What changed in this filing

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Item 1. Business

2024-03-14 compared with 2023-03-10 · 241 added, 248 removed, 1552 unchanged (24% of the section changed)

18 unchanged sentences

We do not operate any of our hotel properties directly;

instead, we employ hotel management companies to operate them for us under management contracts.

Remington Hotels, a subsidiary of Ashford Inc., manages four of our 16 hotel properties.

instead, we contractually engage hotel management companies to operate them for us under management contracts.

Remington Hospitality, a subsidiary of Ashford Inc., manages four of our 16 hotel properties.

Third-party management companies manage the remaining hotel properties.

1 unchanged sentence

has an ownership interest.

These products and services include, but are not limited to, design and construction services, debt placement and related services, audio visual services, real estate advisory and brokerage services, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services, mobile key technology and broker-dealer services.

These products and services include, but are not limited to, design and construction services, debt placement and related services, audio visual services, real estate advisory and brokerage services, insurance policies covering general liability, workers compensation and business automobile claims, insurance claims services, hypoallergenic premium rooms, watersport activities, travel/transportation services, mobile key technology and broker-dealer services, and cash management services.

See note 15 to our consolidated financial statements.

As of December 31, 2022, Mr.

Bennett and Mr.

Archie Bennett, Jr., together owned approximately 610,246 shares of Ashford Inc.

Bennett is chairman and chief executive officer of Ashford Inc.

and, together with Mr.

Archie Bennett, Jr., as of December 31, 2023, holds a controlling interest in Ashford Inc.

As of December 31, 2023, the Bennetts owned approximately 610,261 shares of Ashford Inc.

common stock, which represented an approximate 19.0% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc.

Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, is convertible (at a conversion price of $117.50 per share) into an additional approximate 4,145,385 shares of Ashford Inc.

Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,229,668 shares of Ashford Inc.

common stock, which if converted as of December 31, 2023 would have increased the Bennetts’ ownership interest in Ashford Inc.

to approximately 65.5%, provided that prior to August 8, 2023, the voting power of the holders of the Ashford Inc.

Series D Convertible Preferred Stock is limited to 40% of the combined voting power of all of the outstanding voting securities of Ashford Inc.

entitled to vote on any given matter.

The 18,758,600 shares of Series D Convertible Preferred Stock owned by Mr.

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Bennett, chairman of our board of directors and his father, Mr.

Archie Bennett, Jr., together owned approximately 4,553,919 common shares of the Company (including common units, long-term incentive plan (“LTIP”) units and performance LTIP units), which represented an approximate 5.8% ownership in the Company.

Archie Bennett, Jr., together owned approximately 3,059,526 shares of our common stock (including common units, long-term incentive plan (“LTIP”) units and performance LTIP units), which represented an approximate 4.1% ownership in the Company.

Our Investment and Growth Strategies

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Ashford LLC aims to achieve this goal by benchmarking each asset’s performance compared to similar hotel properties within our portfolio.

Ashford LLC also closely monitors all hotel operating expenses, as well as third-party vendor and service contracts.

LLC also closely monitors all hotel operating expenses, as well as third-party vendor and service contracts.

If expense levels are not commensurate with the property revenues, Ashford LLC works with the property manager to implement cost-cutting initiatives.

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One hotel property is managed by Accor Management US Inc.

(“Accor”), one is managed by Hyatt Corporation (“Hyatt”), one is managed by Four Seasons Hotels Limited (“Four Seasons”) and four hotel properties are managed by Remington Hotels, a subsidiary of Ashford Inc.

The material terms of these hotel management agreements are described below in “Certain Agreements—Hotel Management Agreements.” Each of our hotel properties is encumbered by loans as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness.” For the year ended December 31, 2022, approximately 79% of the rooms revenue was generated by transient business, approximately 19% was generated by group sales and 2% was generated by contract sales.

(“Accor”), one is managed by Hyatt Corporation (“Hyatt”), one is managed by Four Seasons Hotels Limited (“Four Seasons”) and four hotel properties are managed by Remington Hospitality.

The material terms of these hotel management agreements are described below in “Certain Agreements—Hotel Management Agreements.” For the year ended December 31, 2023, approximately 76% of rooms revenue was generated by transient business, approximately 23% was generated by group sales and 1% was generated by contract sales.

The following table sets forth additional information for our hotel properties (dollars in thousands, except ADR and RevPAR) for the year ended December 31, 2023:

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Hotel Yountville Yountville, CA 80 100 % 60.78 % 694.51 422.10 871 4,915

C Beverly Hills Hotel Los Angeles, CA 143 100 % 74.26 % 347.57 258.10 (1,390) 3,157

Cameo Beverly Hills

Los Angeles, CA 143 100 % 72.78 % 308.71 224.69 (4,222) 987

The Ritz-Carlton Reserve Dorado Beach (5)

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The ground lease contains one extension option of either 10 or 20 years dependent upon capital investment spend during the lease term.

(3) The above information, excluding Hotel EBITDA, does not include the operations of the voluntary rental program with respect to condominium units not owned by the Company.

(3) The above information, excluding Hotel net income and Hotel EBITDA, does not include the operations of the voluntary rental program with respect to condominium units not owned by the Company.

(4) Subject to a ground lease that initially expires in 2065.

The ground lease contains two 25-year extension options, at our election.

(5) The above information, excluding Hotel EBITDA, does not include the operations of the voluntary rental program with respect to the residential units not owned by the Company.

The results of the Ritz-Carlton Reserve Dorado Beach are included from March 11, 2022 through December 31, 2022.

(6) The results of the Four Seasons Resort Scottsdale are included from December 1, 2022 through December 31, 2022.

(5) The above information, excluding Hotel net income and Hotel EBITDA, does not include the operations of the voluntary rental program with respect to the residential units not owned by the Company.

(6) Calculated on a portfolio basis for the 16 hotel properties in our portfolio as of December 31, 2023.

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• Other Amenities :

The hotel has a fitness center, outdoor pool, outdoor whirlpool, tennis courts, basketball court, business center, lush gardens and pathways, valet parking and a gift shop.

The hotel has a fitness center, outdoor pool, outdoor whirlpool, tennis and pickleball courts, basketball court, business center, lush gardens and pathways, valet parking and a gift shop.

Location and Access.

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Our subsidiary, Ashford Seattle Waterfront LP, owns a fee simple interest in the Marriott Seattle Waterfront.

The hotel opened in 2003 and is comprised of 348 guest rooms and 13 suites, including 204 king rooms, 155 double/double rooms and two Murphy beds.

The hotel opened in 2003 and is comprised of 362 guest rooms and 7 suites, including 240 king rooms and 129 queen/queen rooms.

About half of the hotel’s guest rooms have water views overlooking Elliott Bay with the remaining guest rooms having partial water views.

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Capital improvements in 2017 included the relocation of the M Club from the eighth floor to the lobby level, which recaptured three guest rooms.

A transformative guest room and corridor renovation occurred in 2022 which included case goods, flooring, wall covering, soft goods, lighting, and bathrooms.

A transformative guest room and corridor renovation occurred in 2022 which included case goods, flooring, wall covering, soft goods, lighting, and bathrooms and added 8 new keys.

The hotel is located on the Seattle Waterfront within walking distance of Pike Place Market, a unique retail experience and a major Seattle tourist attraction.

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During the conversion process, we commissioned two new outdoor murals, located in Block 9 and the Parklet and two sculptures, one located on a lobby wall and one on the exterior of the building.

The hotel’s original art piece, a globe representing San Francisco’s unique position as a world class city, was moved from Block 9 to a prominent position in the Parklet.

The hotel’s original art

piece, a globe representing San Francisco’s unique position as a world class city, was moved from Block 9 to a prominent position in the Parklet.

Location and Access .

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Additionally the restaurant was renovated and repositioned as an upscale tapas bar.

The property joined Marriott’s Autograph Collection® Hotels, a diverse portfolio of independent hotels around the world that reflect unique vision, design and environments.

The property joined Marriott’s Autograph Collection®, a diverse portfolio of independent hotels around the world that reflect unique vision, design and environments.

It is located in the center of Philadelphia’s downtown business district, across from City Hall and one block from the Philadelphia Convention Center.

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The hotel’s corner location and clear signage make it easily visible from both Juniper Street and South Penn Square.

The hotel is approximately 10 miles from the Philadelphia International Airport.

The hotel is approximately 10 miles from Philadelphia International Airport.

Operating History .

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A comprehensive guest room and corridor renovation began in the fourth quarter of 2017 and was completed in the second quarter of 2018.

A refresh of the lobby space was completed in February 2023.

The 32-story building was designed by French architect Jean-Paul Viguier and has views of Lake Michigan and the Chicago skyline.

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The hotel opened in 1968 and is comprised of 142 guest rooms, including 76 king rooms, 43 queen/queen rooms and 23 suites.

Approximately $16.6 million has been spent on capital expenditures since the acquisition of the hotel in May 2013, which included spa, fitness center and guest rooms refresh renovations.

Approximately $17.2 million has been spent on capital expenditures since the acquisition of the hotel, which included spa, fitness center and guest rooms refresh renovations.

The hotel is located on a six-acre parcel in Key West, Florida.

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Outdoor amenities include a rooftop pool and a vegetable garden.

Complimentary bicycles and five Lexus vehicles are available for guest use.

Complimentary bicycles and Lexus vehicles are available for guest use.

Location and Access .

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On March 31, 2017, we acquired a 100% interest in the 190-room Park Hyatt Beaver Creek Resort & Spa in Beaver Creek, Colorado.

In December 2022, we acquired three additional keys that were added to inventory in February 2023, bringing the total hotel room count to 193.

Located in the heart of Beaver Creek Village, approximately 100 miles west of Denver, it is located in one of the most exclusive resort destinations in North America.

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The hotel underwent a full lobby renovation in 2019, which included a new lobby bar and the addition of an epicurean market.

The fitness center and meeting space located within the hotel footprint were renovated in 2023.

Approximately $22.6 million has been spent on capital expenditures since the acquisition of the hotel in March 2017.

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• Food and Beverage :

The property has the acclaimed 46-seat Heritage Oak restaurant and bar, in-room dining service and complimentary wine tastings.

The property has the acclaimed 46-seat Heritage Oak restaurant and bar, in-room dining service and a complimentary glass of wine upon check-in.

• Other Amenities :

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The Ritz-Carlton Sarasota was built in 2001 and has 276 luxurious and spacious rooms, including 31 suites.

The resort also offers an array of amenities, including a 26,000 square foot Beach Club with 410 feet of beachfront, a private, luxury Tom Fazio designed Golf Club, the award-winning 15,000 square foot Ritz-Carlton Spa, eight food and beverage outlets, including the acclaimed Jack Dusty waterfront restaurant, 29,000 square feet of flexible indoor meeting space, two outdoor pools, 24-hour state-of-the-art fitness club and lighted tennis courts.

The resort also offers an array of amenities, including a 26,000 square foot Beach Club with 410 feet of beachfront, a private, luxury Tom Fazio designed Golf Club, a 15,000 square foot Ritz-Carlton Spa that was renovated in 2023, eight food and beverage outlets, including the acclaimed Jack Dusty waterfront restaurant, 29,000 square feet of flexible indoor meeting space, two outdoor pools, 24-hour state-of-the-art fitness club and lighted tennis courts.

Additional property highlights include:

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Approximately $32.8 million has been spent on capital expenditures since the acquisition of the hotel in January 2019.

In 2023, the guestrooms were completely renovated and the Alpine Exchange, a new retail shop and market, was added to the lobby as a new amenity.

The Ritz-Carlton Lake Tahoe was built in 2009 and has 170 luxurious and spacious rooms, including 17 suites.

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• Other Amenities :

The property offers 170 luxurious guest rooms and suites with in-room gas fireplaces and floor-to-ceiling windows, a 17,000 square foot slope-side spa with treatments themed around nature and the Ritz Kids children’s program.

Location and Access .

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(2) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” for a reconciliation of net income (loss) to Hotel EBITDA by property.

C Beverly Hills Hotel, Beverly Hills, California

On August 5, 2021, the Company acquired a 100% interest in the 138-room Mr.

Cameo Beverly Hills, Beverly Hills, California

On August 5, 2021, the Company acquired a 100% interest in the 138-room Cameo Beverly Hills (formerly known as the Mr.

C Beverly Hills Hotel) and five luxury residences adjacent to the hotel.

Approximately $819,000 has been spent on capital expenditures since the acquisition.

C was built in 1965 and underwent an extensive renovation in 2011.

Approximately $2.4 million has been spent on capital expenditures since the acquisition.

The Cameo Beverly Hills was built in 1965 and underwent an extensive renovation in 2011.

It has 138 luxurious and spacious rooms, including 12 suites and 10 mini suites.

It is a luxury hotel ideally located in close proximity to high-end shopping on Rodeo Drive and business demand from Century City and Culver City.

