Xenia Hotels & Resorts, Inc. (XHR) FY 2021 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included herein this Annual 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 Regarding Forward-Looking Statements" and "Part I-Item 1A. Risk Factors" contained in this Annual Report and in our other reports that we file from time to time with the SEC.

Overview

Xenia is a self-advised and self-administered REIT that invests primarily in uniquely positioned luxury and upper upscale hotels and resorts with a focus on the Top 25 lodging markets as well as key leisure destinations in the U.S. As of December 31, 2021, we owned 34 hotels and resorts, comprising 9,659 rooms across 14 states. Our hotels are primarily operated and/or licensed by industry leaders such as Marriott, Hyatt, Kimpton, Fairmont, Loews, Hilton and The Kessler Collection.

We plan to grow our business through a differentiated acquisition strategy, aggressive asset management and capital investment in our properties. We primarily target markets and sub-markets with particular positive characteristics, such as multiple demand generators, favorable supply and demand dynamics and attractive projected hotel revenue growth. We believe our focus on a broader range of markets allows us to evaluate a greater number of acquisition opportunities and thereby be highly selective in our pursuit of only those opportunities that best fit our investment criteria. We own and pursue hotels and resorts in the luxury and upper upscale hotel segments that are affiliated with premium leading brands, as we believe that these segments yield attractive risk-adjusted returns. Within these segments, we focus on hotels and resorts that will provide guests with a distinctive lodging experience and that are tailored to reflect local market environments.

We also seek properties that exhibit an opportunity for us to enhance operating performance through aggressive asset management and targeted capital investment. While we do not operate our hotel properties, our asset management team and our executive management team monitor and work with our hotel managers by conducting regular revenue, sales, and financial performance reviews and also perform in-depth on-site reviews focused on ongoing operating margin improvement initiatives. We interact frequently with our management companies and on-site management personnel, including conducting regular meetings with key executives of our management companies and brands. Through these efforts, we seek to enhance the guest experience, improve property efficiencies, lower costs, maximize revenues, and grow property operating margins which we expect will increase long-term returns to our stockholders.

Impact of COVID-19 on our Business

The onset and global spread of the COVID-19 pandemic led federal, state and local governments in the United States to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, school closures, quarantines, shelter-in-place orders and social distancing requirements, and also to implement multi-step phased, policies of re-opening regions of the country. The effects of the COVID-19 pandemic on the hotel industry have been significant and unprecedented with global demand for lodging drastically reduced and occupancy levels reaching historic lows in 2020 and continuing into 2021. As a result of the COVID-19 pandemic, the majority of our hotels and resorts temporarily suspended operations for certain periods of time during 2020. All of our lodging properties had resumed operations by the end of May 2021.

Leisure demand gradually improved during the second half of 2020, a trend that accelerated during the first seven months of 2021. We also began to see increasing levels of demand for both business transient and group business during the second quarter and into July 2021. In August and September 2021, however, we began to experience a softening in demand due to the impact of the Delta variant and a seasonal decline in leisure demand. Occupancy rebounded in October and November 2021 before declining again in December 2021 as COVID-19 case counts, positivity ratios and hospitalizations began to increase in many parts of the U.S. Additionally, many companies delayed their office re-openings and return to work timelines and, during the fourth quarter of 2021, we began to experience group business cancellations for meetings being held in early 2022. We have estimated the impact of these cancellations, net of cancellation and attrition fees and events that have been rebooked, to be approximately $5.0 million. The decline in demand extended into January 2022 while the preliminary results for February 2022 show a substantial rebound. There remains significant uncertainty regarding the pace of recovery and whether and when business travel and larger group meetings will return to pre-pandemic levels. We may be impacted by, among other things, the distribution and acceptance of COVID-19 vaccines and boosters, breakthrough cases, and new variants of COVID-19, as well as the ongoing local and national response to the virus including indoor mask mandates, group size limitations and other restrictions. As the recovery continues, we expect that the pace will vary from market to market and may be uneven in nature.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company, the Operating Partnership and XHR Holding. The Company's subsidiaries generally consist of limited liability companies, limited partnerships and the TRS. The effects of all inter-company transactions have been eliminated. Corporate costs directly associated with our executive offices,

49

personnel and other administrative costs are reflected as general and administrative expenses on the consolidated statements of operations and comprehensive (loss) income.

Market Outlook

The impact of the COVID-19 pandemic on the global and U.S. economy and the travel industry in particular has been unprecedented, causing a severe impact to our operations beginning in the first quarter of 2020 and continuing through 2021.

The U.S. lodging industry has historically exhibited a strong correlation to U.S. GDP, which increased at an annual rate of approximately 5.7% during 2021, according to the U.S. Department of Commerce, in contrast to a decrease of approximately 3.5% during 2020. The increase in GDP during the year ended December 31, 2021 reflected increases in all major subcomponents, led by personal consumption expenditures (PCE), nonresidential fixed investment, exports, residential fixed investment and private inventory investment. During the fourth quarter of 2021, GDP increased at an annual rate of 6.9%, representing an increase from the annual rate of 2.3% in the third quarter of 2021. The increase during the fourth quarter of 2021 reflected increases in private inventory investment, exports, PCE and nonresidential fixed investment that were partially offset by decreases in federal, state and local government spending. In addition, the unemployment rate fell to 3.9% in December 2021 from 4.8% in September 2021 and 5.9% in June 2021. The unemployment rate has declined considerably from the April 2020 high of 14.7% but remains slightly above the pre-pandemic rate of 3.5% rate in February 2020.

The U.S. lodging industry has been more acutely impacted by the COVID-19 pandemic than the overall U.S. economy and other industries and has not experienced the same level of recovery as the general U.S. economy which is largely due to the persistence of the COVID-19 pandemic, new variants of COVID-19, continued and reinstated governmental restrictions on travel and large gatherings in certain markets, delays in office re-openings and return to work timelines and sentiment towards business and leisure travel as a result of the pandemic. Additionally, we expect it will take longer for the lodging industry to return to pre-pandemic levels than it will for the broader economy and many other industries. Further, we continue to monitor and evaluate the challenges associated with the evolving workforce landscape, particularly related to industry-wide labor shortages and expected increases in wages as well as ongoing supply chain issues which may impact the hotels' ability to source operating supplies and other materials.

Demand increased 37.8% and new hotel supply increased by 5.2% during the year ended December 31, 2021 compared to 2020. The significant increase in demand led to an increase in industry RevPAR of 58.2% for the year ended December 31, 2021 compared to 2020, which was driven by an increase in occupancy of 31.1% coupled with a 20.7% increase in ADR. All U.S. data for the year ended December 31, 2021 are per industry reports.

Significant Events

The following significant events occurred during the year ended December 31, 2021:

•In May 2021, we issued $500 million of 4.875% Senior Notes due in 2029, which we refer to as the 2021 Senior Notes, at a price equal to 100% of face value. We utilized the net proceeds to repay in full the borrowings under our revolving credit facility, prepay in full our corporate credit facility term loan maturing in August 2023 and repay the mortgage loan collateralized by Kimpton Hotel Palomar Philadelphia.

•In May 2021, in connection with the issuance of the 2021 Senior Notes, we effectuated additional amendments to our revolving credit facility and our one remaining corporate credit facility term loan. These additional amendments, among other things, (i) extended the covenant waiver period under the corporate credit facilities, (ii) increased the minimum liquidity covenant level during the covenant waiver period and eliminated the minimum liquidity covenant after the covenant waiver period ends, (iii) adjusted mandatory prepayment requirements, (iv) increased the ability for the Operating Partnership to acquire properties and (v) increased capacity for capital expenditures during the covenant waiver period.

•In August 2021, we entered into an agreement to sell the 352-room Marriott Charleston Town Center, located in Charleston, West Virginia, for a sale price of $5.0 million. The sale closed in November 2021 and the net proceeds from the disposition were used for general corporate purposes. In connection with the sale, we recorded a total impairment loss of $12.6 million in 2021.

•In November 2021, we entered into an agreement to sell the 191-room Kimpton Hotel Monaco Chicago, located in Chicago, Illinois, for a price of $36.0 million. The sale closed in January 2022 and the net proceeds from the disposition will be used for general corporate purposes. In connection with the planned sale, we recorded an impairment loss of $15.7 million in 2021.

50

Our Customers

We generate a significant portion of our revenue from the following broad customer groups: transient business, group business and contract business. Transient business broadly represents individual business or leisure travelers. Historically, business travelers have made up the majority of transient demand at our hotels. Therefore, we will be more affected by trends in business travel than trends in leisure demand. Group business represents clusters of guestrooms booked together, usually with a minimum of 10 rooms. Contract business refers to blocks of rooms sold to a specific company for an extended period of time at significantly discounted rates. Airline crews have historically been typical generators of contract demand at some of our hotels. Additionally, contract rates may be utilized by hotels that are located in markets that are experiencing consistently lower levels of demand.

Our Revenues and Expenses

Revenues

Our revenues are derived from hotel operations and are composed of the following sources:

•Rooms revenues - Represents the sale of rooms at our hotel properties and accounts for a substantial majority of our total revenue. Occupancy and ADR are the major drivers of rooms revenues. The business mix and distribution channel mix of the hotels are significant determinants of ADR.

•Food and beverage revenues - Occupancy and the type of customer staying at the hotel are the major drivers of food and beverage revenue (i.e., group business typically generates more food and beverage business through catering functions when compared to transient business, which may or may not utilize the hotel’s food and beverage outlets).

