Risk Factors

See ‘‘Risk Factors’’ beginning on page 9 of the Company’s 2020 Form 10-K, for a discussion of the risks that should be considered in connection with your investment in our common stock, including:

  • The novel coronavirus pandemic has caused a significant decline in travel and demand for hotels and guestrooms which is adversely impacting our business and we anticipate these conditions will continue and may worsen, and the pandemic has also adversely impacted credit and capital market conditions, such that we have been unable to access these markets and this may continue until conditions normalize.
  • Due to the impact of the coronavirus pandemic on our business, we expect we will no longer have sufficient cash on hand to continue to pay our current obligations during the first half of 2021 and the additional liquidity from a source other than property operations we require may only be available from the Brookfield Investor.
  • In order to obtain the additional liquidity we require, we have been engaged in ongoing discussions with the Brookfield Investor regarding the Restructuring Transactions, including a Pre-Packaged Bankruptcy, but there can be no assurance these efforts will be successful, and, even if we are able to enter into a Restructuring Support Agreement with the Brookfield Investor, the Restructuring Transactions will remain subject to significant conditions.
  • A Pre-Packaged Bankruptcy, like any bankruptcy, is expected to place our common stockholders at significant risk of losing all or substantially all of the value of their investment in our common stock and materially and adversely affect us. If we are unable to negotiate and confirm a Chapter 11 plan of reorganization, we could be required to liquidate in a Chapter 7 bankruptcy in which case our common stock would be worthless.
  • The interests of the Brookfield Investor may conflict with our interests and the interests of our stockholders, and the Brookfield Investor owns all $441.4 million in liquidation preference of Class C Units issued and outstanding as of the date hereof and has significant governance and other rights that could be used to control or influence our decisions or actions.
  • The prior approval rights of the Brookfield Investor will restrict our operational and financial flexibility and could prevent us from taking actions that we believe would be in the best interest of our business.
  • The loss of a brand license for any reason, including due to our failure to make required capital expenditures or to comply with other brand requirements, could adversely affect our financial condition and results of operations.
  • Our Estimated Per-Share NAV was determined as December 31, 2019 and does not reflect any potential negative impact of the coronavirus pandemic after that date or any negative impact of a Pre-Packaged Bankruptcy, which is expected to place our stockholders at significant risk of losing all or substantially all of the value of their investment in our common stock and materially and adversely affect us.
  • No public market currently exists, or may ever exist, for shares of our common stock which are, and may continue to be, illiquid and difficult for our stockholders to sell.
  • All of the properties we own are hotels, and we are subject to risks inherent in the hospitality industry.
  • We primarily own older hotels, which makes us more susceptible to declines in consumer demand, the impact of increases in hotel supply and downturns in economic conditions.
  • New hotel supply has contributed to declines in occupancy at our hotels in prior periods and may continue to have this effect.
  • Increases in interest rates could increase the amount of our debt payments.
  • We have incurred substantial indebtedness, which may limit our future operational and financial flexibility.
  • We depend on our operating partnership and its subsidiaries for cash flow and are effectively structurally subordinated in right of payment to their obligations, which include distribution and redemption obligations to holders of Class C Units.
  • The amount we would be required to pay holders of Class C Units in a fundamental sale transaction may discourage a third party from acquiring us in a manner that might otherwise result in a premium price to our stockholders.
  • We are subject to a variety of risks related to our brand-mandated property improvement plans ("PIPs"), such as we may spend more than budgeted amounts to make necessary renovations and the renovations we make may not have the desired effect of improving the competitive position and enhancing the performance of the hotels renovated.
  • Increases in labor costs have adversely affected the profitability of our hotels and may continue to do so.
  • Our operating results and the value of our properties are affected by economic, regulatory and environmental changes that have an adverse impact on the real estate market in general and other risks generally incident to the ownership of real estate.
  • Our real estate investments are relatively illiquid and subject to some restrictions on sale, and therefore we may not be able to dispose of properties at the time of our choosing or on favorable terms.
  • Our hotels have been and may continue to be subject to impairment charges, including as a result of significant declines in market value or operating performance caused by the coronavirus pandemic.
  • Our failure to continue to qualify to be treated as a real estate investment trust for U.S. federal income tax purposes ("REIT") could have a material adverse effect on us.