On August 1, 2023, the Company announced the rebranding and planned conversion of the hotel to the Cameo Beverly Hills.

Following an extensive renovation, which is expected to be completed by the end of 2025, the hotel will join LXR Hotels & Resorts.

Additional property highlights include:

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• Food and Beverage :

The property also boasts the acclaimed The Restaurant at Mr.

C, which entices travelers and Angelenos alike with its truly authentic Italian flavor by the fourth generation Cipriani.

The property also features I1 Moderno which offers a menu of classic southern Italian recipes with a California flair.

• Other Amenities :

6 unchanged sentences

Operating History .

The following table shows certain historical information regarding The Mr.

C Beverly Hills Hotel since 2020:

The following table shows certain historical information regarding Cameo Beverly Hills since 2021:

Year Ended December 31, Year Ended

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January 1, 2021 through

August 4, 2021 Year Ended December 31, 2020

August 4, 2021

143 143 143 143 143

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Selected Financial Information .

The following table shows certain selected financial information regarding The Mr.

C Beverly Hills Hotel since 2021 (dollars in thousands):

The following table shows certain selected financial information regarding Cameo Beverly Hills since 2021 (dollars in thousands):

Year Ended December 31, Year Ended

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The hotel operating results for the period from August 5, 2021 through December 31, 2021 represent the operating results since the acquisition of the hotel on August 5, 2021.

The hotel operating results for the period from January 1, 2021 through August 4, 2021 and for the year ended December 31, 2020 represent periods before our ownership and were obtained from the prior owner.

The hotel operating results for the period from January 1, 2021 through August 4, 2021 represent periods before our ownership and were obtained from the prior owner.

The Company performed a limited review of the information as part of its analysis of the acquisition.

No financial statements were prepared, audited or reviewed for the year ended December 31, 2020 and for the period from January 1, 2021 through August 4, 2021.

No financial statements were prepared, audited or reviewed for the period from January 1, 2021 through August 4, 2021.

The Ritz-Carlton Reserve, Dorado, Puerto Rico

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The following table shows certain historical information regarding Ritz-Carlton Reserve Dorado Beach since 2021:

Year Ended December 31, 2023

December 31, 2022 (combined) Period from

11 unchanged sentences

The following table shows certain selected financial information regarding The Ritz-Carlton Reserve Dorado Beach since 2021 (dollars in thousands):

Year Ended December 31, 2023

December 31, 2022 (combined) Period from

19 unchanged sentences

The hotel operating results for the period from March 11, 2022 through December 31, 2022 represent the operating results since the acquisition of the hotel on March 11, 2022.

The hotel operating results for the period from January 1, 2022 through March 10, 2022 and for the years ended December 31, 2021 and 2020 represent periods before our ownership and were obtained from the prior owner.

The hotel operating results for the period from January 1, 2022 through March 10, 2022 and for the year ended December 31, 2021 represent periods before our ownership and were obtained from the prior owner.

The Company performed a limited review of the information as part of its analysis of the acquisition.

The financial statements as of and for the year ended December 31, 2021 were audited and included in an amendment to our Current Report on Form 8-K filed on March 11, 2022.

No financial statements were prepared, audited or reviewed for the year ended December 31, 2020 and for the period from January 1, 2022 through March 10, 2022.

No financial statements were prepared, audited or reviewed for the period from January 1, 2022 through March 10, 2022.

Four Seasons Resort, Scottsdale, Arizona

On December 1, 2022, the Company acquired a 100% interest in the 210-room Four Seasons Resort Scottsdale at Troon North in Scottsdale, Arizona.

Approximately $383,000 has been spent on capital expenditures since the acquisition.

Approximately $4.3 million has been spent on capital expenditures since the acquisition.

The Four Seasons Resort Scottsdale was opened in 1999.

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The following table shows certain historical information regarding the Four Seasons Resort Scottsdale since 2021:

Year Ended December 31, 2023

December 31, 2022 (combined) Period from

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Selected Financial Information .

The following table shows certain selected financial information regarding the Four Seasons Resort Scottsdale Hotel since 2021:

(dollars in thousands):

December 31, 2021 (combined) Period from

The following table shows certain selected financial information regarding the Four Seasons Resort Scottsdale Hotel since 2021 (dollars in thousands):

Year Ended December 31, 2023

December 31, 2022 (combined)

December 1, 2022 through

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The hotel operating results for the period from December 1, 2022 through December 31, 2022 represent the operating results since the acquisition of the hotel on December 1, 2022.

The hotel operating results for the period from January 1, 2022 through November 30, 2022 and for the years ended December 31, 2021 and 2020 represent periods before our ownership and were obtained from the prior owner.

The hotel operating results for the period from January 1, 2022 through November 30, 2022 and for the year ended December 31, 2021 represent periods before our ownership and were obtained from the prior owner.

The Company performed a limited review of the information as part of its analysis of the acquisition.

The financial statements as of and for the years ended December 31, 2021 and 2020 were audited and as of and for the nine months ended September 30, 2022 and 2021 were reviewed and included in our Current Report on Form 8-K filed on December 1, 2022.

The financial statements as of and for the year ended December 31, 2021 were audited and as of and for the nine months ended September 30, 2022 and 2021 were reviewed and included in our Current Report on Form 8-K filed on December 1, 2022.

No financial statements were prepared, audited or reviewed for the period from October 1, 2022 through November 30, 2022.

1 unchanged sentence

The senior management team, provided to us by Ashford LLC, facilitated all asset management services for our hotel properties prior to our spin-off from Ashford Trust and continues to do so, including for the properties we acquired after the spin-off.

The team of professionals provided by Ashford LLC proactively works with our third-party hotel management companies and Remington Hotels to attempt to maximize profitability at each of our hotel properties.

The team of professionals provided by Ashford LLC proactively works with our third-party hotel management companies and Remington Hospitality to attempt to maximize profitability at each of our hotel properties.

The asset management team monitors the performance of our hotel properties on a daily basis and holds frequent ownership meetings with personnel at the hotel properties and with key executives of the brands and management companies.

The asset management team works closely with our third-party hotel management companies and Remington Hotels on key aspects of each hotel’s operation, including, among others, revenue management, market positioning, cost structure, capital and operational budgeting as well as the identification of return on investment initiatives and overall business strategy.

In addition, we retain approval rights on key staffing positions at many of our hotel properties, such as the hotel’s general manager and director of sales.

The asset management team works closely with our third-party hotel management companies and Remington Hospitality on key aspects of each hotel’s operation, including, among others, revenue management, market positioning, cost structure, capital and operational budgeting as well as the identification of return on investment initiatives and overall business strategy.

We believe that our strong asset management process helps to ensure that each hotel is being operated to our and our hotel management companies’ stated standards, that our hotel properties are being adequately maintained in order to preserve the value of the asset and the safety of the hotel to customers, and that our hotel management companies are maximizing revenue and enhancing operating margins.

1 unchanged sentence

Hotel Management

also provides us with hotel management services through Remington Hotels, including hotel operations, sales and marketing, revenue management, budget oversight, guest service, asset maintenance (not involving capital expenditures) and related services.

also provides us with hotel management services through Remington Hospitality, including hotel operations, sales and marketing, revenue management, budget oversight, guest service, asset maintenance (not involving capital expenditures) and related services.

See “Certain Agreements-Hotel Management Agreement.”

Design and Construction Services

also provides us with design and construction services through Premier, including construction management, interior design, architectural oversight, and the purchasing, expediting, warehousing coordination, freight management and supervision of installation of furniture, fixtures and equipment (“FF&E”), and related services.

also provides us with design and construction services through Premier, including construction management, interior design, architectural services and oversight, and the purchasing, expediting, warehousing coordination, freight management and supervision of installation of furniture, fixtures and equipment (“FF&E”), and related services.

See “Certain Agreements—Premier Master Project Management Agreement.”

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Hotel Management Agreements .

Twelve of our hotel properties are operated pursuant to a hotel management agreement with one of five brand management companies and four of our hotel properties are operated pursuant to a hotel management agreement with Remington Hotels, a hotel management company acquired by Ashford Inc.

on November 6, 2019, from Mr.

Twelve of our hotel properties are operated pursuant to a hotel management agreement with one of five brand management companies and four of our hotel properties are operated pursuant to a hotel management agreement with Remington Hospitality, a hotel management company acquired by Ashford Inc.

on November 6, 2019, from

Bennett, chairman of our board of directors and chairman, chief executive officer and a significant stockholder of Ashford Inc., and Mr.

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Franchise Agreements .

None of our hotel properties operate under franchise agreements.

One of our hotel properties operates under a franchise agreement.

The management agreements with Marriott (or its affiliates), Hilton (or its affiliates), Four Seasons, Hyatt or Accor allow twelve of our hotel properties to operate under the Marriott, Autograph Collection, The Ritz-Carlton, Ritz-Carlton Reserve, Hilton, Four Seasons, Park Hyatt or Sofitel brand names, as applicable, and provide benefits typically associated with franchise agreements, including, among others, the use of Marriott’s (or its affiliates), Hilton’s (or its affiliates), Four Seasons’ (or its affiliates), Hyatt’s (or its affiliates) or Accor’s (or its affiliates), applicable, reservation system and guest loyalty and reward program.

Any intellectual property and trademarks of its affiliates), Hilton (or its affiliates), Four Seasons (or its affiliates), Hyatt (or its affiliates) or Accor (or its affiliates), as applicable, are exclusively owned and controlled by the applicable manager (or its affiliates) and the management agreement with Marriott (or its affiliates), Hilton (or its affiliates), Four Seasons, Hyatt, and Accor grant the applicable manager the rights to use such intellectual property or trademarks with respect to the applicable hotel.

Any intellectual property and trademarks of Marriott (or its affiliates), Hilton (or its affiliates), Four Seasons (or its affiliates), Hyatt (or its affiliates) or Accor (or its affiliates), as applicable, are exclusively owned and controlled by the applicable manager (or its affiliates) and the management agreement with Marriott (or its affiliates), Hilton (or its affiliates), Four Seasons, Hyatt, and Accor grants the applicable manager the rights to use such intellectual property or trademarks with respect to the applicable hotel.

Licensing Agreement.

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Thomas is subject to a License and Royalty Agreement, which allows the hotel to use The Ritz-Carlton name and mark for 50 years, subject to automatic renewal for two 10-year periods, unless the brand management company notifies us of election not to renew at least one year before the end of the initial term or the then-current renewal term.

The Licensed and Royalty Agreement is coterminous with the management agreement.

The License and Royalty Agreement is coterminous with the management agreement.

In connection with our ability to use The Ritz-Carlton name and mark, we are obligated to pay a royalty fee of 2.6% of gross revenues and an incentive royalty of 20% of operating profit in excess of owner’s priority.

Additionally, in conjunction with the Mr.

C Beverly Hills Hotel acquisition on August 5, 2021, we entered into an Intellectual Property Sublicense Agreement, which allows us to continue to use certain proprietary marks associated with the Mr.

C brand name.

In return, we pay licensing fees of:

(i) 1% of total operating revenue;

(ii) 2% of gross food and beverage revenues;

and (iii) 25% of food and beverage profits.

The agreement expires on August 5, 2023.

Further, The Ritz-Carlton Reserve Dorado Beach is subject to a License and Royalty Agreement, which allows the hotel to use the Ritz-Carlton name and mark for 30 years, subject to automatic renewal for two 10-year periods, unless the licensor notifies us of election not to renew at least 18 months before the end of the initial term or the then-current renewal term.

6 unchanged sentences

As of December 31, 2023, our indebtedness was approximately $1.2 billion, with a weighted average interest rate of 7.42% per annum, taking into account in-the-money interest rate caps.

Approximately 6.5% of our debt bears interest at a fixed rate of 4.5% and the remaining 93.5% bears interest at the variable rate of LIBOR/SOFR plus 2.57%.

Approximately 7.4% of our debt bears interest at a fixed rate of 4.5% and the remaining 92.6% bears interest at a variable rate of SOFR plus 3.32%.

We intend to continue to use variable-rate debt or a mix of fixed and variable-rate debt as we see fit, and we may, if appropriate, enter into interest rate hedges.

We intend to finance our long-term growth and liquidity needs with operating cash flow, equity issuances of both common and preferred stock, joint ventures, a revolving line of credit and secured and unsecured debt financings having staggered

We target leverage of 35% net debt to gross assets.

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and its subsidiaries.

Ashford LLC also has the power to delegate all or any part of its rights and powers to manage and control our business and affairs to such officers, employees, affiliates, agents and representatives of Ashford LLC or our company as it may deem

Any authority delegated by Ashford LLC to any other person is subject to the limitations on the rights and powers of our advisor specifically set forth in the advisory agreement or our charter.

2 unchanged sentences

The advisory agreement provides that Ashford LLC has no responsibility other than to render the services and take the actions described in the advisory agreement in good faith and with the exercise of due care and will not be responsible for any action our board of directors takes in following or declining to follow any of Ashford LLC’s advice or recommendations.