•Other revenues - Represents ancillary revenue such as parking, resort or destination amenity fees, golf, spa services, telephone and other guest services and tenant leases. Occupancy and the nature of amenities at the property are the main drivers of other revenue.

Expenses

Our operating expenses consist of costs to provide hotel services and corporate-level expenses. The following are components of our expenses:

•Rooms expenses - These costs include housekeeping wages, payroll taxes, room supplies, laundry services and front desk costs. Similar to rooms revenues, occupancy is the major driver of rooms expense and as a result, rooms expense has a significant correlation to rooms revenues. These costs as a percentage of revenue can increase based on increases in salaries, wages and benefits, as well as on the level of service and amenities that are provided. Rooms expenses also includes costs for severance and furloughed employee benefits.

•Food and beverage expenses - These expenses primarily include food, beverage and associated labor costs. Occupancy and the type of customer staying at the hotel are major drivers of food and beverage expense (i.e., catered functions generally are more profitable than on-property food and beverage outlet sales), which correlates closely with food and beverage revenue. Food and beverage expenses also includes costs for severance and furloughed employee benefits.

•Other direct expenses - These expenses primarily include labor (including severance and furloughed employee benefits) and other costs associated with other revenues, such as parking and other guest services.

•Other indirect expenses - These expenses primarily include hotel costs associated with general and administrative, state sales and excise taxes, sales and marketing, information technology and telecommunications, repairs and maintenance and utility costs.

•Management and franchise fees - Base management fees are computed as a percentage of gross revenue. The management fees also include incentive management fees, which are typically a percentage of net operating income (or similar measurements of hotel profitability) above an annual threshold based on our total capital investment in the hotel. Franchise fees are computed as a percentage of rooms revenues. See "Part I-Item 2. Properties - Our Principal Agreements" for a summary of key terms related to our management and franchise agreements.

•Depreciation and amortization expense - These are non-cash expenses that primarily consist of depreciation of fixed assets such as buildings, furniture, fixtures and equipment at our hotels, as well as certain corporate assets. Amortization expense primarily consists of amortization of acquired advance bookings and acquired leases, which are amortized over the life of the related term or lease.

51

•Real estate taxes, personal property taxes and insurance - Real estate taxes, personal property taxes and insurance includes the payments due in the respective jurisdictions where our hotels are located, partially offset by refunds from prior year real estate tax appeals, and payments due under insurance policies for our hotel portfolio.

•Ground lease expense - Ground lease expense represents the rent associated with land underlying our hotels and/or meeting facilities that we lease from third-parties. It also includes the non-cash ground rent determined as part of the initial purchase price allocation at acquisition.

•General and administrative expenses - General and administrative expenses primarily consist of compensation expense for our corporate staff and personnel supporting our business (including severance and non-cash stock compensation expense), office administrative and related expenses, legal and professional fees, and other corporate costs.

•Gain on business interruption insurance - Gain on business interruption insurance consists of insurance settlements for lost income that was covered per the terms of our respective insurance policies, which was in excess of insurance deductibles.

•Acquisition, terminated transaction and pre-opening expenses - Acquisition and terminated transaction costs typically consist of legal fees, other professional fees, transfer taxes and other direct costs associated with our pursuit and acquisitions of hotel investments. As a result, these costs will vary depending on the timing, volume and nature of acquisition activity. Pre-opening expenses represent costs incurred as part of rebranding and management transition efforts, which are not eligible to be capitalized.

•Impairment and other losses - Our real estate, intangible assets, goodwill and other long-lived assets are generally held for the long-term. We evaluate these assets for impairment as discussed in "Critical Accounting Policies and Estimates." These evaluations have resulted in impairment losses for certain of these assets, including goodwill, based on the specific facts and circumstances surrounding these assets, and our estimates of the fair value of these assets, including goodwill. Based on economic conditions or other factors applicable to a specific property, we may be required to take additional impairment losses to reflect further declines in our asset and/or investment values. Additionally, from time to time we may record other losses related to property damage resulting from natural disasters and/or other disaster remediation costs.

Most categories of variable operating expenses, including labor costs such as housekeeping, fluctuate with changes in occupancy. Increases in occupancy are accompanied by increases in most categories of variable operating expenses, while increases in ADR typically only result in increases in limited categories of operating costs and expenses, such as management fees and franchise fees, which are based on hotel revenues. Thus, changes in ADR have a more significant impact on operating margins than changes in occupancy.

Factors that May Affect Results of Operations

The principal factors affecting our operating results include overall demand for hotel rooms compared to the supply of available hotel rooms, economic conditions, and the ability of our third-party management companies to increase or maintain revenues while controlling expenses.

•Demand and economic conditions - Consumer demand for lodging, especially business travel, is closely linked to the performance of the overall economy and is sensitive to business and personal discretionary spending levels. Declines in consumer demand due to adverse general economic conditions, risks affecting or reducing travel patterns, restrictions on travel, lower consumer confidence and adverse political conditions can lower the revenues and profitability of our hotel operations. As a result, changes in consumer demand and general business cycles can subject and have subjected our revenues to significant volatility. See "Part I-Item 1A. Risk Factors - Risks Related To The Hotel Industry."

•Supply - New hotel room supply is an important factor that can affect the lodging industry’s performance. Room rates and occupancy, and thus RevPAR, tend to increase when demand growth exceeds supply growth. The addition of new competitive hotels affects the ability of existing hotels to drive growth in RevPAR, and thus profits. New development is driven largely by construction costs, the availability of financing and expected performance of existing hotels.

•Third-party hotel managers - We depend on the performance of third-party hotel management companies that manage the operations of each of our hotels under long-term agreements. Our operating results could be materially and adversely affected if any of our third-party managers fail to provide quality services and amenities, or otherwise

52

fail to manage our hotels in our best interest. We believe we have good relationships with our third-party managers and are committed to the continued growth and development of these relationships.

•Fixed nature of expenses - Many of the expenses associated with operating our hotels are relatively fixed. These expenses include certain personnel costs, rent, property taxes, insurance and utilities, as well as sales and marketing expenses. If we are unable to decrease these costs significantly or rapidly when demand for our hotels decreases, the resulting decline in our revenues can have an adverse effect on our net cash flow, margins and profits. This effect can be especially pronounced during periods of economic contraction or slow economic growth.

•Seasonality - The lodging industry is seasonal in nature, which can be expected to cause fluctuations in our hotel rooms revenues, occupancy levels, room rates, operating expenses and cash flows. The periods during which our hotels experience higher or lower levels of demand vary from property to property and depend upon location, type of property and competitive mix within the specific location. The COVID-19 pandemic has disrupted our historical seasonal patterns and is expected to continue disrupting our historical seasonal patterns while the pandemic continues and during the recovery.

•Competition - The lodging industry is highly competitive. Our hotels compete with other hotels and alternative accommodations for guests in each of their markets based on a number of factors, including, among others, room rates, quality of accommodations, service levels and amenities, location, brand affiliation, reputation, and reservation systems. Competition is often specific to the individual markets in which our hotels are located and includes competition from existing and new hotels. We believe that hotels, such as those in our portfolio, will enjoy the competitive advantages associated with operating under nationally recognized brands.

Key Indicators of Operating Performance

We measure hotel results of operations and the operating performance of our business by evaluating financial and non-financial metrics such as RevPAR; ADR; occupancy; EBITDA, EBITDAre and Adjusted EBITDAre; FFO and Adjusted FFO. We evaluate individual hotel and company-wide performance with comparisons to budgets, prior periods and competing properties. ADR, occupancy and RevPAR may be impacted by macroeconomic factors as well as regional and local economies and events. See "Non-GAAP Financial Measures" for further discussion of the Company's use, definitions and limitations of EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO.

Critical Accounting Policies and Estimates

General

The preparation of consolidated 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. We consider the following policies critical because they require the most difficult, subjective and complex judgments and include estimates about matters that are inherently uncertain, involve various assumptions, require management judgment, and because they are important for understanding and evaluating our reported financial results. As a result, these accounting policies could materially affect our financial position, results of operations and related disclosures. We evaluate our estimates, assumptions and judgments on an ongoing basis, based on information that is then available to us, our historical experiences and various matters that we believe are reasonable and appropriate for consideration under the circumstances. Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on financial position or results of operations. All of our significant accounting policies are disclosed in the notes to our consolidated financial statements in "Part IV. Exhibits and Financial Statements Schedules." The following represent certain critical accounting policies that require us to exercise our business judgment or make significant estimates.

Investment in Hotel Properties

Investments in hotel properties, including land and land improvements, building and building improvements, furniture, fixtures and equipment, and identifiable intangible assets and liabilities, will generally be accounted for as asset acquisitions. The determination of whether or not an acquisition qualifies as an asset acquisition or business combination is an area that requires management's use of judgment in evaluating the criteria of the screen test.

Acquired assets are recorded at their relative fair value based on total accumulated costs of the acquisition, which includes direct acquisition-related costs. Identifiable assets include land, land improvements, building and building improvements, furniture, fixtures and equipment, inventory and identifiable intangible assets or liabilities. Identifiable intangible assets or liabilities typically arise from contractual arrangements assumed in connection with the transaction, including terms that are above or below market compared to an estimated market agreement at the acquisition date. The allocation of the purchase price

53

to elements of our acquired hotel properties is an area that requires judgment and significant estimates. Therefore, the amounts allocated to acquired assets and liabilities could be materially different than if that transaction had occurred on a different date or in a different location. At times estimates are determined based on limited data for comparable market transactions, such as discount rates used in the market or income valuation approach or the purchase involves land or a ground lease in a niche market. This could materially impact the allocation to identifiable assets and the related amortization and depreciation over future periods if the value was assigned to another identifiable asset acquired.

