XENIA HOTELS & RESORTS, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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Certain statements in this Quarterly Report on Form 10-Q, other than purely
historical information, are "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). These statements include
statements about Xenia's plans, objectives, strategies, financial performance
and outlook, trends, the amount and timing of future cash distributions,
prospects or future events and involve known and unknown risks that are
difficult to predict. As a result, our actual financial results, performance,
achievements or prospects may differ materially from those expressed or implied
by these forward-looking statements. In some cases, you can identify
forward-looking statements by the use of words such as "may," "could," "expect,"
"intend," "plan," "seek," "anticipate," "believe," "estimate," "guidance,"
"predict," "potential," "continue," "likely," "will," "would," "illustrative"
and variations of these terms and similar expressions, or the negative of these
terms or similar expressions. Such forward-looking statements are necessarily
based upon estimates and assumptions that, while considered reasonable by Xenia
and its management based on their knowledge and understanding of the business
and industry, are inherently uncertain. These statements are not guarantees of
future performance, and stockholders should not place undue reliance on
forward-looking statements. Forward-looking statements in this Form 10-Q
include, among others, statements about our plans, strategies and the effects of
the COVID-19 pandemic and other macroeconomic factors, including on the demand
for travel (including leisure travel and transient and group business travel),
capital expenditures and the timing of renovations, and derivations thereof,
financial performance, prospects or future events. There are a number of risks,
uncertainties and other important factors, many of which are beyond our control,
that could cause our actual results to differ materially from the
forward-looking statements contained in this Quarterly Report on Form 10-Q. Such
risks, uncertainties and other important factors include, among others: the
factors set forth under "Part I-Item 1A. Risk Factors" and "Part II-Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our Annual Report on Form 10-K filed with the U.S. Securities and
Exchange Commission (the "SEC") on March 1, 2022, as may be updated elsewhere in
this report; and the information set forth in other Quarterly Reports on Form
10-Q and Current Reports on Form 8-K that we have filed or will file with the
SEC; the short- and longer-term effects of the COVID-19 pandemic, including on
the demand for travel (including leisure travel and transient and group business
travel), and levels of consumer confidence; actions that governments,
businesses, and individuals take in response to the COVID-19 pandemic or any
resurgence of the disease or its variants, including limiting or banning travel
and implementation of social distancing requirements; the impact of the COVID-19
pandemic, and actions taken in response to the COVID-19 pandemic or any
resurgence of the disease or its variants, on global and regional economies,
travel, and economic activity, including the duration and magnitude of its
impact on staffing levels, impacts to supply chains, and consumer discretionary
spending; the broad distribution of COVID-19 vaccines and boosters and wide
acceptance by the general population of such vaccines and boosters; the
effectiveness of the vaccines and boosters; the ability of third-party managers
or other partners to successfully navigate the impacts of the COVID-19 pandemic
including labor shortages; the pace of recovery following the COVID-19 pandemic
or any resurgence of the disease or its variants; COVID-19 may cause us to incur
additional expenses; our ability to successfully negotiate amendments and
covenant waivers under our indebtedness; our ability to comply with contractual
covenants; business, financial and operating risks inherent to real estate
investments and the lodging industry; seasonal and cyclical volatility in the
lodging industry; adverse changes in specialized industries, such as the energy,
technology and/or tourism industries that result in a sustained downturn of
related businesses and corporate spending that may negatively impact our
revenues and results of operations; difficulties in procuring required products
caused by supply chain disruptions; macroeconomic and other factors beyond our
control that can adversely affect and reduce demand for hotel rooms, food and
beverage services, and/or meeting facilities, including inflation; contraction
in the U.S. and/or global economy or low levels of economic growth; inflationary
pressures which increases our labor and other costs of providing services to
guests and meeting hotel brand standards, as well as costs related to
construction and other capital expenditures, increases in interest rates,
property and other taxes, and insurance which could result in reduced operating
profit margins; levels of spending in business and leisure segments as well as
consumer confidence; declines in occupancy and average daily rate; decreased
demand for business travel due to technological advancements and preferences for
virtual over in-person meetings and/or changes in guest and consumer
preferences, including consideration of the impact of travel on the environment;
fluctuations in the supply of hotels, due to hotel construction and/or
renovation and expansion of existing hotels, and demand for hotel rooms; changes
in the competitive environment in the lodging industry, including due to
consolidation of management companies, franchisors and online travel agencies,
and changes in the markets where we own hotels; events beyond our control, such
as war, terrorist or cyber-attacks, mass casualty events, government shutdowns
and closures, travel-related health concerns, and natural disasters; cyber
incidents and information technology failures, including unauthorized access to
our computer systems and/or our vendors' computer systems, and our third-party
management companies' or franchisors' computer systems and/or their vendors'
computer systems; our inability to directly operate our properties and reliance
on third-party hotel management companies to operate and manage our hotels; our
ability to maintain good relationships with our third-party hotel management
companies and franchisors; our failure to maintain and/or comply with brand
operating standards; our ability to maintain our brand licenses at our hotels;
relationships with labor unions and changes in labor laws (including increases
in minimum wages); loss of our senior management team or key corporate
personnel; our ability to identify and consummate acquisitions and dispositions
of hotels; our ability to integrate and successfully operate any hotel

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properties acquired in the future and the risks associated with these hotel
properties; the impact of hotel renovations, repositionings, redevelopments and
re-branding activities; our ability to access capital for renovations and
acquisitions and general operating needs on terms and at times that are
acceptable to us; the fixed cost nature of hotel ownership; our ability to
service, restructure or refinance our debt on terms and at times that are
acceptable to us; changes in interest rates and operating costs, including labor
and service related costs; compliance with regulatory regimes and local laws;
uninsured or under insured losses, including those relating to natural
disasters, the physical effects of climate change, civil unrest, terrorism or
cyber-attacks; changes in distribution channels, such as through internet travel
intermediaries or websites that facilitate short-term rental of homes and
apartments from owners; the amount of debt that we currently have or may incur
in the future; provisions in our debt agreements that may restrict the operation
of our business; our organizational and governance structure; our status as a
real estate investment trust ("REIT"); our taxable REIT subsidiary ("TRS")
lessee structure; the cost of compliance with and liabilities under
environmental, health and safety laws; adverse litigation judgments or
settlements; changes in real estate and zoning laws; increases in insurance or
other fixed costs and increases in real property tax valuations or rates;
changes in federal, state or local tax law, including legislative,
administrative, regulatory or other actions affecting REITs; changes in
governmental regulations or interpretations thereof; and estimates relating to
our ability to make distributions to our stockholders in the future.