The advisory agreement provides that Ashford LLC (including its officers, directors, managers, employees and members) will not be liable for any act or omission by it (or them) performed in accordance with and pursuant to the advisory agreement, except by reason of acts constituting gross negligence, bad faith, willful misconduct or reckless disregard of duties under the advisory agreement.

The advisory agreement provides that Ashford LLC (including its officers,

directors, managers, employees and members) will not be liable for any act or omission by it (or them) performed in accordance with and pursuant to the advisory agreement, except by reason of acts constituting gross negligence, bad faith, willful misconduct or reckless disregard of duties under the advisory agreement.

We have agreed to indemnify and hold harmless Ashford LLC (including its partners, directors, officers, stockholders, managers, members, agents, employees and each other person or entity, if any, controlling Ashford LLC) to the full extent lawful, from and against any and all losses, claims, damages or liabilities of any nature whatsoever with respect to or arising from Ashford LLC’s acts or omissions (including ordinary negligence) in its capacity as such, except with respect to losses, claims, damages or liabilities with respect to or arising out of Ashford LLC’s gross negligence, bad faith or willful misconduct, or reckless disregard of its duties under the advisory agreement (for which Ashford LLC will indemnify us).

2 unchanged sentences

We may terminate the advisory agreement at any time, including during the 10-year initial term, without the payment of a termination fee under the following circumstances:

• immediately upon providing written notice to Ashford LLC, following its conviction (including a plea or nolo contendere) of a felony;

• immediately upon providing written notice to Ashford LLC, following its conviction (including a plea of nolo contendere) of a felony;

• immediately upon providing written notice to Ashford LLC, if it commits an act of fraud against us, misappropriates our funds or acts in a manner constituting willful misconduct, gross negligence or reckless disregard in the performance of its material duties under the advisory agreement (including a failure to act);

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Except in the case when the incentive fee is payable on the date of termination of the advisory agreement, up to 50% of the incentive fee may be paid in our common stock or in common units of our operating partnership, at our discretion, with the balance payable in cash unless at the time for payment of the incentive fee, Ashford LLC owns common stock or common units in an amount greater than or equal to three times the base fee for the preceding four quarters or payment in such securities would cause the advisor to be subject to the provision of the Investment Company Act of 1940, as amended, or payment in such securities would not be legally permissible for any reason, in which case the entire incentive fee will be payable in cash.

fully due and payable, each one-third installment of the incentive fee shall not be deemed earned by the advisor or otherwise payable by us unless we, as of the December 31 immediately preceding the due date for the payment of the incentive fee installment, have a FCCR of 0.20x or greater (the “FCCR Condition”).

Upon the determination of the incentive fee, except in the case of any termination of the advisory agreement in which case the incentive fee for the stub period and all unpaid installments of an incentive fee shall be deemed earned and fully due and payable, each one-third installment of the incentive fee shall not be deemed earned by the advisor or otherwise payable by us unless we, as of the December 31 immediately preceding the due date for the payment of the incentive fee installment, have a FCCR of 0.20x or greater (the “FCCR Condition”).

For purposes of this calculation, “FCCR” means our fixed charge coverage ratio, which is the ratio of adjusted EBITDA for the previous four consecutive fiscal quarters to fixed charges, which includes all (i) our and our subsidiaries’ interest expense, (ii) our and our subsidiaries’ regularly scheduled principal payments, other than balloon or similar principal payments which repay indebtedness in full and payments under cash flow mortgages applied to principal, and (iii) preferred dividends paid by us.

18 unchanged sentences

If we materially revise our initial investment guidelines without the express written consent of Ashford LLC, Ashford LLC will use its best judgment to allocate investment opportunities to us and other entities it advises, taking into account such factors as it deems relevant, in its discretion, subject to any then-existing obligations of Ashford LLC to such other entities.

We have agreed that we will not revise our initial investment guidelines to be directly competitive with

the investment guidelines of Ashford Trust as of November 19, 2013.

We have agreed that we will not revise our initial investment guidelines to be directly competitive with the investment guidelines of Ashford Trust as of November 19, 2013.

The advisory agreement gives us the right to equitable treatment with respect to other clients of Ashford LLC, but does not give us the right to preferential treatment, except that Ashford LLC and Ashford Trust have agreed that, so long as we have not materially changed our initial investment guidelines without the express consent of Ashford LLC, any individual hotel investment opportunities that satisfy our investment focus will be presented to our board of directors, who will have up to 10 business days to accept such opportunity prior to it being available to Ashford Trust or any other entity advised by Ashford LLC.

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Thomas, which is owned by a TRS), which in turn have engaged hotel managers to manage our hotel properties.

Each of our hotel properties, other than the Pier House Resort & Spa, the Bardessono Hotel and Spa, Hotel Yountville and Mr.

C Beverly Hills Hotel (which are operated by Remington Hotels), are operated pursuant to a hotel management agreement with one of five independent hotel management companies:

(1) Hilton Management LLC, (2) Marriott Hotel Services, Inc.

(or its affiliates, The Ritz-Carlton Hotel Company, L.L.C., Ritz-Carlton (Virgin Islands), Inc., and Luxury Hotels International of Puerto Rico, Inc.) (3) Four Seasons, (4) Accor, and (5) Hyatt.

“Hilton” is a registered trademark of Hilton International Holding LLC.

“Marriott” is a registered trademark of Marriott International, Inc.

“Autograph Collection” is a registered trademark of Marriott International, Inc.

“The Ritz-Carlton”, “Ritz-Carlton”, and “Ritz-Carlton Reserve” are registered trademarks of The Ritz-Carlton Hotel Company, L.L.C., an affiliate of Marriott International, Inc.

“Park Hyatt” is a registered trademark of Hyatt Corporation.

“Four Seasons” is a registered trademark of Four Seasons Hotels Limited.

Sofitel is a registered trademark of affiliates of Accor.

Each of our hotel properties, other than the

Pier House Resort & Spa, the Bardessono Hotel and Spa, Hotel Yountville and Cameo Beverly Hills (which are operated by Remington Hospitality), are operated pursuant to a hotel management agreement with one of five independent hotel management companies:

(1) Hilton Management LLC, (2) Marriott Hotel Services, LLC (or its affiliates, The Ritz-Carlton Hotel Company, L.L.C., Ritz-Carlton (Virgin Islands), Inc., and Luxury Hotels International of Puerto Rico, Inc.) (3) Four Seasons, (4) Accor, and (5) Hyatt.

The terms of each of the hotel management agreements, as well as any remaining extension, are set forth in the table below:

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Two 10-year options

C Beverly Hills Hotel 8/5/2021 08/05/2031 Three 7-year options and one 4-year option

Cameo Beverly Hills

8/5/2021 08/05/2031 Three 7-year options and one 4-year option

The Ritz-Carlton Reserve Dorado Beach 7/30/2008 12/31/2042 Two 10-year options

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3% 20% of operating cash flow (after deduction for capital renewals reserve and owner’s priority) Reimbursement of hotel’s pro rata share of group services 11.5% of owner’s total investment $145,401,558

Hotel Management Fee (1)

Incentive Fee Marketing Fee

Owner’s Priority (2)

Investment (2)

Marriott Seattle Waterfront

3% After payment of owner’s 1st priority, remaining operating profit is split between owner and manager, such that manager receives 30% of remaining operating profit that is less than the sum of $15,113,000 plus 10.75% of owner-funded capital expenses, and 50% of the operating profit in excess of such sum Reimbursement of the hotel’s pro rata share of chain services, capped at 2.2% of gross revenues per fiscal year

3% After payment of owner’s 1st priority, remaining operating profit is split between owner and manager, such that manager receives 30% of remaining operating profit that is less than the sum of $15,371,744 plus 10.75% of owner-funded capital expenses, and 50% of the operating profit in excess of such sum

Reimbursement of the hotel’s pro rata share of chain services, capped at 2.2% of gross revenues per fiscal year

Owner’s 1st Priority:

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The Clancy 5% 50% of the excess of operating profit (after deduction for contributions to the FF&E reserve) over owner’s priority up to the Spread Threshold of $3,000,000, reduced to 25% for Operating Profit exceeding the Spread Threshold.

1.5% of gross room sales $12,279,659, plus 11.5% of owner funded capital expenses Not applicable

The Notary Hotel 4% 20% of the excess of operating profit over owner’s priority 1.5% of gross room sales 2021 and after:

$8,938,867 Plus 10.25% of owner-funded capital expenditures after the effective date, the amount of reserve shortfalls funded by Owner after the effective date, and the amount of owner-funded capital expenditures spent for completion of the conversion of the hotel to The Notary Hotel, up to $18,000,000 Not applicable

Sofitel Chicago Magnificent Mile 3% 20% of the amount by which the hotel’s annual net operating income exceeds a threshold amount (equal to 8% of our total investment in the hotel), capped at 2.5% of gross hotel revenues 2% of gross hotel revenues $13,664,662 plus 8% of all expenditures to fund capital improvements Not applicable

1.5% of gross room sales $12,429,500, plus 11.5% of owner funded capital expenses

Not applicable

Hotel Management Fee (1)

Incentive Fee Marketing Fee

Owner’s Priority (2)

Investment (2)

The Notary Hotel 4% 20% of the excess of operating profit over owner’s priority 1.5% of gross room sales $9,053,011 Plus 10.25% of owner-funded capital expenditures after the effective date, the amount of reserve shortfalls funded by Owner after the effective date, and the amount of owner-funded capital expenditures spent for completion of the conversion of the hotel to The Notary Hotel, up to $18,000,000

Not applicable

Sofitel Chicago Magnificent Mile 3% 20% of the amount by which the hotel’s annual net operating income exceeds a threshold amount (equal to 8% of our total investment in the hotel), capped at 2.5% of gross hotel revenues 2% of gross hotel revenues $13,831,735 plus 8% of all expenditures to fund capital improvements

Not applicable

Pier House Resort & Spa Greater of $16,897.11

monthly or 3% The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

monthly or 3%

The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

Bardessono Hotel and Spa Greater of $16,897.11

monthly or 3% The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

monthly or 3%

The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

The Ritz-Carlton St.

Thomas 3.0%, comprised of a management fee of 0.4% and a royalty fee of 2.6% 20% of the excess, if any, of Operating Profit for such Fiscal Year over owner’s priority for such Fiscal Year 1.0% of gross revenues $8,000,000 plus 10.25% of the amount of owner-funded capital expenditures Not applicable

Park Hyatt Beaver Creek Resort & Spa Greater of 3.0% or $2,405,544 on an annual basis (increased annually by lesser of CPI or 8% of prior year management fee) 12.5% Profit plus 15% of Profit less the Base Fee that is in excess of $4 million Not applicable Not applicable Not applicable

Hotel Yountville Greater of $16,294 monthly or 3% The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

Thomas 3.0%, comprised of a management fee of 0.4% and a royalty fee of 2.6% 20% of the excess, if any, of Operating Profit for such Fiscal Year over owner’s priority for such Fiscal Year 1.0% of gross revenues $10,634,277 plus 10.25% of the amount of owner-funded capital expenditures

Not applicable

Park Hyatt Beaver Creek Resort & Spa Greater of 3.0% or $2,487,332 on an annual basis (increased annually by lesser of CPI or 8% of prior year management fee)

12.5% Profit plus 15% of Profit less the Base Fee that is in excess of $4 million Not applicable Not applicable Not applicable

Hotel Yountville Greater of $16,897.11

monthly or 3%

The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

The Ritz-Carlton Sarasota 3% 20% of Available cash flow defined as Net Operating Income minus the owner’s priority 1% of gross hotel revenues for each fiscal year, excluding member dues, initiation, or joining fees or deposits of Club members $7,471,325 plus 10.25% of the amount of future owner-funded capital expenditures

Not applicable

The Ritz-Carlton Lake Tahoe 3% The sum of (i) 15% of the amount by which Adjusted House Profit (“AHP”) for such Fiscal Year exceeds the owner’s priority;

provided, however, that in no event shall the total, aggregate sum of the Base Fee and the Incentive Fee paid to Operator in any given Fiscal Year exceed 6% of gross revenues for such Fiscal Year 1% of gross revenues for each fiscal year $8,226,742.04 plus 10% of the amount of certain owner-funded renovation expenditures, plus 10% of any other owner-funded capital expenditures after 1/1/2022 that were approved by manager, plus a varying additional credit based on the number of condominium units (which are to be constructed) in the voluntary rental program

Not applicable

Hotel Management Fee (1)

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Investment (2)

The Ritz-Carlton Sarasota 3% 20% of Available cash flow defined as Net Operating Income minus the owner’s priority 1% of gross hotel revenues for each fiscal year, excluding member dues, initiation, or joining fees or deposits of Club members $7,465,000 plus 10.25% of the amount of owner-funded capital expenditures Not applicable

The Ritz-Carlton Lake Tahoe 3% The sum of (i) 15% of the amount by which Adjusted House Profit (“AHP”) for such Fiscal Year exceeds the owner’s priority;

provided, however, that in no event shall the total, aggregate sum of the Base Fee and the Incentive Fee paid to Operator in any given Fiscal Year exceed 6% of gross revenues for such Fiscal Year 1% of gross revenues for each fiscal year $8,208,965.08 plus 10% of the amount of certain owner-funded renovation expenditures, plus 10% of any other owner-funded capital expenditures after 1/1/2022 that were approved by manager, plus a varying additional credit based on the number of condominium units (which are to be constructed) in the voluntary rental program Not applicable

C Beverly Hills Hotel Greater of $16,294 monthly or 3% The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

The Ritz-Carlton Reserve Dorado Beach 3%, comprised of a management fee of 0.4% and a royalty fee of 2.6% $250,000 if Net House Profit exceeds Owner’s Priority plus 20% of the excess of Net House Profit over Owner’s Priority with annual true-up 1% of Gross Revenues plus allocation of reimbursable expenses $11,670,000 plus (a) 11% of any operating losses funded by owner, plus (b) 11% of certain non-routine capital expenditures incurred by manager and certain non-routine owner-funded capital expenditures, plus (c) $100,000 time the number of condominium units in the voluntary rental program at the beginning of each FY, plus (d) an amount negotiated at the beginning of each year for the West Beach Estates and East Beach Villas participating in the standard and flexible voluntary rental program Not applicable

Four Seasons Resorts Scottsdale 3% 7.5% of the amount of operating profit (after deducting property taxes, insurance premiums, and expenditures from the capital reserve) for a particular period, minus the Hurdle Amount applicable for the same period.

