12/2040

Westin Washington D.C. City Center . . . . . . . . . . . . . . .

12/2040

Franchise Fee

6% of gross room sales and 3% of gross
food and beverage sales
3.5% of gross room sales; program fee
of 4% of gross room sales(2)
5.5% of gross room sales
6% of gross room sales
6% of gross room sales
5% of gross room sales
5% of gross room sales and 3% of gross
food and beverage sales; program fee of
4% of gross room sales(3)
5% of gross room sales; program fee of
4.3% of gross room sales
6% of gross room sales and 3% of gross
food and beverage sales(4)
5% of gross room sales and 2% of gross
food and beverage sales
6% of gross room sales and 2% of gross
food and beverage sales
5% of gross room sales
5% of gross revenues
5% of gross room sales
6% of gross room sales and 3% of gross
food and beverage sales
6% of gross room sales and 2% of gross
food and beverage sales(5)
6% of gross room sales and 2% of gross
food and beverage sales
7% of gross room sales and 3% of gross
food and beverage sales
7% of gross room sales and 3% of gross
food and beverage sales

(1)

(2)

The franchise agreement may be extended at Marriott’s option for one 10-year term.

In February 2026, the franchise fee will increase to 5.5% of gross room sales through the remainder of the term.

(3) On August 22, 2022, we entered into a franchise agreement to convert the brand to a Curio Collection Hotel. The new franchise agreement
has a term of ten years, and the brand conversion will be effective upon the completion of an agreed-upon renovation. The franchise fees
will be 4% of gross rooms sales for the first four years and then increase to 5% through the remainder of the term. There will also be a
program fee of 4% of gross rooms sales.

(4)
(5)

In January 2030, the franchise fees will decrease to 5% of gross room sales and 2% of gross food and beverage sales.
In January 2026, the franchise fees will increase to 7% of gross room sales and 3% of gross food and beverage sales through the remainder
of the term.

Additional information regarding fees incurred under franchise agreements can be found in Note 13 to our

accompanying consolidated financial statements.

Mortgage Debt

Four of our hotels are encumbered by mortgage debt. Additional information regarding such hotels can be found

in Note 5 to our accompanying consolidated financial statements.

Ground Leases

Eight of our hotels and one parking area are subject to ground lease agreements. Additional information
regarding our hotels that are subject to ground leases can be found in Note 8 to our accompanying consolidated
financial statements.

Item 3.

Legal Proceedings

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.

Item 4.

Mine Safety Disclosures

Not applicable.

Part II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Market Information

Our common stock trades on the NYSE under the symbol ‘‘DRH’’. The closing price of our common stock on

the NYSE on December 29, 2023 was $9.39 per share.

Stock Performance Graph

The following graph compares the five-year cumulative total stockholder return on our common stock against
the cumulative total returns of the Standard & Poor’s 500 Index (the ‘‘S&P 500 Total Return’’) and the Dow Jones
U.S. Hotels & Lodging REITs Index (the ‘‘Dow Jones U.S. Hotels Total Return’’). We believe the Dow Jones
industry sector comparison to our
U.S. Hotels & Lodging REITs Index’s total return provides a relevant
common stock’s total stockholder return given the index is based on REITs that primarily invest in lodging real estate.

The graph assumes an initial investment on December 31, 2018 of $100 in our common stock in each of the
indices and also assumes the reinvestment of dividends. The total return values do not include dividends declared,
but not paid, during the period.

2018

2019

2020

2021

2022

2023

DiamondRock Hospitality Company Total Return . . . . . $100.00 $129.66 $ 96.55 $112.46 $ 96.94 $112.76
S&P 500 Total Return . . . . . . . . . . . . . . . . . . . . . . . . . . . $100.00 $131.49 $155.68 $200.37 $164.08 $207.21
Dow Jones U.S. Hotel Hotels Total Return. . . . . . . . . . . $100.00 $109.70 $ 73.24 $ 87.06 $ 81.38 $ 99.96

This performance graph shall not be deemed ‘‘filed’’ for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or incorporated by reference into any filing by us under the Securities Act of 1933, as amended
(the ‘‘Securities Act’’), except as shall be expressly set forth by specific reference in such filing.

Dividend Information

In order to maintain our qualification as a REIT, we 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.

We generally pay quarterly cash dividends to common stockholders at the discretion of our board of directors.
The timing and frequency of future dividends will be determined by our board of directors after considering 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.

Stockholder Information

As of February 23, 2024, there were 13 record holders of our common stock and we believe we have more than
one thousand beneficial holders. As of February 23, 2024, there were 11 holders of common OP units (in addition
to the Company and executive officers of the Company).

In order to comply with certain requirements related to our qualification as a REIT, our charter, subject to certain
exceptions, limits the number of common shares that may be owned by any single person or affiliated group to
9.8% of the outstanding common shares.

Equity Compensation Plan Information

The following table provides information as of December 31, 2023 regarding shares of common stock that may

be issued under the Company’s equity compensation plans.

Plan Category

Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
(a)

Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)

Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c)

Equity compensation plans approved by

security holders . . . . . . . . . . . . . . . . . . . . . . . . .

2,903,835(1)

Equity compensation plans not approved by

security holders . . . . . . . . . . . . . . . . . . . . . . . . .

—

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,903,835

—(2)

—

(1)

Includes 1,871,539 shares of common stock issuable pursuant to our deferred compensation plan and 1,032,296 shares of common stock
issuable upon the achievement of certain performance conditions.

(2)

Performance stock units and deferred stock units do not have any exercise price.

Fourth Quarter 2023 Repurchases of Equity Securities

Period

(a)
Total Number
of Shares
Purchased

(b)
Average Price
Paid per Share

October 1 - October 31, 2023 . . . . . . . . .
November 1 - November 30, 2023 . . . . .
December 1 - December 31, 2023. . . . . .

—
—
—

$—
$—
$—

—
—
—

(d)
Maximum
Approximate
Dollar Value of
Shares that May
Yet be Purchased
Under the Plans
or Programs
(in thousands)(1)

$185,324
$185,324
$185,324

(1)

Represents amounts available under the Company’s $200.0 million share repurchase program approved by the board of directors on
September 29, 2022 (the ‘‘Share Repurchase Program’’). The Share Repurchase Program does not obligate the Company to acquire any
particular amount of shares, and may be suspended or discontinued at any time at the Company’s discretion. The Share Repurchase Program
expires on February 28, 2025.

Fourth Quarter 2023 Sales of Unregistered Securities

None.

Item 6.

Reserved

Not applicable.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and related notes
thereto included elsewhere in this report. This discussion contains forward-looking statements about our business.
These statements are based on current expectations and assumptions that are subject to risks and uncertainties.
Actual results could differ materially because of factors discussed in ″Special Note About Forward-Looking
Statements″ and ″Risk Factors″ contained in this Annual Report on Form 10-K and in our other reports that we file
from time to time with the SEC.

Overview

DiamondRock Hospitality Company (the ‘‘Company’’ or ‘‘we’’) is a lodging-focused real estate company that
owns a portfolio of premium hotels and resorts. As of December 31, 2023, we owned 36 hotels with 9,746 rooms
located in 25 different markets in the United States. The markets that we target are those that we believe align with
our strategic objectives, which include investing in assets in destination markets with constrained supply trends, those
that provide geographic diversity relative to our existing portfolio, and those markets that are considered to have high
growth potential. Our hotels are concentrated in major urban markets and in destination resort locations and more
than 60% of our hotels are operated under a brand owned by one of the leading global lodging brand companies
(Marriott International, Inc., Hilton Worldwide, or IHG Hotels & Resorts). 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.

We are a real estate investment trust (″REIT″) for United States (″U.S.″) federal income tax purposes. We
conduct our business through a traditional umbrella partnership REIT, 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 December 31, 2023. The remaining
0.3% of the common OP units are held by third parties and executive officers of the Company. See Note 9 for
additional disclosures related to common OP units.

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 (‘‘ADR’’);

Rooms Revenue per Available Room (‘‘RevPAR’’);

Earnings Before Interest, Income Taxes, Depreciation and Amortization (‘‘EBITDA’’), Earnings Before
Interest, Income Taxes, Depreciation and Amortization for real estate (‘‘EBITDAre’’), Adjusted EBITDA,
and Hotel Adjusted EBITDA; and

Funds From Operations (‘‘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 year ended December 31, 2023 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, inflation, interest rates, 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, Hotel Adjusted EBTIDA, FFO and Adjusted FFO as
measures of the financial performance of our business. See ‘‘Non-GAAP Financial Measures’’ for further discussion
on these financial measures.

Our Hotels

The following table sets forth certain operating information for the year ended December 31, 2023 for each of

the hotels we owned during 2023.

Property

Location

Number
of
Rooms

Occupancy
(%)

ADR
($)

RevPAR
($)

%
Change
from 2022
RevPAR(1)

Chicago Marriott Downtown Magnificent Mile . . . Chicago, Illinois
Westin Boston Seaport District. . . . . . . . . . . . . . . Boston, Massachusetts
Salt Lake City Marriott Downtown at City Creek . . Salt Lake City, Utah
Worthington Renaissance Fort Worth Hotel . . . . . . Fort Worth, Texas
Westin San Diego Bayview . . . . . . . . . . . . . . . . . San Diego, California
Westin Fort Lauderdale Beach Resort . . . . . . . . . . Fort Lauderdale, Florida
Westin Washington D.C. City Center . . . . . . . . . . Washington, D.C.
The Dagny Boston (formerly Hilton Boston

Downtown) . . . . . . . . . . . . . . . . . . . . . . . . . . Boston, Massachusetts

The Hythe Vail . . . . . . . . . . . . . . . . . . . . . . . . . Vail, Colorado
Courtyard New York Manhattan/Midtown East. . . . New York, New York
Atlanta Marriott Alpharetta . . . . . . . . . . . . . . . . . Atlanta, Georgia
The Gwen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chicago, Illinois
Hilton Garden Inn New York/Times Square

Central . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New York, New York

Embassy Suites by Hilton Bethesda . . . . . . . . . . . Bethesda, Maryland
Hilton Burlington Lake Champlain . . . . . . . . . . . . Burlington, Vermont

1,200
793
510
504
436
433
410

403
344
321
318
311

282
272
258

59.5% $246.73 $146.76
202.17
246.93
81.9%
116.96
186.86
62.6%
144.86
197.52
73.3%
165.18
217.02
76.1%
196.48
264.71
74.2%
159.99
219.08
73.0%

77.8%
56.4%
90.9%
65.7%
74.5%

91.4%
71.0%
75.7%

278.65
436.67
342.30
155.55
297.18

275.67
163.92
248.79

216.90
246.16
311.13
102.21
221.33

251.93
116.45
188.22

11.0%
11.6%
11.7%
11.5%
12.5%
(3.8)%
24.1%

(4.8)%
7.3%
13.1%
21.4%
1.7%

(2.3)%
55.2%
3.9%

Property

Location

Number
of
Rooms

Occupancy
(%)

ADR
($)

RevPAR
($)

Henderson Beach Resort . . . . . . . . . . . . . . . . . . . Destin, Florida
Kimpton Hotel Palomar Phoenix . . . . . . . . . . . . . Phoenix, Arizona
Bourbon Orleans Hotel . . . . . . . . . . . . . . . . . . . . New Orleans, Louisiana
Hotel Clio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Denver, Colorado
Courtyard New York Manhattan/Fifth Avenue . . . . New York, New York
Margaritaville Beach House Key West . . . . . . . . . Key West, Florida
The Lodge at Sonoma Resort. . . . . . . . . . . . . . . . Sonoma, California
Courtyard Denver Downtown . . . . . . . . . . . . . . . Denver, Colorado
The Lindy Renaissance Charleston Hotel. . . . . . . . Charleston, South

Carolina

Kimpton Shorebreak Huntington Beach Resort. . . . Huntington Beach,

California

Cavallo Point, The Lodge at the Golden Gate . . . . Sausalito, California
Chico Hot Springs Resort & Day Spa . . . . . . . . . . Pray, Montana
Havana Cabana Key West . . . . . . . . . . . . . . . . . . Key West, Florida
Tranquility Bay Beachfront Resort . . . . . . . . . . . . Marathon, Florida
Hotel Emblem San Francisco . . . . . . . . . . . . . . . . San Francisco,

California

Kimpton Shorebreak Fort Lauderdale Beach

Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fort Lauderdale, Florida

L’Auberge de Sedona . . . . . . . . . . . . . . . . . . . . . Sedona, Arizona
The Landing Lake Tahoe Resort & Spa. . . . . . . . . South Lake Tahoe,

California

Orchards Inn Sedona . . . . . . . . . . . . . . . . . . . . . Sedona, Arizona
Lake Austin Spa Resort. . . . . . . . . . . . . . . . . . . . Austin, Texas
Henderson Park Inn . . . . . . . . . . . . . . . . . . . . . . Destin, Florida

255
242
220
199
189
186
182
177
167

157

142
117
106
103
96

96
88
82

70
40
37

%
Change
from 2022
RevPAR(1)

(18.2)%
16.1%
14.7%
6.4%
6.7%
(8.3)%
(6.0)%
7.4%
0.2%

55.4%
76.0%
75.6%
71.9%
95.3%
82.7%
60.2%
75.2%
88.7%

432.60
222.03
241.00
313.75
289.73
398.18
451.90
216.78
347.26

239.49
168.84
182.23
225.52
276.15
329.19
272.13
163.04
307.88

81.9%

322.69

264.35

(5.1)%

55.4%
67.0%
83.2%
76.8%
65.8%

67.7%
62.8%
51.4%

591.89
183.46
300.60
630.39
234.34

211.05
926.89
448.48

59.9%
293.83
58.5% 1,065.76
595.38
68.9%

327.66
122.97
250.01
484.26
154.14

142.94
581.76
230.43

176.08
623.11
410.13

(8.5)%
5.1%
(10.4)%
(11.4)%
(4.9)%

(6.0)%
(18.2)%
(7.7)%

(12.8)%
(17.1)%
(12.7)%

TOTAL/WEIGHTED AVERAGE . . . . . . . . . . . . .

9,746

72.1% $ 282.11 $203.32

2.9%

(1)

The percentage change from 2022 RevPAR reflects the comparable period in 2022 to our 2023 ownership period.

Overview for 2023

While our results for the year ended December 31, 2022 included a strong recovery from the pandemic, the
Omicron variant of COVID-19 limited the recovery of our business during the beginning of that period. As such, the
results for the year ended December 31, 2023 reflect improvement in comparison to the year ended December 31,
2022, when considering the pandemic. Certain customer segments, particularly business and group travel, continue
to recover from the impacts of the pandemic, while other customer segments and markets related to destination
leisure travel began stabilizing during the year ended December 31, 2023 after experiencing significant growth since
2021. Our overall growth when comparing periods in 2023 to 2022 is more normalized than it was during the height
of the pandemic and our subsequent recovery.