Impairment

Long-lived assets and intangibles

The Company assesses the carrying values of the respective long-lived assets, which includes hotel properties and the related intangible assets, whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Events or circumstances that may cause a review include, but are not limited to, when (1) a hotel property experiences a significant decrease in the market price of the long-lived asset, (2) a hotel property experiences a current or projected loss from operations combined with a history of operating or cash flow losses, (3) it becomes more likely than not that a hotel property will be sold before the end of its useful life, (4) an accumulation of costs is significantly in excess of the amount originally expected for the acquisition, construction or renovation of a long-lived asset, (5) adverse changes in the demand occur for lodging at a specific property due to declining national or local economic conditions and/or new hotel construction in markets where the hotel is located, (6) there is a significant adverse change in legal factors or in the business climate that could affect the value of the long-lived asset and/or (7) there is a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition. When such conditions exist, we perform an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the eventual disposition of a hotel exceed its carrying value. If it is determined that the estimated undiscounted future cash flow do not exceed the carrying value of the asset, an adjustment to reduce the carrying amount of the hotel to its estimated fair market value is recorded and an impairment loss is recognized.

Goodwill

The excess of the cost of an acquired entity (i.e. those that met the definition of an acquired business), over the net of the fair values assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill. Goodwill has been recognized and allocated to specific properties. The Company tests goodwill for impairment annually or more frequently if events or changes in circumstances indicate impairment.

Annually, we opt to perform a qualitative analysis, which is an assessment of whether it is more likely than not that the goodwill is impaired. If it is determined that it is more likely than not that the goodwill is impaired, we perform a single-step analysis to identify and measure impairment. The fair value of goodwill is based on either the direct capitalization or the discounted cash flow valuation method. The direct capitalization method is based on a capitalization rate applied to the underlying hotel's most recent stabilized trailing twelve month net operating income at the time of the fair value analysis. The discounted cash flow method is based on estimated future cash flow projections utilizing discount rates, terminal capitalization rates, and planned capital expenditures. These estimates approximate the inputs the Company believes would be utilized by market participants in assessing fair value. If the carrying amount of the property’s assets, including goodwill, exceeds its estimated fair value an impairment charge is recorded in an amount equal to that excess but only to the extent the value of goodwill is reduced to zero.

Impairment Estimates

In the evaluation of impairment of our hotel properties, including the related intangible assets and goodwill, we make many assumptions and estimates including valuation approach, projected cash flows, growth rates, eventual disposition, expected useful life and holding period, future capital expenditures, and fair values, which includes consideration of capitalization rates, discount rates, and comparable selling prices. The valuation and possible subsequent impairment of a hotel or goodwill is a significant estimate that can and does change based on our continuous process of analyzing each hotel property and goodwill and reviewing assumptions about uncertain inherent factors, as well as the economic condition of the property at a particular point in time.

If we misjudge or estimate incorrectly or if future operating profitability, market or industry factors differ from our expectations, we may record an impairment charge which is inappropriate, fail to record a charge when we should have done so or the amount of such charges may be inaccurate.

54

Results of Operations

Operating Results Overview

Our total portfolio RevPAR, which includes the results of hotels sold or acquired for the period of ownership by the Company, increased 92.4% to $103.64 for the year ended December 31, 2021, compared to $53.88 for the year ended December 31, 2020. The increase in our total portfolio RevPAR for the year ended December 31, 2021 compared to the same period in 2020 was driven by increases in both occupancy and ADR due to a recovery from the COVID-19 pandemic.

Net loss decreased 12.1% for the year ended December 31, 2021 compared to 2020, which was primarily attributed to:

•an increase in operating income of $157.9 million from our current portfolio of 34 hotels as a result of a recovery from the COVID-19 pandemic;

•a $22.5 million reduction in operating loss attributed to one hotel sold during the fourth quarter of 2021 and four hotels sold during the fourth quarter of 2020;

•a $1.6 million increase attributed to business interruption proceeds; and

•a $0.3 million reduction in loss on extinguishment of debt attributed to the write off of unamortized debt issuance costs associated with the repayment of debt.

These increases were offset by:

•a $0.1 million loss in 2021 compared to a $93.6 million gain in 2020 on the sale of investment properties;

•a $31.2 million reduction in other income attributed to costs associated with the termination of four interest rate hedges in 2021 and the recognition of non-recurring forfeited deposits for terminated transactions in 2020;

•a $19.3 million increase in interest expense attributed to a higher weighted-average interest rate coupled with an increase in weighted-average debt outstanding;

•a $16.6 million reduction in income tax benefit attributed primarily to the utilization of the net operating loss carryback provisions of the CARES Act in 2020;

•a $1.4 million increase in impairment and other losses; and

•a $0.4 million increase in corporate general and administrative expenses.

Adjusted EBITDAre and Adjusted FFO attributable to common stock and unit holders increased 308.9% and 134.1%, respectively, for the year ended December 31, 2021 compared to 2020, which was attributable to a recovery from the COVID-19 pandemic on the Company's results of operations. Refer to "Non-GAAP Financial Measures" for the definition of these financial measures, a description of how they are useful to investors as key supplemental measures of our operating performance and the reconciliation of these non-GAAP financial measures to net (loss) income attributable to common stock and unit holders.

Portfolio Composition

As of December 31, 2021 and 2020, the Company owned 34 lodging properties with a total of 9,659 rooms and owned 35 lodging properties with a total of 10,011 rooms, respectively. As of December 31, 2019, the Company owned 39 lodging properties with a total of 11,245 rooms.

55

The following represents the disposition details for the properties sold in the years ended December 31, 2021, 2020 and 2019 (in thousands, except number of rooms):

No hotels were acquired during the years ended December 31, 2021 and 2020. The following represents our acquisitions activity for the year ended December 31, 2019 (in thousands, except number of rooms):

Comparison of the year ended December 31, 2021 to the year ended December 31, 2020

Operating Information

The following table sets forth certain operating information for the years ended December 31, 2021 and 2020:

(1)     During the year ended December 31, 2021, we disposed of one hotel with 352 rooms. During the year ended December 31, 2020, we disposed of four hotels with 1,233 rooms and reduced the room count by one at Grand Bohemian Hotel Mountain Brook, Autograph Collection.

(2)    For hotels disposed of during the period, operating results and statistics are only included through the date of the respective disposition.

(3)    Hotel operating income represents the difference between total revenues and total hotel operating expenses.

56

As a result of the impact of the COVID-19 pandemic, we temporarily suspended operations at certain of our hotels and resorts for a portion of 2020 and 2021. The following represents the status of our hotels and resorts at the end of each quarter during the year ended December 31, 2020:

(1)    We re-commenced operations at one hotel and sold four hotels during the fourth quarter of 2020. Hyatt Regency Portland at the Oregon Convention Center was our only hotel with suspended operations as of December 31, 2020.

Hyatt Regency Portland at the Oregon Convention Center re-commenced operations in May 2021 and we sold one hotel during the fourth quarter of 2021. All 34 of our hotels and resorts were open and operating as of December 31, 2021.

Revenues

Revenues increased significantly compared to 2020 driven by increases in occupancy and ADR due to a recovery from the COVID-19 pandemic and as a result of a greater number of open and operating hotels during 2021 when compared to 2020. Revenues consists of room, food and beverage, and other revenues from our hotels, as follows (in thousands):

Rooms revenues

Rooms revenues increased by $159.1 million, or 73.0%, to $377.0 million for the year ended December 31, 2021 from $218.0 million for the year ended December 31, 2020 due to increases in occupancy and ADR due to a recovery from the COVID-19 pandemic and as a result of a greater number of open and operating hotels during 2021 when compared to 2020. This increase is net of a reduction of $16.3 million attributed to the sale of Marriott Charleston Town Center in November 2021, Marriott Napa Valley Hotel & Spa and Residence Inn Boston Cambridge in October 2020 and Hotel Commonwealth and Renaissance Austin Hotel in November 2020 (collectively, "the one hotel sold in the fourth quarter of 2021 and the four hotels sold in the fourth quarter of 2020").

Food and beverage revenues

Food and beverage revenues increased by $67.2 million, or 63.5%, to $173.0 million for the year ended December 31, 2021 from $105.9 million for the year ended December 31, 2020 due to a recovery from the COVID-19 pandemic and as a result of a greater number of open and operating hotels during 2021 when compared to 2020. This increase is net of a reduction of $4.9 million attributed to the one hotel sold in the fourth quarter of 2021 and the four hotels sold in the fourth quarter of 2020.

Other revenues

Other revenues increased by $20.2 million, or 43.9%, to $66.1 million for the year ended December 31, 2021 from $46.0 million for the year ended December 31, 2020 due a recovery from the COVID-19 pandemic and as a result of a greater number of open and operating hotels during 2021 when compared to 2020. This increase is net of reductions of $1.7 million in revenues from cancellations and attrition and $2.3 million attributed to the one hotel sold in the fourth quarter of 2021 and the four hotels sold in the fourth quarter of 2020.

57

Hotel Operating Expenses

Hotel operating expenses consist of the following (in thousands):

Total hotel operating expenses

Generally, hotel operating costs fluctuate based on various factors, including occupancy, labor costs, utilities and insurance costs which have increased during the last year. Luxury and upper upscale hotels generally have higher fixed costs than other types of hotels due to the services and amenities provided to guests.