Cameo Beverly Hills

Greater of $16,897.11 monthly or 3% The lesser of 1% of gross revenues or the amount by which actual house profit exceeds budgeted house profit Not applicable Not applicable Not applicable

The Ritz-Carlton Reserve Dorado Beach 3%, comprised of a management fee of 0.4% and a royalty fee of 2.6% $250,000 if Net House Profit exceeds Owner’s Priority plus 20% of the excess of Net House Profit over Owner’s Priority with annual true-up 1% of Gross Revenues plus allocation of reimbursable expenses $14,351,404 plus (a) 11% of any operating losses funded by owner, plus (b) 11% of certain non-routine capital expenditures incurred by manager and certain non-routine owner-funded capital expenditures, plus (c) $100,000 time the number of condominium units in the voluntary rental program at the beginning of each FY, plus (d) an amount negotiated at the beginning of each year for the West Beach Estates and East Beach Villas participating in the standard and flexible voluntary rental program

Not applicable

Four Seasons Resort Scottsdale

3% 7.5% of the amount of operating profit (after deducting property taxes, insurance premiums, and expenditures from the capital reserve) for a particular period, minus the Hurdle Amount applicable for the same period.

If there is a negative incentive fee in any year, the negative balance will carry forward and operate as a hurdle to future incentive fees 1.47% of budgeted gross revenues.

$10,499,207 (to be reduced to zero in January 1, 2033) plus 11.5% of Additional Capital after January 1, 2018 in excess of the FF&E Reserve.

$18,669,193.11 (to be reduced to zero in January 1, 2033).

Any Additional Capital will be reduced to zero 15 years after made.

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Any intellectual property and trademarks of Marriott (or its affiliates, including, without limitation, The Ritz-Carlton), Hilton (or its affiliates), Four Seasons (or its affiliates), Accor (or its affiliates), or Hyatt (or its affiliates), as applicable, are exclusively owned and controlled by the applicable manager or an affiliate of such manager who grants the manager rights to use such intellectual property or trademarks with respect to the applicable hotel.

Below is a summary of the principal terms of the hotel management agreements with Marriott (or its affiliates), Hilton, Accor, Hyatt, Four Seasons, and Remington Hotels.

Below is a summary of the principal terms of the hotel management agreements with Marriott (or its affiliates), Hilton, Accor, Hyatt, Four Seasons, and Remington Hospitality.

Marriott Management Agreements

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provided, however, the hotel management agreement may not be terminated by the non-defaulting party unless and until such Event of Default has a material adverse effect on the non-defaulting party.

In the case of The Notary Hotel, The Clancy, and The Ritz-Carlton Reserve Dorado Beach, if the defaulting party contests such Event of Default or such material adverse effect, the non-defaulting party may not terminate unless a court of competent jurisdiction has issued a final, binding and non-appealable order finding that the Event of Default has occurred and that the default resulted in a material adverse effect.

In the case of The Notary Hotel, The

Clancy, and The Ritz-Carlton Reserve Dorado Beach, if the defaulting party contests such Event of Default or such material adverse effect, the non-defaulting party may not terminate unless a court of competent jurisdiction has issued a final, binding and non-appealable order finding that the Event of Default has occurred and that the default resulted in a material adverse effect.

Early Termination for Casualty .

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(i) operating profit for each such fiscal year is less than the applicable performance termination threshold (as defined in the hotel management agreement), which, (a) in the case of Marriott Seattle Waterfront is 9.5% of the approximate total investment in the hotel, (b) in the case of The Clancy is 82.6% of the owner’s priority return (as defined in the hotel management agreement), (c) in the case of The Notary Hotel is 85% of the owner’s priority return (as defined in the hotel management agreement), (d) in the case of The Ritz-Carlton St.

Thomas is $6,000,000, plus 85% of 10.25% of owner-funded capital expenditures incurred after November 20, 2019, (e) in the case of The Ritz-Carlton Sarasota is $6,000,000, (f) in the case of The Ritz-Carlton Lake Tahoe is $7,200,000 minus (b) (i) the annual amount of certain shared facilities expenses relating to offsite parcels that are deemed to gross operating expenses for a fiscal year, and (g) in the case of Dorado Beach, a Ritz-Carlton Reserve, it is 75% of the owner’s priority return (as defined in the hotel management agreement), (ii) the RevPAR penetration index of the hotel during each such fiscal year is less than the revenue index threshold (as such terms are defined in the hotel management agreements) which ranges from 0.65 to 1.80 (this item is currently being negotiated for Dorado Beach, a Ritz-Carlton Reserve), and (iii) the fact that the criteria set forth in (i) or (ii) is not the result of certain disruptive events, such force majeure, major renovation, or any default by us under the hotel management agreement.

Thomas is $6,000,000, plus 85% of 10.25% of owner-funded capital expenditures incurred after November 20, 2019, (e) in the case of The Ritz-Carlton Sarasota is $6,000,000, (f) in the case of The Ritz-Carlton Lake Tahoe is $7,200,000 minus the annual amount of certain shared facilities expenses relating to offsite parcels that are deemed to gross operating expenses for a fiscal year, and (g) in the case of Dorado Beach, a Ritz-Carlton Reserve, it is 75% of the owner’s priority return (as defined in the hotel management agreement), (ii) the RevPAR penetration index of the hotel during each such fiscal year is less than the revenue index threshold (as such terms are defined in the hotel management agreements) which ranges from 0.65 to 1.80 (this item is currently being negotiated for Dorado Beach, a Ritz-Carlton Reserve), and (iii) the fact that the criteria set forth in (i) or (ii) is not the result of certain disruptive events, such force majeure, major renovation, or any default by us under the hotel management agreement.

The manager has a right to avoid a performance termination by paying to us the total amount by which the operating profit for each of the fiscal years in question was less than the performance termination threshold for such fiscal years, or in the case of The Notary Hotel and The Clancy, by waiving base management fees (and, with respect to The Ritz-Carlton St.

Thomas, certain royalty fees owed to Marriott Switzerland Licensing Company S.ar.L (St.

Kitts & Nevis Branch)) until such time as the total amount of waived base management fees

equals the shortfall of operating profit for each of the fiscal years in question to the performance termination threshold for such fiscal years.

Kitts & Nevis Branch)) until such time as the total amount of waived base management fees equals the shortfall of operating profit for each of the fiscal years in question to the performance termination threshold for such fiscal years.

Limitation on Termination Rights.

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Thomas also requires that the sale must occur within 15 months after the manager’s 30-day negotiation period if the manager makes an offer acceptable to us pursuant to the manager’s right of first offer;

The Ritz-Carlton Sarasota management agreement requires that the sale must occur within 365 days after the manager’s receipt of our original notice pertaining to the manager’s right of first offer and The Notary Hotel and The Clancy management agreements require that the sale must occur within one year after the expiration of the right of first negotiation period;

The Notary Hotel and The Clancy management agreements require that the sale must occur within one year after the expiration of the right of first negotiation period;

The Ritz-Carlton Reserve Dorado Beach management agreements requires that the sale must occur within 18 months after the 30-day right of first negotiation period) or the notice of sale is deemed void and we must provide a new notice to the manager.

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The base term of each of our two management agreements with Hilton (or its affiliates) was 10 years, expiring December 31, 2013.

All of these agreements have been extended through December 31, 2033, and all of these agreements have three 10-year automatic extension options remaining, at the discretion of the manager.

All of these agreements have been extended through December 31, 2033, and all of these agreements have two 10-year automatic extension options remaining, at the discretion of the manager.

Events of Default.

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Performance Termination.

Each of the management agreements with Hilton (or its affiliates) provide us with a right to terminate the hotel management agreement without the payment of a termination fee if the manager fails to achieve certain

criteria relating to the performance of the applicable hotel.

The performance period is measured with respect to any two consecutive fiscal years.

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Four Seasons may not exercise its cure right twice during each 20-year extension term.

Notwithstanding the foregoing, we will not have the right to terminate this agreement if during either fiscal year during an applicable test period, one or more of the following events occurs and, in their totality, after giving effect to proceeds received from any applicable business interruption insurance, they adversely affect gross operating profit or RevPAR:

profit or RevPAR:

casualty, condemnation, a force majeure event, a capital refurbishing program affecting 20% or more of the Four Seasons Resort Scottsdale.

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(i) the RevPAR for the hotel is less than 90% of the RevPAR for the hotel’s competitive set for each such operating year and (ii) the adjusted net operating income (meaning the net operating income less the hurdle amount of approximately $10.5 million plus 8% of any amounts we spent on capital expenditures) is a negative number (i.e.

less than zero) for each such operating year, provided that for any operating year in which the operation of the hotel is materially and adversely affected by a force majeure event, a refurbishing program or major capital improvements, the RevPAR for the hotel and the adjusted net operating income for such operating years shall be adjusted equitably.

less than zero) for each such operating year, provided that for any operating year in which the operation of the hotel is materially and adversely affected by a force majeure

event, a refurbishing program or major capital improvements, the RevPAR for the hotel and the adjusted net operating income for such operating years shall be adjusted equitably.

The manager will have a right up to three times in any eight-year period to avoid a performance termination by paying to us a cure amount that equals, for any operating year, the lower of (i) the amount by which the adjusted net operating income is less than zero and (ii) the amount that we would have been entitled to receive as a distribution from the hotel had the hotel not had a RevPAR shortfall.

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So long as we are not in default under the Accor management agreement and any advances made by the manager on our behalf would be repaid in connection with the sale, we may sell the Sofitel Chicago Magnificent Mile and assign the Accor management agreement (including as a result of a change of control) without the consent of the manager to any of our affiliates or to any person that (i) is not a competitor of the manager (as defined in the Accor management agreement), (ii) is not generally recognized in the community as being a person of ill repute or with whom a prudent business person would not wish to associate in a commercial venture, and (iii) has a minimum net worth required by the Accor management agreement, if the assignee expressly assumes the Accor management agreement.

For recent developments regarding the Accor management agreement, see “Item 3.

Legal Proceedings.”

Park Hyatt Beaver Creek Resort & Spa Management Agreement

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Pursuant to the agreement, an assignment is deemed to have occurred if more than 40% of the beneficial ownership of the owner of the hotel is transferred.

Remington Hotels Master Hotel Management Agreement

Remington Hospitality Master Hotel Management Agreement

In 2013, we entered into a master hotel management agreement with Remington Lodging governing the terms of Remington Lodging’s provision of hotel management services and design and construction services with respect to hotels owned or leased by us.

In connection with Ashford Inc.’s acquisition of Premier from Remington Lodging in August 2018, we amended and restated the original master hotel management agreement to provide only for hotel management services to be provided to our TRS lessees by Remington Lodging by entering into the Amended and Restated Hotel Master Management Agreement dated as of August 8, 2018, which agreement we refer to below as the “master hotel management agreement.” In connection with Ashford Inc.’s acquisition of the hotel management business of Remington Lodging on November 6, 2019, Remington Hotels became a subsidiary of Ashford Inc., and the master hotel management agreement between Remington Hotels and us remains in effect.

Pursuant to the master hotel management agreement, Remington Hotels currently manages the Pier House Resort & Spa, the Bardessono Hotel and Spa, Hotel Yountville and Mr.

C Beverly Hills Hotel.