Hotel Acquisitions. On August 1, 2023, we acquired the 117-room Chico Hot Springs Resort and an adjacent
ranch located in Pray, Montana for $31.9 million, including prorations and transaction costs. On October 25, 2023,
we acquired the Chico Day Spa adjacent to the hotel for $0.8 million, including prorations and transaction costs.

Outlook for 2024

U.S. economic growth is broadly expected to decelerate in 2024 as the effects of monetary policy, most notably
elevated interest rates, impact both businesses and consumers. According to many economic forecasts, a soft landing
rather than a recession is the most likely scenario, supported by falling U.S. inflation and prospects for more
accommodative policies from the Federal Reserve. The Federal Reserve has indicated it will remain data dependent
in determining whether to continue to raise or begin to ease interest rates and may begin to ease interest rates as early
as mid-2024 provided there are clear signs inflation is consistent with their target. However, the ultimate timing and
impacts of these monetary policy changes and related impacts on the economy are unknown. Travel demand is highly
sensitive to changes in macroeconomic factors and the threat of even a mild recession or slowdown creates a

backdrop of uncertainty for the hospitality industry. The impact on the hospitality industry for 2024 may be
intensified when considered in connection with high interest rates placing pressure on consumer spending and the
uneven post-pandemic recovery across markets and demand segments.

Our portfolio is composed primarily of luxury and upper-upscale hotels and resorts located in major urban
markets and popular leisure destinations. More than 60% of our profits come from our urban hotels, and we believe
they are well positioned for outsized growth in 2024. Americans have transitioned back to the office but are not
expected to return to a full five-day schedule as seen prior to the pandemic. Accordingly, group meeting activity is
expected to be the leading source of revenue growth as the remote/hybrid office environment drives increased offsite
employee meetings and events at our urban market hotels. Corporate transient demand is also expected to show
steady improvement as office attendance increases. Our destination resorts have outperformed the recovery of the
broader U.S. lodging industry and, depending on the macroeconomic environment, we expect the strong consumer
preference for drive-to destinations will support resilient revenues and profits at our resorts in 2024. Longer term, we
believe robust secular demand for experiential leisure travel, low growth in directly competitive supply, and targeted
investments to renovate and reposition destination hotels can extend and intensify our growth. We anticipate industry
profitability will be challenged by elevated interest rates and pressures on labor costs, insurance and property taxes
as well as a short booking window and emerging and shifting travel patterns. We continue to work closely with our
hotel managers to maximize revenue and identify operating efficiencies.

We expect the expansion of corporate travel demand will enable the industry to improve profits in 2024 and we
enter the year with several favorable factors, including: (1) ownership of a high-quality portfolio, with a strong group
revenue pace for 2024, based on group bookings to date (2) internal growth from five recent and three additional in
process hotel rebranding or repositionings, (3) internal growth from the continuation of our asset management
initiatives and return on investment projects, (4) conservative debt capital structure with limited near-term debt
maturities, and (5) liquidity of $623.5million as of December 31, 2023.

Results of Operations

At December 31, 2023 and 2022, we owned 36 and 35 hotels, respectively. All properties owned during these
periods have been included in our results of operations during the respective periods since their date of acquisition.
Based on when a property was acquired, operating results for certain properties are not comparable for the year ended
December 31, 2023 and 2022. The properties detailed for the non-comparable periods highlighted in the table below
are hereinafter referred to as ‘‘non-comparable properties’’ and all other properties are referred to as ‘‘comparable
properties’’:

Property

Location

Acquisition Date

Tranquility Bay Beachfront Resort
Kimpton Shorebreak Fort Lauderdale Beach Resort
Lake Austin Spa Resort
Chico Hot Springs Resort & Day Spa

January 6, 2022

Marathon, Florida
Fort Lauderdale, Florida April 1, 2022
Austin, Texas
Pray, Montana

November 21, 2022
August 1, 2023

Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022

Revenue. Revenue consists of the following (in thousands):

Year Ended December 31,

2023

2022

Change
$

Rooms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 717,447
259,757
Food and beverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97,663
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 681,269
238,234
82,000

$36,178
21,523
15,663

5.3%
9.0
19.1

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,074,867

$1,001,503

$73,364

7.3%

Our total revenues increased $73.4 million from $1,001.5 million for the year ended December 31, 2022 to

$1,074.9 million for the year ended December 31, 2023.

Rooms revenues increased by $36.2 million from the year ended December 31, 2022 to the year ended
December 31, 2023, $12.7 million of which was due to the acquisition of the non-comparable properties. The

remaining increase of $23.5 million was the result of improved occupancy and ADR at our urban hotels as group and
corporate travel continued to improve, partially offset by declines in ADR at our resort hotels due to the normalizing
of leisure demand.

The following are key hotel operating statistics for the years ended December 31, 2023 and 2022. The 2022
operating statistics reflect the period in 2022 comparable to our ownership period in 2023 for hotels acquired in 2023
and 2022.

Year Ended December 31,

2023

2022

% Change

Occupancy % . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RevPAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72.1%

68.3%

$282.11
$203.32

$289.07
$197.50

3.8%
(2.4)%
2.9%

Food and beverage revenues increased $21.5 million from the year ended December 31, 2022 to the year ended
December 31, 2023, of which $3.8 million was due to the acquisition of non-comparable properties. The remaining
increase of $17.7 million was primarily due to increases in both banquet revenues and outlet revenues.

Other revenues, which primarily represent spa, parking, resort fees and attrition and cancellation fees, increased
$15.7 million from the year ended December 31, 2022 to the year ended December 31, 2023, $11.1 million of which
was due to non-comparable properties. The remaining increase of $4.6 million was primarily due to increases in
resort fees and parking revenues, partially offset by a decline in attrition and cancellation fees.

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

Year Ended December 31,

2023

2022

Change
$

Rooms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $176,765
180,546
Food and beverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
261,536
Other departmental and support expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,998
Management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35,738
Franchise fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other property-level expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102,177
Total hotel operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $781,760

$163,062 $13,703

8.4%

163,622
233,691
23,439
32,683
80,258

16,924 10.3
27,845 11.9
6.7
1,559
3,055
9.3
21,919 27.3

$696,755 $85,005 12.2%

Our hotel operating expenses increased $85.0 million from $696.8 million for the year ended December 31,
2022 to $781.8 million for the year ended December 31, 2023, $21.6 million of which was due to the acquisition of
non-comparable properties. The remaining increase in hotel operating expenses was primarily due to increased
occupancy and related labor costs. Other property-level expenses increased due to higher property tax assessments
and insurance premiums.

Depreciation and amortization. Depreciation and amortization on our hotel buildings is generally recorded over
a 40 year period subsequent to an 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 increased $2.5 million from the year ended
December 31, 2022 primarily due to the properties acquired during 2022 and 2023, as well as the renovations and
rebrandings that were completed in 2022 and 2023.

Impairment losses. During the year ended December 31, 2023, we recorded impairment losses of $0.9 million
related to the write-off of construction in progress that was determined not to be recoverable. During the year ended
December 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 our acquisition of four third-party
owned units.

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 increased $0.2 million, from $31.8 million for the year ended
December 31, 2022 to $32.0 million for the year ended December 31, 2023, primarily due to increases in
employee-related costs. Additionally, during the year ended December 31, 2022, we recognized the reversal of

compensation expense of $0.7 million resulting from the forfeiture of long-term incentive awards related to the
resignation of our former Executive Vice President, Asset Management and Chief Operating Officer.

Business interruption insurance income. For the year ended December 31, 2023, we recognized $0.5 million of
business interruption insurance income related to an electrical fire at the Hilton Garden Inn New York/Times Square
Central that caused the hotel to be closed for seven days and $0.1 million related to an insurance claim at the
Worthington Renaissance Fort Worth Hotel. During the year ended December 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.

Interest expense. Our interest expense increased $26.8 million from $38.3 million for the year ended
December 31, 2022 to $65.1 million for the year ended December 31, 2023, and was comprised of the following (in
millions):

Year Ended December 31,

Change

2023

2022

Mortgage debt interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit facility interest and unused fees . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt issuance costs and debt premium . . . . . . . . . . . . . . .
Interest rate swap mark-to-market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,436
43,294
1,256
2,053
2,033

(29.4)%

$ 23,276
21,153
5,279
2,489

$ (6,840)
$22,141 104.7
(76.2)
$ (4,023)
(17.5)
$ (436)
(13,914) $15,947 (114.6)

$65,072

$ 38,283

$26,789

70.0%

The increase in interest expense is primarily related to rising interest rates on our variable rate unsecured term
loans and the change in the fair value of certain of our interest rate swaps not designated as cash flow hedges, which
were designated as cash flow hedges as of April 1, 2023, partially offset by a decrease in mortgage debt interest
related to the payoff of four mortgage loans in 2022.

Loss on early extinguishment of debt. In September 2022, we refinanced our senior unsecured credit facility and
unsecured term loans. As a result, we recognized a $9.7 million loss on early extinguishment of debt related to the
write-off of certain unamortized debt issuance costs and fees paid to the lenders in consideration for our refinancing.
We also recognized $0.1 million of loss on early extinguishment of debt related to the write-off of certain
unamortized debt issues costs related to the payoff of four mortgage loans during the year ended December 31, 2022.
No loss on early extinguishment of debt was recorded for the year ended December 31, 2023.

Income taxes. We recorded an income tax expense of $0.3 million in 2023 and income tax expense of
$2.6 million in 2022. The 2023 income tax expense was incurred on the $4.3 million pre-tax income of our TRSs.
The 2023 income tax provision includes a change in our valuation allowance of $1.0 million. The 2022 income tax
expense was incurred on the $11.6 million pre-tax income of our TRSs. The 2022 income tax provision includes a
change in our valuation allowance of $3.9 million.

Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021

Discussion of the comparison of the results of operations for the year ended December 31, 2022 to the year
ended December 31, 2021 was included in our Annual Report on Form 10-K for the year ended December 31, 2022
on page 44 under Part II, Item 7 ″Management’s Discussion and Analysis of Financial Condition and Results of
Operations,″ which was filed with the SEC on February 24, 2023.

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of funds necessary to pay our scheduled debt service,
near term debt maturities, operating expenses, ground lease payments, capital expenditures directly associated with
our hotels, any share repurchases, distributions to our common and preferred stockholders, and the cost of acquiring
additional hotels. Other than scheduled debt service payments, we have one mortgage loan that matures within one
year which has a principal balance of $74.3 million as of December 31, 2023. We intend to repay this mortgage loan
using cash on hand.

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 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 December 31, 2023, we had no cash
traps in place.

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, certain redemptions of limited operating partnership units (‘‘common OP
units’’), ground lease payments, share repurchases, 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 us.

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 periodic borrowings on
our senior unsecured credit facility. We have a preference to maintain a significant portion of our portfolio as
unencumbered 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 leverage 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.

We believe that we maintain a reasonable amount of debt. As of December 31, 2023, we had $1.2 billion of debt
outstanding with a weighted average interest rate of 5.22% and a weighted average maturity date of approximately
2.7 years, assuming all extension options available in our debt agreements are exercised. We have one mortgage loan
maturing in August 2024, which we intend to repay using cash on hand. As of December 31, 2023, 32 of our 36 hotels
are unencumbered by mortgage debt. We remain committed to our core strategy of prudent leverage.

The following table outlines the timing and extent of our debt principal maturities and estimated interest
payments for our mortgage debt and unsecured term loans as of December 31, 2023 (in thousands), assuming all
extension options available in our debt agreements are exercised.

2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

82,381 $ 57,970
48,447
295,808
36,619
300,000
— 33,019
251

500,000

$ 140,351
344,255
336,619
33,019
500,251

$1,178,189 $176,306

$1,354,495

Principal

Interest(1)

Total Principal
and Interest

(1)

The interest expense for our variable rate unsecured term loans is calculated based on the rate as of December 31, 2023 of 6.81%.

Information about our financing activities is available in Note 5 to the accompanying consolidated financial

statements.

ATM Program

We maintain 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 during the years ended December 31, 2023 and 2022.

Share Repurchase Program

Our board of directors has authorized a share repurchase program pursuant to which we are authorized to
repurchase up to $200.0 million of our common stock through February 28, 2025. During the year ended
December 31, 2023, we repurchased 318,454 shares of common stock at an average price of $7.60 per share for an
aggregate purchase price of $2.4 million. Information about our share repurchase program is in Note 9 to the
accompanying consolidated financial statements.

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 Sixth Amended and Restated Credit Agreement that provides us with a $400 million senior
unsecured revolving credit facility and two term loan facilities in the aggregate amount of $800 million. The
revolving credit facility matures on September 27, 2026, which we may extend for an additional year upon the
payment of applicable fees and satisfaction of certain standard conditions. The term loan facilities consist of a
$500 million term loan that matures on January 3, 2028 and a $300 million term loan that matures on January 3, 2025.
The maturity date of the $300 million term loan may be extended for an additional year upon the payment of
applicable fees and satisfaction of certain standard conditions. We have the right to increase the aggregate amount
of the facilities to $1.4 billion upon the satisfaction of certain standard conditions.

Additional information about the credit and term loan facilities, including a summary of significant covenants,

can be found in Note 5 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 any hotel dispositions. Our
principal uses of cash are acquisitions of hotel properties, debt service and maturities, share repurchases, capital
expenditures, operating costs, ground lease payments, corporate expenses, and distributions to holders of common
stock, common units and preferred stock. As of December 31, 2023, we had $121.6 million of unrestricted corporate
cash and $45.6 million of restricted cash, and no outstanding borrowings on our senior unsecured credit facility.

Our net cash provided by operations was $237.6 million for the year ended December 31, 2023. Our cash from
operations generally consists of the net cash flow from hotel operations, offset by cash paid for corporate expenses,
interest payments, and other working capital changes. The increase in cash provided by operations was primarily
driven by timing differences related to collections from our hotel managers.

Our net cash used in investing activities was $120.8 million for the year ended December 31, 2023, which
consisted of $86.3 million of capital expenditures, $32.7 million paid for the acquisition of the Chico Hot Springs
Resort & Day Spa and adjacent ranch, and $1.8 million of cash paid for the acquisition of the land parcel underlying
the parking structure at the Worthington Renaissance Fort Worth Hotel.

Our net cash used in financing activities was $56.7 million for the year ended December 31, 2023, which
consisted of $31.9 million of distributions paid to holders of common stock and common units, $9.8 million of
distributions paid to holders of preferred stock, $9.5 million of scheduled mortgage debt principal payments,
$3.0 million paid to repurchase shares upon the vesting of restricted stock for the payment of tax withholdings
obligations, and $2.4 million paid to repurchase shares under our share repurchase program.

We currently anticipate our significant sources of cash for the year ending December 31, 2024 will be the net
cash flow from hotel operations and any potential hotel dispositions. We expect our estimated uses of cash for the
year ending December 31, 2024 will be scheduled debt service and maturity payments, capital expenditures,
distributions to preferred and common stockholders, corporate expenses and potential share repurchases.