These factors are not necessarily all of the important factors that could cause
our actual financial results, performance, achievements or prospects to differ
materially from those expressed in or implied by any of our forward-looking
statements. Other unknown or unpredictable factors also could harm our results.
All forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by the cautionary statements
set forth above. Forward-looking statements speak only as of the date they are
made, and we do not undertake or assume any obligation to update publicly any of
these forward-looking statements to reflect actual results, new information or
future events, changes in assumptions or changes in other factors affecting
forward-looking statements, except to the extent required by applicable laws. If
we update one or more forward-looking statements, no inference should be drawn
that we will make additional updates with respect to those or other
forward-looking statements.

The following discussion and analysis should be read in conjunction with the
Company's Unaudited Condensed Consolidated Financial Statements and accompanying
notes, which appear elsewhere in this Quarterly Report on Form 10-Q.

Insight

Xenia Hotels & Resorts, Inc. ("we", "us", "our", "Xenia" or the "Company") is a
self-advised and self-administered REIT that invests in uniquely positioned
luxury and upper upscale hotels and resorts with a focus on top 25 lodging as
well as key leisure destinations in the United States. As of June 30, 2022, we
owned 34 hotels, comprising 9,812 rooms, across 14 states. Our hotels are
operated and/or licensed by industry leaders such as Marriott, Hyatt, Kimpton,
Fairmont, Loews, Hilton, The Kessler Collection and Davidson.

Ongoing impact of COVID-19 on our business

The outbreak and global spread of the COVID-19 pandemic has led federal, state and local governments to United States to impose measures to control its spread, including restrictions on freedom of movement and business operations, and also to implement phased policies to reopen parts of the country. The effects of the COVID-19 pandemic on the hospitality industry have been significant and unprecedented.

Our hotel portfolio began to see improvements in leisure demand during the
second half of 2020, a trend that accelerated in 2021 and has continued in 2022.
During the first half of 2022, operations continued to improve including strong
leisure bookings, higher levels of business transient demand and improving group
demand resulting in total portfolio ADR climbing above 2019 levels for the
comparable period.

Despite this improvement, there remains significant uncertainty regarding the
pace of recovery and whether and when business travel and larger group meetings
will return to pre-pandemic levels. We may be impacted by, among other things,
the distribution and acceptance of COVID-19 vaccines and boosters, breakthrough
cases, and new variants of COVID-19, as well as the ongoing local, national and
global responses to the virus. As the recovery continues, we expect that the
pace will vary from market to market and may be uneven in nature. Additionally,
there has been increasing uncertainty regarding the broader economic environment
as higher levels of inflation have persisted along with rising interest rates
and increased concerns of a recession in the near term.

Additionally, there has been increasing uncertainty regarding the broader
economic environment as higher levels of inflation have persisted along with
rising interest rates and increased concerns of a recession. We rely on our
ability to raise room rates and prices of other products and services to keep
pace with inflation. Our hotel operators generally possess the ability to adjust
room rates daily, except for certain group or corporate rates contractually
committed to in advance, in a stable macroeconomic

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environment. However, our operators may be unable to increase rates faster than inflation, or even at the same rate, when inflation levels are high due to competitive pressures or prevailing economic conditions.

presentation basis

The accompanying condensed consolidated financial statements include the
accounts of the Company, the Operating Partnership, and XHR Holding. The
Company's subsidiaries generally consist of limited liability companies, limited
partnerships and the TRS. The effects of all inter-company transactions have
been eliminated. Corporate costs directly associated with our principal
executive offices, personnel and other administrative costs are reflected as
general and administrative expenses on the condensed consolidated statements of
operations and comprehensive income (loss).

Our income and expenses

Our revenue is primarily derived from hotel operations, including rooms revenue,
food and beverage revenue and other revenue, which consists of parking, spa,
resort fees, other guest services, and tenant leases, among other items.

Our operating costs and expenses consist of the costs to provide hotel services,
including rooms expense, food and beverage expense, other direct and indirect
operating expenses, and management and franchise fees. Rooms expense includes
housekeeping wages and associated payroll taxes, room supplies, laundry services
and front desk costs. Food and beverage expense primarily includes the cost of
food, beverages and associated labor. Other direct and indirect hotel expenses
include labor and other costs associated with the other operating department
revenue, as well as labor and other costs associated with general and
administrative departments, sales and marketing, information technology and
telecommunications, repairs and maintenance and utility costs. We enter into
management agreements with independent third-party management companies to
operate our hotels. The management companies typically earn base and incentive
management fees based on the levels of revenues and profitability of each
individual hotel.

Key operational performance indicators

We measure hotel results of operations and the operating performance of our
business by evaluating financial and nonfinancial metrics such as Revenue Per
Available Room ("RevPAR"); average daily rate ("ADR"); occupancy rate
("occupancy"); earnings before interest, income taxes, depreciation and
amortization for real estate ("EBITDAre") and Adjusted EBITDAre; and funds from
operations ("FFO") and Adjusted FFO. We evaluate individual hotel and
company-wide performance with comparisons to budgets, prior periods and
competing properties. RevPAR, ADR, and occupancy may be impacted by
macroeconomic factors as well as regional and local economies and events. See
"Non-GAAP Financial Measures" for further discussion of the Company's use,
definitions and limitations of EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO
and the reasons management believes these financial measures are useful to
investors.

Results of Operations

Lodging Industry Overview

We began to see improvements in leisure demand during the second half of 2020, a
trend that accelerated in 2021 and has continued into the first half of 2022.
Further, by mid-February, we began to experience higher levels of business
transient and group business which continued into the second quarter. Despite
this relative improvement, there is still significant uncertainty regarding the
pace of recovery and the length of time it will take for business travel and
larger group meetings to return to pre-pandemic levels. Persistent inflation,
rising interest rates and fears of a recession in the near term have further
increased uncertainty regarding the pace of recovery for the lodging industry.

The U.S. lodging industry has historically exhibited a strong correlation to
U.S. GDP, which decreased at an estimated annual rate of approximately 1.4% and
0.9% during the first and second quarters of 2022, according to the U.S.
Department of Commerce, compared to the annual rate growth trend from the third
and fourth quarters of 2021 of 2.3% and 6.9%, respectively. The decrease during
the second quarter reflected decreases in private inventory investment,
residential fixed investment, federal government spending, state and local
government spending and nonresidential fixed investment that were partially
offset by increases in exports, personal consumption expenditures, and imports.
In addition, the unemployment rate remained at 3.6% in June from March and fell
from 3.9% in December 2021 and from 4.8% in September 2021. The unemployment
rate has declined considerably from the April 2020 high of 14.7%.