The master hotel management agreement will also govern the management of hotels we acquire in the future that are managed by Remington Hotels, which has the right to manage and operate hotel properties we acquire in the future unless our independent directors either (i) unanimously elect not to engage Remington Hotels, or (ii) by a majority vote, elect not to engage Remington Hotels because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in our best interest not to engage Remington Hotels for the particular hotel, or (B) based on the prior performance of Remington Hotels, another manager or developer could perform the management duties materially better than Remington Lodging for the particular hotel.

See “Certain Agreements—Mutual Exclusivity Agreements—Remington Hotels Hotel Management MEA—Exclusivity Rights of Remington Hotels.” Prior to its acquisition by Ashford Inc.

In connection with Ashford Inc.’s acquisition of Premier from Remington Lodging in August 2018, we amended and restated the original master hotel management agreement to provide only for hotel management services to be provided to our TRS lessees by Remington Lodging by entering into the Amended and Restated Hotel Master Management Agreement dated as of August 8, 2018, which agreement we refer to below as the “master hotel management agreement.” In connection with Ashford Inc.’s acquisition of the hotel management business of Remington Lodging on November 6, 2019, Remington Hospitality became a subsidiary of Ashford Inc., and the master hotel management agreement between Remington Hospitality and us remains in effect.

Pursuant to the master hotel management agreement, Remington Hospitality currently manages the Pier House Resort & Spa, the Bardessono Hotel and Spa, Hotel Yountville and Cameo Beverly Hills Hotel.

The master hotel management agreement will also govern the management of hotels we acquire in the future that are managed by Remington Hospitality, which has the right to manage and operate hotel properties we acquire in the future unless our independent directors either (i) unanimously elect not to engage Remington Hospitality, or (ii) by a majority vote, elect not to engage Remington Hospitality because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in our best interest not to engage Remington Hospitality for the particular hotel, or (B) based on the prior performance of Remington Hospitality, another manager or developer could perform the management duties materially better than Remington Hospitality for the particular hotel.

See “Certain Agreements—Mutual Exclusivity Agreements—Remington Hospitality Hotel Management MEA—Exclusivity Rights of Remington Hospitality.” Prior to its acquisition by Ashford Inc.

on November 6, 2019, Remington Lodging was owned 100% by Mr.

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The master hotel management agreement provides for an initial term of 10 years as to each hotel governed by the agreement.

The term may be renewed by Remington Hotels, at its option, subject to certain performance tests, for three successive periods of seven years each and, thereafter, a final term of four years, provided that at the time the option to renew is exercised, Remington Hotels is not then in default under the master hotel management agreement.

If at the time of the exercise of any renewal period, Remington Hotels is in default, then the exercise of the renewal option will be conditional on timely cure of such default, and if such default is not timely cured, then our TRS lessee may terminate the master hotel management agreement regardless of the exercise of such option and without the payment of any fee or liquidated damages.

If Remington Hotels desires to exercise any option to renew, it must give our TRS lessee written notice of its election to renew the master hotel management agreement no less than 90 days before the expiration of the then current term of the master hotel management agreement.

The term may be renewed by Remington Hospitality, at its option, subject to certain performance tests, for three successive periods of seven years each and, thereafter, a final term of four years, provided that at the time the option to renew is exercised, Remington Hospitality is not then in default under the master hotel management agreement.

If at the time of the exercise of any renewal period, Remington Hospitality is in default, then the exercise of the renewal option will be conditional on timely cure of such default, and if such default is not timely cured, then our TRS lessee may terminate the master hotel management agreement regardless of the exercise of such option and without the payment of any fee or liquidated damages.

If Remington Hospitality desires to exercise any option to renew, it must give our TRS lessee written notice of its election to renew the master hotel management agreement no less than 90 days before the expiration of the then current term of the master hotel management agreement.

Amounts Payable under the Master Hotel Management Agreement.

Remington Hotels receives a base management fee, and if the hotels meet and exceed certain thresholds, an additional incentive fee.

Remington Hospitality receives a base management fee, and if the hotels meet and exceed certain thresholds, an additional incentive fee.

The base management fee for each hotel will be due monthly and will be equal to the greater of:

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• 3% of the gross revenues associated with that hotel for the related month.

set forth in the annual operating budget approved for the applicable fiscal year, except with respect to hotels where Remington Hotels takes over management upon our acquisition, in which case, for the first five years, the incentive management fee to be paid to Remington Hotels, if any, is the amount by which the hotel’s actual house profit exceeds the projected house profit for such calendar year as set forth in our acquisition pro forma.

The incentive management fee, if any, for each hotel will be due annually in arrears within 90 days of the end of the fiscal year and will be equal to the lesser of (i) 1% of gross revenues and (ii) the amount by which the actual house profit (gross operating profit of the applicable hotel before deducting management fees or franchise fees) exceeds the target house profit as set forth in the annual operating budget approved for the applicable fiscal year, except with respect to hotels where Remington Hospitality takes over management upon our acquisition, in which case, for the first five years, the incentive management fee to be paid to Remington Hospitality, if any, is the amount by which the hotel’s actual house profit exceeds the projected house profit for such calendar year as set forth in our acquisition pro forma.

If, however, based on actual operations and revised forecasts from time to time, it is reasonably anticipated that the incentive fee is reasonably expected to be earned, the TRS lessee will consider payment of the incentive fee pro rata on a quarterly basis.

The incentive fee is designed to encourage Remington Hotels to generate higher house profit at each hotel by increasing the fee due to Remington Hotels when the hotels generate house profit above certain threshold levels.

The incentive fee is designed to encourage Remington Hospitality to generate higher house profit at each hotel by increasing the fee due to Remington Hospitality when the hotels generate house profit above certain threshold levels.

Any increased revenues will generate increased lease payments under the percentage leases and should thereby benefit our stockholders.

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• a sale of a hotel;

• the failure of Remington Hotels to satisfy certain performance standards;

• the failure of Remington Hospitality to satisfy certain performance standards;

• for the convenience of our TRS lessee;

• a casualty to, condemnation of, or force majeure involving a hotel;

• upon a default by Remington Hotels or us that is not cured prior to the expiration of any applicable cure periods.

In certain cases of early termination of the master hotel management agreement with respect to one or more of the hotels, we must pay Remington Hotels termination fees, plus any amounts otherwise due to Remington Hotels pursuant to the terms of the master hotel management agreement.

We will be obligated to pay termination fees in the circumstances described below, provided that Remington Hotels is not then in default, subject to certain cure and grace periods:

If any hotel subject to the master hotel management agreement is sold during the first 12 months of the date such hotel becomes subject to the master hotel management agreement, our TRS lessee may terminate the master hotel management agreement with respect to such sold hotel, provided that it pays to Remington Hotels an amount equal to the management fee (both base fees and incentive fees) estimated to be payable to Remington Hotels with respect to the applicable hotel pursuant to the then-current annual operating budget for the balance of the first year of the term.

• upon a default by Remington Hospitality or us that is not cured prior to the expiration of any applicable cure periods.

In certain cases of early termination of the master hotel management agreement with respect to one or more of the hotels, we must pay Remington Hospitality termination fees, plus any amounts otherwise due to Remington Hospitality pursuant to the terms of the master hotel management agreement.

We will be obligated to pay termination fees in the circumstances described below, provided that Remington Hospitality is not then in default, subject to certain cure and grace periods:

If any hotel subject to the master hotel management agreement is sold during the first 12 months of the date such hotel becomes subject to the master hotel management agreement, our TRS lessee may terminate the master hotel management agreement with respect to such sold hotel, provided that it pays to Remington Hospitality an amount equal to the management fee (both base fees and incentive fees) estimated to be payable to Remington Hospitality with respect to the applicable hotel pursuant to the then-current annual operating budget for the balance of the first year of the term.

If any hotel subject to the master hotel management agreement is sold at any time after the first year of the term and the TRS lessee terminates the master hotel management agreement with respect to such hotel, our TRS lessee will have no obligation to pay any termination fees.

If any hotel subject to the master hotel management agreement is the subject of a casualty during the first year of the initial 10-year term and the TRS lessee elects not to rebuild, then we must pay to Remington Hotels the termination fee, if any, that would be owed if the hotel had been sold.

However, after the first year of the initial 10-year term, if a hotel is the subject of a casualty and the TRS lessee elects not to rebuild the hotel even though sufficient casualty insurance proceeds are available to do so, then the TRS lessee must pay to Remington Hotels a termination fee equal to the product obtained by multiplying (i) 65% of the aggregate management fees (both base fees and incentive fees) estimated to be paid to Remington Hotels with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) by (ii) nine.

If any hotel subject to the master hotel management agreement is the subject of a casualty during the first year of the initial 10-year term and the TRS lessee elects not to rebuild, then we must pay to Remington Hospitality the termination fee, if any, that would be owed if the hotel had been sold.

However, after the first year of the initial 10-year term, if a hotel is the subject of a casualty and the TRS lessee elects not to rebuild the hotel even though sufficient casualty insurance proceeds are available to do so, then the TRS lessee must pay to Remington Hospitality a termination fee equal to the product obtained by multiplying (i) 65% of the aggregate management fees (both base fees and incentive fees) estimated to be paid to Remington Hospitality with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) by (ii) nine.

• Condemnation or Force Majeure.

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• Failure to Satisfy Performance Test.

If any hotel subject to the master hotel management agreement fails to satisfy a certain performance test, the TRS lessee may terminate the master hotel management agreement with respect to such hotel, and in such case, the TRS lessee must pay to Remington Hotels an amount equal to 60% of the product obtained by multiplying (i) 65% of the aggregate management fees (both base fees and incentive fees) estimated to be paid to Remington Hotels with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) by (ii) nine.

Remington Hotels will have failed the performance test with respect to a particular hotel if during any fiscal year during the term (i) such hotel’s gross operating profit margin for such fiscal year is less than 75% of the average gross operating profit margins of comparable hotels in similar markets and geographical locations, as reasonably determined by Remington Hotels and the TRS lessee, and (ii) such hotel’s RevPAR yield penetration is less than 80%.

Upon a performance test failure, the TRS lessee must give Remington Hotels two years to cure.

If, after the first year, the performance test failure has not been cured, then the TRS lessee may, in order not to waive any such failure, require Remington Hotels to engage a consultant with significant hotel lodging experience reasonably acceptable to both Remington Hotels and the TRS lessee, to make a determination as to whether or not another management company could manage the hotel in a

materially more efficient manner.

If the consultant’s determination is in the affirmative, then Remington Hotels must engage such consultant to assist with the cure of such performance failure for the second year of the cure period after that failure.

If the consultant’s determination is in the negative, then Remington Hotels will be deemed not to be in default under the performance test.

The cost of such consultant will be shared by the TRS lessee and Remington Hotels equally.

If Remington Hotels fails the performance test for the second year of the cure period and, after that failure, the consultant again makes a finding that another management company could manage the hotel in a materially more efficient manner than Remington Hotels, then the TRS lessee has the right to terminate the management agreement with respect to such hotel upon 45 days’ written notice to Remington Hotels and to pay to Remington Hotels the termination fee described above.

Further, if any hotel subject to the Remington Hotels master hotel management agreement is within a cure period due to a failure of the performance test, an exercise of a renewal option shall be conditioned upon timely cure of the performance test failure, and if the performance failure is not timely cured, the TRS lessee may elect to terminate the management agreement without paying any termination fee.

If any hotel subject to the master hotel management agreement fails to satisfy a certain performance test, the TRS lessee may terminate the master hotel management agreement with respect to such hotel, and in such case, the TRS lessee must pay to Remington Hospitality an amount equal to 60% of the product obtained by multiplying (i) 65% of the aggregate management fees (both base fees and incentive fees) estimated to be paid to Remington Hospitality with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) by (ii) nine.

Remington Hospitality will have failed the performance test with respect to a particular hotel if during any fiscal year during the term (i) such hotel’s gross operating profit margin for such fiscal year is less than 75% of the average gross operating profit margins of comparable hotels in similar markets and geographical locations, as reasonably determined by Remington Hospitality and the TRS lessee, and (ii) such hotel’s RevPAR yield penetration is less than 80%.

Upon a performance test failure, the TRS lessee must give Remington Hospitality two years to cure.

If, after the first year, the performance test failure has not been cured, then the TRS lessee may, in order not to waive any such failure, require Remington Hospitality to engage a consultant with significant hotel lodging experience reasonably acceptable to both Remington Hospitality and the TRS lessee, to make a determination as to whether or not another management company could manage the hotel in a materially more efficient manner.

If the consultant’s determination is in the affirmative, then Remington Hospitality must engage such consultant to assist with the cure of such performance failure for the second year of the cure period after that failure.

If the consultant’s determination is in the negative, then Remington Hospitality will be deemed not to be in default under the performance test.

The cost of such consultant will be shared by the TRS lessee and Remington Hospitality equally.