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 taxable REIT subsidiaries, 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.

We have paid the following dividends to holders of our common stock and distributions to holders of

common OP units and LTIP units during 2022 and 2023, and through the date of this report:

For the year ended December 31, 2023, we paid an aggregate cash dividend of $0.12 per holder of
common stock, OP units, and LTIP units. For the year ended December 31, 2022, we paid an aggregate cash dividend
of $0.09 per holder of common stock, OP units, and LTIP units.

For each of the years ended December 31, 2023 and 2022, we paid an aggregate cash dividend of

$2.0625 per holder of Series A Preferred Stock.

Capital Expenditures

The management and franchise agreements for each of our hotels provide for the establishment of separate
property improvement reserves 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 reserves under the
applicable management or franchise agreement. As of December 31, 2023, we have set aside $39.7 million for capital
projects in property improvement funds, which are included in restricted cash on our consolidated balance sheets.

We invested approximately $86.3 million in capital improvements at our hotels during the year ended

December 31, 2023. Significant projects in 2023 included the following:

•

The Dagny Boston: We completed a comprehensive renovation to rebrand the Hilton Boston
Downtown/Faneuil Hall as The Dagny Boston, an independent lifestyle hotel, during the third quarter of
2023.

Salt Lake City Marriott: We completed a renovation of the guestrooms during the third quarter of 2023.

We expect to spend approximately $100 million in capital improvements at our hotels in 2024, which includes

the completion of certain projects that commenced in 2023. Significant projects in 2024 include the following:

• Westin San Diego Bayview: In late 2023, we commenced a comprehensive renovation of the hotel’s

guestrooms, which is expected to be completed in the second quarter of 2024.

• Hilton Burlington Lake Champlain: In 2023, we commenced a repositioning of the hotel to rebrand it as
a Curio Collection by Hilton hotel. The repositioning is expected to be completed in the summer of 2024
and includes a new restaurant concept by a well-known, award-winning chef.

•

Bourbon Orleans Hotel: We expect to reposition and rebrand the hotel during 2024 to capture rate potential
against the luxury and lifestyle competitive sets.

•

Orchards Inn Sedona: We expect to commence a repositioning of Orchards Inn as the Cliffs at L’Auberge.
The project will integrate the hotel with the adjacent L’Auberge de Sedona and include construction of a
new pool connecting the two properties, renovation of the guestrooms and creation of a new arrival
experience and new outdoor event space. The project is expected to be completed in 2025.

The Landing Lake Tahoe Resort and Spa: We expect to commence a renovation of the property to
accommodate 14 new keys and construct an adjacent indoor/outdoor event space to be completed in 2025.

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, Hotel 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, Hotel 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, Hotel 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
comprehensive income and consolidated statements of 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 and EBITDAre

EBITDA represents net

income (calculated in accordance with U.S. GAAP) excluding:

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.

(1)

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.

FFO

The Company computes FFO in accordance with standards established by Nareit, which defines FFO as net income
(calculated 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 and property-level 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 and
comprehensive income 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.

Hotel Pre-Opening Costs: We exclude the pre-opening costs associated with the redevelopment or
rebranding of a hotel 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: 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.

Hotel Adjusted EBITDA

We believe that Hotel Adjusted EBITDA provides our investors a useful financial measure to evaluate our hotel
operating performance, excluding the impact of our capital structure (primarily interest), our asset base (primarily
depreciation and amortization), and our corporate-level expenses. With respect to Hotel Adjusted EBITDA, we
believe that excluding the effect of corporate-level expenses provides a more complete understanding of the operating
results over which individual hotels and third-party management companies have direct control. We believe
property-level results provide investors with supplemental information on the ongoing operational performance of
our hotels and effectiveness of the third-party management companies operating our business on a property-level
basis. Hotel Adjusted EBITDA margins are calculated as Hotel Adjusted EBITDA divided by total hotel revenues.

The following table is a reconciliation of our U.S. GAAP net income to EBITDA, EBITDAre, Adjusted

EBITDA and Hotel Adjusted EBITDA (in thousands):

Year Ended December 31,
2022

2021

2023

Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate related depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . .
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sale of hotel properties(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EBITDAre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash lease expense and other amortization . . . . . . . . . . . . . . . . . . . . . . . .
Professional fees and pre-opening costs related to Frenchman’s Reef(2) . . . . .
Uninsured costs related to natural disasters(3) . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel pre-opening costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel manager transition items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance costs(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 86,635 $109,705 $(195,405)
37,043
3,267
102,963
(52,132)
126,697
—
74,565
6,673
1,388
298
—
—
651
(37)
Adjusted EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $271,669 $280,570 $ 83,538
32,552
(947)
Hotel Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $301,156 $312,105 $ 115,143

Corporate expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest (income) and other (income) expense, net . . . . . . . . . . . . . . . . . . . . . .

38,283
2,607
108,849
259,444
2,843
1,659
263,946
6,226
—
—
9,766
—
1,164
(532)

65,072
317
111,302
263,326
941
—
264,267
6,156
—
—
—
1,246
—
—

31,790
(255)

32,048
(2,561)

(1) During the year ended December 31, 2022, we recognized an incremental loss of $1.7 million due to post-closing adjustments related to

hotels sold in 2021.

(2)

(3)

(4)

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 are not covered by insurance.

Represents costs incurred at the Bourbon Orleans Hotel as a result of Hurricane Ida that were not recovered by insurance.

Consists of severance costs incurred, and adjustments thereto, associated with 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):

Year Ended December 31,
2022

2021

2023

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 86,635 $109,705 $(195,405)
102,963
127,282
—

Real estate related depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sale of hotel properties(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to preferred stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

198,878
(9,817)

223,056
(9,817)

108,849
2,843
1,659

111,302
941
—

FFO available to common stock and unit holders . . . . . . . . . . . . . . . . . . . . . .
Non-cash lease expense and other amortization . . . . . . . . . . . . . . . . . . . . . . . .
Professional fees and pre-opening costs related to Frenchman’s Reef(2) . . . . .

189,061
6,156
—

213,239
6,226
—

34,840
(9,817)

25,023
6,673
1,388

Year Ended December 31,
2022

2021

2023

Uninsured costs related to natural disasters(3) . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel pre-opening costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel manager transition items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance costs(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustments to interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . .

—
—
1,246
—
—
2,033

—
9,766
—
1,164
(532)
(13,914)

298
—
—
651
(37)
(7,690)

Adjusted FFO available to common stock and unit holders. . . . . . . . . . . . . . $198,496 $215,949

$26,306

(1) During the year ended December 31, 2022, we recognized an incremental loss of $1.7 million due to post-closing adjustments related to

hotels sold in 2021.

(2)

(3)

(4)

Represents costs incurred at the Bourbon Orleans Hotel as a result of Hurricane Ida that were not recovered by insurance.

Critical Accounting Estimates and Policies

Our 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 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. The following represent certain critical accounting policies that require us
to exercise our business judgment or make significant estimates:

Investment in Hotels

Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve
service potential, which generally includes significant improvements, renovations and replacements, are capitalized,
while repairs and maintenance are expensed as incurred.

Acquisitions of hotel properties are generally accounted for as acquisitions of a group of assets and recorded at
relative fair value based upon total accumulated cost of the acquisition. The acquisition cost is allocated to land,
buildings, improvements, furniture, fixtures and equipment, as well as identifiable intangible and lease assets and
liabilities. In making estimates of fair values for purposes of allocating purchase price we evaluate several factors,
including but not limited to comparable sales, expected future cash flows discounted at risk adjusted rates as well as
industry and Company data. Direct acquisition-related costs are capitalized as a component of the acquired assets.

Depreciation is recorded using the straight-line method over the assets’ estimated useful lives, which are
generally as follows: 5 to 40 years for buildings and improvements; 1 to 10 years for furniture, fixtures and
equipment; and 3 to 5 years for computer equipment and acquired software.

We evaluate the carrying value of our property and equipment for indicators of impairment. Indicators of
impairment 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. When such indicators exist, we perform an analysis to
determine the recoverability of the asset group by comparing the estimated undiscounted future cash flows, including
the proceeds from the ultimate disposition of a hotel, less costs to sell, to the net carrying value of the asset group.
If the carrying value of the asset group is not recoverable and it exceeds the estimated fair value of the asset group,
we recognize an impairment loss in our consolidated statement of operations and comprehensive income for the

amount by which the carrying value exceeds the estimated fair value. We allocate the impairment loss related to the
asset group among the various assets within the asset group pro rata based on the relative carrying values of the
respective assets.

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.

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 and comprehensive income.

Inflation

Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation.
Generally, our management companies may adjust room rates daily, excluding previous contractually committed
reservations. 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.

Inflation has increased recently to levels not seen in years. The United States Federal Reserve has raised interest rates
in response to concerns about inflation. The Federal Reserve has indicated it will remain data dependent in determining
whether to continue to raise or slowly ease interest rates during 2024. Increases in interest rates, especially if coupled with
reduced government spending and volatility in financial markets, may have the effect of further increasing economic
uncertainty, and increasing the cost of new indebtedness and servicing our outstanding variable rate debt.

Seasonality

New Accounting Pronouncements Not Yet Implemented

See Note 2 to the accompanying consolidated financial statements for additional information relating to recently

issued accounting pronouncements.

Item 7A. 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 December 31, 2023 was $1.2 billion, of
which $0.8 billion had a variable interest rate. Our primary sensitivity in 2023 was to changes in one-month Secured
Overnight Financing Rate (‘‘SOFR’’), as the interest rates on our variable-rate indebtedness were based on this
benchmark rate. We use interest rate swaps in order to maintain what we believe to be an appropriate level of
exposure to interest rate variability. As of December 31, 2023, we held interest rate swaps related to $325 million of
our variable-rate indebtedness, through which we receive one-month term SOFR and pay a fixed rate. If market rates
of interest on our unhedged variable rate debt fluctuate by 100 basis points, interest expense would increase or
decrease, depending on rate movement, future earnings and cash flows, by $4.8 million annually.

Item 8.

Financial Statements and Supplementary Data

See Index to the Financial Statements on page F-1.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure 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 our Chief Executive
Officer and Chief Financial Officer have 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 (i) is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) is
accumulated and communicated to our management, including our principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding disclosure.

Changes in Internal Control over Financial Reporting

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.

Management’s Report on Internal Control over Financial Reporting

The report of our management regarding internal control over financial reporting is set forth on page F-2 of this
Annual Report on Form 10-K under the caption ‘‘Management’s Report on Internal Control over Financial
Reporting’’ and incorporated herein by reference.

Attestation Report of Independent Registered Public Accounting Firm

The report of our independent registered public accounting firm regarding our internal control over financial
reporting is set forth on page F-3 of this Annual Report on Form 10-K under the caption ‘‘Report of Independent
Registered Public Accounting Firm’’ and incorporated herein by reference.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

The information required by Items 10-14 is incorporated by reference to our proxy statement for the 2024 annual
meeting of stockholders (to be filed with the SEC not later than 120 days after the end of the fiscal year covered by
this report) (‘‘2024 proxy statement’’).

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information required by this item is incorporated by reference to our 2024 proxy statement.

Item 11.

Executive Compensation

The information required by this item is incorporated by reference to our 2024 proxy statement.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

The information required by this item is incorporated by reference to our 2024 proxy statement. Information
regarding our equity plans set forth in Item 5 of this Annual Report on Form 10-K is incorporated by reference into
this Item 12.

Item 13.

Certain Relationships and Related Transactions and Director Independence

The information required by this item is incorporated by reference to our 2024 proxy statement.

Item 14.

Principal Accountant Fees and Services

The information required by this item is incorporated by reference to our 2024 proxy statement.

Our independent public accounting firm is KPMG LLP, McLean, Virginia, PCAOB Auditor ID: 185.

PART IV

Item 15.

Exhibits and Financial Statement Schedules

Financial Statements

Included herein at pages F-1 through F-31.

Financial Statement Schedules

The following financial statement schedule is included herein on pages F-32 and F-33:

Schedule III - Real Estate and Accumulated Depreciation

All other schedules for which provision is made in Regulation S-X are either not required to be included herein
under the related instructions or are inapplicable or the related information is included in the footnotes to the
applicable financial statement and, therefore, have been omitted.

Exhibits

The following exhibits are included in this Annual Report on Form 10-K for the fiscal year ended December 31,

2023 (and are numbered in accordance with Item 601 of Regulation S-K):

Exhibit
Number

3.1.1

3.1.2

3.1.3

3.1.4

3.1.5

3.1.6

3.1.7

3.2.1

4.1

4.2

Description of Exhibit

Articles of Amendment and Restatement of the Articles of Incorporation of DiamondRock
Hospitality Company (incorporated by reference to the Registrant’s Registration Statement on
Form S-11 filed with the Securities and Exchange Commission on March 1, 2005 (File no. 333-
123065))
Amendment to the Articles of Amendment and Restatement of the Articles of Incorporation of
DiamondRock Hospitality Company (incorporated by reference to the Registrant’s Current Report
on Form 8-K filed with the Securities and Exchange Commission on January 10, 2007)
Amendment to the Articles of Amendment and Restatement of the Articles of Incorporation of
DiamondRock Hospitality Company (incorporated by reference to the Registrant’s Current Report
on Form 8-K filed with the Securities and Exchange Commission on July 9, 2012)
Articles Supplementary Prohibiting DiamondRock Hospitality Company From Electing to be
Subject to Section 3-803 of the Maryland General Corporation Law Absent Stockholder Approval
(incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities
and Exchange Commission on February 26, 2014)
Amendment to the Articles of Amendment and Restatement of the Articles of Incorporation of
DiamondRock Hospitality Company (incorporated by reference to the Registrant’s Current Report
on Form 8-K filed with the Securities and Exchange Commission on May 5, 2016)
Articles of Amendment to the Articles of Amendment and Restatement of the Articles of
Incorporation of DiamondRock Hospitality Company (incorporated by reference to the Registrant’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on May 13, 2019)
Articles Supplementary Designating DiamondRock Hospitality Company’s 8.250% Series A
Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.7 to the
Registrant’s Form 8-A filed with the Securities and Exchange Commission on August 28, 2020 (File
No. 001-32514))
Fifth Amended and Restated Bylaws of DiamondRock Hospitality (incorporated by reference to the
Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on
August 1, 2023)
Form of Certificate for Common Stock for DiamondRock Hospitality Company (incorporated by
reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on May 5, 2010)
Form of Specimen Certificate for DiamondRock Hospitality Company’s 8.250% Series A
Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 4.1 to the
Registrant’s Form 8-A filed with the Securities and Exchange Commission on August 28, 2020
(File No. 001-32514))