Total hotel operating expenses increased $94.5 million, or 26.9%, to $446.0 million for the year ended December 31, 2021 from $351.5 million for the year ended December 31, 2020, primarily due to the extent and timing of the impact of the COVID-19 pandemic and as a result of a greater number of open and operating hotels during 2021 when compared to 2020. This increase is net of a reduction of $25.8 million in hotel operating expenses attributed to the one hotel sold in the fourth quarter of 2021 and the four hotels sold in the fourth quarter of 2020.

Corporate and Other Expenses

Corporate and other expenses consist of the following (in thousands):

Depreciation and amortization

Depreciation and amortization expense decreased $17.1 million, or 11.7%, to $129.4 million for the year ended December 31, 2021 from $146.5 million for the year ended December 31, 2020. The decrease was primarily attributed to a reduction in depreciation expense related to the one hotel sold in the fourth quarter of 2021 and the four hotels sold in the fourth quarter of 2020 and due to the timing of fully depreciated furniture, fixtures, and equipment during the comparable periods.

Real estate taxes, personal property taxes and insurance

Real estate taxes, personal property taxes and insurance expense decreased $10.1 million, or 19.8%, to $40.9 million for the year ended December 31, 2021 from $51.0 million for the year ended December 31, 2020. The decrease was primarily attributed to a reduction in assessed real estate values and successful property tax appeals totaling $5.3 million, offset by increases in insurance premiums of $2.3 million and reductions related to the one hotel sold in the fourth quarter of 2021 and the four hotels sold in the fourth quarter of 2020.

58

Ground lease expense

Ground lease expense decreased $0.9 million, or 43.2%, to $1.2 million for the year ended December 31, 2021 from $2.0 million for the year ended December 31, 2020, which was primarily attributable to abatement of rent associated with the ballroom lease at Hyatt Regency Santa Clara from March 2020 through September 2021.

General and administrative expenses

General and administrative expenses increased $0.4 million, or 1.2%, to $30.8 million for the year ended December 31, 2021 from $30.4 million for the year ended December 31, 2020 primarily due to increases in bonus and stock compensation offset by reductions in corporate personnel, legal fees related to loan amendments and an increase in corporate employee retention credits. General and administrative expenses for 2021 and 2020 include non-cash stock compensation amortization expense of $11.6 million and $10.9 million, respectively.

Gain on business interruption insurance

Gain on business interruption insurance was $1.6 million for the year ended December 31, 2021, which was attributed to insurance proceeds of $1.1 million for a portion of lost revenue associated with cancellations in 2020 related to the COVID-19 pandemic and lost income of $0.5 million in 2021 as a result of damage from the Texas winter storms in February 2021.

Acquisition, terminated transaction and pre-opening expenses

Acquisition, terminated transaction and pre-opening expenses decreased to $1 thousand for the year ended December 31, 2021 from $1.0 million for the year ended December 31, 2020, due to a decrease in non-recurring charges associated with terminated transactions costs.

Impairment and other losses

We recorded impairment charges of $30.4 million and $29.0 million during years ended December 31, 2021 and 2020, respectively.

During the year ended December 31, 2021, we recorded an impairment loss of $12.6 million for the 352-room Marriott Charleston Town Center to reduce the carrying value of the long-lived asset to its fair value. The impairment was the result of a shortened estimated hold period due to the expected sale. The hotel was sold in November 2021. Additionally, in November 2021, we entered into an agreement to sell the 191-room Kimpton Hotel Monaco Chicago for a sale price of $36.0 million and the buyer funded an at-risk deposit. As a result of the shortened estimated hold period due to the expected sale, we recorded an impairment loss of $15.7 million for this property. The hotel was sold in January 2022.

In August 2021, Hurricane Ida impacted one of our lodging properties, Loews New Orleans Hotel located in New Orleans, Louisiana. As a result, we recorded an impairment loss of $0.5 million for the three and nine months ended September 30, 2021, which represented the write off of the estimated historical cost, net of accumulated depreciation, of property damaged during the hurricane. During the three months ended December 31, 2021, we determined it was probable that we would receive insurance proceeds to replace the property damage and subsequently recorded a recovery of the $0.5 million.

Additionally, during the year ended December 31, 2021, we expensed $1.1 million of hurricane-related repair and cleanup costs related to Loews New Orleans Hotel which sustained damage from Hurricane Ida as well as $0.4 million of winter storm-related repair and cleanup costs related to two hotels that experienced damage as a result of the Texas winter storms in February 2021. We also wrote off $0.6 million related to previously capitalized design costs for a renovation project that will no longer be completed due to a change of scope.

During the year ended December 31, 2020, we determined the carrying values of goodwill related to Andaz Savannah and Bohemian Hotel Savannah Riverfront, Autograph Collection, were in excess of their respective fair values and therefore recorded a total impairment charge of $20.1 million. The goodwill impairments were directly attributed to existing weakness due to new supply in the market and the material adverse impact the COVID-19 pandemic had on the results of operations. The fair value was estimated using a ten-year discounted cash flows approach. In addition, we recorded an impairment loss of $8.9 million related to Renaissance Austin Hotel as it was determined to have a shortened hold period due to the expected sale. The hotel was subsequently sold in November 2020.

Refer to Notes 2 and 8 to the accompanying consolidated financial statements included herein for further discussion.

59

Results of Non-Operating Income and Expenses

Non-operating income and expenses consist of the following (in thousands):

(Loss) gain on sale of investment properties

For the year ended December 31, 2021, after recognizing an impairment loss of $12.6 million, we recognized a loss of $75 thousand related to the sale of Marriott Charleston Town Center in November 2021. The gain on sale for the year ended December 31, 2020 was attributed to the disposition of Residence Inn Boston Cambridge and Marriott Napa Valley Hotel & Spa in October 2020 and Renaissance Austin Hotel in November 2020, which was offset by a loss on sale attributed to the disposition of Hotel Commonwealth in November 2020.

Other (loss) income

Other income decreased $31.2 million, or 107.9%, to a loss of $2.3 million for the year ended December 31, 2021 from income of $28.9 million for the year ended December 31, 2020. The decrease was primarily attributed to the recognition of $28.8 million of non-recurring forfeited deposits from terminated transactions during the year ended December 31, 2020. Additionally, the decrease includes the recognition of $2.8 million of costs associated with the termination of four interest rate hedges for the year ended December 31, 2021.

Interest expense

Interest expense increased $19.3 million, or 31.2%, to $81.3 million for the year ended December 31, 2021 from $62.0 million for the year ended December 31, 2020. This was primarily due to an increase in outstanding debt during portions of the year ended December 31, 2021 compared to 2020, coupled with an increase in the weighted-average interest rate. Refer to Note 6 in the consolidated financial statements included herein for further discussion.

Loss on extinguishment of debt

Loss on extinguishment of debt decreased by $0.3 million, or 16.6%, to $1.4 million for the year ended December 31, 2021 from $1.6 million for the year ended December 31, 2020. The loss on extinguishment of debt during 2021 was attributable to the write off of unamortized debt issuance costs upon the early repayment of the corporate credit facility term loan due to mature in August 2023 and the mortgage loan collateralized by Kimpton Hotel Palomar Philadelphia.

The loss on extinguishment of debt during 2020 was attributable to the write off of unamortized debt issuance costs upon the repayment of two corporate credit facility term loans that were to mature in 2022 and the mortgage loan collateralized by Marriott Dallas Downtown as well as the assignment of the mortgage loan collateralized by Residence Inn Boston Cambridge upon its disposition.

Income tax (expense) benefit

Income tax benefit decreased $16.6 million, or 104.5%, to tax expense of $0.7 million for the year ended December 31, 2021 from a tax benefit of $15.9 million for the year ended December 31, 2020. The income tax expense for the year ended December 31, 2021 was primarily attributed to state gross margins taxes levied on gross revenues. The income tax benefit for the year ended December 31, 2020 was primarily attributed to utilization of the net operating loss carryback provisions of the CARES Act.

60

Comparison of the year ended December 31, 2020 to the year ended December 31, 2019

This information is contained in "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021, and is incorporated herein by reference.

Non-GAAP Financial Measures

We consider the following non-GAAP financial measures useful to investors as key supplemental measures of our operating performance: EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss, operating profit, cash from operations, or any other operating performance measure as prescribed per GAAP.

EBITDA, EBITDAre and Adjusted EBITDAre

EBITDA is a commonly used measure of performance in many industries and is defined as net income or loss (calculated in accordance with GAAP) excluding interest expense, provision for income taxes (including income taxes applicable to sale of assets) and depreciation and amortization. We consider EBITDA useful to an investor regarding our results of operations, in evaluating and facilitating comparisons of our operating performance between periods and between REITs by removing the impact of our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our operating results, even though EBITDA does not represent an amount that accrues directly to common stockholders. In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and dispositions and along with FFO and Adjusted FFO, it is used by management in the annual budget process for compensation programs.

We then calculate EBITDAre in accordance with standards established by the National Association of Real Estate Investment Trusts ("Nareit"), which we adopted on January 1, 2018. Nareit defines EBITDAre as EBITDA plus or minus losses and gains on the disposition of depreciated property, including gains/losses on change of control, plus 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 adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.