The U.S. lodging industry has been more acutely impacted by the COVID-19
pandemic than the overall U.S. economy and other industries and has not
experienced the same level of recovery as the U.S. economy which is largely due
to the persistence of the COVID-19 pandemic and its variants and sentiment
towards business and leisure travel as a result of the pandemic. Additionally,
we expect the recovery of the lodging industry will take longer than it will for
the broader economy and many other industries. Further, we continue to monitor
and evaluate the challenges associated with inflationary pressures and rising
interest rates, the evolving workforce landscape, particularly related to
achieving the appropriate balance between hotel staffing

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levels and demand as our hotel operations increase, as well as ongoing supply chain issues that may continue to affect hotels’ ability to source operating supplies and other materials.

Demand increased 12.5% and 18.3%, respectively, during the three and six months
ended June 30, 2022. New hotel supply increased by 2.3% and 3.1%, respectively,
during the same period. The significant increase in demand led to increases in
industry RevPAR of 38.8% and 49.4% for the three and six months ended June 30,
2022 compared to 2021, which was driven by an increase in occupancy of 10.0% and
14.8% coupled with a 26.2% and 30.1% increase in ADR, respectively. All U.S.
data for the three and six months ended June 30, 2022 are per industry reports.

Overview of the second quarter of 2022

Our total portfolio RevPAR, which includes the results of hotels sold or
acquired for the period of ownership by the Company, increased 77.5% and 98.4%
to $185.44 and $165.16 for the three and six months ended June 30, 2022 compared
to $104.50 and $83.25 for the three and six months ended June 30, 2021,
respectively. The increase in our total portfolio RevPAR for the three and six
months ended June 30, 2022 compared to the same period in 2021 was driven by
increases in leisure transient business and improving business transient and
corporate group demand.

Net income increased 166.6% for the three months ended June 30, 2022 compared to
net loss in 2021, which was primarily attributed to an increase in operating
income of $56.0 million from the 33-comparable hotels owned during the three
months ended June 30, 2022 and 2021 as a result of a recovery from the COVID-19
pandemic, a $12.3 million reduction in impairment and other losses, other income
of $1.5 million in 2022 from insurance proceeds in excess of recognized losses
related to damage sustained at Loews New Orleans Hotel during Hurricane Ida
compared to other loss of $2.8 million in 2021 from the termination of four
interest rate hedges, a $1.6 million increase in operating income attributed to
the acquisition of W Nashville, a $1.4 million reduction in loss on
extinguishment of debt and a $0.6 million reduction in operating loss attributed
to the sale of hotels in November 2021 and January 2022. These increases were
partially offset by a $3.4 million increase in income tax expense, a $1.0
million increase in corporate general and administrative expenses and a $0.7
million increase in interest expense attributed to a higher weighted-average
interest rate.

Net income increased 122.8% for the six months ended June 30, 2022 compared to
net loss in 2021, which was primarily attributed to an increase in operating
income of $115.3 million from the 33-comparable hotels owned during the six
months ended June 30, 2022 and 2021 as a result of a recovery from the COVID-19
pandemic, an $11.0 million reduction in impairment and other losses, other
income of $2.5 million in 2022 from insurance proceeds in excess of recognized
losses related to damage sustained at Loews New Orleans Hotel during Hurricane
Ida compared to other loss of $2.8 million in 2021 from the termination of four
interest rate hedges, a $1.8 million increase in operating income attributed to
the acquisition of W Nashville, a $1.2 million reduction in operating loss
attributed to the sale of hotels in November 2021 and January 2022 and a $1.1
million reduction in loss on extinguishment of debt. These increases were
partially offset by a $4.8 million increase in income tax expense, a $2.5
million increase in interest expense attributed to a higher weighted-average
interest rate, a $1.9 million increase in corporate general and administrative
expenses and a $1.1 million reduction in gain on business interruption
insurance.

Adjusted EBITDAre and Adjusted FFO attributable to common stock and unit holders
for the three and six months ended June 30, 2022 increased 223.6% and 483.7%,
and 626.7% and 912.1%, respectively, compared to 2021, which was attributable to
the extent and timing of the impact of and recovery from the COVID-19 pandemic
on our results of operations. Refer to "Non-GAAP Financial Measures" for the
definition of these financial measures, a description of the reasons we believe
they are useful to investors as key supplemental measures of our operating
performance and the reconciliation of these non-GAAP financial measures to net
income (loss) attributable to common stock and unit holders.

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Operation Information Comparison

The following table shows selected operating information for the three and six months ended June 30, 2022 and 2021:

                                                                                             Six Months Ended
                                                                                                 June 30,
                                                                                          2022              2021                Change
Number of properties at January 1                                                          34                35                   (1)
Properties acquired                                                                         1                 -                    1
Properties disposed                                                                        (1)                -                   (1)
Number of properties at June 30                                                            34                35                   (1)

Number of rooms at January 1                                                              9,659            10,011                (352)
Rooms in properties acquired                                                               346                -                   346
Rooms in properties disposed(1)                                                           (193)               -                  (193)
Number of rooms at June 30                                                                9,812            10,011                (199)

                              Three Months Ended                                             Six Months Ended
                                   June 30,                                                      June 30,
                            2022              2021                Increase                2022              2021               Increase
Total Portfolio
Statistics:
Occupancy(2)                 68.9  %           48.8  %               2,010   bps           62.9  %           40.8  %             2,210   bps
ADR(2)                   $ 269.20          $ 214.03                   25.8     %       $ 262.76          $ 203.92                 28.9     %
RevPAR(2)                $ 185.44          $ 104.50                   77.5     %       $ 165.16          $  83.25                 98.4     %

(1) During the six months ended June 30, 2022the Company sold a 191-room hotel and reduced the number of rooms from two to Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch.

(2)  For hotels acquired during the applicable period, includes operating
statistics since the date of acquisition. For hotels disposed of during the
period, operating results and statistics are included through the date of the
respective disposition. The six months ended June 30, 2021 includes hotels that
had suspended operations for a portion of the period presented.