Exhibit
Number

Description of Exhibit

4.3†
10.1

10.2

10.3*

10.4*

10.5*

10.6*

10.7*

10.8*

10.9*

10.10*

10.11*

10.12

10.13*

10.14*

Description of Securities of DiamondRock Hospitality Company
Amended and Restated Agreement of Limited Partnership of DiamondRock Hospitality Limited
Partnership, dated as of August 28, 2018 (incorporated by reference to the Registrant’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on August 31, 2018)
Amendment No. 1 to the Agreement of Limited Partnership of DiamondRock Hospitality Limited
Partnership, dated August 28, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on August 31,
2020)
DiamondRock Hospitality Company Deferred Compensation Plan (incorporated by reference to the
Registrant’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission
on August 8, 2014)
First Amendment to DiamondRock Hospitality Company Deferred Compensation Plan, approved by
the Compensation Committee of the Board of Directors on December 15, 2014 (incorporated by
reference to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange
Commission on February 27, 2015)
Form of Restricted Stock Award Agreement (incorporated by reference to the Registrant’s Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission on May 5, 2010)
Form of Market Stock Unit Agreement (incorporated by reference to the Registrant’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on March 9, 2010)
Relative TSR Performance Stock Unit Agreement (incorporated by reference to the Registrant’s
Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 25,
2014)
Form of Deferred Stock Unit Award Agreement (incorporated by reference to the Registrant’s
Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 5,
2010)
Form of Director Election Form (incorporated by reference to the Registrant’s Quarterly Report on
Form 10-Q filed with the Securities and Exchange Commission on May 5, 2010)
Form of Incentive Stock Option Agreement (incorporated by reference to the Registrant’s
Registration Statement on Form S-11 filed with the Securities and Exchange Commission
(File no. 333-123065))
Form of Non-Qualified Stock Option Agreement (incorporated by reference to the Registrant’s
Registration Statement on Form S-11 filed with the Securities and Exchange Commission
(File no. 333-123065))
Sixth Amended and Restated Credit Agreement, dated as of September 27, 2022, by and among
DiamondRock Hospitality Limited Partnership, DiamondRock Hospitality Company, Wells Fargo
Bank, National Association, as Administrative Agent, each of Wells Fargo Securities, LLC, BofA
Securities, Inc., U.S. Bank National Association, KeyBanc Capital Markets Inc., Regions Capital
Markets, a Division of Regions Bank, PNC Capital Markets LLC, TD Securities (USA) LLC,
Capital One, National Association and BMO Harris Bank, N.A., as Joint Lead Arrangers, each of
Wells Fargo Securities, LLC, BofA Securities, Inc., U.S. Bank National Association and TD
Securities (USA ) LLC, as Joint Bookrunners, each of Bank of America, N.A., U.S. Bank National
Association and TD Bank, N.A., as Syndication Agents, each of KeyBank National Association,
Regions Bank, PNC Bank, National Association, BMO Harris Bank, N.A. and Capital One,
National Association, as Documentation Agents, and each of Wells Fargo Bank, National
Association and PNC Bank, National Association, as Sustainability Structuring Agents (incorporated
by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 28, 2022)
Form of Severance Agreement (and schedule of material differences thereto) (incorporated by
reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on April 30, 2012)
Form of Stock Appreciation Right (incorporated by reference to the Registrant’s Current Report on
Form 8-K filed with the Securities and Exchange Commission on March 6, 2008)

Exhibit
Number

10.15*

10.16*

10.17*

10.18*

10.19*

10.20*

10.21*

10.22*

10.23*

10.24*

10.25*

10.26*

10.27*

10.28*

10.29*

21.1†
23.1†
31.1†

31.2†

32.1**

Description of Exhibit

Form of Dividend Equivalent Right (incorporated by reference to the Registrant’s Current Report
on Form 8-K filed with the Securities and Exchange Commission on March 6, 2008)
Form of Amendment No. 1 to Dividend Equivalent Rights Agreement under the DiamondRock
Hospitality Company 2004 Stock Option and Incentive Plan (incorporated by reference to the
Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on
December 30, 2008)
Form of Indemnification Agreement (incorporated by reference to the Registrant’s Current Report
on Form 8-K filed with the Securities and Exchange Commission on December 16, 2009)
Severance Agreement between DiamondRock Hospitality Company and William J. Tennis, dated as
of December 16, 2009 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-
Q filed with the Securities and Exchange Commission on April 30, 2012)
Letter Agreement, dated as of December 9, 2009, by and between DiamondRock Hospitality
Company and William J. Tennis (incorporated by reference to the Registrant’s Annual Report on
Form 10-K filed with the Securities and Exchange Commission on February 26, 2010)
First Amendment to Severance Agreement between DiamondRock Hospitality Company and
William J. Tennis, dated March 12, 2021 (incorporated by reference to the Registrant’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on March 15, 2021)
Severance Agreement between DiamondRock Hospitality Company and Troy G. Furbay, dated as of
April 9, 2014 (incorporated by reference to the Registrant’s Quarterly Report on From 10-Q filed
with the Securities and Exchange Commission on May 12, 2014)
DiamondRock Hospitality Company 2016 Equity Incentive Plan, effective as of May 3, 2016
(incorporated by reference to Appendix B to the Registrant’s Proxy Statement on Schedule 14A filed
with the Securities and Exchange Commission on March 24, 2016)
First Amendment to the DiamondRock Hospitality Company 2016 Equity Incentive Plan
(incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities
and Exchange Commission on December 26, 2018)
Form of Restricted Stock Award Agreement under the 2016 Equity Incentive Plan (incorporated by
reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on August 5, 2016)
Form of Performance Stock Unit Agreement under the 2016 Equity Incentive Plan (incorporated by
reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on August 5, 2016)
Form of Deferred Stock Unit Award Agreement under the 2016 Equity Incentive Plan (incorporated
by reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on August 5, 2016)
Form of LTIP Unit Award Agreement under the 2016 Equity Incentive Plan (incorporated by
reference to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on May 9, 2019)
Severance Agreement between DiamondRock Hospitality Company and Jeffrey J. Donnelly, dated as of
August 8, 2019 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on November 8, 2019)
Severance Agreement between DiamondRock Hospitality Company and Justin L. Leonard, effective
July 18, 2022 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on August 4, 2022)
List of DiamondRock Hospitality Company Subsidiaries
Consent of KPMG LLP
Certification of Chief Executive Officer Required by Rule 13a-14(a) of the Securities Exchange Act of
1934, as amended.
Certification of Chief Financial Officer Required by Rule 13a-14(a) of the Securities Exchange Act of
1934, as amended.
Certification of Chief Executive Officer and Chief Financial Officer Required by Rule 13a-14(b) of the
Securities Exchange Act of 1934, as amended.

Exhibit
Number

97†
101.SCH†
101.CAL†
101.LAB†
101.PRE†
101.DEF†
104†

Description of Exhibit

DiamondRock Hospitality Company Compensation Recovery Policy
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase Document.
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Inline XBRL Taxonomy Definition Linkbase Document.
Cover Page Interactive Data File (formatted as inline XBRL and with applicable taxonomy
extension information contained in Exhibits 101.*)

†

Exhibit is a management contract or compensatory plan or arrangement.

Filed herewith

Furnished herewith

Item 16.

Form 10-K Summary

Not applicable.

Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Bethesda, State of Maryland, on February 28, 2024.

SIGNATURES

DIAMONDROCK HOSPITALITY COMPANY

By:

/s/ WILLIAM J. TENNIS

Name: William J. Tennis
Title:

Executive Vice President, General Counsel and Corporate Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the

following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ MARK W. BRUGGER

Mark W. Brugger

Chief Executive Officer and Director
(Principal Executive Officer)

February 28, 2024

/s/ JEFFREY J. DONNELLY

Jeffrey J. Donnelly

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

February 28, 2024

/s/ BRIONY R. QUINN

Briony R. Quinn

Senior Vice President and Treasurer
(Principal Accounting Officer)

February 28, 2024

/s/ WILLIAM W. McCARTEN

Chairman

February 28, 2024

William W. McCarten

/s/ TIMOTHY R. CHI

Director

February 28, 2024

Timothy R. Chi

/s/ MICHAEL A. HARTMEIER

Director

February 28, 2024

Michael A. Hartmeier

/s/ KATHLEEN A. MERRILL

Director

February 28, 2024

Kathleen A. Merrill

/s/ WILLIAM J. SHAW

Director

February 28, 2024

William J. Shaw

/s/ BRUCE D. WARDINSKI

Director

February 28, 2024

Bruce D. Wardinski

/s/ TABASSUM S. ZALOTRAWALA

Director

February 28, 2024

Tabassum S. Zalotrawala

Index to Financial Statements

Management’s Report on Internal Control Over Financial Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31,

2023, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Equity for the Years Ended December 31, 2023, 2022 and 2021 . . . . . . . . . . .
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2023 . . . . . . . . . . . . . . . . . .

Page

F-2
F-3
F-6

F-7
F-9
F-10
F-12
F-32

F-1

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting
for the Company. Internal control over financial reporting refers to the process designed by, or under the supervision
of, our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management and
other personnel, 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, and
includes those policies and procedures that:

(1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions

and dispositions of the assets of the company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorizations of management and directors of the
company; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or

disposition of the company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting
objectives because of its inherent limitations. Internal control over financial reporting is a process that involves
human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures.
Internal control over financial reporting also can be circumvented by collusion or improper management override.
Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely
basis by internal control over financial reporting. However, these inherent limitations are known features of the
financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not
eliminate, this risk.

Management has used the framework set forth in the report entitled Internal Control - Integrated Framework
(2013) published by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the
effectiveness of the Company’s internal control over financial reporting. Management has concluded that the
Company’s internal control over financial reporting was effective as of December 31, 2023. KPMG LLP, an
independent registered public accounting firm, audited the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2023 as stated in their report, which appears below.

February 28, 2024

/s/ Mark W. Brugger

Chief Executive Officer
(Principal Executive Officer)

/s/ Jeffrey J. Donnelly

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

/s/ Briony R. Quinn

Senior Vice President and Treasurer
(Principal Accounting Officer)

F-2

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
DiamondRock Hospitality Company:

Opinion on Internal Control Over Financial Reporting

We have audited DiamondRock Hospitality Company and subsidiaries’ (the Company) internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based
on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related
consolidated statements of operations and comprehensive income, equity, and cash flows for each of the years in the
three-year period ended December 31, 2023, and the related notes and financial statement schedule III (collectively,
the consolidated financial statements), and our report dated February 28, 2024 expressed an unqualified opinion on
those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report
of Independent Registered Public Accounting Firm. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit
also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

/s/ KPMG LLP
McLean, Virginia
February 28, 2024

F-3

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
DiamondRock Hospitality Company:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of DiamondRock Hospitality Company and
subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and
comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31,
2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting
principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission, and our report dated February 28, 2024 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that:
(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating
the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.

Evaluation of investments in hotel properties for impairment

As discussed in Notes 2 and 3 to the consolidated financial statements, property and equipment, net as of
December 31, 2023, was $2,755.2 million, which primarily consists of investments in hotel properties. The Company
reviews its 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. If such events or circumstances are identified,
management performs an analysis to compare the estimated undiscounted future cash flows from operations and the
proceeds from the ultimate disposition of a hotel, to the carrying amount of the hotel property. If the estimated
undiscounted future cash flows are less than the carrying amount of the hotel property, an adjustment to reduce the
carrying amount to the related hotel’s estimated fair value is recorded and an impairment loss is recognized.

F-4

We identified the evaluation of investments in hotel properties for impairment as a critical audit matter. Identifying
and evaluating the Company’s judgments about events or changes in circumstances that indicate the carrying amount
of a hotel property may not be recoverable involved a high degree of auditor judgment. This included judgments
regarding the likelihood that a property will be sold significantly before the end of its previously estimated useful life.
Changes in these judgments could have a significant impact on the determination of whether the carrying amount of
the investments in hotel properties may not be recoverable.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls over the Company’s process to identify and evaluate
events or changes in circumstances that indicate the carrying amount of investments in hotel properties may not be
recoverable, and when applicable, the Company’s process to evaluate whether a hotel’s carrying amount is
recoverable based on its undiscounted future cash flows. We assessed management’s assumptions and the likelihood
of a potential decrease in expected future cash flows caused by a shortened hold period that may indicate an
investment in a hotel property would not be recoverable. We assessed the Company’s intent and ability to hold each
hotel property by examining documents to assess the Company’s plans, if any, to dispose of individual hotel
properties. We inquired of Company officials and obtained written representations regarding the status of potential
plans, if any, to dispose of individual hotel properties, corroborated the Company’s plans with others in the
organization who are responsible for, and have the authority over, potential disposition activities. When events or
changes in circumstances indicated the carrying amount of a hotel property may not be recoverable, we challenged
the methodology and significant assumptions used by the Company to estimate undiscounted future cash flows.

/s/ KPMG LLP

We have served as the Company’s auditor since 2004.

McLean, Virginia
February 28, 2024

F-5

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

December 31, 2023 December 31, 2022

ASSETS
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from hotel managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,755,195
97,692
45,576
144,689
73,940
121,595

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,238,687

LIABILITIES AND EQUITY
Liabilities:
Debt, net of unamortized debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due to hotel managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unfavorable contract liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions declared and unpaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income related to key money, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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
December 31, 2023 and 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Common stock, $0.01 par value; 400,000,000 shares authorized; 209,627,197
and 209,374,830 shares issued and outstanding at December 31, 2023 and
2022, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions in excess of earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,748,476
99,047
39,614
176,708
76,131
67,564

$3,207,540

1,185,793
110,875
123,682
65,097
61,069
43,120
12,946
8,780

1,611,362

1,177,005
112,866
116,522
69,209
59,866
39,563
6,324
8,349

1,589,704

2,096
2,291,297
(2,036)
(649,330)

1,642,075
6,908

1,648,983

2,094
2,288,433
—
(700,694)

1,589,881
6,297

1,596,178

Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,238,687

$3,207,540

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

F-6

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except share and per share amounts)

Year Ended December 31,
2022

2021

2023

Revenues:
Rooms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Food and beverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

717,447
259,757
97,663

681,269
238,234
82,000

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,074,867

1,001,503

Operating expenses:
Rooms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Food and beverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other departmental and support expenses . . . . . . . . . . . . . . . . . . .
Management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other property-level expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business interruption insurance income . . . . . . . . . . . . . . . . . . . . .

Total operating expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest (income) and other (income) expense, net . . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . .

Total other expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) before income taxes. . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net (income) loss attributable to noncontrolling interests. .

Net income (loss) attributable to the Company . . . . . . . . . . . .
Distributions to preferred stockholders . . . . . . . . . . . . . . . . . . . . .

176,765
180,546
261,536
24,998
35,738
102,177
111,302
941
32,048
(647)

925,404

65,072
(2,561)
—

62,511

86,952
(317)

86,635
(295)

86,340
(9,817)

163,062
163,622
233,691
23,439
32,683
80,258
108,849
2,843
31,790
(499)

839,738

38,283
1,404
9,766

49,453

112,312
(2,607)

109,705
(377)

109,328
(9,817)

399,055
117,742
50,337

567,134

102,183
89,795
158,014
10,208
18,665
82,804
102,963
126,697
32,552
(705)

723,176

37,043
(947)
—

36,096

(192,138)
(3,267)

(195,405)
821

(194,584)
(9,817)

Net income (loss) attributable to common stockholders . . . . .