If Remington Hospitality fails the performance test for the second year of the cure period and, after that failure, the consultant again makes a finding that another management company could manage the hotel in a materially more efficient manner than Remington Hospitality, then the TRS lessee has the right to terminate the management agreement with respect to such hotel upon 45 days’ written notice to Remington Hospitality and to pay to Remington Hospitality the termination fee described above.

Further, if any hotel subject to the Remington Hospitality master hotel management agreement is within a cure period due to a failure of the performance test, an exercise of a renewal option shall be conditioned upon timely cure of the performance test failure, and if the performance failure is not timely cured, the TRS lessee may elect to terminate the management agreement without paying any termination fee.

• For Convenience.

With respect to any hotel managed by Remington Hotels pursuant to the master hotel management agreement, if the TRS lessee elects for convenience to terminate the management of such hotel, at any time, including during any renewal term, the TRS lessee must pay a termination fee to Remington Hotels, equal to the product of (i) 65% of the aggregate management fees for such hotel (both base fees and incentive fees) estimated to be payable to Remington Hotels with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) and (ii) nine.

With respect to any hotel managed by Remington Hospitality pursuant to the master hotel management agreement, if the TRS lessee elects for convenience to terminate the management of such hotel, at any time, including during any renewal term, the TRS lessee must pay a termination fee to Remington Hospitality, equal to the product of (i) 65% of the aggregate management fees for such hotel (both base fees and incentive fees) estimated to be payable to Remington Hospitality with respect to the applicable hotel pursuant to the then-current annual operating budget (but in no event less than the management fees for the preceding full fiscal year) and (ii) nine.

If the master hotel management agreement terminates as to all of the hotels covered in connection with a default under the master hotel management agreement, the hotel management MEA can also be terminated at the non-defaulting party’s election.

See “Certain Agreements—Mutual Exclusivity Agreements—Remington Hotels Hotel Management MEA.”

See “Certain Agreements—Mutual Exclusivity Agreements—Remington Hospitality Hotel Management MEA.”

Maintenance and Modifications.

Remington Hotels must maintain each hotel in good repair and condition and make such routine maintenance, repairs and minor alterations as it deems reasonably necessary.

Remington Hospitality must maintain each hotel in good repair and condition and make such routine maintenance, repairs and minor alterations as it deems reasonably necessary.

The cost of all such routine maintenance, repairs and alterations will be paid by the TRS lessee.

All non-routine repairs and maintenance, either to a hotel or its fixtures, furniture and equipment pursuant to the capital improvement budget described below, will be managed by Premier pursuant to the master project management agreement.

Remington Hotels must coordinate with the TRS lessee the procurement and maintenance of all workers’ compensation, employer’s liability, and other appropriate and customary insurance related to its operations as a property manager, the cost of which is the responsibility of the TRS lessee.

Remington Hospitality must coordinate with the TRS lessee the procurement and maintenance of all workers’ compensation, employer’s liability, and other appropriate and customary insurance related to its operations as a property manager, the cost of which is the responsibility of the TRS lessee.

Assignment and Subleasing.

Neither Remington Hotels nor the TRS lessee may assign or transfer the master hotel management agreement without the other party’s prior written consent.

However, Remington Hotels may assign its rights and obligations to an affiliate that satisfies the eligible independent contractor requirements and is “controlled” by Mr.

Neither Remington Hospitality nor the TRS lessee may assign or transfer the master hotel management agreement without the other party’s prior written consent.

However, Remington Hospitality may assign its rights and obligations to an affiliate that satisfies the eligible independent contractor requirements and is “controlled” by Mr.

Archie Bennett, Jr., or their respective family partnerships or trusts, the sole members or beneficiaries of which are at all times lineal descendants of Messrs.

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“Controlled” means (i) the possession of a majority of the capital stock (or ownership interest) and voting power of such affiliate, directly or indirectly, or (ii) the power to direct or cause the direction of the management and policies of such affiliate in the capacity of chief executive officer, president, chairman, or other similar capacity where they are actively engaged or involved in providing such direction or control and spend a substantial amount of time managing such affiliate.

No assignment will release Remington Hotels from any of its obligations under the master hotel management agreement.

No assignment will release Remington Hospitality from any of its obligations under the master hotel management agreement.

Damage to Hotels.

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If the lease relating to such damaged hotel is terminated pursuant to the terms of the lease, the TRS lessee has the right to terminate the master hotel management agreement with respect to such damaged hotel upon 60 days’ written notice.

Upon termination, neither the TRS lessee nor Remington Hotels will have any further liabilities or obligations under the master hotel management agreement with respect to such damaged hotel, except that we may be obligated to pay to Remington Hotels a termination fee, as described above.

Upon termination, neither the TRS lessee nor Remington Hospitality will have any further liabilities or obligations under the master hotel management agreement with respect to such damaged hotel, except that we may be obligated to pay to Remington Hospitality a termination fee, as described above.

If the hotel management agreement remains in effect with respect to such damaged hotel, and the damage does not result in a reduction of gross revenues at the hotel, the TRS lessee’s obligation to pay management fees will be unabated.

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If all or substantially all of a hotel is subject to a total condemnation or a partial taking that prevents use of the property as a hotel, the master hotel management agreement, with respect to such hotel, will terminate, subject to the requirements of the applicable lease.

Upon termination, neither the TRS lessee nor Remington

Hotels will have any further rights, remedies, liabilities or obligations under the master hotel management agreement with respect to such hotel.

Upon termination, neither the TRS lessee nor Remington Hospitality will have any further rights, remedies, liabilities or obligations under the master hotel management agreement with respect to such hotel.

If any partial taking of a property does not make it unreasonable to continue to operate the hotel, there is no right to terminate the master hotel management agreement.

If there is an event of force majeure or any other cause beyond the control of Remington Hotels that directly involves a hotel and has a significant adverse effect upon the continued operations of that hotel, then the master hotel management agreement may be terminated by the TRS lessee.

Upon termination, neither the TRS lessee nor Remington Hotels will have any further rights, remedies, liabilities or obligations under the master hotel management agreement with respect to such hotel.

If there is an event of force majeure or any other cause beyond the control of Remington Hospitality that directly involves a hotel and has a significant adverse effect upon the continued operations of that hotel, then the master hotel management agreement may be terminated by the TRS lessee.

Annual Operating Budget.

The master hotel management agreement provides that not less than 45 days prior to the beginning of each fiscal year during the term of the master hotel management agreement, Remington Hotels will submit to the TRS lessee for each of the hotels, an annual operating budget setting forth in detail an estimated profit and loss statement for each of the next 12 months (or for the balance of the fiscal year or a partial first fiscal year), including a schedule of hotel room rentals and other rentals and a marketing and business plan for each of the hotels.

The budget is subject to the TRS lessee approval, which may not be unreasonably withheld.

The budget may be revised from time to time, taking into account such circumstances as the TRS lessee deems appropriate or as business and operating conditions shall demand, subject to the reasonable approval of Remington Hotels.

The master hotel management agreement provides that not less than 45 days prior to the beginning of each fiscal year during the term of the master hotel management agreement, Remington Hospitality will submit to the TRS lessee for each of the hotels, an annual operating budget setting forth in detail an estimated profit and loss statement for each of the next 12 months (or for the balance of the fiscal year or a partial first fiscal year), including a schedule of hotel room rentals and other rentals and a marketing and business plan for each of the hotels.

The budget is subject to the TRS lessee

approval, which may not be unreasonably withheld.

Capital Improvement Budget.

Premier must prepare a capital improvement budget of the expenditures necessary for replacement of FF&E and building repairs for the hotels during the following fiscal year and provide such budget to the relevant TRS lessee and landlord for approval at the same time Remington Hotels submits the proposed annual operating budget for approval by TRS lessee.

Remington Hotels may not make any other expenditures for these items without the relevant TRS lessee and landlord approval, except expenditures which are provided in the capital improvements budget or are required by reason of any (i) emergency, (ii) applicable legal requirements, (iii) the terms of any franchise agreement or (iv) are otherwise required for the continued safe and orderly operation of our hotels.

Premier must prepare a capital improvement budget of the expenditures necessary for replacement of FF&E and building repairs for the hotels during the following fiscal year and provide such budget to the relevant TRS lessee and landlord for approval at the same time Remington Hospitality submits the proposed annual operating budget for approval by TRS lessee.

Remington Hospitality may not make any other expenditures for these items without the relevant TRS lessee and landlord approval, except expenditures which are provided in the capital improvements budget or are required by reason of any (i) emergency, (ii) applicable legal requirements, (iii) the terms of any franchise agreement or (iv) are otherwise required for the continued safe and orderly operation of our hotels.

Indemnity Provisions.

Remington Hotels has agreed to indemnify the TRS lessee against all damages not covered by insurance that arise from:

(i) the fraud, willful misconduct or gross negligence of Remington Hotels subject to certain limitations;

(ii) infringement by Remington Hotels of any third party’s intellectual property rights;

(iii) employee claims based on a substantial violation by Remington Hotels of employment laws or that are a direct result of the corporate policies of Remington Hotels;

(iv) the knowing or reckless placing, discharge, leakage, use or storage of hazardous materials in violation of applicable environmental laws on or in any of our hotels by Remington Hotels;

or (v) the breach by Remington Hotels of the master hotel management agreement, including action taken by Remington Hotels beyond the scope of its authority under the master hotel management agreement, which is not cured.

Except to the extent indemnified by Remington Hotels as described in the preceding paragraph, the TRS lessee will indemnify Remington Hotels against all damages not covered by insurance and that arise from:

(i) the performance of Remington Hotels’ services under the master hotel management agreement;

Remington Hospitality has agreed to indemnify the TRS lessee against all damages not covered by insurance that arise from:

(i) the fraud, willful misconduct or gross negligence of Remington Hospitality subject to certain limitations;

(ii) infringement by Remington Hospitality of any third party’s intellectual property rights;

(iii) employee claims based on a substantial violation by Remington Hospitality of employment laws or that are a direct result of the corporate policies of Remington Hospitality;

(iv) the knowing or reckless placing, discharge, leakage, use or storage of hazardous materials in violation of applicable environmental laws on or in any of our hotels by Remington Hospitality;

or (v) the breach by Remington Hospitality of the master hotel management agreement, including action taken by Remington Hospitality beyond the scope of its authority under the master hotel management agreement, which is not cured.

Except to the extent indemnified by Remington Hospitality as described in the preceding paragraph, the TRS lessee will indemnify Remington Hospitality against all damages not covered by insurance and that arise from:

(i) the performance of Remington Hospitality’ services under the master hotel management agreement;

(ii) the condition or use of our hotels;

(iii) certain liabilities to which Remington Hotels is subjected, including pursuant to the WARN Act, in connection with the termination of the master hotel management agreement;

(iii) certain liabilities to which Remington Hospitality is subjected, including pursuant to the WARN Act, in connection with the termination of the master hotel management agreement;

(iv) all employee cost and expenses;

or (v) any claims made by an employee of Remington Hotels against Remington Hotels that are based on a violation or alleged violation of the employment laws.

or (v) any claims made by an employee of Remington Hospitality against Remington Hospitality that are based on a violation or alleged violation of the employment laws.

Events of Default.

Events of default under the master hotel management agreement include:

• The TRS lessee or Remington Hotels files a voluntary bankruptcy petition, or experiences a bankruptcy-related event not discharged within 90 days.

• The TRS lessee or Remington Hotels fails to make any payment due under the master hotel management agreement, subject to a 10-day notice and cure period.

• The TRS lessee or Remington Hotels fails to observe or perform any other term of the master hotel management agreement, subject to a 30-day notice and cure period.

• The TRS lessee or Remington Hospitality files a voluntary bankruptcy petition, or experiences a bankruptcy-related event not discharged within 90 days.

• The TRS lessee or Remington Hospitality fails to make any payment due under the master hotel management agreement, subject to a 10-day notice and cure period.

• The TRS lessee or Remington Hospitality fails to observe or perform any other term of the master hotel management agreement, subject to a 30-day notice and cure period.

There are certain instances in which the 30-day notice and cure period can be extended to up to 120 days.

• Remington Hotels does not qualify as an “eligible independent contractor” as such term is defined in Section 856(d)(9) of the Code.

• Remington Hospitality does not qualify as an “eligible independent contractor” as such term is defined in Section 856(d)(9) of the Code.

If an event of default occurs and continues beyond any grace period, the non-defaulting party will have the option of terminating the master hotel management agreement, on 30 days’ notice to the other party.

To minimize conflicts between us and Remington Hotels on matters arising under the master hotel management agreement, the Company’s Corporate Governance Guidelines provide that any waiver, consent, approval, modification, enforcement matters or elections which the Company may make pursuant to the terms of the master hotel management agreement shall be within the exclusive discretion and control of a majority of the independent members of the board of directors (or higher vote

thresholds specifically set forth in such agreements).