Revenue

Revenue includes rooms, catering and other revenue from our hotels as follows (in thousands):

                       Three Months Ended June 30,                                                          Six Months Ended June 30,
                         2022                  2021             Increase            % Change                 2022                  2021             Increase            % Change
Revenues:
Rooms revenues     $      165,580          $  95,195          $  70,385                  73.9  %       $      288,778          $ 150,841          $ 137,937                  91.4  %
Food and beverage
revenues                   96,781             40,143             56,638                 141.1  %              164,516             61,735            102,781                 166.5  %
Other revenues             21,090             16,636              4,454                  26.8  %               40,504             27,250             13,254                  48.6  %
Total revenues     $      283,451          $ 151,974          $ 131,477                  86.5  %       $      493,798          $ 239,826          $ 253,972                 105.9  %


Rooms revenues

Rooms revenues increased by $70.4 million, or 73.9%, to $165.6 million for the
three months ended June 30, 2022 from $95.2 million for the three months ended
June 30, 2021 primarily due to increases in occupancy and ADR due to a recovery
from the COVID-19 pandemic. Additionally, the acquisition of W Nashville in
March 2022 contributed to the increase in rooms revenue by $8.8 million. The
increase is net of a reduction of $2.9 million attributed to the sale of
Marriott Charleston Town Center in November 2021 and Kimpton Hotel Monaco
Chicago in January 2022 (collectively, "the hotels sold in November 2021 and
January 2022").

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Rooms revenues increased by $137.9 million, or 91.4%, to $288.8 million for the
six months ended June 30, 2022 from $150.8 million for the six months ended
June 30, 2021 primarily due to increases in occupancy and ADR due to a recovery
from the COVID-19 pandemic. Additionally, the acquisition of W Nashville in
March 2022 contributed to the increase in rooms revenue by $9.1 million. This
increase is net of a reduction of $4.1 million attributed to the hotels sold in
November 2021 and January 2022.

Food and beverage revenue

Food and beverage revenues increased by $56.6 million, or 141.1%, to $96.8
million for the three months ended June 30, 2022 from $40.1 million for the
three months ended June 30, 2021 primarily due to increases in occupancy due to
a recovery from the COVID-19 pandemic. Additionally, the acquisition of W
Nashville in March 2022 contributed to the increase in food and beverage revenue
by $6.9 million. This increase is net of a reduction of $0.7 million attributed
to the hotels sold in November 2021 and January 2022.

Food and beverage revenues increased by $102.8 million, or 166.5%, to $164.5
million for the six months ended June 30, 2022 from $61.7 million for the six
months ended June 30, 2021 primarily due to increases in occupancy due to a
recovery from the COVID-19 pandemic. Additionally, the acquisition of W
Nashville in March 2022 contributed to the increase in food and beverage revenue
by $7.1 million. This increase is net of a reduction of $0.9 million in food and
beverage revenues attributed to the hotels sold in November 2021 and January
2022.

Other revenues

Other revenues increased by $4.5 million, or 26.8%, to $21.1 million for the
three months ended June 30, 2022 from $16.6 million for the three months ended
June 30, 2021 primarily due to a recovery from the COVID-19 pandemic. This
increase includes $1.8 million in additional revenues from cancellations and
attrition as well as $0.6 million attributed to the acquisition of W Nashville
in March 2022. These increases are net of a reduction of $0.2 million attributed
to the hotels sold in November 2021 and January 2022.

Other revenues increased by $13.3 million, or 48.6%, to $40.5 million for the
six months ended June 30, 2022 from $27.3 million for the six months ended
June 30, 2021 primarily due to a recovery from the COVID-19 pandemic. This
increase includes $5.0 million in additional revenues from cancellations and
attrition as well as $0.6 million attributed to the acquisition of W Nashville
in March 2022. These increases are net of a reduction of $0.4 million attributed
to the hotels sold in November 2021 and January 2022.

Hotel running costs

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

                        Three Months Ended June 30,                                                         Six Months Ended June 30,
                          2022                  2021            Increase            % Change                 2022                  2021             Increase            % Change
Hotel operating
expenses:
Rooms expenses      $       36,423          $  22,388          $ 14,035                  62.7  %       $       65,640          $  37,925          $  27,715                  73.1  %
Food and beverage
expenses                    60,298             28,592            31,706                 110.9  %              105,908             46,770             59,138                 126.4  %
Other direct
expenses                     6,366              4,736             1,630                  34.4  %               11,660              7,934              3,726                  47.0  %
Other indirect
expenses                    63,059             44,047            19,012                  43.2  %              116,919             81,374             35,545                  43.7  %
Management and
franchise fees              11,049              6,140             4,909                  80.0  %               18,675              8,984              9,691                 107.9  %
Total hotel
operating expenses  $      177,195          $ 105,903          $ 71,292                  67.3  %       $      318,802          $ 182,987          $ 135,815                  74.2  %


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Total hotel operating expenses

In general, hotel operating costs fluctuate based on various factors, including
occupancy, labor costs, utilities and insurance costs. Luxury and upper upscale
hotels generally have higher fixed costs than other types of hotels due to the
level of services and amenities provided to guests.

Total hotel operating expenses increased $71.3 million, or 67.3%, to $177.2
million for the three months ended June 30, 2022 from $105.9 million for the
three months ended June 30, 2021 primarily due to increases in occupancy and
other related operating costs due to a recovery from the COVID-19 pandemic.
Additionally, W Nashville contributed to the increase in hotel operating
expenses by $10.4 million. The increase in total hotel operating expenses is net
of a reduction of $3.2 million attributed to the hotels sold in November 2021
and January 2022.

Total hotel operating expenses increased $135.8 million, or 74.2%, to $318.8
million for the six months ended June 30, 2022 from $183.0 million for the six
months ended June 30, 2021 primarily due to increases in occupancy and other
related operating costs due to a recovery from the COVID-19 pandemic.
Additionally, W Nashville contributed to the increase in hotel operating
expenses by $10.7 million. The increase in total hotel operating expenses is net
of a reduction of $5.3 million attributed to the hotels sold in November 2021
and January 2022.

Corporate and other expenses

Corporate and other expenses break down as follows (in thousands):

                          Three Months Ended June 30,                                                            Six Months Ended June 30,
                                                                  Increase /                                                                             Increase /
                            2022                 2021             (Decrease)             % Change                 2022                  2021             (Decrease)             % Change

Depreciation and amortization $34,251 $33,008 $1,243

                   3.8  %       $       64,816          $  66,205          $     (1,389)                 (2.1) %
Real estate taxes,
personal property
taxes and insurance           11,369            10,997                   372                   3.4  %               22,224             21,537                   687                   3.2  %
Ground lease expense             833               379                   454                 119.8  %                1,350                782                   568                  72.6  %
General and
administrative
expenses                       9,083             8,096                   987                  12.2  %               16,869             15,018                 1,851                  12.3  %
Gain on business
interruption
insurance                          -                 -                     -                     -  %                    -             (1,116)                1,116                 100.0  %

Impairment and other
losses                             -            12,313               (12,313)               (100.0) %                1,278             12,313               (11,035)                (89.6) %

Total head office and other expenses $55,536 $64,793 ($9,257)

                (14.3) %       $      106,537          $ 114,739          $     (8,202)                 (7.1) %


Depreciation and amortization

Depreciation and amortization expense increased $1.2 million, or 3.8%, to $34.3
million for the three months ended June 30, 2022 from $33.0 million for the
three months ended June 30, 2021. This increase was primarily attributed to the
acquisition of W Nashville in March 2022, partially offset by reduction
attributed to the timing of fully depreciated assets during the comparable
periods and a reduction in depreciation expense related to the hotels sold in
November 2021 and January 2022.