76,523

99,511

(204,401)

Earnings (loss) earnings per share:

Earnings (loss) per share available to common

stockholders—basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Earnings (loss) per share available to common

stockholders—diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.36

0.47

(0.96)

Weighted-average number of common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

211,518,826

212,423,873

212,056,923

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

212,304,117

213,188,987

212,056,923

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

F-7

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - (CONTINUED)
(in thousands, except per share amounts)

Comprehensive income (loss):
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss):

Unrealized (loss) on interest rate derivative instruments . . . . . . . . . . . . . . .
Unrealized gain on Rabbi Trust assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive (income) loss attributable to noncontrolling interests . . . . . .

Year Ended December 31,

2023

2022

2021

$86,635

$109,705

$(195,405)

(2,634)
591

84,592
(288)

—
—

109,705
(377)

(195,405)
821

Comprehensive income (loss) attributable to the Company. . . . . . . . . . . . . . .

$84,304

$109,328

$(194,584)

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

F-8

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except share and per share amounts)

Preferred Stock Common Stock

Par
Value

Additional
Paid-In
Capital

Par
Value

Accumulated
Other
Comprehensive
Income (Loss)

Distributions
in excess of
earnings

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

Net loss . . . . . . . . . . . . . . . . . . . .

— —

Distributions on preferred stock ($2.0625

per preferred share) . . . . . . . . . . . .

Share-based compensation . . . . . . . . .

Shares redeemed to satisfy withholdings

on vested share based compensation . .

Redemption of common OP units . . . . .

— —

—

495,366

(145,975)

323,990

—

(2)

—

7,612

(1,480)

2,367

—

(194,584)

(821)

(195,405)

(9,817)

—

(9,817)

7,618

(1,482)

2,370

—

1,125

—

(2,370)

(9,817)

8,743

(1,482)

—

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

Net income . . . . . . . . . . . . . . . . . .

— —

Distributions on common stock/units

($0.09 per common share/unit) . . . . .

Distributions on preferred stock ($2.0625

per preferred share) . . . . . . . . . . . .

Share-based compensation . . . . . . . . .

Shares redeemed to satisfy withholdings

on vested share based compensation . .

Redemption of common OP units . . . . .

— —

—

252,259

(83,139)

28,502

—

(1)

—

7,328

(827)

214

Common stock repurchased and retired . .

— — (1,569,687)

(15)

(12,272)

—

109,328

(19,274)

(9,817)

—

(9,817)

7,331

(828)

214

(12,287)

377

(74)

—

458

—

(214)

—

109,705

(19,348)

(9,817)

7,789

(828)

—

(12,287)

Balance at December 31, 2022 . . . . . . . 4,760,000

$48

209,374,830 $2,094 $2,288,433

$ —

$(700,694)

$1,589,881

$ 6,297

$1,596,178

Net Income . . . . . . . . . . . . . . . . . .

— —

Unrealized loss on interest rate derivative
instruments . . . . . . . . . . . . . . . .

Unrealized gain on Rabbi trust assets . . .

Distributions on common stock/units

($0.12 per common share/unit) . . . . .

Distributions on preferred stock ($2.0625

per preferred share) . . . . . . . . . . . .

Share-based compensation . . . . . . . . .

Shares redeemed to satisfy withholdings

on vested share based compensation . .

Redemption of common OP units . . . . .

Common stock repurchased and retired . .

— —

—

867,041

(333,779)

37,559

(318,454)

—

(3)

(5)

—

7,946

(3,029)

365

(2,418)

—

86,340

295

86,635

(2,625)

589

—

(2,625)

589

(9)

(2,634)

591

—

(25,159)

(127)

(25,286)

(9,817)

—

(9,817)

7,955

(3,032)

366

(2,423)

—

816

—

(366)

(9,817)

8,771

(3,032)

—

(2,423)

Balance at December 31, 2023 . . . . . . . 4,760,000

$48

209,627,197 $2,096 $2,291,297

$(2,036)

$(649,330)

$1,642,075

$ 6,908

$1,648,983

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

F-9

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Cash flows from operating activities:

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income (loss) to net cash provided by

(used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate asset depreciation as corporate expenses . . . . . . . . . . . . . .
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash lease expense and other amortization . . . . . . . . . . . . . . . . .
Non-cash interest rate swap fair value adjustment . . . . . . . . . . . . . . .
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred income related to key money . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Changes in assets and liabilities:

Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due to/from hotel managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,
2022

2021

2023

$ 86,635

$ 109,705

$(195,405)

111,302
192
—
6,156
2,033
2,053
941
(431)
8,771
(975)

(3,684)
24,151
420

108,849
220
9,766
6,226
(13,914)
2,489
2,843
(423)
7,789
(781)

(9,563)
(24,034)
7,067

102,963
226
—
6,673
7,690
2,547
126,697
(329)
8,744
468

3,142
(63,236)
(2,487)

(2,307)

Net cash provided by (used in) operating activities . . . . . . . . . . . . . .

237,564

206,239

Cash flows from investing activities:

Capital expenditures for operating hotels. . . . . . . . . . . . . . . . . . . . . . . . .
Property acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of properties, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of interest in land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extension of the Salt Lake City Marriott Downtown ground lease . . . .
Receipt of deferred key money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(86,314)
(32,699)
—
(1,833)
—
—

(67,657)
(181,942)
—
—
—
1,000

(47,132)
(226,627)
213,817
—
(2,781)
524

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .

(120,846)

(248,599)

(62,199)

Cash flows from financing activities:

Scheduled mortgage debt principal payments . . . . . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of mortgage debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from senior unsecured term loans. . . . . . . . . . . . . . . . . . . . . . .
Repayments of senior unsecured term loans . . . . . . . . . . . . . . . . . . . . . .
Draws on senior unsecured credit facility . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of senior unsecured credit facility . . . . . . . . . . . . . . . . . . . .
Payment of financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions on common stock and units . . . . . . . . . . . . . . . . . . . . . . . .
Distributions on preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares redeemed to satisfy tax withholdings on vested share-based

compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash (used in) provided by financing activities . . . . . . . . . . . . . .

Net increase (decrease) in cash and cash equivalents, and restricted cash.
Cash, cash equivalents, and restricted cash beginning of year . . . . . . . . . .

(9,544)
(2,423)
—
—
—
—
—
—
(31,909)
(9,817)

(3,032)

(56,725)

59,993
107,178

(14,629)
(12,287)
(178,141)
800,000
(400,000)
110,000
(200,000)
(13,846)
(6,421)
(9,817)

(828)

74,031

31,671
75,507

(15,318)
—
(1,880)
—
—
205,500
(170,500)
(1,217)
(119)
(9,817)

(1,482)

5,167

(59,339)
134,846

Cash, cash equivalents, and restricted cash, end of year. . . . . . . . . . . . . . .

$ 167,171

$ 107,178

$ 75,507

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

F-10

Year Ended December 31,
2022

2021

2023

Supplemental disclosure of cash flow information:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$60,363

$47,547

$42,494

Cash paid for income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,666

$ 6,625

$ 1,632

Non-cash investing and financing activities:

Unpaid dividends and distributions declared . . . . . . . . . . . . . . . . . . . . . . . .

$ 6,324

$12,946

Accrued capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 4,667

$ 8,007

$ 7,295

Transfer of land interest in consideration for extension of ground lease . .

$ —

855

Redemption of Operating Partnership units for common stock . . . . . . . . .

365

214

$ 2,370

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:

2023

2022

2021

Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $121,595 $ 67,564 $38,620
36,887
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45,576

39,614

Total cash, cash equivalents, and restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $167,171 $107,178 $75,507

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

F-11

DIAMONDROCK HOSPITALITY COMPANY

Notes to the Consolidated Financial Statements

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. As of December 31, 2023, we owned 36 hotels with 9,746 rooms.
Our hotels are concentrated in major urban markets and in destination resort locations and more than 60% of our
hotels are operated under a brand owned by one of
lodging brand companies
(Marriott International, Inc., Hilton Worldwide, or IHG Hotels & Resorts). 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.

the leading global

We are a real estate investment trust (‘‘REIT’’) for U.S. federal income tax purposes. We conduct our business
through a traditional umbrella partnership REIT, 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 December 31, 2023. The remaining 0.3% of the common
OP units are held by third parties and executive officers of the Company. See Note 9 for additional disclosures related
to common OP units.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Our consolidated financial statements include all of the accounts of the Company and its subsidiaries in
accordance with U.S. generally accepted accounting principles (‘‘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.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation. These
reclassifications did not affect the Company’s financial position, results of operations, or cash flows. An adjustment
was made to the consolidated balance sheet for the year ended December 31, 2022 to combine mortgage debt, net
of unamortized debt issuance costs and unsecured term loans, net of unamortized debt issuance costs as debt, net of
unamortized debt issuance costs. An adjustment was made to the consolidated statements of operations and
comprehensive income for the year ended December 31, 2022 to present other departmental and support expenses
and other property-level expenses, which were previously reported in total as other hotel expenses.

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.

F-12

Fair Value Measurements

In evaluating fair value, U.S. GAAP outlines a valuation framework and creates a fair value hierarchy that
distinguishes between assumptions based on market data (observable inputs) and a reporting entity’s own
assumptions (unobservable inputs). The hierarchy ranks the quality and reliability 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

We evaluate the carrying value of our property and equipment for indicators of impairment. Indicators of
impairment that may cause a review include, but are not limited to, adverse changes in the demand for lodging at our
hotels, current or projected losses from operations, and an expectation that a hotel is more likely than not to be sold
significantly before the end of its useful life. When such indicators exist, we perform an analysis to determine the
recoverability of the asset group by comparing the estimated undiscounted future cash flows, including the proceeds
from the ultimate disposition of a hotel, less costs to sell, to the net carrying value of the asset group. If the carrying
value of the asset group is not recoverable and it exceeds the estimated fair value of the asset group, we recognize
an impairment loss in our consolidated statement of operations and comprehensive income for the amount by which
the carrying value exceeds the estimated fair value. We allocate the impairment loss related to the asset group among
the various assets within the asset group pro rata based on the relative carrying values of the respective assets.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with original maturities, when purchased, of

three months or less.

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

F-13

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 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 recognized as 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 have elected to be treated as a REIT under the provisions of the Internal Revenue Code, 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 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.

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 and comprehensive income. 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 uncertain tax positions as of
December 31, 2023 and 2022.

Intangible Assets and Liabilities

Intangible assets and liabilities recorded may include trade names, management or franchise agreement
intangibles, right-to-manage assets, 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

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

F-14

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 Payments

The Company may award time-based restricted stock awards and performance-based stock awards to officers,

employees and non-employee directors.

Restricted stock awards vest in equal annual installments over three to five years from the date of grant. Vested
restricted stock awards are settled for the Company’s common stock. The grant date fair value per share is equal to
the closing stock price on the date of grant.

Performance-based awards are settled at the end of a three-year performance period with 50 percent of the award
subject to achievement based on a measure of the Company’s total stockholder return relative to a peer company
group and the other 50 percent of the award subject to achievement of hotel market share improvement. The total
number of performance shares that vest based on each performance measure (relative stockholder return and hotel
market share improvement) is based on an achievement factor that, in each case, ranges from a zero to 150 percent
payout. The grant date fair value of the relative stockholder return awards is estimated using the Monte Carlo
Simulation, and the grant date fair value for the hotel market share improvement awards is equal to the closing stock
price on the date of grant.

The measurement objective for these share-based awards is the estimated fair value at the grant date of the equity
instruments that we are obligated to issue when employees have rendered the requisite service and satisfied any other
conditions necessary to earn the right to benefit from the awards. We recognize share-based compensation expense
ratably over the requisite service period which is included in corporate expenses in the accompanying consolidated
statements of operations and comprehensive income. The requisite service period is the period during which an
employee is required to provide service in exchange for an award. We recognize forfeitures as they occur.
Compensation expense for awards with performance conditions is recognized over the requisite service period if it
is probable that the performance condition will be satisfied. If such performance conditions are not considered
probable until they occur, no compensation expense for these awards is recognized.

Derivative Instruments

In the normal course of business, we are exposed to the effects of interest rate changes in connection with our
variable rate debt. We may enter into derivative instruments, including interest rate swaps and caps, to manage or
hedge interest rate risk. The Company recognizes all derivatives as assets or liabilities on its consolidated balance
sheets at fair value. On the date the derivative contract is entered into, or at a later point in time, we may designate
the derivative as a hedging instrument, and, if so, we formally document all relationships between hedging activities,
including the risk management objective and strategy for undertaking various hedge transactions. Changes in the fair
value of a derivative that was determined to be an effective cash flow hedge is reported in other comprehensive
income (loss) and is reclassified to interest expense in the same period during which the hedged transaction affects
earnings. If we do not specifically designate the derivative as a cash flow hedge, changes in the fair value of the
undesignated derivative instrument are reported in current period earnings.

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 interests in either cash or delivery of shares
of our common stock. See Note 9 for additional details. On the consolidated statements of operations and
comprehensive income, 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.

F-15

Restricted Cash

Restricted cash primarily consists of cash held in reserve for replacement of furniture and fixtures 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 and comprehensive income.

Debt issuance costs related to our senior unsecured credit facility 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 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 and comprehensive income.

If a refinancing of our debt is considered an extinguishment, unamortized debt issuance costs are included in the
gain or loss on extinguishment. All fees paid to or received from creditors are included in the gain or loss on
extinguishment. Fees paid to third parties are capitalized as debt issuance costs. If a refinancing of our debt is
considered a modification, the net debt issuance costs at the time of modification are amortized over the remaining
life of the modified debt.

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 represents consideration received from third parties to incentivize the Company to enter into hotel
management or franchise agreements or to complete specific capital projects. Key money is deferred and amortized
over the term of the hotel management or 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

F-16

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. If we purchase an
underlying asset prior to the termination of the lease term, the right-of-use asset and related lease liability is reversed
and the net gain or loss is recorded as part of the acquisition basis.

Concentration of 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.

We have concentration risk related to one of our hotel properties. In 2023, Chicago Marriott represented 10%

of total revenues, total assets, and income before taxes.

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. All of our hotels meet the aggregation criteria established by U.S. GAAP for segment
reporting, and as a result, we have one reportable segment.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (″ASU″) No. 2023-07 (″ASU 2023-07″),
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures which requires, among other
things, the following: (i) enhanced disclosures about significant segment expenses that are regularly provided to the
chief operating decision maker and included in a segment’s reported measure of profit or loss; (ii) disclosure of the
amount and description of the composition of other segment items, as defined in ASU 2023-07, by reportable
segment; and (iii) reporting the disclosures about each reportable segment’s profit or loss and assets on an annual and
interim basis. The provisions of ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and
interim periods within fiscal years beginning after December 15, 2024; early adoption is permitted. We are currently
evaluating the impact of ASU 2023-07 on our consolidated financial statements.