To minimize conflicts between us and Remington Hospitality on matters arising under the master hotel management agreement, the Company’s Corporate Governance Guidelines provide that any waiver, consent, approval, modification, enforcement matters or elections which the Company may make pursuant to the terms of the master hotel management agreement shall be within the exclusive discretion and control of a majority of the independent members of the board of directors (or higher vote thresholds specifically set forth in such agreements).

In addition, our board of directors has established a Related Party Transactions Committee comprised solely of independent members of our board of directors to review all related party transactions that involve conflicts.

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In connection with Ashford Inc.’s acquisition of Premier from Remington Lodging in August 2018, Braemar OP, our TRSs and Premier entered into an agreement for design and construction services to be provided to us by Premier, solely in order to effect the transfer of the design and construction business to Premier, by entering into the Master Project Management Agreement dated as of August 8, 2018, which agreement we refer to below as the “master project management agreement.” Pursuant to the master project management agreement, Premier currently provides design and construction services to all of our hotels.

Premier, solely in order to effect the transfer of the design and construction business to Premier, by entering into the Master Project Management Agreement dated as of August 8, 2018, which agreement we refer to below as the “master project management agreement.” Pursuant to the master project management agreement, Premier currently provides design and construction services to all of our hotels.

The master project management agreement will also govern the provision of design and construction services to hotels we acquire in the future, as Premier has the right to provide design and construction services to hotel properties we acquire in the future, to the extent we have the right and/or control the right to direct the development and construction of and/or capital improvements to or refurbishment of, such hotels, unless our independent directors either (i) unanimously elect not to engage Premier, or (ii) by a majority vote, elect not to engage Premier because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in our best interest not to engage Premier for the particular hotel, or (B) based on the prior performance of Premier, another manager or developer could perform the project management, project related services or development duties materially better than Premier for the particular hotel.

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The master project management agreement provides that the TRS lessee will pay Premier a design and construction fee equal to 4% of the total project costs associated with the implementation of the approved capital improvement budget for a hotel until such time that the capital improvement budget and/or renovation project costs involve expenditures in excess of 5% of gross revenues of such hotel, whereupon the design and construction fee will be 3% of total project costs in excess of the 5% of gross revenue threshold.

In addition, the TRS lessee will pay Premier additional fees as follows:

• architecture - 6.5% of total construction costs;

• construction management - 10.0% of total construction costs (for projects without a general contractor);

• interior design - 6.0% of the amount selected (including the cost of any and all items selected by Premier or which are specified in the general contractor’s scope of work but excluding any associated charges for labor, freight and tax);

• FF&E purchasing - 8.0% of the purchased amount (which includes the selected items, freight and tax) unless the total purchased amount for a single hotel property in a single year is greater than $2.0 million, in which case the fee is reduced to 6.0% of the purchased amount in excess of $2 million.

In addition, the TRS lessee will pay Premier market service fees at current market rates with respect to construction management, interior design, architecture, FF&E purchasing, FF&E expediting/freight management, FF&E warehousing and FF&E installation and supervision.

Such fees will be payable monthly as the service is delivered based on percentage complete, as reasonably determined by Premier for each service, or payable as set forth in other agreements.

The master project management agreement may be terminated as to one or more of the hotels earlier than the stated term if certain events occur, including:

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• For Convenience.

With respect to any hotel project-managed by Premier pursuant to the master project management agreement, if the TRS lessee elects for convenience to terminate the project management of such hotel, at any time, including during any renewal term, the TRS lessee must pay a termination fee to Premier, equal to the product of (i) 65% of the aggregate design and construction fees and market service fees for such hotel estimated to be payable to Premier with respect to the applicable hotel for the full current fiscal year in which such termination is to occur (but in no event less than the design and construction fees and market service fees for the preceding full fiscal year) and (ii) nine.

Premier with respect to the applicable hotel for the full current fiscal year in which such termination is to occur (but in no event less than the design and construction fees and market service fees for the preceding full fiscal year) and (ii) nine.

Implementation of Capital Improvement Budget.

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(ii) infringement by Premier of any third party’s intellectual property rights;

(iii) the knowing or reckless placing, discharge, leakage, use or storage of hazardous materials in

violation of applicable environmental laws on or in any of our hotels by Premier;

(iii) the knowing or reckless placing, discharge, leakage, use or storage of hazardous materials in violation of applicable environmental laws on or in any of our hotels by Premier;

or (iv) the breach by Premier of the master project management agreement, including action taken by Premier beyond the scope of its authority under the master project management agreement, which is not cured.

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Mutual Exclusivity Agreements

Remington Hotels Hotel Management MEA

Remington Hospitality Hotel Management MEA

In 2013, we entered into a mutual exclusivity agreement with Remington Lodging.

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In connection with Ashford Inc.’s acquisition of Premier from Remington Lodging in August 2018, we amended and restated the original mutual exclusivity agreement to provide that Remington Lodging gave us a first right of refusal to purchase any lodging-related investments identified by Remington Lodging and any of its affiliates that met our initial investment criteria, and we agreed to engage Remington Lodging to provide hotel management for hotels we acquired or invested in, to the extent that we had the right or controlled the right to direct such matters.

As a result, concurrently with Ashford Inc.’s acquisition of Premier, we, Braemar OP and Remington Lodging entered into the Amended and Restated Mutual Exclusivity Agreement dated as of August 8, 2018, which agreement we refer to below as the “hotel management MEA.” In connection with Ashford Inc.’s acquisition of the hotel management business of Remington Lodging on November 6, 2019, Remington Hotels became a subsidiary of Ashford Inc., and the mutual exclusivity agreement between Remington Hotels and us remains in effect.

As a result, concurrently with Ashford Inc.’s acquisition of Premier, we, Braemar OP and Remington Lodging entered into the Amended and Restated Mutual Exclusivity Agreement dated as of August 8, 2018, which agreement we refer to below as the “hotel management MEA.” In connection with Ashford Inc.’s acquisition of the hotel management business of Remington Lodging on November 6, 2019, Remington Hospitality became a subsidiary of Ashford Inc., and the mutual exclusivity agreement between Remington Hospitality and us remains in effect.

The initial term of the hotel management MEA is 10 years from November 19, 2013.

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• a party’s early termination rights (see “Early Termination”), or

• a termination of all our master hotel management agreement between TRS lessee and Remington Hotels because of an event of default under the master hotel management agreement that affects all properties (see “Relationship with Master Hotel Management Agreement”).

• a termination of all our master hotel management agreement between TRS lessee and Remington Hospitality because of an event of default under the master hotel management agreement that affects all properties (see “Relationship with Master Hotel Management Agreement”).

Modification of Investment Guidelines.

If we materially modify our initial investment guidelines without the written consent of Remington Hotels, which consent may be withheld at its sole and absolute discretion, and may further be subject to the consent of Ashford Trust parties, the Remington Hotels parties will have no obligation to present or offer us investment opportunities at any time thereafter.

Instead, the Remington Hotels parties, subject to the superior rights of the Ashford Trust parties or any other party with which the Remington Hotels parties may have an existing agreement, shall use their reasonable discretion to determine how to allocate investment opportunities it identifies.

If we materially modify our investment guidelines without the written consent of Remington Hotels, the Ashford Trust parties will have superior rights to investment opportunities identified by the Remington Hotels parties, and we will no longer retain preferential treatment to investment opportunities identified by the Remington Hotels parties.

If we materially modify our initial investment guidelines without the written consent of Remington Hospitality, which consent may be withheld at its sole and absolute discretion, and may further be subject to the consent of Ashford Trust parties, the Remington Hospitality parties will have no obligation to present or offer us investment opportunities at any time thereafter.

Instead, the Remington Hospitality parties, subject to the superior rights of the Ashford Trust parties or any other party with which the Remington Hospitality parties may have an existing agreement, shall use their reasonable discretion to determine how to allocate investment opportunities it identifies.

If we materially modify our investment guidelines without the written consent of Remington Hospitality, the Ashford Trust parties will have superior rights to investment opportunities identified by the Remington Hospitality parties, and we will no longer retain preferential treatment to investment opportunities identified by the Remington Hospitality parties.

A material modification for this purpose means any modification of our initial investment guidelines to be competitive with Ashford Trust’s investment guidelines.

Our Exclusivity Rights.

Remington Hotels and Mr.

Bennett have granted us a first right of refusal to pursue certain lodging investment opportunities identified by Remington Hotels or its affiliates (including Mr.

Remington Hospitality and Mr.

Bennett have granted us a first right of refusal to pursue certain lodging investment opportunities identified by Remington Hospitality or its affiliates (including Mr.

Bennett), including opportunities to buy hotel properties, to buy land and build hotels, or to otherwise invest in hotel properties that satisfy our initial investment guidelines and are not considered excluded transactions pursuant to the hotel management MEA.

If investment opportunities are identified and are subject to the hotel management MEA, and we have not materially modified our initial investment guidelines without the written consent of Remington Hotels, then Remington Hotels, Mr.

Bennett and their affiliates, as the case may be, will not pursue those opportunities (except as described below) and will give us a written notice and description of the investment opportunity, and we will have 10 business days to either accept or reject the investment opportunity.

If we reject the opportunity, Remington Hotels may then pursue such investment opportunity, subject to a right of first refusal in favor of Ashford Trust pursuant to an existing agreement between Ashford Trust and Remington Hotels, on materially the same terms and conditions as offered to us.

If the terms of such investment opportunity materially change, then Remington Hotels must offer the revised investment opportunity to us, whereupon we will have 10 business days to either accept or reject the opportunity on the revised terms.

Bennett and their affiliates, as the case may be, will not pursue those opportunities (except as described below) and will give us a

written notice and description of the investment opportunity, and we will have 10 business days to either accept or reject the investment opportunity.

If we reject the opportunity, Remington Hospitality may then pursue such investment opportunity, subject to a right of first refusal in favor of Ashford Trust pursuant to an existing agreement between Ashford Trust and Remington Hospitality, on materially the same terms and conditions as offered to us.

If the terms of such investment opportunity materially change, then Remington Hospitality must offer the revised investment opportunity to us, whereupon we will have 10 business days to either accept or reject the opportunity on the revised terms.

Reimbursement of Costs.

If we accept an investment opportunity from Remington Hotels, we will be obligated to reimburse Remington Hotels or its affiliates for the actual out-of-pocket and third-party costs and expenses paid by Remington Hotels or its affiliates in connection with such investment opportunity, including any earnest money deposits, but excluding any finder’s fee, brokerage fee, development fee or other compensation paid by Remington Hotels or its affiliates.

Remington Hotels must submit to us an accounting of the costs in reasonable detail.

Exclusivity Rights of Remington Hotels.

If we elect to pursue an investment opportunity that consists of the management and operation of a hotel property, we will hire Remington Hotels to provide such services unless our independent directors either (i) unanimously elect not to engage Remington Hotels, or (ii) by a majority vote, elect not to engage Remington Hotels because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in our best interest not to engage Remington Hotels for the particular hotel, or (B) based on the prior performance of Remington Hotels, another manager or developer could perform the management duties materially better than Remington Hotels for the particular hotel.

In return, Remington Hotels has agreed that it will provide those services.

If we accept an investment opportunity from Remington Hospitality, we will be obligated to reimburse Remington Hospitality or its affiliates for the actual out-of-pocket and third-party costs and expenses paid by Remington Hospitality or its affiliates in connection with such investment opportunity, including any earnest money deposits, but excluding any finder’s fee, brokerage fee, development fee or other compensation paid by Remington Hospitality or its affiliates.

Remington Hospitality must submit to us an accounting of the costs in reasonable detail.

Exclusivity Rights of Remington Hospitality.

If we elect to pursue an investment opportunity that consists of the management and operation of a hotel property, we will hire Remington Hospitality to provide such services unless our independent directors either (i) unanimously elect not to engage Remington Hospitality, or (ii) by a majority vote, elect not to engage Remington Hospitality because they have determined, in their reasonable business judgment, (A) special circumstances exist such that it would be in our best interest not to engage Remington Hospitality for the particular hotel, or (B) based on the prior performance of Remington Hospitality, another manager or developer could perform the management duties materially better than Remington Hospitality for the particular hotel.

In return, Remington Hospitality has agreed that it will provide those services.

Excluded Investment Opportunities.

The following are excluded from the hotel management MEA and are not subject to any exclusivity rights or right of first refusal:

• With respect to Remington Hotels, an investment opportunity where our independent directors have unanimously voted not to engage Remington Hotels as the manager or developer.

• With respect to Remington Hotels, an investment opportunity where our independent directors, by a majority vote, have elected not to engage Remington Hotels as the manager or developer based on their determination, in their reasonable business judgment, that special circumstances exist such that it would be in our best interest not to engage Remington Hotels with respect to the particular hotel.

• With respect to Remington Hotels, an investment opportunity where our independent directors, by a majority vote, have elected not to engage Remington Hotels as the manager or developer because they have determined, in their reasonable business judgment, that another manager or developer could perform the management, development or other duties materially better than Remington Hotels for the particular hotel, based on Remington Hotels’ prior performance.