Depreciation and amortization expense decreased $1.4 million, or (2.1)%, to
$64.8 million for the six months ended June 30, 2022 from $66.2 million for the
six months ended June 30, 2021. This decrease was primarily attributed to the
timing of fully depreciated assets during the comparable periods and a reduction
in depreciation expense related to the hotels sold in November 2021 and January
2022, partially offset by an increase in depreciation expense attributed to the
acquisition of W Nashville in March 2022.

                                       32

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Property taxes, personal property taxes and insurance

Real estate taxes, personal property taxes and insurance expense increased $0.4
million, or 3.4%, and $0.7 million, or 3.2%, to $11.4 million and $22.2 million
for the three and six months ended June 30, 2022 from $11.0 million and $21.5
million for the three and six months ended June 30, 2021. This year-to-date
increase was primarily attributed increases in insurance premiums of $1.6
million, a $1.5 million non-recurring property tax refund received in 2021 and
$0.8 million attributed to the acquisition of W Nashville in March 2022. These
increases were partially offset by a $2.1 million reduction in real estate taxes
and a $0.9 million reduction related to the hotels sold in November 2021 and
January 2022.

Ground lease expense

Ground lease expense increased $0.5 million, or 119.8%, and $0.6 million, or
72.6%, to $0.8 million and $1.4 million for the three and six months ended
June 30, 2022 from $0.4 million and $0.8 million for the three and six months
ended June 30, 2021. The increase was primarily attributable to an increase in
percentage rent in 2022, which is based on revenues at certain hotels with
ground leases, compared to 2021.

General and administrative expenses

General and administrative expenses increased $1.0 million, or 12.2% and $1.9
million, or 12.3%, to $9.1 million and $16.9 million for the three and six
months ended June 30, 2022 from $8.1 million and $15.0 million for the three and
six months ended June 30, 2021 primarily due to increases in compensation
expense.

Gain on business interruption insurance

The gain on business interruption insurance was $1.1 million for the six months ended June 30, 2021which was attributed to insurance proceeds for a portion of lost revenue associated with cancellations related to the COVID-19 pandemic.

Depreciation and other losses

In August 2021Hurricane Ida hit Loews Hotel New Orleans situated in New Orleans, Louisiana. In the six months ended June 30, 2022the Company expensed additional repair and cleanup costs related to the hurricane $1.3 million.

During the three and six months ended June 30, 2022, the Company concluded that
it intended to sell the 352-room Marriott Charleston Town Center, in Charleston,
West Virginia and began marketing the property. Based on multiple bids from
qualified buyers and ongoing price discussions, the Company expected the hotel
to be sold for a price that was less than its net book value. As a result, an
impairment loss of approximately $12.3 million was recorded for the three and
six months ended June 30, 2021.

Non-operating income and expenses

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

                            Three Months Ended June 30,                                                                            Six Months Ended June 30,
                               2022                2021            Increase / (Decrease)             % Change                  2022                          2021              Increase / (Decrease)             % Change

Non-operating income and expenses:

Other income (loss)      $       1,681          $ (2,805)                  4,486                          159.9  %                904                       (2,689)                    3,593                          133.6  %
Interest expense               (20,353)          (19,691)                   (662)                          (3.4) %            (40,891)                     (38,441)                   (2,450)                          (6.4) %
Loss on extinguishment
of debt                              -            (1,356)                  1,356                          100.0  %               (294)                      (1,356)                    1,062                           78.3  %
Income tax expense              (3,570)             (169)                 (3,401)                      (2,012.4) %             (5,177)                        (334)                   (4,843)                      (1,450.0) %


Other income (loss)

Other income increased $4.5 million, or 159.9%, and $3.6 million, or 133.6%, to
$1.7 million and $0.9 million for the three and six months ended June 30, 2022
from a loss of $2.8 million and $2.7 million for the three and six months ended
June 30, 2021. The increase was primarily attributed to a gain of $1.5 million
and $2.5 million from insurance proceeds settlements in excess of recognized
losses associated with hurricane-related damage at Loews New Orleans Hotel for
the three and six months ended June 30, 2022 coupled with the recognition of
$2.8 million of costs associated with the termination of four interest rate
hedges for the three and six months ended June 30, 2021.

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Interest expense

Interest expense increased $0.7 million, or 3.4%, and $2.5 million, or 6.4%, to
$20.4 million and $40.9 million for the three and six months ended June 30, 2022
from $19.7 million and $38.4 million for the three and six months ended June 30,
2021. The increase was primarily due to an increase in the weighted-average
interest rate, partially offset by a decrease in the outstanding debt as of June
30, 2022 compared to 2021. Refer to Note 5 in the accompanying condensed
consolidated financial statements for further discussion.

Loss on extinguishment of debt

The loss on extinguishment of debt of $0.3 million for the six months ended
June 30, 2022 was attributable to the write-off of unamortized debt issuance
costs upon the early repayment of one mortgage loan. The loss on extinguishment
of debt of $1.4 million for the three and six months ended June 30, 2021 was
attributable to the write off of unamortized debt issuance costs upon the early
repayment of the corporate credit facility term loan that was due to mature in
August 2023 and one mortgage loan.

income tax expense

Income tax expense increased $3.4 million, or 2,012.4%, and $4.8 million, or
1,450.0%, to $3.6 million and $5.2 million for the three and six months ended
June 30, 2022 from $0.2 million and $0.3 million for the three and six months
ended June 30, 2021. The increase from prior year was primarily attributed to
higher projected taxable income related to the recovery from the COVID-19
pandemic and the acquisition of W Nashville in March 2022 coupled with an
increase in the effective tax rate for the first half of 2022 compared to 2021.
These increases were partially offset by the use of the Company's federal and
state net operation loss carryforwards.

Cash and capital resources

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

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

Liquidity

As of June 30, 2022, we had $223.8 million of consolidated cash and cash
equivalents and $46.9 million of restricted cash and escrows. The restricted
cash as of June 30, 2022 primarily consisted of $40.7 million related to
furniture, fixtures and equipment replacement reserves ("FF&E reserves") as
required per the terms of our management and franchise agreements, cash held in
restricted escrows of $4.2 million primarily for real estate taxes and mortgage
escrows, $1.7 million in deposits made for capital projects and $0.3 million for
disposition-related holdbacks.