2023,

In December

the FASB issued ASU No.

Income Taxes
(Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, entities to disclose
additional information with respect to the effective tax rate reconciliation and to disclose the disaggregation by
jurisdiction of income tax expense and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after
December 15, 2024, with early adoption permitted. We are currently evaluating the impact of ASU 2023-09 on our
consolidated financial statements.

2023-09

(″ASU 2023-09″),

3. Property and Equipment

Property and equipment consists of the following (in thousands):

December 31,

2023

2022

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

590,824 $
7,994
2,878,508
561,484
21,175

577,861
7,994
2,798,654
525,901
32,422

Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,059,985
(1,304,790)

3,942,832
(1,194,356)

$ 2,755,195 $ 2,748,476

F-17

As of December 31, 2023 and 2022, we had accrued capital expenditures of $4.7 million and $8.0 million,

respectively.

During the year ended December 31, 2023, we recorded impairment losses of $0.9 million related to the
write-off of construction in progress that was determined not to be recoverable. During the year ended December 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 our acquisition of four third-party owned units.
During the year ended December 31, 2021, we recorded impairment losses of $126.7 million related to two hotels
we sold during the year ended December 31, 2021 (as discussed in Note 4).

4. Hotel Acquisitions and Dispositions

Acquisitions

2022 Acquisitions

In January 2022, we acquired the 103-room Tranquility Bay Beachfront Resort located in Marathon, Florida, for

$62.4 million, including prorations and transaction costs. The acquisition was funded with corporate cash.

In April 2022, we acquired the 96-room Kimpton Shorebreak Fort Lauderdale Beach Resort located in Fort
Lauderdale, Florida for $35.6 million, including prorations and transaction costs. The acquisition was funded with
corporate cash.

In November 2022, we acquired the 40-room Lake Austin Spa Resort located in Austin, Texas for $75.8 million,

including prorations and transaction costs. The acquisition was funded with corporate cash.

Included in our acquisition of the Tranquility Bay Beachfront Resort was income from 84 units owned by
third parties that currently participate in the hotel’s rental management program. We recognized a $45.2 million
right-to-manage intangible asset related to these long-term rental agreements. In 2022, subsequent to the initial
acquisition, we entered into agreements to purchase four of the third-party owned units for $4.1 million in aggregate.
As a result, we recorded an impairment loss of of $2.8 million related to the right-to-manage intangible asset during
the year ended December 31, 2022. The intangible asset is being amortized over a period of 40 years, which is our
estimate of its useful life, inclusive of expected renewal periods. Amortization expense for the years ended
December 31, 2023 and 2022 was $1.1 million. The amortization expense for each of the next five fiscal years is
expected to be $1.1 million. The intangible asset, net of accumulated amortization was $40.2 million and
$41.3 million as of December 31, 2023 and 2022, respectively, and is recorded within prepaid and other assets on
the accompanying consolidated balance sheets.

2023 Acquisition

On August 1, 2023, we acquired the 117-room Chico Hot Springs Resort and an adjacent ranch located in Pray,
Montana for $31.9 million, including prorations and transaction costs. The acquisition was funded with corporate
cash. On October 25, 2023, we acquired the Chico Day Spa adjacent to the hotel for $0.8 million, including prorations
and transaction costs.

Dispositions

In April 2021, we sold the wholly owned subsidiary of the Company that owned the Frenchman’s Reef &
Morning Star Marriott Beach Resort to an unaffiliated third party pursuant to a share purchase agreement (the
‘‘Purchase Agreement’’). Pursuant to the Purchase Agreement, the Company received $35.0 million in cash upon
closing, as well as a participation right in the future profits of the hotel once certain return metrics are achieved.
Although we expect the profit participation could be meaningful, there can be no assurance that the property will
satisfy such return metrics. We have no earned revenue under this profit participation arrangement since the sale.
During 2021, we recorded an impairment loss of $11.5 million to adjust the hotel’s carrying amount to the contractual
consideration.

In June 2021, we sold The Lexington Hotel to an unaffiliated third party for $185.3 million. During 2021, we
recorded an impairment loss of $115.2 million to adjust the hotel’s carrying amount to the contractual consideration.

F-18

5. Debt

The following table sets forth information regarding the Company’s debt (dollars in thousands):

Loan

Courtyard New York Manhattan /
Midtown East mortgage loan . . . . . . . . . .
Worthington Renaissance Fort Worth
Hotel mortgage loan . . . . . . . . . . . . . . . . .
Hotel Clio mortgage loan . . . . . . . . . . . . .
Westin Boston Seaport District mortgage
loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured term loan. . . . . . . . . . . . . . . . .
Unsecured term loan. . . . . . . . . . . . . . . . .
Senior unsecured credit facility . . . . . . . .

Total debt . . . . . . . . . . . . . . . . . . . . . . . . .
Unamortized debt issuance costs(3) . . .

Debt, net of unamortized debt issuance
costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-Average Interest Rate(4) . . . . . .

Interest Rate as of
December 31, 2023

Maturity Date

2023

2022

Principal Balance
as of December 31,

August 2024

74,346

76,153

4.40%

3.66%
4.33%

May 2025
July 2025

4.36%
SOFR + 1.35%(1)
SOFR + 1.35%(1)
SOFR + 1.40%

November 2025
January 2028
January 2025(2)
September 2026(2)

5.22%

73,727
56,091

174,025
500,000
300,000
—

75,625
57,469

178,487
500,000
300,000
—

1,178,189
(1,184)

1,187,734
(1,941)

$1,177,005

$1,185,793

(1)

Interest rate as of December 31, 2023 was 6.81%.

(2) Maturity date may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary

conditions.

(3)

Excludes debt issuance costs related to our senior unsecured credit facility, which are included within Other Assets on the accompanying
consolidated balance sheet.

(4) Weighted-average interest rate as of December 31, 2023 includes effect of interest rate swaps.

As of December 31, 2023, the aggregate debt maturities for our mortgage debt and unsecured term loans,

assuming all extension options available in our debt agreements are exercised, are as follows (in thousands):

2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

82,381
295,808
300,000
—
500,000
—

$1,178,189

Mortgage 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 pledged assets; however, in the event of fraud, misapplication of
funds or other customary recourse provisions, the lender may seek payment from us. As of December 31, 2023, four
of our 36 hotel properties were secured by mortgage debt. We have one mortgage loan that matures within one year,
which has a principal balance of $74.3 million as of December 31, 2023. We intend to repay this mortgage loan using
cash on hand.

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

F-19

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 December 31,
2022, we had $2.9 million held in cash traps, which is included within restricted cash on the accompanying balance
sheet. As of December 31, 2023, all cash traps had been released.

Senior Unsecured Credit Facility and Unsecured Term Loans

Prior to September 27, 2022, we were party to credit agreements that provided for a $400 million senior
unsecured credit facility (the ‘‘Revolving Credit Facility’’), which was scheduled to mature in July 2023, a
$350 million unsecured term loan that was scheduled to mature in July 2024 (the ‘‘Facility Term Loan’’) and a
$50 million unsecured term loan that was scheduled to mature in October 2023 (the ‘‘2023 Term Loan’’). The interest
rate on the Revolving Credit Facility and unsecured term loans was based upon LIBOR, plus an applicable margin
based upon the Company’s leverage ratio.

On September 27, 2022, we entered into a Sixth Amended and Restated Credit Agreement (the ‘‘Amended
Credit Agreement’’) that provides us with a $400 million senior unsecured revolving credit facility and two term loan
facilities in the aggregate amount of $800 million. The revolving credit facility matures on September 27, 2026,
which we may extend for an additional year upon the payment of applicable fees and satisfaction of certain standard
conditions. The term loan consist of a $500 million term loan that matures on January 3, 2028, and a $300 million
term loan that matures January 3, 2025. The maturity date of the $300 million term loan may be extended for an
additional year upon the payment of applicable fees and satisfaction of certain standard conditions. We have the right
to increase the aggregate amount of the facilities to $1.4 billion upon the satisfaction of certain standard conditions.

We utilized the proceeds from the term loans under the Amended Credit Agreement to repay the Facility Term
Loan, the 2023 Term Loan, $150 million that was outstanding on our Revolving Credit Facility, and our mortgage
loans that were scheduled to mature in 2023. We recognized a $9.7 million loss on early extinguishment of debt
related to the write-off of certain unamortized debt issuance costs and fees paid to the lenders in consideration for
the Amended Credit Agreement.

Interest is paid on the periodic advances on the revolving credit facility and amounts outstanding on the term loans
at varying rates, based upon the adjusted Secured Overnight Financing Rate (‘‘SOFR’’), as defined in the Amended Credit
Agreement, plus an applicable margin. The applicable margin is based upon our leverage ratio, as follows:

Leverage Ratio
Less than 30% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Greater than or equal to 30% but less than 35% . . . . . . . . . . . . . . . . . . . . . . .
Greater than or equal to 35% but less than 40% . . . . . . . . . . . . . . . . . . . . . . .
Greater than or equal to 40% but less than 45% . . . . . . . . . . . . . . . . . . . . . . .
Greater than or equal to 45% but less than 50% . . . . . . . . . . . . . . . . . . . . . . .
Greater than or equal to 50% but less than 55% . . . . . . . . . . . . . . . . . . . . . . .
Greater than or equal to 55% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Applicable Margin
for Revolving Loans
1.40%
1.45%
1.50%
1.60%
1.80%
1.95%
2.25%

Applicable Margin
for Term Loans
1.35%
1.40%
1.45%
1.55%
1.75%
1.85%
2.20%

The Amended Credit Agreement contains various financial covenants. A summary of the most significant

covenants are as follows:

Maximum leverage ratio(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minimum fixed charge coverage ratio(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured recourse indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less than 45% of
Total Asset Value
60.0%
1.20x

Unencumbered leverage ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unencumbered implied debt service coverage ratio . . . . . . . . . . . . . . . . . . . . .

Covenant
60%
1.50x

Actual at
December 31, 2023
29.3%
2.93x

11.4%
30.0%
2.49x

(1)

(2)

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

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

F-20

The components of the Company’s interest expense consisted of the following (in thousands):

Year Ended December 31,
2022

2021

2023

Mortgage debt interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unsecured term loan interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit facility interest and unused fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt issuance costs and debt premium. . . . . . . . . . . . . . . . . .
Interest rate swap mark-to-market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,436
43,294
1,256
2,053
2,033

$65,072

$ 23,276
21,153
5,279
2,489
(13,914)

$24,992
14,794
2,400
2,547
(7,690)

$ 38,283

$37,043

6. Derivatives

As of December 31, 2023 and 2022, the Company had the following derivatives (in thousands):

Hedged Debt

Type

Fixed
Rate Index

Effective Date

Maturity Date

Fair Value of Assets (Liabilities)
December 31,
December 31,
2022
2023

Notional
Amount

Senior unsecured term loans . . . Swap(1) 2.21%SOFR December 28, 2022 October 18, 2023 $25,000
Senior unsecured term loans . . . Swap(1) 2.21%SOFR December 28, 2022 October 18, 2023 $25,000
Senior unsecured term loans . . . Swap(1) 1.63%SOFR November 28, 2022 July 25, 2024
$87,500
Senior unsecured term loans . . . Swap(1) 1.63%SOFR November 28, 2022 July 25, 2024
$87,500
$75,000
Senior unsecured term loans . . . Swap
$75,000
Senior unsecured term loans . . . Swap

3.36%SOFR March 1, 2023
3.50%SOFR March 1, 2023

January 1, 2028
January 1, 2027

$ —
—
1,660
1,658
554
449

$4,321

$ 517
515
3,979
3,976
—
—

$8,987

(1)

Swap was designated as cash flow hedge as of April 1, 2023.

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a
counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without
exchange of the underlying notional amount. During 2023, such derivatives were used to hedge the variable cash
flows associated with variable-rate debt.

The table below details the location in the consolidated financial statements of the gains and losses recognized

on derivative financial statements (in thousands):

Effect of derivative instruments

Location in Statements of Operations and
Comprehensive Income

2023‘

2022

2021

Loss recognized in other comprehensive
income . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrealized loss on interest
derivative instruments

rate

Interest (income) for derivatives that

were designated as cash flow hedges .

Interest expense

$ 2,634

$(7,688)

— $ —

Year Ended December 31,

Interest (income) expense for derivatives
that were not designated as cash flow
hedges . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest expense

469

$(13,486)

$(3,578)

During the next twelve months, the Company estimates that $2.5 million will be reclassified from other

comprehensive income as a reduction to interest expense.

F-21

7. Fair Value Measurements

The fair value of certain financial assets and liabilities and other financial instruments are as follows (in

thousands):

Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,177,005

$1,167,638

$1,185,793

$1,148,533

December 31, 2023

December 31, 2022

Carrying
Amount(1)

Fair Value

Carrying
Amount(1)

Fair Value

(1)

The carrying amount of debt is net of unamortized debt issuance costs.

The fair value of our interest rate swaps are Level 2 measurements 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 fair values of our other financial instruments not included in the table above are estimated to be equal to

their carrying amounts.

8. 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 one parking area as of December 31, 2023. 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 December 31, 2023, our operating leases have a weighted-average remaining lease term of 64 years
and a weighted-average discount rate of 5.78%.

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

Year Ended December 31,

2023

2022

Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$11,106

$11,255

Variable lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,687

$ 1,576

Cash paid for amounts included in the measurement of operating lease liabilities . . . . . .

$ 3,995

$ 4,087

Future minimum lease payments are as follows (in thousands):

Year Ending December 31,

As of December 31, 2023

2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less imputed interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,139
4,206
4,701
4,737
5,020
747,799

770,602
(657,736)

$ 112,866

F-22

Six of our hotels are subject to ground lease agreements that cover all of the land underlying the respective hotel

as of December 31, 2023:

•

The Embassy Suites by Hilton Bethesda hotel is subject to a ground lease that runs until 2087. There are
no renewal options.

The Courtyard New York Manhattan/Fifth Avenue is subject
2085, inclusive of one 49-year renewal option.

to a ground lease that runs until

The Salt Lake City Marriott is subject to two ground leases: one ground lease covers the land under the
hotel and the other ground lease covers the portion of the hotel that extends into the adjacent City Creek
Center. The term of the ground lease covering the land under the hotel runs through 2106. The term of the
ground lease covering the extension into the City Creek Center runs through 2056.

The Westin Boston Seaport District is subject to a ground lease that runs until 2099. There are no renewal
options.

The Hotel Palomar Phoenix is subject to a ground lease that runs until 2085, inclusive of three renewal
options of five years each.

Cavallo Point is subject to a ground lease with the United States National Park Service that runs until 2066.
There are no renewal options.