• Existing hotel investments of Remington Hotels or its affiliates with any of their existing joint venture partners, investors or property owners.

• Existing bona fide arm’s length third-party management arrangements (or arrangements for other services) of Remington Hotels or any of its affiliates with third parties other than us and our affiliates.

• Like-kind exchanges made pursuant to existing contractual obligations by any of the existing joint venture partners, investors or property owners in which Remington Hotels or its affiliates have an ownership interest, provided that Remington Hotels provides us with notice 10 days prior to such transaction.

• With respect to Remington Hospitality, an investment opportunity where our independent directors have unanimously voted not to engage Remington Hospitality as the manager or developer.

• With respect to Remington Hospitality, an investment opportunity where our independent directors, by a majority vote, have elected not to engage Remington Hospitality as the manager or developer based on their determination, in their reasonable business judgment, that special circumstances exist such that it would be in our best interest not to engage Remington Hospitality with respect to the particular hotel.

• With respect to Remington Hospitality, an investment opportunity where our independent directors, by a majority vote, have elected not to engage Remington Hospitality as the manager or developer because they have determined, in their reasonable business judgment, that another manager or developer could perform the management, development or other duties materially better than Remington Hospitality for the particular hotel, based on Remington Hospitality’ prior performance.

• Existing hotel investments of Remington Hospitality or its affiliates with any of their existing joint venture partners, investors or property owners.

• Existing bona fide arm’s length third-party management arrangements (or arrangements for other services) of Remington Hospitality or any of its affiliates with third parties other than us and our affiliates.

• Like-kind exchanges made pursuant to existing contractual obligations by any of the existing joint venture partners, investors or property owners in which Remington Hospitality or its affiliates have an ownership interest, provided that Remington Hospitality provides us with notice 10 days prior to such transaction.

Management or Development.

If we hire Remington Hotels to manage or operate a hotel, it will be pursuant to the terms of the master hotel management agreement agreed to between us and Remington Hotels.

If we hire Remington Hospitality to manage or operate a hotel, it will be pursuant to the terms of the master hotel management agreement agreed to between us and Remington Hospitality.

Events of Default.

Each of the following is a default under the hotel management MEA:

• we or Remington Hotels experience a bankruptcy-related event;

• we fail to reimburse Remington Hotels as described under “Reimbursement of Costs,” subject to a 30-day cure period;

• we or Remington Hotels does not observe or perform any other term of the agreement, subject to a 30-day cure period (which may be increased to a maximum of 120 days in certain instances).

• we or Remington Hospitality experience a bankruptcy-related event;

• we fail to reimburse Remington Hospitality as described under “Reimbursement of Costs,” subject to a 30-day cure period;

• we or Remington Hospitality does not observe or perform any other term of the agreement, subject to a 30-day cure period (which may be increased to a maximum of 120 days in certain instances).

If a default occurs, the non-defaulting party will have the option of terminating the hotel management MEA subject to 30 days’ written notice and pursuing its rights and remedies under applicable law.

Early Termination.

Remington Hotels has the right to terminate the exclusivity rights granted to us if:

Remington Hospitality has the right to terminate the exclusivity rights granted to us if:

Bennett is removed as our chief executive officer or as chairman of our board of directors or is not re-appointed to either position, or he resigns as chief executive officer or chairman of our board of directors;

• we terminate the Remington Hotels exclusivity rights pursuant to the terms of the hotel management MEA;

• we terminate the Remington Hospitality exclusivity rights pursuant to the terms of the hotel management MEA;

• our advisory agreement with Ashford LLC is terminated for any reason pursuant to its terms and Mr.

Bennett is no longer serving as our chief executive officer and chairman of our board of directors.

We may terminate the exclusivity rights granted to Remington Hotels if:

• Remington Hotels fails to qualify as an “eligible independent contractor” as defined in Section 856(d)(9) of the Code and for that reason, we terminate the master hotel management agreement with Remington Hotels;

• Remington Hotels is no longer “controlled” by Mr.

We may terminate the exclusivity rights granted to Remington Hospitality if:

• Remington Hospitality fails to qualify as an “eligible independent contractor” as defined in Section 856(d)(9) of the Code and for that reason, we terminate the master hotel management agreement with Remington Hospitality;

• Remington Hospitality is no longer “controlled” by Mr.

Bennett or Mr.

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Bennett (including stepchildren) and spouses;

• we experience a change in control and terminate the master hotel management agreement between us and Remington Hotels with respect to all hotels and have paid a termination fee equal to the product of (i) 65% of the aggregate management fees budgeted in the annual operating budget applied to the hotels for the full current fiscal year in which such termination is to occur for such hotels (both base fees and incentive fees, but in no event less than the base fees and incentive fees for the preceding full fiscal year) and (ii) nine;

• the Remington Hotels parties terminate our exclusivity rights pursuant to the terms of the mutual exclusivity agreement;

• we experience a change in control and terminate the master hotel management agreement between us and Remington Hospitality with respect to all hotels and have paid a termination fee equal to the product of (i) 65% of the aggregate management fees budgeted in the annual operating budget applied to the hotels for the full current fiscal year in which such termination is to occur for such hotels (both base fees and incentive fees, but in no event less than the base fees and incentive fees for the preceding full fiscal year) and (ii) nine;

• the Remington Hospitality parties terminate our exclusivity rights pursuant to the terms of the mutual exclusivity agreement;

• our advisory agreement with Ashford LLC is terminated for any reason pursuant to its terms and Mr.

Bennett is no longer serving as our chief executive officer and chairman of our board of directors.

The hotel management MEA may not be assigned by any of the parties without the prior written consent of the other parties, provided that Remington Hotels can assign its interest in the hotel management MEA, without the written consent of the other parties, to a “manager affiliate entity” as that term is defined in the agreement, so long as such affiliate qualifies as an “eligible independent contractor” at the time of such transfer.

The hotel management MEA may not be assigned by any of the parties without the prior written consent of the other parties, provided that Remington Hospitality can assign its interest in the hotel management MEA, without the written consent of the other parties, to a “manager affiliate entity” as that term is defined in the agreement, so long as such affiliate qualifies as an “eligible independent contractor” at the time of such transfer.

Relationship with Master Hotel Management Agreement.

The rights provided to us and to Remington Hotels in the hotel management MEA may be terminated if the master hotel management agreement between us and Remington Hotels terminates in its entirety because of an event of default as to all of the then-managed properties.

A termination of Remington Hotels’ management rights with respect to one or more hotels (but not all hotels) does not terminate the hotel management MEA.

The rights provided to us and to Remington Hospitality in the hotel management MEA may be terminated if the master hotel management agreement between us and Remington Hospitality terminates in its entirety because of an event of default as to all of the then-managed properties.

A termination of Remington Hospitality’ management rights with respect to one or more hotels (but not all hotels) does not terminate the hotel management MEA.

A termination of the hotel management MEA does not terminate the master hotel management agreement either in part or in whole, and the master hotel management agreement would continue in accordance with its terms as to the hotels covered, despite a termination of the hotel management MEA.

Premier Project Management MEA

related investments identified by Premier and any of its affiliates that met our initial investment criteria, and we agreed to engage Premier to provide project management for hotels we acquired or invested in, to the extent that we had the right or controlled the right to direct such matters.

In connection with Ashford Inc.’s acquisition of Premier from Remington Lodging in August 2018, we entered into the Mutual Exclusivity Agreement dated as of August 8, 2018 with Braemar OP and Premier, which agreement we refer to below as the “project management MEA,” pursuant to which Premier gave us a first right of refusal to purchase any lodging-related investments identified by Premier and any of its affiliates that met our initial investment criteria, and we agreed to engage Premier to provide project management for hotels we acquired or invested in, to the extent that we had the right or controlled the right to direct such matters.

The initial term of the project management MEA is 10 years from November 19, 2013.

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Instead, Premier shall allocate investment opportunities it identifies pursuant to the terms of our advisory agreement.

A material modification for this purpose means any modification of our initial investment guidelines to be competitive with Ashford Trust’s investment guidelines.

A material modification for

this purpose means any modification of our initial investment guidelines to be competitive with Ashford Trust’s investment guidelines.

Our Exclusivity Rights.

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• With respect to Premier, an investment opportunity where our independent directors, by a majority vote, have elected not to engage Premier as the manager or developer based on their determination, in their reasonable business judgment, that special circumstances exist such that it would be in our best interest not to engage Premier with respect to the particular hotel.

judgment, that another manager or developer could perform the project management, project related services or development duties materially better than Premier for the particular hotel, based on Premier’s prior performance.

• With respect to Premier, an investment opportunity where our independent directors, by a majority vote, have elected not to engage Premier as the manager or developer because they have determined, in their reasonable business judgment, that another manager or developer could perform the project management, project related services or development duties materially better than Premier for the particular hotel, based on Premier’s prior performance.

• Existing hotel investments of Premier or its affiliates with any of their existing joint venture partners, investors or property owners.

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Likewise, we have agreed to give Ashford Trust a right of first offer with respect to any properties that we acquire in a portfolio transaction, to the extent our board of directors determines it is appropriate to market and sell such assets and we control the disposition, provided such assets satisfy Ashford Trust’s investment guidelines.

Any such right of first offer granted

to Ashford Trust will be subject to certain prior rights, if any, granted to the managers of the related properties or other third parties.

Any such right of first offer granted to Ashford Trust will be subject to certain prior rights, if any, granted to the managers of the related properties or other third parties.

The right of first offer agreement has an initial term of 10 years and is subject to automatic one year renewal periods unless one party notifies the other at least 180 days prior to the expiration of the current term that it does not intend to renew the agreement.

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Two of our hotels are held in a joint venture in which we have a 75% equity interest.

The two hotels owned by the joint venture are leased to subsidiaries of the joint venture, which two subsidiaries we have elected to treat as TRSs.

The two hotels owned by the joint venture are leased to subsidiaries of the joint venture, which two subsidiaries we

have elected to treat as TRSs.

Since 2013 Braemar TRS has formed multiple subsidiaries which lease acquired hotels.

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Virgin Islands, is owned by our USVI TRS.

The leases for our hotel properties include a term of five years, which expires on December 31, 2025 (December 31, 2026 in the case of the Mr.

C Beverly Hills Hotel).

The leases for our hotel properties include a term of five years, which expires on December 31, 2025 (December 31, 2026 in the case of the Cameo Beverly Hills).

The leases may be terminated earlier than the stated term if certain events occur, including specified damages to the related hotel, a condemnation of the related hotel or the sale of the related hotel, or an event of default that is not cured within any applicable cure or grace periods.

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Bardessono Hotel and Spa.

The Bardessono Hotel and Spa is subject to a ground lease with Bardessono Brothers LLC and expires October 31, 2065, with two 25-year extension options.

The Bardessono Hotel and Spa is subject to a ground lease with Bardessono Brothers LLC and expires December 31, 2065, with two 25-year extension options.

Rent is payable monthly and is the greater of minimum rent or percentage rent with an annual true-up on October 1.

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These costs could be substantial and liability under these laws may attach without regard to whether the owner or operator knew of, or was responsible for, the presence of the contaminants, and the liability may be joint and several.

The presence of contamination or the failure to remediate contamination at our hotels may expose us to third-party liability or materially and adversely affect our ability to sell, lease or develop the real estate or to incur debt using the real estate as collateral.

presence of contamination or the failure to remediate contamination at our hotels may expose us to third-party liability or materially and adversely affect our ability to sell, lease or develop the real estate or to incur debt using the real estate as collateral.

Our hotels are subject to various federal, state, and local environmental, health and safety laws and regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from emergency generators, storm water and wastewater discharges, lead-based paint, mold and mildew and waste management.

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We have selected policy specifications and insured limits which we believe to be appropriate given the relative risk of loss, the cost of the coverage and industry practice.

We do not carry insurance for generally uninsured losses, including, but not limited to losses caused by riots, global pandemics war or acts of God as well as certain types of coverages previously available under policies set forth above (for example, communicable disease, abuse & molestation coverages previously available under general liability policies).

We do not carry insurance for generally uninsured losses, including, but not limited to losses caused by riots, global pandemics war or acts of God as well as certain types of coverages previously available under policies set forth above (for example, communicable disease, abuse and molestation coverages previously available under general liability policies).

In the opinion of our management, our hotels are adequately insured.

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Our principal competitors include other hotel operating companies, ownership companies and national and international hotel brands.

We face increased competition from providers of less expensive accommodations, such as select service hotels or

independent owner-managed hotels, during periods of economic downturn when leisure and business travelers become more sensitive to room rates.

We face increased competition from providers of less expensive accommodations, such as select service hotels or independent owner-managed hotels, during periods of economic downturn when leisure and business travelers become more sensitive to room rates.

We also experience competition from alternative types of accommodations such as home sharing companies.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business