As of June 30, 2022, there was no outstanding balance on our revolving credit
facility and the full $450 million is available to be borrowed. Proceeds from
future borrowings may be used for working capital, general corporate or other
purposes permitted by the amended revolving credit agreement.

In May 2021, we upsized the ATM Agreement and, as a result, we had $200 million
available for sale under the ATM Agreement as of June 30, 2022. The terms of the
amended revolving credit facility imposed restrictions on the use of proceeds
raised from equity issuances, however those restrictions expired as a result of
the Company exiting the covenant waiver period.

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

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Debt and loan commitments

From June 30, 2022our total outstanding debt was $1.4 billion and had a weighted average interest rate of 5.20%.

Mortgages

In January 2022, we repaid in full the $65.0 million outstanding balance on the
mortgage loan collateralized by The Ritz-Carlton, Pentagon City. Our mortgage
loan agreements require contributions to be made to FF&E reserves. In addition,
certain quarterly financial covenants were waived for a period of time specified
in the respective amended loan agreements and certain financial covenants have
been adjusted following the waiver periods.

Business credit facilities

Certain financial covenants related to our amended corporate credit facilities
were suspended until the date that the compliance certificates demonstrating
compliance with the financial covenants thereunder for the fiscal quarter ending
June 30, 2022 were delivered (such period, the "covenant waiver period").
Certain financial covenants that were suspended during the covenant waiver
period resumed quarterly testing beginning with the fiscal quarter ending June
30, 2022 but remain at modified covenant levels through the second quarter in
2023 (such period, unless earlier terminated by the Operating Partnership in
accordance with the terms of the amended corporate credit facilities, the
"permitted variations period"). In addition, the amended corporate credit
facilities had certain restrictions and covenants which were applicable during
the covenant waiver period, including (i) mandatory prepayment requirements,
(ii) affirmative covenants related to the pledge of equity of certain
subsidiaries and (iii) negative covenants restricting certain acquisitions,
investments, capital expenditures, ground leases and distributions. A minimum
liquidity covenant also applied during the covenant waiver period.

We determined that we met our modified financial covenants for the quarter ended
June 30, 2022 and delivered the compliance certificates demonstrating such
compliance under the amended corporate credit facilities and, as a result, are
no longer subject to the additional restrictions and covenants that applied
during the covenant waiver period, other than in respect of certain restrictions
and covenants related to the pledge of equity of certain subsidiaries which
remain applicable until after the end of the permitted variations period.

Senior Notes

The indentures governing the Senior Notes contain customary covenants that limit
the Operating Partnership's ability and, in certain circumstances, the ability
of its subsidiaries, to borrow money, create liens on assets, make distributions
and pay dividends, redeem or repurchase stock, make certain types of
investments, sell stock in certain subsidiaries, enter into agreements that
restrict dividends or other payments from subsidiaries, enter into transactions
with affiliates, issue guarantees of indebtedness and sell assets or merge with
other companies. These limitations are subject to a number of important
exceptions and qualifications set forth in the indentures.

Debt commitments

As of June 30, 2022, we were not in compliance with its debt covenants on one
mortgage loan which did not result in an event of default but allows the lender
the option to institute a cash sweep until covenant compliance is achieved for a
period of time specified in the loan agreement. The cash sweep permits the
lender to withdraw excess cash generated by the property into a separate bank
account that they control, which may be used to reduce the outstanding loan
balance.

Derivatives

As of June 30, 2022, we had eight interest rate swaps with an aggregate notional
amount of $250.0 million. These swaps fix a portion of the variable interest
rate on two of our mortgage loans for a portion of the term of each respective
mortgage loan and fix LIBOR for a portion of the term of our one outstanding
corporate credit facility term loan agented by KeyBank National Association. Our
interest rate swaps are scheduled to expire later in 2022 which will increase
our exposure to rising interest rates. The corporate credit facility term loan
spread may vary, as it is determined by our leverage ratio. The applicable
interest rate for the corporate credit facility term loan was set to the highest
level of grid-based pricing during the covenant waiver period; however, with the
delivery of the compliance certificates under the corporate credit facilities
for the fiscal quarter ending June 30, 2022, we exited the covenant waiver
period and the applicable interest rate reverted to pricing based on the
Company's leverage ratio. In addition, two interest rate swaps were terminated
in January 2022 in connection with the repayment of a $65.0 million mortgage
loan.

Our ability to apply hedge accounting in the future could be impacted to the
extent that the payment terms of our loans change. The discontinuation of hedge
accounting could result in future changes in the fair market values of hedges
and/or a portion or all of the $0.2 million balance of accumulated other
comprehensive income as of June 30, 2022 to be recognized on the condensed
consolidated statements of operations and comprehensive income (loss) through
net income (loss). Any future

                                       35
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defaults by the Company under the terms of its hedges, including those which may
arise from cross default provisions with loan agreements, could result in the
Company being immediately liable for the fair market value liability of the
defaulted hedges.

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

All of our interest rate swap contracts mature prior to June 30, 2023. While we
expect LIBOR to be available in substantially its current form through maturity,
it is possible that LIBOR will become unavailable prior to that date. This could
result, for example, if sufficient banks decline to make submissions to the
LIBOR administrator. In that case, the risks associated with the transition to
an alternative reference rate will be accelerated and magnified. The
introduction of an alternative rate also may create additional basis risk and
increased volatility as alternative rates are phased in and utilized in parallel
with LIBOR.

Capital Markets

We maintain an established "At-the-Market" ("ATM") program pursuant to an Equity
Distribution Agreement ("ATM Agreement") with Wells Fargo Securities, LLC,
Robert W. Baird & Co. Incorporated, Jefferies LLC, KeyBanc Capital Markets Inc.
and Raymond James & Associates, Inc. In accordance with the terms of the ATM
Agreement, which was amended and upsized in May 2021, we may from time to time
offer and sell shares of our common stock having an aggregate offering price up
to $200 million. No shares were sold under the ATM Agreement during the three
and six months ended June 30, 2022 and, as of June 30, 2022, $200 million of
common stock remained available for issuance.

Our Board of Directors has authorized a stock repurchase program pursuant to
which we are authorized to purchase up to $175 million of our outstanding common
stock in the open market, in privately negotiated transactions or otherwise,
including pursuant to Rule 10b5-1 plans (the "Repurchase Program"). The
Repurchase Program does not have an expiration date. This Repurchase Program may
be suspended or discontinued at any time and does not obligate us to acquire any
particular amount of shares. As of June 30, 2022, we had approximately $94.7
million remaining under our share repurchase authorization.