We further adjust EBITDAre to exclude the impact of non-controlling interests in consolidated entities other than our Operating Partnership Units because our Operating Partnership Units may be redeemed for common stock. We believe it is meaningful for the investor to understand Adjusted EBITDAre attributable to all common stock and Operating Partnership unit holders. We also adjust EBITDAre for certain additional items such as depreciation and amortization related to corporate assets, hotel property acquisition, terminated transaction and pre-opening expenses, amortization of share-based compensation, non-cash ground rent and straight-line rent expense, the cumulative effect of changes in accounting principles, and other costs we believe do not represent recurring operations and are not indicative of the performance of our underlying hotel property entities. We believe Adjusted EBITDAre attributable to common stock and unit holders provides investors with another financial measure in evaluating and facilitating comparison of operating performance between periods and between REITs that report similar measures.

FFO and Adjusted FFO

We calculate FFO in accordance with standards established by Nareit, as amended in the 2018 restatement white paper, which defines FFO as net income or loss (calculated in accordance with GAAP), excluding real estate-related depreciation, amortization and impairments, gains (losses) from sales of real estate, the cumulative effect of changes in accounting principles, similar adjustments for unconsolidated partnerships and consolidated variable interest entities, and items classified by GAAP as extraordinary. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. We believe that the presentation of FFO provides useful supplemental information to investors regarding our operating performance by excluding the effect of real estate depreciation and amortization, gains (losses) from sales for real estate, impairments of real estate assets, extraordinary items and the portion of these items related to unconsolidated entities, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance. We believe that the presentation of FFO can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common stockholders. Our calculation of FFO may not be comparable to measures calculated by other companies who do not use the Nareit definition of FFO or do not calculate FFO per diluted share in accordance with Nareit guidance. Additionally, FFO may not be helpful when comparing us to non-REITs. We present FFO attributable to common stock and unit holders, which includes our Operating Partnership Units because our Operating Partnership Units may be redeemed for common stock. We believe it is meaningful for the investor to understand FFO attributable to all common stock and unit holders.

61

We further adjust FFO for certain additional items that are not in Nareit’s definition of FFO such as hotel property acquisition, terminated transaction and pre-opening expenses, amortization of debt origination costs and share-based compensation, non-cash ground rent and straight-line rent expense, operating results from properties that are sold and other items we believe do not represent recurring operations. We believe that Adjusted FFO provides investors with useful supplemental information that may facilitate comparisons of ongoing operating performance between periods and between REITs that make similar adjustments to FFO and is beneficial to investors’ complete understanding of our operating performance.

The following is a reconciliation of net (loss) income to EBITDA, EBITDAre and Adjusted EBITDAre attributable to common stock and unit holders for the years ended December 31, 2021, 2020, and 2019 (in thousands):

(1)    During the year ended December 31, 2021, we recognized impairment charges of $12.6 million and $15.7 million related to Marriott Charleston Town Center and Kimpton Hotel Monaco Chicago, respectively, which were attributed to their respective net book value exceeding the undiscounted cash flows over a shortened hold period. Additionally, during the year ended December 31, 2021, we wrote off $0.6 million related to previously capitalized design costs for a renovation project that will no longer be completed due to a change of scope. During the year ended December 31, 2020, we recorded an $8.9 million impairment loss related to Renaissance Austin Hotel as it was determined to have a shortened hold period due to the expected sale. In addition, during the year ended December 31, 2020, we recorded goodwill impairments totaling $20.1 million for Andaz Savannah and Bohemian Hotel Savannah Riverfront, Autograph Collection. The goodwill impairments were directly attributed to existing market weakness due to new supply and the material adverse impact the COVID-19 pandemic had on the results of operations at each hotel. During the year ended December 31, 2019, we recognized a long-lived asset impairment charge of $14.8 million attributed to Marriott Chicago at Medical District/UIC and a goodwill impairment charge of $9.4 million attributed to Bohemian Hotel Savannah Riverfront, Autograph Collection.

(2)    During the year ended December 31, 2020, we reduced our corporate office staffing levels in order to preserve capital over the long-term as a result of the material adverse impact the COVID-19 pandemic has had on our results of operations. As a result, during the year ended December 31, 2020, we incurred $1.6 million of accelerated amortization of share-based compensation expense.

(3)    During the year ended December 31, 2020, we recognized other income of $28.8 million as a result of forfeited deposits from terminated transactions.

(4)    During the year ended December 31, 2021, we recorded estimated hurricane-related repair and cleanup costs of $1.1 million related to the damage sustained at Loews New Orleans Hotel during Hurricane Ida. Additionally, during the year ended December 31, 2021, we recorded Texas winter storm-related repair and cleanup costs of $0.4 million at two hotels. For the year ended December 31, 2020, we incurred $1.8 million of non-recurring expenses for severance related costs in connection with the reduction in corporate personnel. In addition, during the year ended December 31, 2020, we incurred non-recurring legal costs of $0.7 million to amend the terms of our debt.

62

The following is a reconciliation of net (loss) income to FFO and Adjusted FFO for the years ended December 31, 2021, 2020, and 2019 (in thousands):

(1)    During the year ended December 31, 2021, we recognized impairment charges of $12.6 million and $15.7 million related to Marriott Charleston Town Center and Kimpton Hotel Monaco Chicago, respectively, which were attributed to their respective net book value exceeding the undiscounted cash flows over a shortened hold period. Additionally, during the year ended December 31, 2021, we wrote off $0.6 million related to previously capitalized design costs for a renovation project that will no longer be completed due to a change of scope. During the year ended December 31, 2020, we recorded an $8.9 million impairment loss related to Renaissance Austin Hotel as it was determined to have a shortened hold period due to the expected sale. In addition, during the year ended December 31, 2020, we recorded goodwill impairments totaling $20.1 million for Andaz Savannah and Bohemian Hotel Savannah Riverfront, Autograph Collection. The goodwill impairments were directly attributed to existing market weakness due to new supply and the material adverse impact the COVID-19 pandemic had on the results of operations at each hotel. During the year ended December 31, 2019, we recognized a long-lived asset impairment charge of $14.8 million attributed to Marriott Chicago at Medical District/UIC and a goodwill impairment charge of $9.4 million attributed to Bohemian Hotel Savannah Riverfront, Autograph Collection.

(2)    Loan related costs included amortization of debt premiums, discounts and deferred loan origination costs.

(3)    During the year ended December 31, 2020, we reduced our corporate office staffing levels in order to preserve capital over the long-term as a result of the material adverse impact the COVID-19 pandemic has had on our results of operations. As a result during the year ended December 31, 2020, we incurred $1.6 million of accelerated amortization of share-based compensation expense.

(4)    During the year ended December 31, 2020, we recognized other income of $28.8 million as a result of forfeited deposits from terminated transactions.

(5)    During the year ended December 31, 2021, we recorded estimated hurricane-related repair and cleanup costs of $1.1 million related to the damage sustained at Loews New Orleans Hotel during Hurricane Ida. Additionally, during the year ended December 31, 2021, we recorded Texas winter storm-related repair and cleanup costs of $0.4 million at two hotels. For the year ended December 31, 2020, we incurred $1.8 million of non-recurring expenses for severance related costs in connection with the reduction in corporate personnel. In addition, during the year ended December 31, 2020, we incurred non-recurring legal costs of $0.7 million to amend the terms of our debt.

Use and Limitations of Non-GAAP Financial Measures

EBITDA, EBITDAre, Adjusted EBITDAre, FFO, and Adjusted FFO do not represent cash generated from operating activities under GAAP and should not be considered as alternatives to net income or loss, operating profit, cash flows from operations or any other operating performance measure prescribed by GAAP. Although we present and use EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO because we believe they are useful to investors in evaluating and facilitating comparisons of our operating performance between periods and between REITs that report similar measures, the use of these non-GAAP measures has certain limitations as analytical tools. These non-GAAP financial measures are not measures of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to fund capital expenditures, contractual commitments, working capital, service debt or make cash distributions. These measurements do not reflect cash expenditures for long-term assets and other items that we have incurred and will incur. These non-GAAP financial measures may include funds that may not be available for management’s discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. These non-GAAP financial measures as presented may not be comparable to non-GAAP financial measures as calculated by other real estate companies.

63

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 GAAP financial measures, and our consolidated statements of operations and comprehensive (loss) income, include interest expense, 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 reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding 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.

Liquidity and Capital Resources

We expect to meet our short-term liquidity requirements from cash on hand, cash flow from hotel operations, use of our unencumbered asset base, asset dispositions, borrowings under our revolving credit facility, and proceeds from various capital market transactions, including issuances of debt and equity securities. The objectives of our cash management policy are to maintain the availability of liquidity and minimize operational costs.

On a long-term basis, our objectives are to maximize revenue and profits generated by our existing properties and acquired hotels, to further enhance the value of our portfolio and produce an attractive current yield, as well as to generate sustainable and predictable cash flow from our operations to distribute to our common stock and unit holders. To the extent we are able to successfully improve the performance of our portfolio, we believe this will result in increased operating cash flows. Additionally, we may meet our long-term liquidity requirements through additional borrowings, the issuance of equity and debt securities, which may not be available on advantageous terms or at all, and/or proceeds from the sales of hotels.

Liquidity

As of December 31, 2021, we had $517.4 million of consolidated cash and cash equivalents and $36.9 million of restricted cash and escrows. The restricted cash as of December 31, 2021 primarily consisted of $29.3 million related to FF&E reserves as required per the terms of our management and franchise agreements, cash held in restricted escrows of $6.6 million primarily for real estate taxes and mortgage escrows and $1.0 million in deposits made for capital projects.