A portion of the Hotel Clio is subject to a ground lease that covers approximately 5,500 square feet. The term
of the ground lease runs through December 2030, inclusive of two 5-year renewal options. The lease may be
indefinitely extended thereafter in one-year increments. The remainder of the land on which the hotel is constructed
is owned by us in fee simple.

We lease the buildings and sublease the underlying land containing 28 of the 70 rooms at the Orchards Inn
Sedona, which expires in 2070, including all extension options. The remainder of the land underlying the hotel is
owned by us in fee simple.

We sublease a parking area near the Bourbon Orleans Hotel. The sublease runs through July 2069. There are no

renewal options.

These ground leases generally require us to make rental payments (including a percentage of gross receipts as
percentage rent with respect to the Courtyard New York Manhattan/Fifth Avenue, Westin Boston Seaport District,
Salt Lake City Marriott, and Cavallo Point ground leases). Most of our ground leases require us to make payments
for all charges, costs, expenses, assessments and liabilities, including real property taxes and utilities. Furthermore,
these ground leases generally require us to obtain and maintain insurance covering the subject property.

The following table reflects the current and future annual rents under our ground leases:

Property

Embassy Suites by Hilton Bethesda . . . . . . . . . . . . . . . . . . .
Courtyard New York Manhattan/Fifth Avenue(3) . . . . . . . . . .

Salt Lake City Marriott (Ground lease for hotel) . . . . . . . . . .

Salt Lake City Marriott (Ground lease for extension). . . . . . .
Westin Boston Seaport District(5)(Base rent) . . . . . . . . . . . . .

Term(1)

Through 4/2087
10/2017 - 9/2027
10/2027 - 9/2037
10/2037 - 9/2047
10/2047 - 9/2057
10/2057 - 9/2067
10/2067 - 9/2077
10/2077 - 9/2085
Through 12/2106

1/2018 - 12/2056
1/2021 - 12/2025
1/2026 - 12/2030
1/2031 - 12/2035
1/2036 - 5/2099

Annual Rent
$1,021,214(2)
$1,132,812
$1,416,015
$1,770,019
$2,212,524
$2,765,655
$3,457,069
$4,321,336
Greater of $132,000 or 2.6% of annual
gross room sales
$15,738(4)
$1,000,000
$1,500,000
$1,750,000
No base rent

F-23

Property

Term(1)

Annual Rent

Westin Boston Seaport District (Percentage rent) . . . . . . . . . .

Hotel Clio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Orchards Inn Sedona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hotel Palomar Phoenix (Base Rent) . . . . . . . . . . . . . . . . . . .
Hotel Palomar Phoenix (Government Property Lease Excise

Tax)(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cavallo Point (Base Rent) . . . . . . . . . . . . . . . . . . . . . . . . . .
Cavallo Point(11) (Percentage Rent) . . . . . . . . . . . . . . . . . . . .

6/2016 - 5/2026
6/2026 - 5/2036
6/2036 - 5/2046
6/2046 - 5/2056
6/2056 - 5/2066
6/2066 - 5/2099
1/2021 - 12/2025
1/2026 - 12/2030(6)
7/2018 - 12/2070
4/2022 - 3/2085
1/2022 - 6/2033

7/2033 - 6/2043
7/2043 - 6/2053
7/2053 - 6/2063
7/2063 - 3/2085
1/2019 - 12/2066
1/2019 - 12/2023

1/2024 - 12/2028

1/2029 - 12/2033

1/2034 - 12/2066

Cavallo Point(12)(Participation Rent) . . . . . . . . . . . . . . . . . . .

Through 12/2066

Bourbon Orleans Hotel parking sublease . . . . . . . . . . . . . . . .

Through 7/2069

1.0% of annual gross revenue
1.5% of annual gross revenue
2.75% of annual gross revenue
3.0% of annual gross revenue
3.25% of annual gross revenue
3.5% of annual gross revenue
$55,000
$60,000
$145,175(7)
$36,345(8)
$312,000

$234,000
$156,000
$78,000
$—
$67,034(10)
2.0% of adjusted gross revenue over
threshold
3.0% of adjusted gross revenue over
threshold
4.0% of adjusted gross revenue over
threshold
5.0% of adjusted gross revenue over
threshold
10.0% of adjusted gross revenue over
threshold
$36,000(13)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

These terms assume our exercise of all renewal options.

Represents rent for the year ended December 31, 2023. Rent increases annually by 5.5%.

The total annual rent includes the fixed rent noted in the table plus a percentage rent equal to 5% of gross receipts for each lease year, but
only to the extent that 5% of gross receipts exceeds the minimum fixed rent in such lease year. There was no such percentage rent earned
during the years ended December 31, 2023 and 2022.

Represents rent for the year ended December 31, 2023. Rent increases annually based on the greater of 2% or a Consumer Price Index
calculation.

Total annual rent under the ground lease is capped at 2.5% of hotel gross revenues during the initial 30 years of the ground lease.

Beginning January 2031, we have the right to renew the ground lease in one-year increments at the prior year’s annual rent plus 3%.

Represents rent for the year ended December 31, 2023. Rent increases annually in June based on a Consumer Price Index calculation.

Represents rent for the year ended March 31, 2023. Rent increases annually each April by 2.5%.

(9) As lessee of a government property, the hotel is subject to a Government Property Lease Excise Tax under Arizona state statute.

(10) Base rent resets every five years based on the average of the previous three years of adjusted gross revenues, as defined in the ground lease,

multiplied by 75%. The next base rent reset will be January 2024.

(11) Percentage rent is applied to annual adjusted gross revenues, as defined in the ground lease, between $30 million and the participation rent

threshold. Base rent is deducted from the percentage rent.

(12) Participation rent is applied to annual adjusted gross revenues, as defined in the ground lease, over $42 million plus an annual increase based

on a Consumer Price Index calculation.

(13) Represents rent for the year ending December 31, 2023. Annual rent increases by $6,000 every five years. The next rent increase will be

January 2027.

9. Equity

Common Shares

We are authorized by our charter 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.

F-24

In September 2022, our board of directors approved a share repurchase program authorizing us to repurchase
up to $200.0 million of our common stock through February 28, 2025. The timing and actual number of shares
repurchased will depend on a variety of factors, including price and general business and market conditions. The
share repurchase program does not obligate us to acquire any particular amount of shares, and may be suspended or
discontinued at any time at our discretion. During the year ended December 31, 2023, we repurchased 318,454 shares
of common stock at an average price of $7.60 per share for an aggregate purchase price of $2.4 million. During the
year ended December 31, 2022, we repurchased 1.6 million shares of common stock at an average price of 7.81 per
share for a total purchase price of $12.3 million. As of February 28, 2024, we have $185.3 million of authorized
capacity remaining under the share repurchase program.

Preferred Shares

We are authorized to issue up to 10 million 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 December 31, 2023 and 2022, there were 4,760,000 shares of 8.250% Series A Cumulative Redeemed
Preferred Stock (‘‘Series A Preferred Stock’’) issued and outstanding with a liquidation preference 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 the 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 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 10 for additional disclosures
related to LTIP units.

There were 723,166 and 719,542 common OP units held by unaffiliated third parties and executive officers of
the Company as of December 31, 2023 and 2022, respectively. There were 314,137 and 98,050 LTIP units
outstanding as of December 31, 2023 and 2022, respectively. All vested LTIP units have reached economic parity
with common OP units and have been converted into common OP units.

Dividends and Distributions

For the year ended December 31, 2023, we paid an aggregate cash dividend of $0.12 per holder of common
stock, OP units, and LTIP units. For the year ended December 31, 2022, we paid an aggregate cash dividend of
$0.09 per holder of common stock, OP units, and LTIP units.

F-25

For each of the years ended December 31, 2023 and 2022, we paid an aggregate cash dividend of $2.0625 per

holder of Series A Preferred Stock.

10. Equity Incentive Plan

We are authorized to issue up to 6,082,664 shares of our common stock under our 2016 Equity Incentive Plan

(the ‘‘2016 Plan’’), which we have fully committed as of December 31, 2023.

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 the 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 and comprehensive income. A summary of our restricted stock awards from
January 1, 2021 to December 31, 2023 is as follows:

Weighted-
Average Grant
Date Fair
Value

Number of
Shares

Unvested balance at January 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

557,273
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,177,537
(47,025)
Forfeited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(244,490)
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unvested balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,443,295
438,070
(250,261)
(274,167)

Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unvested balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,356,937
247,762
(21,184)
(382,822)

$9.83
9.37
9.21
9.94

9.46
9.55
9.43
9.56

9.47
8.94
9.13
9.60

Unvested balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,693

$9.33

The total unvested restricted stock awards as of December 31, 2023 are expected to vest as follows: 513,251
during 2024, 329,103 during 2025, 344,918 during 2026, 6,712 during 2027, and 6,709 during 2028. As of
December 31, 2023, the unrecognized compensation cost related to restricted stock awards was $5.4 million and the
weighted-average period over which the unrecognized compensation expense will be recorded is approximately 23
months. For the years ended December 31, 2023, 2022, and 2021, we recorded $4.2 million, $4.3 million and
$3.9 million, respectively, of compensation expense net of forfeitures related to restricted stock awards. The
compensation expense recorded for the year ended December 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, Asset Management and Chief Operating Officer, as well as certain other employees.

Performance Stock Units

Performance stock units (‘‘PSUs’’) are restricted stock units that vest three to five 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

F-26

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 generally measured over
a three-year performance period based on a report prepared for each hotel by STR, Inc., 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 vesting period and is included in corporate
expenses in the accompanying consolidated statements of operations and comprehensive income. 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. The determination of
the grant-date fair values of outstanding awards based on our relative total stockholder return included the following
assumptions:

Award Grant Date

March 2, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February 22, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
August 9, 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
February 23, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Volatility

Risk-Free
Rate

68.8%
71.4%
73.3%
74.5%

0.26%
1.74%
3.20%
4.40%

Total
Stockholder
Return PSUs

Hotel
Market
Share PSUs

$9.28
$9.84
$9.65
$9.22

$9.40
$9.56
$9.32
$8.94

A summary of our PSUs from January 1, 2021 to December 31, 2023 is as follows:

Unvested balance at January 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional units from dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unvested balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional units from dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted-
Average Grant
Date Fair
Value

$ 9.63
9.34
9.90

9.45
9.66
7.89
10.14
9.34

9.35
9.08
8.35
9.01

Number of
Units

912,186
347,981
(290,927)

969,240
407,570
3,600
(269,224)
(160,533)

950,653
363,523
17,886
(299,766)

1,032,296

$ 9.34

(1)

(2)

(3)

The number of shares of common stock earned for the PSUs vested in 2021 was equal to 100.00% of the PSU Target Award.

The number of shares of common stock earned for the PSUs vested in 2022 was equal to 105.71% of the PSU Target Award.

The number of shares of common stock earned for the PSUs vested in 2023 was equal to 103.36% of the PSU Target Award.

The remaining unvested PSUs expected to vest are as follows: 300,905 during 2024, 328,122 in 2025 and 367,569
during 2026, and 35,700 during 2027. As of December 31, 2023, the unrecognized compensation cost related to the PSUs
was $4.1 million and is expected to be recognized on a straight-line basis over a period of 24 months. For the years ended
December 31, 2023, 2022, and 2021, we recorded approximately $3.0 million, $2.3 million, and $3.0 million, respectively,
of compensation expense net of forfeitures related to the PSUs. The compensation expense recorded for the year ended
December 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, Asset Management and Chief Operating Officer.

F-27

LTIP Units

A summary of our LTIP units from January 1, 2021 to December 31, 2023 is as follows:

Unvested balance at January 1, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unvested balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted-
Average Grant
Date Fair
Value

$10.29
10.38

10.22
9.32
10.38

9.39
8.94
9.49

$ 9.01

Number of
Units

243,809
(108,421)

135,388
71,084
(108,422)

98,050
257,270
(41,183)

314,137

(1) As of December 31, 2023, all vested LTIP units have achieved economic parity with common OP units and have been converted to common

OP units.

The remaining unvested LTIP units are expected to vest as follows: 99,974 during 2024 and 2025, 99,973 during
2026, and 14,216 during 2027. As of December 31, 2023, the unrecognized compensation cost related to LTIP unit
awards was $2.1 million and the weighted-average period over which the unrecognized compensation expense will
be recorded is approximately 30 months. For the years ended December 31, 2023, 2022, and 2021, we recorded
$0.8 million, $0.5 million, and $1.1 million, respectively, of compensation expense related to LTIP unit awards.

11. Income Taxes

For federal income tax purposes, the cash distributions paid to holders of our common stock and Series A
Preferred Stock may be characterized as ordinary income, return of capital (generally non-taxable) or capital gains.
Tax law permits certain characterization of distributions which could result in differences between cash basis and tax
basis distribution amounts.

The following characterizes distributions paid to holders of common stock and Series A Preferred Stock on a

tax basis for the years ended December 31, 2023, 2022, and 2021:

Year Ended December 31,
2022

2021

2023

Common Stock

Ordinary non-qualified income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.120000 $0.044543 $
Qualified dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

— 0.045457

$0.120000 $0.090000 $

—
—

—

Series A Preferred Stock

Ordinary non-qualified income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2.062500 $1.020772 $
Qualified dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return of capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

— 1.041728
—

—
—
— 2.062500

$2.062500 $2.062500 $2.062500

F-28

Our provision for income taxes consists of the following (in thousands):

Current - Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred - Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,
2022

2023
$ (84)
1,376
1,292
492
(486)
(981)
(975)
$ 317

901
2,487
3,388
1,090
2,044
(3,915)
(781)
$ 2,607

2021
$ 2,759
40
2,799
5,190
(6,159)
1,437
468
$ 3,267

A reconciliation of the statutory federal tax provision to our income tax provision is as follows (in thousands):

Year Ended December 31,
2022

2021

2023

Statutory federal tax provision (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax impact of REIT election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income tax provision (benefit), net of federal tax benefit . . . . . . . . . . .
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Permanent differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 18,226
(17,281)
890
(981)
(349)
(188)

$ 23,620
(21,110)
4,531
(3,915)
(495)
(24)

$(40,337)
45,946
(6,119)
1,437
2,561
(221)

Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

317

$ 2,607

$ 3,267

Deferred income taxes are recognized for temporary differences between the financial reporting bases of assets
and liabilities and their respective tax bases and for operating loss and tax credit carryforwards based on enacted tax
rates expected to be in effect when such amounts are paid. However, deferred tax assets are recognized only to the
extent that it is more likely than not that they will be realizable based on consideration of available evidence,
including future reversals of existing taxable temporary differences, projected future taxable income and tax planning
strategies. Deferred tax assets are included in prepaid and other assets and deferred tax liabilities are included in
accounts payable and accrued expenses on the accompanying consolidated balance sheets. The total deferred tax
assets and liabilities are as follows (in thousands):

2023

2022

Federal

Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Valuation allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,585
2,049
407
(2,074)
(1,766)

$ 3,541
3,282
511
(3,808)
(3,002)

Federal - Deferred tax assets (liabilities), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,201

524

State

Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative minimum tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Valuation allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 8,921
553
231
120
(559)
(8,253)

$ 8,499
851
211
141
(987)
(7,999)

State - Deferred tax assets, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,013

716

As of December 31, 2023, we had deferred tax assets of $11.5 million consisting of federal and state net
operating loss carryforwards. The state loss carryforwards generally expire in 2032 through 2041 if not utilized by
then; however, for certain states some loss carryforwards do not expire. The federal loss carryforwards do not expire.