No shares were purchased under the buyback program during the three and six months ended June 30, 2022 and 2021. The terms of our amended corporate credit facilities prohibited us from repurchasing our common shares until we complied with applicable covenants. However, these restrictions expired following our exit from the waiver period.

Capital expenditures and reserve funds

We maintain each of our properties in good repair and condition and in
conformity with applicable laws and regulations, franchise agreements and
management agreements. Routine capital expenditures are administered by the
hotel management companies. However, we have approval rights over the capital
expenditures as part of the annual budget process for each of our properties.
From time to time, certain of our hotels may undergo renovations as a result of
our decision to expand or upgrade portions of the hotels, such as guest rooms,
public space, meeting space and/or restaurants, in order to better compete with
other hotels in our markets. In addition, upon the acquisition of a hotel we may
be required to complete a property improvement plan in order to bring the hotel
into compliance with the respective brand standards. If permitted by the terms
of the management agreement, funding for a renovation will first come from the
FF&E reserves. We are obligated to maintain reserve funds with respect to
certain agreements with our hotel management companies, franchisors and lenders
to provide funds, generally 3% to 5% of hotel revenues, sufficient to cover the
cost of certain capital improvements to the hotels and to periodically replace
and update furniture, fixtures and equipment. Certain of the agreements require
that we reserve this cash in separate accounts. To the extent that the FF&E
reserves are not available or adequate to cover the cost of the renovation, we
may fund a portion of the renovation with cash on hand, borrowings from our
revolving credit facility and/or other sources of available liquidity. We have
been, and will continue to be, prudent with respect to our capital spending,
taking into account our cash flows from operations.

As of June 30, 2022 and December 31, 2021, we had a total of $40.7 million and
$29.3 million, respectively, of FF&E reserves. During the three and six months
ended June 30, 2022 we made total capital expenditures of $14.3 million and
$21.8 million, respectively, and during the three and six months ended June 30,
2021, we made total capital expenditures of $4.6 million and $11.9 million,
respectively.

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Off-balance sheet arrangements

As of June 30, 2022, we had various contracts outstanding with third-parties in
connection with the renovation of certain of our hotel properties. The remaining
commitments under these contracts as of June 30, 2022 totaled $14.5 million.

Sources and uses of species

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

Comparison of the six months ended June 30, 2022 half-year ended
June 30, 2021

The table below presents summarized cash flow information for the Condensed Consolidated Statements of Cash Flows (in thousands):

                                                                     Six 

Months ended June 30th,

                                                                     2022                     2021
Net cash provided by operating activities                   $       98,635               $      4,822
Net cash used in investing activities                             (314,680)                    (9,971)
Net cash (used in) provided by financing activities                (67,507)                   111,272

(decrease) net increase in cash and cash equivalents and restricted cash

                                             $     (283,552)              $    106,123

Cash and cash equivalents and restricted cash, beginning of period

                                                          554,231                    428,786
Cash and cash equivalents and restricted cash, at end of
period                                                      $      270,679               $    534,909


Operating

•Cash provided by operating activities was $98.6 million and $4.8 million for
the six months ended June 30, 2022 and 2021, respectively. Cash flows from
operating activities generally consist of the net cash generated by our hotel
operations, partially offset by the cash paid for interest, corporate expenses
and other working capital changes. Our cash flows from operating activities may
also be affected by changes in our portfolio resulting from hotel acquisitions,
dispositions or renovations. The net increase in cash from operating activities
during the six months ended June 30, 2022 was primarily due to an increase in
hotel operating income attributed to a recovery from the impact of the COVID-19
pandemic and the acquisition of W Nashville in March 2022, net of reductions
from the hotels sold in November 2021 and January 2022. Refer to the "Results of
Operations" section for further discussion of our operating results for
the three and six months ended June 30, 2022 and 2021.

Invest

•Cash used in investing activities was $314.7 million and $10.0 million for the
six months ended June 30, 2022 and 2021, respectively. Cash used in investing
activities for the six months ended June 30, 2022 was attributed to $328.5
million for the acquisition of W Nashville and $21.8 million in capital
improvements at our hotel properties, which was partially offset by net proceeds
of $32.8 million from the disposition of Kimpton Hotel Monaco Chicago, $1.5
million of proceeds from property insurance and $1.4 million of performance
guaranty payments received that were recorded as a reduction in the respective
hotel's cost basis. Cash used in investing activities for the six months ended
June 30, 2021 was attributed to $11.9 million in capital improvements at our
hotel properties, which was partially offset by $1.9 million of performance
guaranty payments received that were recorded as a reduction in the respective
hotel's cost basis.

Financing

•Cash used in financing activities was $67.5 million and cash provided by
financing activities was $111.3 million for the six months ended June 30, 2022
and 2021, respectively. Cash used in financing activities for the six months
ended June 30, 2022 was attributed the repayment of mortgage debt totaling $65.0
million, principal payments of mortgage debt totaling $2.0 million and shares
redeemed to satisfy tax withholding on vested share-based compensation of $0.5
million. Cash provided by financing activities for the six months ended June 30,
2021 was primarily attributed $500.0 million in proceeds from the issuance of
the 2021 Senior Notes, offset by the repayment of the revolving credit facility
of $163.1 million, the repayment of one corporate credit facility term loan
totaling $150.0 million, the repayment of

                                       37

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mortgage debt totaling $56.8 million, payment of loan fees and issuance costs of
$10.1 million, principal payments of mortgage debt totaling $4.2 million,
redemption of Operating Partnership Units for common stock and cash of $4.1
million, and shares redeemed to satisfy tax withholding on vested share-based
compensation of $0.4 million.

Non-GAAP Financial Measures

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

EBITDA, EBITDAre and adjusted EBITDAre

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

We calculate EBITDAre in accordance with standards established by the National
Association of Real Estate Investment Trusts ("Nareit"). Nareit defines EBITDAre
as EBITDA plus or minus losses and gains on the disposition of depreciated
property, including gains or losses on change of control, plus impairments of
depreciated property and of investments in unconsolidated affiliates caused by a
decrease in the value of depreciated property in the affiliate, and adjustments
to reflect the entity's share of EBITDAre of unconsolidated affiliates.