As of December 31, 2021, there was no outstanding balance on our revolving credit facility and the full $523 million is available to be borrowed. In February 2022, the availability under our revolving credit facility will decrease to $450 million through its maturity in February 2024. Proceeds from future borrowings may be used for working capital, general corporate or other purposes permitted by the revolving credit agreement (subject to certain additional restrictions during the covenant waiver period).

In response to the COVID-19 pandemic, certain of our third-party managers temporarily suspended required contributions to the FF&E reserves. In addition, in certain cases, we had the ability to utilize a portion of these cash balances for hotel operating expenses. The usage of such FF&E reserves was subject to lender approval for hotels encumbered by mortgage loans and, in certain cases, was required to be replenished. As of December 31, 2021, we had used $17.8 million of the FF&E reserves for working capital purposes and had replenished all required amounts.

We upsized the ATM program in May 2021. As a result, we had $200 million available for sale under the ATM program as of December 31, 2021. The terms of the amended revolving credit facility impose restrictions on the use of proceeds raised from equity issuances.

We remain committed to increasing total shareholder returns through the following priorities: (1) maximize revenue and profits generated by our existing properties and acquired hotels, including the continued focused management of expenses, (2) further enhance the value of our portfolio and produce an attractive current yield and (3) generate sustainable and predictable cash flow from our operations to distribute to our common stock and unit holders. Future determinations regarding the declaration and payment of dividends will be at the discretion of our Board of Directors and will depend on then-existing conditions, including our results of operations, payout ratio, capital requirements, financial condition, prospects, contractual arrangements, any limitations on payment of dividends present in our current and future debt agreements, maintaining our REIT status and other factors that our Board of Directors may deem relevant.

64

Debt and Loan Covenants

As of December 31, 2021, our outstanding total debt was $1.5 billion and had a weighted-average interest rate of 5.18%. Our weighted-average debt maturity as of December 31, 2021 was 3.7 years for our mortgage loans, 5.2 years for our corporate credit facility term loan, the Senior Notes, and revolving credit facility and 4.8 years for all debt.

Debt as of December 31, 2021 and December 31, 2020 consisted of the following (dollars in thousands):

(1)The rates shown represent the annual interest rates as of December 31, 2021. The variable index for one mortgage loan is one-month LIBOR and for two mortgage loans is daily SOFR. The variable index for the corporate credit facilities reflects a 25 basis point LIBOR floor which is applicable for the value of all corporate credit facilities not subject to an interest rate hedge.

(2)The Company entered into an interest rate swap agreement to fix the interest rate of this variable rate mortgage loan for the entire term of the loan. This mortgage loan was repaid in May 2021. The interest rate swap associated with this loan was terminated in connection with the repayment.

(3)In May 2021, the Company repaid the outstanding balance of the respective mortgage loan, the corporate credit facility term loan due to mature in August 2023 and the revolving credit facility with cash on hand and proceeds from the 2021 Senior Notes.

(4)A variable interest rate loan for which the interest rate has been fixed through October 2022, after which the rate reverts to variable.

(5)A variable interest rate loan for which the interest rate has been fixed on $25 million of the balance through October 2022, after which the rate reverts to variable.

(6)A variable interest rate loan for which the interest rate has been fixed through January 2023. The outstanding balance of this mortgage loan was repaid in January 2022 and the two interest rate swaps associated with this loan were terminated in connection with the repayment.

(7)Represents the weighted-average interest rate as of December 31, 2021.

(8)A variable interest rate loan for which LIBOR was previously fixed for $125 million of the balance through October 2022. The spread to LIBOR varied, as it was determined by the Company's leverage ratio. This loan was repaid in May 2021 and the interest rate swaps associated with this loan were redesignated in connection with the repayment.

(9)A variable interest rate loan for which LIBOR has been fixed through September 2022. The spread to LIBOR may vary, as it is determined by the Company's leverage ratio. The applicable interest rate has been set to the highest level of grid-based pricing during the covenant waiver period.

(10)Commitments under the revolving credit facility total $523 million through February 2022, after which the total commitments will decrease to $450 million through maturity in February 2024.

(11)Includes loan premiums, discounts and deferred financing costs, net of accumulated amortization.

Mortgage Loans

Our mortgage loan agreements require contributions to be made to FF&E reserves. In addition, certain quarterly financial covenants have been waived for a period of time specified in the respective amended loan agreements and certain financial covenants have been adjusted following the waiver periods.

65

Corporate Credit Facilities

In June 2020, certain subsidiaries of the Company entered into an amendment of its revolving credit facility (the “June 2020 Revolver Amendment”). The June 2020 Revolver Amendment amended the Amended and Restated Revolving Credit Agreement, dated as of January 11, 2018, by and among the XHR LP ("the Borrower"), the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Revolving Credit Agreement”).

We also entered into amendments for each of our then existing corporate credit facility term loans (collectively, the “June 2020 Term Loan Amendments” and together with the June 2020 Revolver Amendment, the “June 2020 Amendments”), which amended (i) the Term Loan Agreement, dated as of October 22, 2015, by and among the Borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders from time to time party thereto (the “Wells Term Loan Agreement”); (ii) the Term Loan Agreement, dated as of October 22, 2015, by and among the Borrower, KeyBank National Association, as administrative agent, and the lenders from time to time party thereto (the "KeyBank 2015 Term Loan Agreement"); (iii) the Term Loan Agreement, dated as of August 21, 2018, by and among the Borrower, PNC Bank, National Association, as administrative agent, and the lenders from time to time party thereto (the "PNC Term Loan Agreement"); and (iv) the Term Loan Agreement, dated as of September 13, 2017, by and among the Borrower, KeyBank National Association, as administrative agent, and the lenders from time to time party thereto. Such credit agreements, collectively with the Revolving Credit Agreement (as they have each been described herein), are referred to herein as the “Credit Agreements”.

The June 2020 Amendments, among other things, relieved the Borrower’s compliance with certain covenants under the Credit Agreements by (i) waiving the event of default caused by the Borrower’s noncompliance with the unsecured interest coverage ratio financial covenant for the fiscal quarter ending March 31, 2020; (ii) suspending the testing of the leverage ratio covenant, the fixed charge coverage ratio covenant and the unsecured interest coverage ratio covenant thereunder, in each case, through the fiscal quarter ending March 31, 2021 (unless terminated earlier by the Borrower) (the “initial covenant waiver period”); and (iii) providing for a phased return to pre-amendment covenant levels by mid-2022. In addition, the amendments extended the maturity date for the $175 million corporate credit facility term loan agented by Wells Fargo Bank, National Association from February 2021 to February 2022.

The June 2020 Amendments added or modified certain restrictions and covenants, which are applicable during the covenant waiver period (defined below) and until the Borrower has thereafter demonstrated compliance with its financial covenants, including mandatory prepayment requirements and new negative covenants restricting certain acquisitions, investments, capital expenditures, ground leases, and distributions. A new minimum liquidity covenant also applies during the covenant waiver period.

The June 2020 Amendments (other than with respect to the Wells Term Loan Agreement) set the applicable interest rate under the respective Credit Agreements during the covenant waiver period to the highest level of the grid-based pricing under each such Credit Agreement, with a Eurodollar rate floor of 0.25%, except to the extent the loans are subject to interest rate hedges.

The June 2020 Amendments required that certain additional subsidiaries of the Borrower become guarantors of the obligations under the Credit Agreements. In addition, the obligations under the Credit Agreements are secured by a first priority security interest in the capital stock of a material portion of the Borrower’s subsidiaries (the “Pledged Entities”), which pledges remain in effect until the date after the covenant waiver period on which (x) the Borrower achieves compliance with all of its financial covenants under each Credit Agreement for two consecutive fiscal quarters at pre-amendment levels and (y) the financial covenant maintenance levels have reverted to pre-amendment levels, unless the Pledged Entities are released prior to such date in connection with a permitted transaction.

In August 2020, in connection with the issuance of the $300 million of 2020 Senior Notes, the Company effectuated additional amendments to each of the Credit Agreements (the "August 2020 Amendments"). The August 2020 Amendments included permanent changes to the application of mandatory prepayments and enable us to acquire hotels by issuing equity. The August 2020 Amendments modified the mandatory prepayment provisions of each Credit Agreement by allowing us, in the event that the revolving credit facility outstanding balance is less than $350 million, to retain 55% of net proceeds raised through various actions, including debt issuances, equity issuances, and dispositions, for general corporate purposes with the remaining 45% being used to prepay the revolving credit facility (without a permanent reduction in the commitments thereunder), the Wells Term Loan Agreement and the KeyBank 2015 Term Loan Agreement.

In October 2020, the Company further amended each of the Credit Agreements (the "October 2020 Amendments"), other than the Wells Term Loan Agreement and the KeyBank 2015 Term Loan Agreement, which were repaid in full upon consummation of the October 2020 Amendments. The October 2020 Amendments (i) increased commitments under the revolving credit facility by $23 million to $523 million through February 2022, after which the total commitments will decrease to $450 million through February 2024, reflecting a two year extension of the maturity date of the revolving credit facility; (ii) extended the initial covenant waiver period through year end 2021 and extended the modification of certain financial covenants, once quarterly testing resumes, through the first quarter of 2023; (iii) modified the mandatory prepayment provisions of each Credit

66

Agreement by allowing us in the event that the revolving credit facility outstanding balance is less than $350 million, to apply 50% of the net proceeds raised through various activities, including debt issuances, equity issuances, and dispositions, to repay its revolving credit facility (without a permanent reduction in the commitments thereunder), with the balance of the proceeds retained by the Company; and (iv) extended the minimum liquidity covenant through the second quarter of 2022.