F-29

We analyze our deferred tax assets for each jurisdiction and record a valuation allowance when we deem it more
likely than not that future results will not generate sufficient taxable income to realize the deferred tax assets. As of
December 31, 2023, we have a valuation allowance of $10.0 million on our deferred tax assets, which represents the
amount of deferred tax assets that we believe is more likely than not to be realized. Our assessment included, among
other considerations, the future reversals of existing taxable temporary differences and future taxable income that can
be reasonably projected.

12. Earnings (Loss) Per Share

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

per-share data):

Numerator:
Net income (loss) attributable to common stockholders . . . . . . . .
Denominator:
Weighted-average number of common shares

outstanding—basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of dilutive securities:

Unvested restricted common stock. . . . . . . . . . . . . . . . . . . . .
Shares related to unvested PSUs . . . . . . . . . . . . . . . . . . . . . .

Weighted-average number of common shares

Years Ended December 31,
2022

2021

2023

76,523

99,511

(204,401)

211,518,826

212,423,873

212,056,923

340,981
444,310

323,435
441,679

—
—

outstanding—diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

212,304,117

213,188,987

212,056,923

Earnings (loss) per share:

Earnings (loss) per share available to common

stockholders—basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Earnings (loss) per share available to common

stockholders—diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.36

0.47

(0.96)

For the year ended December 31, 2021, 379,767 of unvested restricted common shares and 299,810 of unvested
PSU’s were excluded from diluted weighted-average common shares outstanding, as their effect would be
anti-dilutive. There were no unvested restricted common shares or PSUs excluded from the diluted weighted-average
common shares outstanding for the year ended December 31, 2023 and 2022.

The common OP units held by the noncontrolling interest holders have been excluded from the denominator of
the diluted EPS 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.

13. Relationships with Managers and Franchisors

We are party to a hotel management agreement at each of our hotels. Under our hotel management agreements,
the hotel manager receives a base management fee and, if certain financial thresholds are met or exceeded, an
incentive management fee. The base management fee is between 1% and 3.5% of gross hotel revenues for each fiscal
year. The incentive management fee is generally based on hotel operating profits, but the fee only applies to that
portion of hotel operating profits above a negotiated return on our invested capital, which we refer to as the owner’s
priority. We refer to this excess of operating profits over the owner’s priority as ‘‘available cash flow.’’

Our management agreements generally provide us with termination rights upon a manager’s failure to meet

certain financial performance criteria and manager’s decision not to cure the failure by making a cure payment.

F-30

The following is a summary of management fees for the years ended December 31, 2023, 2022 and 2021

(in thousands):

Year Ended December 31,
2022

2021

2023

Base management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incentive management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred income related to key money(1) . . . . . . . . . . . . . . . .
Amortization of unfavorable contract liabilities . . . . . . . . . . . . . . . . . . . . . . . .

$22,543
4,444
(400)
(1,589)

$20,630
4,790
(392)
(1,589)

$11,542
468
(213)
(1,589)

Total management fees, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$24,998

$23,439

$10,208

(1)

Relates to key money received for Chicago Marriott Downtown Magnificent Mile, Westin Washington D.C. City Center and Henderson
Beach Resort.

Five of our hotels earned incentive management fees for the years ended December 31, 2023 and 2021. Eleven

of our hotels earned incentive management fees for the year ended December 31, 2022.

Franchise Agreements

We are party to franchise agreements for 19 of our hotels as of December 31, 2023. The franchise agreements
require royalty fees based on a percentage of gross rooms revenue and, for certain hotels, an additional fee based on
a percentage of gross food and beverage revenue. In addition, franchise agreements require fees for marketing,
reservation or other program fees based on a percentage of the hotel’s gross rooms revenue. Pursuant to these
franchise agreements, we pay a royalty fee ranging between 3.5% and 7% of gross room sales, and, under certain
agreements, between 1% and 3% of gross food and beverage sales.

The following is a summary of franchise fees for the years ended December 31, 2023, 2022 and 2021 (in

thousands):

Year Ended December 31,
2022

2021

2023

Franchise fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred income related to key money(1) . . . . . . . . . . . . . . . .
Total franchise fees, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$35,769
(31)

$32,714
(31)

$18,781
(116)

$35,738

$32,683

$18,665

(1)

Relates to key money received for The Lexington Hotel and Courtyard New York Manhattan/Fifth Avenue.

14. Commitments and Contingencies

Litigation

F-31

DiamondRock Hospitality Company
Schedule III - Real Estate and Accumulated Depreciation
As of December 31, 2023 (in thousands)

Description

Encumbrances

Land

Building and
Improvements

Initial Cost

Costs
Capitalized
Subsequent to
Acquisition

Gross Amount at End of Year

Land

Building and
Improvements

Total

Accumulated
Depreciation

Net Book
Value

Year of
Acquisition

Depreciation
Life

Atlanta Marriott Alpharetta .

Bourbon Orleans Hotel

Cavallo Point, The Lodge at
.

Golden Gate.

Chicago Marriott Downtown,
.

Magnificent Mile .

Chico Hot Springs Resort & Day
.
.
.

Spa .

Embassy Suites by Hilton
.
.

Bethesda.

The Gwen Hotel .

Courtyard Denver Downtown .

Courtyard New York

Manhattan/Fifth Avenue.

Courtyard New York

Manhattan/Midtown East .

Havana Cabana Key West .

Henderson Beach Resort

Henderson Park Inn .

Hilton Burlington Lake
.

Champlain.

Hilton Garden Inn New

York/Times Square Central .

Hotel Clio .

Hotel Emblem San Francisco .

Hotel Palomar Phoenix .

The Hythe Vail

Kimpton Shorebreak Fort

Lauderdale Beach Resort .

Kimpton Shorebreak Huntington
.

Beach Resort .

Margaritaville Beach House Key
.
.
.

West .

Lake Austin Spa Resort .

The Landing Lake Tahoe Resort
.
.
.

& Spa .

L’Auberge de Sedona .

Orchards Inn Sedona .

Salt Lake City Marriott

Downtown at City Creek .

The Dagny Boston (formerly

Hilton Boston
Downtown/Faneuil Hall) .

The Lindy Renaissance
.
Charleston Hotel

The Lodge at Sonoma Resort .

Tranquility Bay Beachfront
.
.

Resort .

Westin Boston Seaport District .

Westin Fort Lauderdale Beach
.
.

Resort .

Westin San Diego Bayview .

Westin Washington D.C City
.
.
.

Center .

Worthington Renaissance Fort
.

Worth Hotel .

Total .

—

3,623

33,503

5,576

3,623

39,079

42,702

$ (16,783)

25,919

20,644

60,969

2,623

20,645

63,591

84,236

(3,780)

80,456

2005

2021

10 - 40 Years

—

123,100

8,360

—

131,460

(22,483)

108,977

2018

10 - 40 Years

36,900

347,921

98,124

36,900

446,045

482,945

(177,735)

305,210

2006

10 - 40 Years

11,291

20,595

382

11,291

20,977

32,268

(445)

31,823

2023

10 - 20 Years

—

31,650

9,400

45,656

76,961

36,180

—

34,685

16,500

32,888

10,118

8,395

54,812

13,371

93,176

17,462

10,626

25,036

6,653

8,831

9,972

6,408

3,709

1,895

—

31,650

9,400

56,282

101,997

42,833

56,282

133,647

52,233

(23,901)

(37,760)

(13,212)

32,381

95,887

39,021

2004

2006

2011

10 - 40 Years

—

43,516

(18,872)

24,644

2004

10 - 40 Years

16,500

32,888

10,645

8,539

64,784

19,779

96,358

19,213

81,284

52,667

107,003

27,752

(28,305)

(4,456)

(4,980)

(1,309)

52,979

48,211

102,023

26,443

2004

2014

2021

10 - 40 Years

9,197

40,644

10,554

9,197

51,198

60,395

(13,182)

47,213

2012

10 - 40 Years

60,300

9,200

7,856

—

5,800

88,896

63,183

21,085

59,703

52,463

2,175

14,693

9,042

2,979

37,390

60,300

9,200

7,856

—

5,800

91,071

77,876

30,127

62,682

89,853

151,371

87,076

37,983

62,682

95,653

(21,217)

(21,714)

(6,975)

(8,899)

(29,502)

130,154

65,362

31,008

53,783

66,151

2014

2011

2012

2018

2005

10 - 40 Years

3,436

29,206

893

3,436

30,099

33,535

(1,301)

32,234

2022

10 - 40 Years

19,908

37,525

5,128

20,423

42,138

62,561

(9,368)

53,193

2015

10 - 40 Years

49,592

25,089

14,816

39,384

9,726

42,958

43,879

24,351

22,204

10,180

17,788

295

1,756

8,201

690

49,592

25,089

14,816

39,384

9,726

60,746

44,174

26,107

30,405

10,870

110,338

69,263

(11,746)

(1,457)

40,923

69,789

20,596

(3,916)

(4,713)

(1,971)

98,592

67,806

37,007

65,076

18,625

2015

2022

2018

2017

10 - 40 Years

—

45,815

19,204

—

65,019

(24,864)

40,155

2004

10 - 40 Years

23,262

128,628

41,714

23,262

170,342

193,604

(41,153)

152,451

2012

10 - 40 Years

5,900

3,951

1,865

—

54,293

22,902

32,511

22,720

19,357

273,696

83,227

95,617

10,833

23,229

39,172

15,169

13,188

5,900

3,951

1,865

—

54,293

22,902

43,344

45,949

19,391

312,868

98,396

108,805

49,244

49,900

(12,647)

(17,868)

21,256

(997)

312,868

(128,190)

152,689

131,707

(21,576)

(30,542)

36,597

32,032

20,259

184,678

131,113

101,165

2010

2004

2022

2007

2014

2012

10 - 40 Years

24,579

122,229

16,277

24,579

138,506

163,085

(39,089)

123,996

2012

10 - 40 Years

—

(74,346)

—

(56,091)

—

(174,025)

—

(73,727)

15,500

63,428

28,866

17,172

90,622

107,794

(34,392)

73,402

2005

10 - 40 Years

$(378,189)

$587,965

$2,381,896

$507,465

$590,824

$2,886,502

$3,477,326

$(841,300)

$2,636,026

F-32

Notes:

A) The change in total cost of properties for the fiscal years ended December 31, 2023, 2022 and 2021 is as follows

(in thousands):

Balance at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,350,481
Additions:

Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

210,764
41,482

Deductions:

Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dispositions and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions:

Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions:

(175,551)
(205,358)

3,221,818

122,832
39,859

3,384,509

31,886
60,931

Balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,477,326

B) The change in accumulated depreciation of real estate assets for the fiscal years ended December 31, 2023, 2022

and 2021 is as follows (in thousands):

Balance at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$683,543
70,765
(61,002)

Balance at December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

693,306
75,328

768,634
72,666

Balance at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$841,300

C) The aggregate cost of properties for U.S. Federal income tax purposes (in thousands) is approximately

$3,371,023 as of December 31, 2023.

F-33

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CHICO HOT SPRINGS RESORT & DAY SPA, PARADISE VALLEY, MONTANA

CORPORATE INFORMATION

BOARD OF DIRECTORS

WILLIAM W. MCCARTEN
Chairman of the Board

MARK W. BRUGGER
President and Chief Executive Officer
and Director

TIMOTHY R. CHI
Chief Executive Officer at The Knot Worldwide, Inc.
and Independent Director

MICHAEL A. HARTMEIER
Independent Director

KATHLEEN A. MERRILL
Executive Advisor at Southwest Airlines and
Independent Director

WILLIAM J. SHAW
Independent Director

BRUCE D. WARDINSKI
President and Chief Executive Officer at Playa Hotels
and Resorts and Independent Director

TABASSUM S. ZALOTRAWALA
Chief Development Officer at McDonald’s USA
and Independent Director

CORPORATE OFFICERS

MARK W. BRUGGER
President and Chief Executive Officer

JEFFREY J. DONNELLY
Executive Vice President and
Chief Financial Officer

TROY G. FURBAY
Executive Vice President and
Chief Investment Officer

JUSTIN L. LEONARD
Executive Vice President, Asset Management
and Chief Operating Officer

BRIONY R. QUINN
Senior Vice President, Chief Accounting Officer
and Treasurer

WILLIAM J. TENNIS
Executive Vice President, General Counsel
and Corporate Secretary

CORPORATE HEADQUARTERS

DiamondRock Hospitality Company
2 Bethesda Metro Center
Suite 1400
Bethesda, Maryland 20814
(240) 744-1150
FAX (240) 744-1199

ANNUAL MEETING

DiamondRock Hospitality Company will hold its annual
meeting of shareholders on May 1, 2024 at 10:00am ET
via live audio webcast.

A formal notice and proxy will be mailed before the
meeting to shareholders entitled to vote.

REGISTRAR AND STOCK TRANSFER AGENT

American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
(718) 921-8200
www.astfinancial.com

INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

KPMG LLP
8350 Broad Street, Suite 900
McLean, Virginia 22102

OTHER SHAREHOLDER INFORMATION

For information about DiamondRock Hospitality Com-
pany and its subsidiaries, including copies of its annual
report on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K, you may call our corporate
headquarters or submit a written request to Investor
Relations.

Our Chief Executive Officer and Chief Financial Officer
have furnished the Sections 302 and 906 certifica tions
required by the U.S. Securities and Exchange Commis-
sion in our Annual Report on Form 10-K. In addition, our
Chief Executive Officer has certified to the NYSE that he
is not aware of any violations by us of NYSE corporate
governance standards.

INTERNET ACCESS

A corporate profile, recent press releases, SEC filings,
property locations and other information about
DiamondRock Hospitality Company can be found on
the internet at www.drhc.com.

THE WORTHINGTON RENAISSANCE FORT WORTH HOTEL, FORT WORTH, TEXAS

FRONT COVER LEFT: Tranquility Bay Beachfront Resort, Marathon, Florida. RIGHT: The Westin Boston Seaport District, Boston, Massachusetts.

BACK COVER LEFT: The Gwen, a Luxury Collection Hotel, Chicago, Illinois. RIGHT: The Westin Fort Lauderdale Beach Resort, Fort Lauderdale, Florida.

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2 BETHESDA METRO CENTER

SUITE 1400, BETHESDA, MARYLAND 20814

(240) 744-1150 | WWW.DRHC.COM