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

FFO and Adjusted FFO

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

We further adjust FFO for certain additional items that are not in Nareit's
definition of FFO such as hotel property acquisition, terminated transaction and
pre-opening expenses, amortization of debt origination costs and share-based
compensation, non-cash ground rent and straight-line rent expense, and other
items we believe do not represent recurring operations. We believe

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that Adjusted FFO provides investors with useful supplemental information that
may facilitate comparisons of ongoing operating performance between periods and
between REITs that make similar adjustments to FFO and is beneficial to
investors' complete understanding of our operating performance.

The following is a reconciliation of net income (loss) to EBITDA, EBITDAre and
Adjusted EBITDAre attributable to common stock and unit holders for the three
and six months ended June 30, 2022 and 2021 (in thousands):

                                                          Three Months Ended June 30,                    Six Months Ended June 30,
                                                            2022                  2021                   2022                    2021
Net income (loss)                                     $       28,478          $ (42,743)         $      23,001               $ (100,720)
Adjustments:
Interest expense                                              20,353             19,691                 40,891                   38,441
Income tax expense                                             3,570                169                  5,177                      334
Depreciation and amortization                                 34,251             33,008                 64,816                   66,205
EBITDA                                                $       86,652          $  10,125          $     133,885               $    4,260
Impairment of investment properties(1)                             -             12,313                      -                   12,313

EBITDAre                                              $       86,652          $  22,438          $     133,885               $   16,573

Reconciliation with adjusted EBITDA Depreciation and impairment related to company assets

                                                $         (104)         $    (102)         $        (206)              $     (203)
Gain on insurance recoveries(2)                               (1,519)                 -                 (2,513)                       -
Loss on extinguishment of debt                                     -              1,356                    294                    1,356

Amortization of share-based compensation expense               3,578              3,643                  5,785                    5,938
Non-cash ground rent and straight-line rent expense               16                 33                     32                       51

Other non-recurring expenses(3)                                    -                 20                  1,292                       23

Adjusted EBITDA is attributable to common shares and unit holders

                                          $       88,623          $  27,388          $     138,569               $   23,738


(1)   During the three and six months ended June 30, 2021, the Company recorded
a $12.3 million impairment loss related to Marriott Charleston Town Center,
which was attributed to its net book value exceeding the undiscounted cash flows
over a shortened expected hold period.

(2)   During the three and six months ended June 30, 2022, the Company recorded
$1.5 million and $2.5 million, respectively, of insurance proceeds in excess of
recognized losses related to damage sustained at Loews New Orleans Hotel during
Hurricane Ida in August 2021. These gains on insurance recovery are included in
other income (loss) on the condensed consolidated statement of operations and
comprehensive income (loss) for the periods then ended.

(3) During the six months ended June 30, 2022the Company recorded repair and clean-up costs related to the hurricane of $1.3 million which is included in impairment and other losses in the condensed consolidated statement of income and comprehensive income for the period then ended.

The following is a reconciliation of net income (loss) to FFO and Adjusted FFO
attributable to common stock and unit holders for the three and six months ended
June 30, 2022 and 2021 (in thousands):

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                                                           Three Months Ended June 30,                 Six Months Ended June 30,
                                                             2022                  2021                2022                 2021
Net income (loss)                                      $       28,478      

($42,743) $23,001 ($100,720)
Adjustments: Depreciation charges related to investment properties

                                                     34,147             32,906                64,610              66,002
Impairment of investment properties(1)                              -             12,313                     -              12,313

FFO Attributable to Common Share and Unitholders $62,625

$2,476 $87,611 ($22,405)

Reconciliation to Adjusted FFO
Gain on insurance recoveries(2)                        $       (1,519)      

$- $(2,513) $ – Loss on extinguishment of debt

                                      -              1,356                   294               1,356

Loan related costs, net of adjustment related to
non-controlling interests(3)                                    1,331              1,558                 2,617               3,324
Amortization of share-based compensation expense                3,578              3,643                 5,785               5,938
Non-cash ground rent and straight-line rent expense                16                 33                    32                  51

Other non-recurring expenses(4)                                     -                 20                 1,292                  23

Adjusted FFO attributable to common shares and unitholders

                                                $       66,031       

$9,086 $95,118 ($11,713)


(1)   During the three and six months ended June 30, 2021, the Company recorded
a $12.3 million impairment loss related to Marriott Charleston Town Center,
which was attributed to its net book value exceeding the undiscounted cash flows
over a shortened expected hold period.

(2)   During the three and six months ended June 30, 2022, the Company recorded
$1.5 million and $2.5 million, respectively, of insurance proceeds in excess of
recognized losses related to damage sustained at Loews New Orleans Hotel during
Hurricane Ida in August 2021. These gains on insurance recovery are included in
other income (loss) on the condensed consolidated statement of operations and
comprehensive income (loss) for the periods then ended.

(3) Loan costs include amortization of debt premiums, discounts and deferred loan origination fees.

(4) During the six months ended June 30, 2022the Company recorded repair and clean-up costs related to the hurricane of $1.3 million which is included in impairment and other losses in the condensed consolidated statement of income and comprehensive income for the period then ended.

Use and Limitations of Non-GAAP Financial Measures

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

We compensate for these limitations by separately considering the impact of the
excluded items to the extent they are material to operating decisions or
assessments of our operating performance. Our reconciliations to the most
comparable GAAP financial measures, and our condensed consolidated statements of
operations and comprehensive income (loss), include interest expense, and other
excluded items, all of which should be considered when evaluating our
performance, as well as the usefulness of our non-GAAP financial measures. These
non-GAAP financial measures reflect additional ways of viewing our operations
that we believe, when viewed with our GAAP results and the reconciliations to
the corresponding GAAP financial measures, provide a more complete understanding
of factors and trends affecting our business than could be obtained absent this
disclosure. We strongly encourage investors to review our financial information
in its entirety and not to rely on a single financial measure.

Significant Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities at the date of our financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual amounts may
differ significantly from these estimates

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and assumptions. We evaluate our estimates, assumptions and judgments to confirm
that they are reasonable and appropriate on an ongoing basis, based on
information that is then available to us as well as our experience relating to
various matters. All of our significant accounting policies, including certain
critical accounting policies, are disclosed in our Annual Report on Form 10-K
for the year ended December 31, 2021 and Note 2 in the accompanying condensed
consolidated financial statements included herein.

Seasonality

Demand in the lodging industry is affected by recurring seasonal patterns, which
are greatly influenced by overall economic cycles, the geographic locations of
the hotels and the customer mix at the hotels. The impact of the COVID-19
pandemic has and may continue to disrupt our historical seasonal patterns.

New accounting statements not yet implemented

See Note 2 to the accompanying condensed consolidated financial statements for additional information regarding recently issued accounting pronouncements.

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