In May 2021, in connection with the issuance of the 2021 Senior Notes, the Company repaid in full the PNC Term Loan Agreement and effectuated additional amendments to the Credit Agreements for our revolving credit facility and our one remaining corporate credit facility term loan (the "May 2021 Amendments"). The May 2021 Amendments, among other things, (i) further extended the initial covenant waiver period under the remaining corporate credit facilities until the date that financial statements are required to be delivered thereunder for the fiscal quarter ending June 30 2022 (as so extended, unless earlier terminated by the Operating Partnership in accordance with the terms of the corporate credit facilities, the "covenant waiver period") and extended the modification of certain financial covenants, once quarterly testing resumes, through the second quarter of 2023, (ii) increased the minimum liquidity covenant level during the covenant waiver period from $100 million to $150 million and eliminated the minimum liquidity covenant after the covenant waiver period ends, (iii) adjusted the mandatory prepayment requirements under the corporate credit facilities to limit the requirement to repay loans using net proceeds of certain asset sales and debt or equity issuances solely to the Operating Partnership’s revolving credit facility, (iv) increased the ability for the Operating Partnership to acquire properties and (v) increased capacity for capital expenditures during the covenant waiver period under the corporate credit facilities.

As of December 31, 2021, there was no outstanding balance on the revolving credit facility. During the years ended December 31, 2021, 2020 and 2019, the Company incurred unused commitment fees of approximately $1.4 million, $0.5 million and $1.5 million, respectively, and interest expense of $1.9 million, $8.6 million and $0.2 million, respectively.

Senior Notes

The Operating Partnership issued the 2020 Senior Notes in an aggregate principal amount of $500 million during the year ended December 31, 2020. The 2020 Senior Notes bear interest at a rate of 6.375% per annum.

In May 2021, the Operating Partnership issued the 2021 Senior Notes in an aggregate principal amount of $500 million. The 2021 Senior Notes bear interest at a rate of 4.875% per annum. We used the net proceeds of the 2020 Senior Notes, along with cash on hand, to repay outstanding indebtedness and the net proceeds of the 2021 Senior Notes to repay in full the borrowings under our revolving credit facility, prepay in full our corporate credit facility term loan maturing in August 2023 and repay the mortgage loan collateralized by Kimpton Hotel Palomar Philadelphia. We intend to use the remaining net proceeds from the offering of the 2021 Senior Notes for general corporate purposes.

The indentures governing the Senior Notes contain customary covenants that limit the Operating Partnership's ability and, in certain circumstances, the ability of its subsidiaries, to borrow money, create liens on assets, make distributions and pay dividends on or redeem or repurchase stock, make certain types of investments, sell stock in certain subsidiaries, enter into agreements that restrict dividends or other payments from subsidiaries, enter into transactions with affiliates, issue guarantees of indebtedness, and sell assets or merge with other companies. These limitations are subject to a number of important exceptions and qualifications set forth in the indentures. In addition, the indentures governing the Senior Notes require the Operating Partnership to maintain total unencumbered assets as of each fiscal quarter of at least 150% of total unsecured indebtedness, in each case calculated on a consolidated basis.

The Senior Notes are fully and unconditionally guaranteed, jointly and severally, by the Company and certain of its subsidiaries that incur or guarantee any indebtedness under the Company’s corporate credit facilities, any additional first lien obligations, certain other bank indebtedness or any other material capital markets indebtedness (each, a “subsidiary guarantor” and together with the Company, the “guarantors”). The Senior Notes are initially secured, subject to certain permitted liens, by a first priority security interest in all of the equity interests (the “collateral”) of a material portion of the Operating Partnership’s subsidiaries, and any proceeds of such equity interests, which collateral also secures obligations under the amended corporate credit facilities on a first priority basis. The collateral securing the Senior Notes will be released in full if the Operating Partnership achieves compliance with certain financial covenant requirements under the corporate credit facilities, after which the Senior Notes will be unsecured, which is expected to occur prior to the maturity of the Senior Notes.

The Operating Partnership may redeem the 2020 Senior Notes prior to August 15, 2022 and the 2021 Senior Notes prior to June 1, 2024 at a make-whole price. After those dates, the Operating Partnership may also redeem the Senior Notes at certain redemption prices that decline ratably to par. The Operating Partnership may also redeem a portion of the Senior Notes with proceeds from certain equity offerings or certain support received from government authorities in connection with the COVID-19 global pandemic, subject to certain conditions.

67

Debt Covenants

As of December 31, 2021, we were not in compliance with the debt covenants for two of our mortgage loans which did not result in events of default but allows the respective lenders the option to institute a cash sweep until covenant compliance is achieved for a period of time specified in the respective loan agreements. The cash sweeps permit the lenders to withdraw excess cash generated by the property into a separate bank account that they control, which may be used to reduce the outstanding loan balance.

As of June 30, 2021, the Company was not in compliance with its debt covenants for three of its mortgage loans, which resulted in an event of default for each mortgage loan. In July 2021, the Company amended the terms of these mortgage loans to waive each event of default as of June 30, 2021 and to adjust covenant calculations for five quarters following the waiver. As a result, the Company was in compliance with each of these three loans as of December 31, 2021.

Derivatives

We continuously monitor and evaluate the level of floating rate debt exposure that we have and will continue to use interest rate hedges to limit it as we determine appropriate. See "Part II-Item. 7 Management's Discussion of Financial Condition and Results of Operations - Derivative Instruments" for more information related to our hedging policy and transaction activity.

Capital Markets

We have an established at-the-market ("ATM") program pursuant to an Equity Distribution Agreement ("ATM Agreement") with Wells Fargo Securities, LLC, Robert W. Baird & Co. Incorporated, Jefferies LLC, KeyBanc Capital Markets Inc. and Raymond James & Associates, Inc. In accordance with the terms of the ATM Agreement, the Company may from time to time offer and sell shares of its common stock having an aggregate gross offering price of up to $200 million. No shares were sold under the ATM Agreement during the years ended December 31, 2021, 2020 and 2019. As of December 31, 2021, we had $200 million available for sale under the ATM Agreement. We may have restrictions on the use of proceeds raised from equity capital during the covenant waiver period.

We may, from time to time, seek to retire or purchase additional amounts of our outstanding equity through cash purchases and/or exchanges for other securities in open market purchases, privately negotiated transactions or otherwise, including pursuant to a Rule 10b5-1 plan. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Our Board of Directors has authorized a stock repurchase program pursuant to which we are authorized to purchase up to $175 million of our outstanding common stock in the open market, in privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 plans (the "Repurchase Program"). Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The Repurchase Program does not have an expiration date. This Repurchase Program may be suspended or discontinued at any time and does not obligate us to acquire any particular amount of shares.

No shares were purchased as part of the Repurchase Program during the year ended December 31, 2021. During the year ended December 31, 2020, 165,516 shares were repurchased under the Repurchase Program, at a weighted-average price of $13.68 per share for an aggregate purchase price of $2.3 million. No shares were purchased as part of the Repurchase Program during the year ended December 31, 2019. As of December 31, 2021, we had approximately $94.7 million remaining under its share repurchase authorization.

Off-Balance Sheet Arrangements

As of December 31, 2021, we had various contracts outstanding with third-parties in connection with the renovation of certain of our hotel properties. The remaining commitments under these contracts at December 31, 2021 totaled $7.7 million.

Capital Expenditures and Reserve Funds

We maintain each of our properties in good repair and condition and in conformity with applicable laws and regulations, franchise agreements and management agreements. Routine capital expenditures are administered by the property management companies. However, we have approval rights over the capital expenditures as part of the annual budget process for each of our properties. From time to time, certain of our hotels may be undergoing renovations as a result of our decision to upgrade portions of the hotels, such as guest rooms, public space, meeting space and/or restaurants, in order to better compete with other hotels in our markets. In addition, upon the acquisition of a hotel we often are required to complete a property improvement plan in order to bring the hotel into compliance with the respective brand standards. If permitted by the terms of the management agreement, funding for a renovation will first come from the FF&E reserves. We are obligated to maintain reserve funds with respect to certain agreements with our hotel management companies, franchisors and lenders to provide funds,

68

generally 3% to 5% of hotel revenues, sufficient to cover the cost of certain capital improvements to the hotels and to periodically replace and update furniture, fixtures and equipment. Most of the agreements require that we reserve this cash in separate accounts. To the extent that the FF&E reserves are not available or adequate to cover the cost of the renovation, we may fund a portion of the renovation with cash on hand, borrowings from our revolving credit facility and/or other sources of available liquidity. We have been and will continue to be prudent with respect to our capital spending, taking into account our cash flows from operations.

As of December 31, 2021 and 2020, we had a total of $29.3 million and $25.9 million, respectively, of FF&E reserves. During the year ended December 31, 2021 and 2020, we made total capital expenditures of $31.8 million and $69.2 million, respectively.

In response to the COVID-19 pandemic, certain of our third-party managers temporarily suspended required contributions to the FF&E reserves. In addition, in certain cases, we had the ability to utilize a portion of these cash balances for hotel operating expenses. The usage of such FF&E reserves was subject to lender approval for hotels encumbered by mortgage loans and, in certain cases, was required to be replenished. As of December 31, 2021, we had used $17.8 million of FF&E reserves for working capital purposes and had replenished all required amounts.

Sources and Uses of Cash

Our principal sources of cash are cash flows from operations, borrowings under debt financings including draws on our revolving credit facility and from various types of equity offerings or the sale of our hotels. As a result of the impact the COVID-19 pandemic has had on our business, certain sources of capital may not be as readily available to us as they have been historically. Our principal uses of cash are asset acquisitions, capital investments, routine debt service and debt repayments, operating costs, corporate expenses and dividends. We may also elect to use cash to buy back our common stock in the future under the Repurchase Program.

Comparison of the Year Ended December 31, 2021 to the Year Ended December 31, 2020

The table below presents summary cash flow information for the consolidated statements of cash flows (in thousands):

Operating

•Cash provided by operating activities was $40.8 million for the year ended December 31, 2021 and cash used in operating activities was $77.7 million for the year ended December 31, 2020. Cash flows from operating activities generally consist of the net cash generated by our hotel operations, offset by the cash paid for corporate expenses and other working capital changes. Our cash flows from operating activities may also be affected by changes in our portfolio resulting from hotel acquisitions, dispositions or renovations. The net increase to cash provided by operating activities during the year ended December 31, 2021 was primarily due to an increase in operating income attributed to a recovery from the impact of the COVID-19 pandemic and as a result of a greater number of open and operating hotels during 2021 when compared to 2020, net of reductions from the one hotel sold in the fourth quarter of 2021 and four hotels sold in the fourth quarter of 2020. Refer to the "Results of Operations" section for further discussion of our operating results for the years ended December 31, 2021 and 2020.

69

Investing

•Cash used in investing activities during the year ended December 31, 2021 was $24.2 million and cash provided by investing activities was $254.2 million during the year ended December 31, 2020. Cash used in investing activities for the year ended December 31, 2021 was attributed to $31.8 million in capital improvements at our hotel properties which was offset by (i) $4.7 million in net proceeds from the disposition of Marriott Charleston Town Center and (ii) $2.9 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis. Cash provided by investing activities for the year ended December 31, 2020 was attributed to (i) $320.4 million in net proceeds from the dispositions of Residence Inn Boston Cambridge, Marriott Napa Valley Hotel & Spa, Hotel Commonwealth and Renaissance Austin Hotel and (ii) $3.0 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis which was offset by $69.2 million in capital improvements at our hotel properties.

Financing

•Cash provided by financing activities during the year ended December 31, 2021 was $108.9 million compared to $57.4 million during year ended December 31, 2020. Cash provided by financing activities for the year ended December 31, 2021 was attributed to $500.0 million in proceeds from the issuance of the 2021 Senior Notes, offset by:

•the repayment of the revolving credit facility of $163.1 million;

•the repayment of the corporate credit facility term loan maturing in 2023 totaling $150.0 million;

•the repayment of mortgage debt totaling $56.8 million;

•payment of loan fees and issuance costs of $10.2 million;

•principal payments of mortgage debt totaling $6.0 million;

•redemption of Operating Partnership Units for common stock and cash of $4.1 million; and

•shares redeemed to satisfy tax withholding on vested share-based compensation of $0.9 million.

•Cash provided by financing activities for the year ended December 31, 2020 was attributed to $500.5 million in proceeds from the issuance of the 2020 Senior Notes, which included a $0.5 million premium related to the add-on offering, and a $3.1 million net draw on the revolving credit facility, offset by:

•the repayment of two corporate credit facility term loans maturing in 2022 totaling $300.0 million;

•the repayment of mortgage debt totaling $51.0 million;

•the payment of $63.2 million in dividends for common stock and units;

•payment of loan fees and issuance costs of $18.1 million;

•redemption of Operating Partnership Units for common stock and cash of $8.6 million;

•the repurchase of common stock totaling $2.3 million;

•principal payments of mortgage debt totaling $2.2 million; and

•shares redeemed to satisfy tax withholding on vested share based compensation of $0.8 million.

70

Contractual Obligations

The table below presents, on a consolidated basis, obligations and commitments to make future payments under debt obligations (including interest) and lease agreements as of December 31, 2021 (in thousands):

(1)    Includes principal and interest payments, for both variable and fixed rate loans. The variable rate interest payments were calculated based upon the variable rate spread plus 1 month LIBOR or SOFR yield curves as applicable as of December 31, 2021.

Derivative Instruments

In the normal course of business, we are exposed to the effects of interest rate changes. We may enter into derivative instruments including interest rate swaps, caps and collars to manage or hedge interest rate risk in accordance with the criteria of the hedging policy approved by our Board of Directors. Derivative instruments are subject to fair value reporting at each reporting date and the increase or decrease in fair value is recorded in net income (loss) or accumulated other comprehensive income (loss), based on the applicable hedge accounting guidance. We anticipate that our interest rate hedges will be highly effective because the terms of the derivative instruments closely match the terms of the related hedged debt agreements. As such, periodic changes in the fair value of these derivatives are expected to be reflected in other comprehensive income (loss) in our consolidated financial statements. Derivatives expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company believes it minimizes the credit risk by transacting with well-known creditworthy financial institutions.

Our ability to apply hedge accounting in the future could be impacted to the extent that the payment terms of our loans change. The discontinuation of hedge accounting could result in future changes in the fair market values of hedges and/or a portion or all of the $4.1 million balance of accumulated other comprehensive loss as of December 31, 2021 to be recognized on the consolidated statements of operations and comprehensive loss through net loss. Any future defaults by the Company under the terms of its hedges, including those which may arise from cross default provisions with loan agreements, could result in the Company being immediately liable for the fair market value liability of the defaulted hedges.

As of December 31, 2021, we had various interest rate swaps with an aggregate notional amount of $315.0 million. These swaps fix a portion of the variable interest rate on three of our mortgage loans for a portion of or the entire term of the mortgage loan and fix LIBOR for a portion of or the entire term of our one outstanding corporate credit facility term loan agented by KeyBank National Association. The corporate credit facility term loan spread may vary, as it is determined by the Company's leverage ratio. The applicable interest rate for the corporate credit facility term loan has been set to the highest level of grid-based pricing during the covenant waiver period. In addition, four interest rate swaps were terminated in May 2021 in connection with the repayment of a $56.8 million mortgage loan, the $150 million corporate credit facility term loan agented by PNC Bank, National Association and the $163.1 million outstanding balance on the revolving credit facility. Three interest rate swaps were terminated in October 2020 in connection with the repayment of the $175 million corporate credit facility term loan agented by Wells Fargo Bank, National Association.

On March 5, 2021, the U.K. Financial Conduct Authority ("FCA") announced that USD LIBOR will either cease to be provided by any administrator or no longer be representative immediately after December 31, 2021, in the case of 1 week and 2 month USD settings, and immediately after June 30, 2023, in the case of the remaining USD settings. This announcement has several implications, including setting the spread that may be used to automatically convert contracts from LIBOR to the Secured Overnight Financing Rate ("SOFR"). Additionally, banking regulators are encouraging banks to discontinue new LIBOR debt issuance by December 31, 2021. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

71

As of December 31, 2021, we have various interest rate swaps with notional amounts that have maturity dates ranging from 2022 to 2023 and that are indexed to LIBOR. All of our contracts mature prior to June 30, 2023. While we expect LIBOR to be available in substantially its current form through June 30, 2023, it is possible that LIBOR will become unavailable prior to that date. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified. The introduction of an alternative rate also may create additional basis risk and increased volatility as alternative rates are phased in and utilized in parallel with LIBOR. In September 2021, two of our mortgage loans converted from LIBOR-based interest rates to daily SOFR interest rates. These changes did not have a significant impact on the Company's interest expense or on hedge accounting.

Inflation

We rely on the performance of our hotels to increase revenues in order to keep pace with inflation. Generally, our third-party management companies possess the ability to adjust room rates daily, except for group or corporate rates contractually committed to in advance, although competitive pressures may limit the ability of our third-party management companies to raise rates faster than inflation or even at the same rate.

Inflation may affect our expenses, including, without limitation, by increasing costs such as wages, benefits, food, taxes, property and casualty insurance, borrowing costs, utilities, the cost of capital expenditures, etc. In addition, our hotel expenses may increase at higher rates than hotel revenue.

Seasonality

Demand in the lodging industry is affected by recurring seasonal patterns, which are greatly influenced by overall economic cycles, the geographic locations of the hotels and the customer mix at the hotels.

Subsequent Events

In November 2021, we entered into an agreement to sell the 191-room Kimpton Hotel Monaco Chicago in Chicago, Illinois for a sale price of $36.0 million. The sale closed in January 2022 and did not result in a gain or loss due to a previous impairment of $15.7 million. Net cash proceeds from the sale, after transaction closing costs, were approximately $32.1 million and will be used for general corporate purposes.

In January 2022, we repaid in full the $65.0 million outstanding balance on the mortgage loan collateralized by The Ritz-Carlton, Pentagon City and incurred a loss on extinguishment of debt of approximately $0.3 million. In connection with the repayment, we terminated two interest rate swaps and incurred swap termination costs of $1.6 million.

In February 2022, we entered into an agreement to acquire the W Nashville in Nashville, Tennessee, for a purchase price of $328.7 million, at which time our $10.0 million deposit became at-risk. The sale is expected to close in the first quarter of 2022.

New Accounting Pronouncements Not Yet Implemented

See Note 2 to the accompanying consolidated financial statements included herein this Annual Report for additional information related to recently issued accounting pronouncements.